I recently saw a quote from motivational speaker Steve Maraboli that said “Once your mindset changes, everything on the outside will change along with it.”
While I can certainly relate with the quote on a personal level, it does indeed apply to a business context as well. A winning corporate mindset is not only an organizational team building tool, but also a very real bottom line advantage that impacts financials, organizational efficiencies, customer satisfaction, and employee engagement.
Nevertheless, 97% of companies have yet to fully realize the potential impact of a full-fledged digital transformation mindset, and they are severely lagging the 3% who have from a results perspective begging the question why.
In collaboration with Oxford Economics, we recently surveyed 3,171 senior executives around the world on the topic of digital transformation, and found that only 3% of the respondents had digitally transformed their entire enterprise as opposed to the 97% who were mostly in planning or pilot stages. The “SAP Digital Transformation Executive study” showed that while most everyone surveyed recognized the importance of digital transformation, only this small group had actually transformed to embody a corporate-wide digital mindset. Some of the staggering findings resulting of this mindset were tangible advantages such as 23% higher revenue, increased profitability expectations for 80% of the leaders (versus 53% for everybody else), and increased market share expectations for 85% of leaders versus 39% for everybody else.
While the leaders were scattered globally, we wanted further understand what drove these very significant differences in results and also understand if there were country specific patterns or prioritizations that enable or inhibit the move towards digital transformation. We worked with Oxford Economics to analyze what truly made up the digital mindset by creating an index that looked at a wide range of indicators and sub-indicators centered around three key pillars:
- Management of digital transformation
- Impact of digital transformation
- Digital-enabling environment
The management of digital transformation
As the successful management of digital transformation requires a clear direction and vision, goals must be set and strategies developed to achieve them. We tracked how companies set digital transformation as a strategic priority, how digital investments are prioritized, if digital engagement strategies are far along, and if product development and delivery strategies are aligned with the digital transformation goals. On a country level, the results showed clear differences between countries with the Netherlands leading the pack ahead of the United States. Though interestingly, companies in the Netherlands were far ahead on setting and agreeing on digital goal, but relatively less advanced on the actual digital strategies needed to accomplish these goals. Plus, a country like Brazil was doing comparatively well on setting the digital goals, but clearly lacking in the overall development of digital strategies to follow through.
The impact of digital transformation
In looking at the impact of digital transformation, companies were scored on their ability to execute digital strategies and their ability to realize performance improvement from both a market perspective and an internal efficiency standpoint. The United States topped the list in this category driven by a higher ability to realize improved performance with Southeast Asia, Commonwealth of Independent States (CIS), and Mexico at the bottom suffering from low scores on the execution of digital strategies.
Room for improvement isn’t an option it’s a requirement
In looking at the management and impact of digital transformation across countries, it is apparent that while there are marked differences between countries, the overall index scores are low across board with all countries scoring less than 16 out of a possible 50 on both measures. So while certain countries are generally ahead of others, there is significant room for growth across the board and companies are well served to ramp up their efforts across both the management and impact indicators.
When adding the digital leader group to the scores, the pictures changes dramatically though. The leader group scores more than twice as high across both the management and impact index as the highest ranked country.
The mindset adopted by these leaders who have implemented digital transformation across their business is not defined just by the action of just going through the digital transformation motions haphazardly. Rather, it is defined by the ability to set digital transformation goals as a strategic business priority, the emphasis on executing on the digital strategies across the business as opposed to in silos, and critically, the ability to achieve superior business results that set them apart from the competition.
As the leaders keep focusing on four key areas (namely, customer emphasis, talent management, next-gen technology, and true company transformation), they are likely to pull farther ahead of their peers. Their mindset is already now changing everything not just inside their business, but certainly outside and around their business as well.