Pivoting to digital maturity

Constant pressure on businesses to innovate and grow in a dynamic competitive environment has made digital transformation a top priority for businesses across industries. Organizations are devoting significant time, effort, and capital to digitally transform. Some achieve significant tangible results from these efforts. Others achieve less impact. Why?

In search of the factors that lead to digital transformation success, we surveyed 1,200 senior executives knowledgeable about their organizations’ digital transformation efforts. The findings from the survey, coupled with our own experience, show how organizations can structure their digital transformation initiatives to help ensure that they have a positive impact—in other words, that they’re doing what it takes to become more digitally mature.

In the pages of this report, we discuss in detail our findings on what tends to drive successful digital transformation. These can be briefly summarized as follows:

• Organizations are planning to invest aggressively in digital transformation efforts. According to our survey, digital transformation budgets will increase by 25 percent in the coming year versus the prior year.
• Digital transformation is about more than implementing discrete technologies. Rather, it requires developing a broad array of technology-related assets and business capabilities, which we call digital pivots, that can help propel an organization along the journey toward becoming a digital enterprise.
• Organizations that are more digitally mature—meaning they are deriving greater benefit from digital transformation efforts—are in large part distinguished by their cross-functional execution of more digital pivots. In other words, the more comprehensive and coordinated an organization’s digital transformation efforts are, the more likely it is to be digitally mature.
• On average, higher-maturity organizations’ digital transformation efforts are twice as broad as those at lower-maturity organizations.
• To prioritize transformation efforts, we recommend first implementing foundational pivots focused on assets such as infrastructure and talent, then applying a broad range of pivots to one business function to achieve systemic, pervasive transformation of that function. Focusing on transforming back-office operational functions first is less risky, whereas focusing on customer-facing functions may produce market impact more quickly.
• The digital pivots are necessary—but not sufficient—for digital transformation. Higher-maturity organizations tend to be distinguished by the presence of complementary “soft” factors such as strong leadership and a digital mindset.
• A higher level of digital maturity is correlated with above-average financial performance. Higher-maturity organizations are nearly three times more likely than lower-maturity organizations to report net profit margins and annual revenue growth that are significantly above the averages in their industry.