Are you a digital dinosaur? How technology drives today’s most profitable businesses
With the increasingly fragmented and multi-faceted digital landscape, businesses need to work harder than ever to remain innovative, evolve quickly, and make the right decisions whilst facing a perplexing array of digital opportunities and mediums.
After recently spending three years agency-side in Boston, it’s been a fascinating transition back to the Australian / New Zealand market. In comparison to a more mature digital landscape in the US and UK, here there often still remains a huge divide between the defined commercial priorities of a business, and the digital priorities.
In less innovative companies, digital simply never makes it to the top of the list, making it hard for agencies and internal advocates to build teams or create strategies that will genuinely propel the business forward. In the US, I found this gap to be less prevalent. The digital priorities ARE the commercial priorities.
A recent report by Econsultancy showed a startling gap between what agencies felt were the pressing priorities for a business (more empowered consumers, mobile technology and social media), versus what the internal respondents said (economic environment and technological advances).
But does this delta really matter? The short answer is: Yes.
Firstly, let’s look at the necessity of innovation in starker terms.
Econsultancy referenced some fascinating research by Professor Richard Foster of Yale University, showing the average lifespan of a company in the S&P 500 index decreasing from 61 years in 1958, to just 18 years in the present day. He estimates that by 2027, over three-quarters of businesses in the index will be brands we’ve never heard of.
So evolution in itself is crucial, but how big a part does digital play in this?
In a joint research piece by the MIT Center for Digital Business and Capgemini Consulting, the findings were clear: “The higher a company’s level of digital maturity, the better its financial performance is likely to be”. This new breed of businesses (the Digerati) have the digital maturity to not only build digital innovations (digital intensity), but to also drive enterprise-wide innovation (transformation management intensity) – leaving their dinosaur competitors in the dust.
The research looked at 400 businesses over a two-year period, finding that on average, Digerati are 26% more profitable, yield a 12% higher market valuation, and generate 9% more revenue from their employees and physical assets.
By plotting the two elements of digital intensity and transformation management intensity on axes, the findings carved out four archetypes of digital maturity:
In looking at digital maturity by vertical; pharmaceuticals, FMCG and manufacturing fell into the Beginners category, which are either unaware of digital opportunities or simply not investing in them.
The Fashionistas are nimble, aren’t afraid of experimentation and may often create cutting-edge strategies. Ultimately however, they lack a cohesive vision which compromises true synergy across campaigns. Telecoms and travel / hospitality fall into this section, one that will benefit from stronger digital leadership to avoid company silos.
Conservatives lean towards caution vs advancement, and may be overly sceptical of new technologies. Their strength lies in the development of solid platforms, trusted tools and established approaches i.e. insurance and utilities companies – particularly the former, where the risk-averse culture can strangle innovation.
The Digerati, in comparison, will invest in experimentation and new technologies, but also prioritise the elements of transformation management: cohesive vision, corporate governance, employee engagement and IT to business relationships. Banking, retail and high-tech businesses are the early-adopters making up the biggest segments of this category. Agility, innovation and restlessness are in the Digerati DNA.
This can be further extended by considering a business’ conversion maturity – how successfully they monitor and improve their conversion rate optimisation (CRO). Arun Sivashankaran of FunnelEnvy suggests conversion maturity can be measured by two factors: Openness to testing, and willingness / ability to apply results – or, measurement and execution. He gives another four archetypes which typify businesses along these continuums with the Datarati being the pioneers of both. It takes both courage and discipline to be simultaneously agile in strategy, and robust in execution.
There have been some fantastic posts recently about conversion optimisation techniques, such as improving your shopping cart design / UI; presenting your shoppers with the crucial information they need (i.e. free shipping / returns and security); streamlining registration processes; optimising payment fields; and shortening lead gen forms to achieve better site performance.
Has your business embraced digital? Have you already developed a deep love for A/B testing? Has it made a difference? We’d love to hear your thoughts!!
By Esther Tankhilevich