The fourth industrial revolution
5 learnings from the digital transformation of the world's largest companies
We're in the midst of the fourth industrial revolution - the rise of the interconnected enterprise. Time to have a look at our peers: how do the world's largest companies approach this transformation? What are they achieving, and what can we learn from them?
Digital transformation: 5 paradoxes
To find out how companies are approaching their digital transformation, we conducted a survey among top executives of the world's largest companies.
The survey revealed a mix of enthusiasm and ambitious plans for future investment – as well as a series of disconnects between companies’ plans and actions. While digital transformation is taking shape in nearly every organisation, paradoxes can be observed around strategy, supply chain transformation, talent readiness, and drivers for investment.
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- The strategy paradox. Nearly all respondents (94 percent) indicated that digital transformation is a top strategic objective for their organization. Just because respondents appear to understand its strategic importance, however, doesn’t necessarily mean they are fully exploring the realm of strategic possibilities made possible by digital transformation.
- The supply chain paradox. Executives identified the supply chain as a top area for both current and prospective digital transformation investments. However, supply chain executives and those outside of the C-Suite who direct the actual day-to-day business operations, do not appear to have a seat at the table when it comes to decisions about digital transformation investments.
- The talent paradox. In keeping with Deloitte’s previous research on Industry 4.0, executives report feeling quite confident that they have the right talent in place to support digital transformations – but also seem to admit that talent poses a vexing challenge. Indeed, only 15 percent of respondents indicated they need to dramatically alter the composition and skill sets. At the same time, however, executives point to finding, training, and retaining the right talent as their top organisational and cultural challenge.
- The innovation paradox. Executives report their digital transformation initiatives are driven largely by productivity improvement and operational goals – essentially, leveraging advanced technologies primarily to do the same things better. This finding has been borne out in previous Deloitte studies, suggesting a wider pattern around using advanced technologies for near-term business operations – at least initially – rather than truly transformative opportunities. Yet, innovative opportunities abound – and should not be discounted. Organisations driven by other factors, such as an increased desire for innovation and internal strategy focus, reported equally positive return on investment.
- Around the physical-digital-physical loop. The ability to fully harness information from connected assets and use it to drive informed decisions is important to the full realisation of Industry 4.0, and one which many organisations may not yet fully be able to execute in practice.
About the research
To understand how companies are investing in Industry 4.0 to enable digital transformation, Deloitte conducted a global survey of 361 executives in 11 countries in the Americas, Asia, and Europe. The survey was conducted in the spring of 2018 by Forbes Insights, and captured insights from respondents in aerospace and defense, automotive, chemicals and specialty materials, industrial manufacturing, metals and mining, oil and gas, and power and utilities.
All survey respondents were director level or higher, including CxOs (47%), Business Unit Presidents (5%), EVPs/SVPs (7%), Vice Presidents (11%), Executive Directors/Senior Directors (9%), and Directors (21%).
All executives represented organisations with revenue of $500 million or more, with more than half (57 percent) coming from organisations with more than $1 billion in revenue.