70% of the 1,400 business leaders surveyed by Bain say they’re experiencing ‘significant digital disruption, and 85% of them believe this disruption will either maintain its pace or accelerate’
Nearly 80% of companies that are considered as “digital disrupters” gained market share over the last two years, according to new research by Bain & Company. Bain’s fifth annual Benchmarking Survey of Corporate Digital Transformation shows that digital disrupters put “digital” at the very top of their agendas, yet even they are having to adapt to a fresh wave of emerging technologies that are enabling new competitors and business models.
Of the 1,400 business leaders across 13 countries that Bain surveyed, 70% of them said they are experiencing significant digital disruption, and 85% of business leaders believe disruption will either maintain its pace, or accelerate, over the next five years. With no company invulnerable, Bain is explaining the ways disrupters stand out and reminding executives of the six digital transformation challenges that are likely to determine future winners and losers.
“The astonishing out performance of tech stocks may have eased, but don’t expect a corresponding slowdown in digital disruption,” said James Anderson, partner in Bain’s London office and leader in Bain’s Vector capability. “In fact, we are seeing a fresh wave of disruption today driven by new business models and emerging technologies such as deep-learning artificial intelligence, the metaverse, Web3, advanced robotics, and connected devices supported by edge computing and 5G networks.”
Disrupters Stand Out
According to Bain, disrupters believe we are living through a profound shift in how business operates; when compared to what is known as “digital chasers,” disrupters are twice as likely to say that digital technologies will radically alter their sector. Bain found that disrupters are:
- Talent magnets: Disrupters are eight times more likely than late digital adopters to attract and retain the right people, with the right skills, in the right roles.
- Innovative: Nearly two-thirds of disrupters are building “Engine 2” digital businesses outside their core as a response to both opportunity and disruption; another source of resilience and growth.
- Attentive to environmental, social, and governance (ESG) progress: Most disrupters view ESG initiatives as being intertwined with their digital activity; about 60% consider ESG a primary criterion in the prioritization of their digital initiatives, and about 90% clearly track the role of digital initiatives in ESG progress.
Six Key Digital Transformation Challenges
Although 97% of the executives Bain surveyed indicated that digital transformation is a priority, fewer than 20% of them believe that their company has achieved more than 80% of their digital transformation goals. Bain found that there are six priority areas that companies should focus on:
- Commit to the cause: More than 80% of early-stage transformers said their top-level commitment to change hadn’t yet cascaded through the ranks or been fully codified into compensation and career management.
- Refactor tech architecture: Accelerate the shift to cloud technologies and invest in a modular and flexible enterprise technology stack.
- Extract full value from data: Embed repeatable processes for scaling advanced analytics; deploy artificial intelligence (AI) and machine learning at scale.
- Make Agile the norm: Ditch siloed operating models and ensure that Agile and other new ways of working extend beyond the IT department.
- Ignite innovation: Rekindle a risk-taking culture; only 1 in 10 early-stage transformers currently feel they have the risk-taking culture (and effective risk management) that is commonplace at disrupters.
- Become a talent magnet: Invest more in employee training, give employees room to pursue experimental side projects and search internally for “digital dreamers”.
“Digital transformation has unlocked significant value already for most companies, but with a new era of technological evolution, it is only just beginning to exert its disruptive power,” said Laura Polasek, vice president within Bain’s Vector practice. “Companies must stay focused on prioritization of their digital agenda to continue to transform and succeed.”
Source: James Anderson, partner London & Laura ^Polasek, Practice vice President Milan of Bain & Company (https://www.bain.com)