Digital transformation is a hot topic turned priority for many businesses today. Why? Almost everything in the world is going digital and the modern business must adapt - quickly - to this technological momentum to remain relevant in the marketplace.
Senior executives, sectors, and even countries face increasingly complex challenges that affect business productivity and cause disruptions in innovation. The solution to these challenges lies in the use of the appropriate technologies.
The emergence of artificial intelligence (AI), big data, Enterprise 2.0, and social media has a great impact on the corporate environment that affects firms, economies, and everything in between. Let's now narrow in on how digital transformation has definitively impacted business productivity and innovation:
1. Digitization Expands Industry Boundaries
Digitization has induced a competitive pressure that's currently felt in almost all industries. Though the effect is still not much pronounced, it is already developing momentum. As of now, only 10% of industries have embraced technology as a means of diversifying beyond their main industry.
As many industries learn the benefits of using digitization to diversify, competitive pressure will rise to a level that only the fittest will survive. Those that have embraced digitization for diversification have seen their revenues grow by about 25%.
2. Digitization Gives Rise to Large Economic Potential
The advent of new technologies has fueled global productivity growth. By 2030, we expect an additional 13 trillion U.S. dollars to be added to the global GDP courtesy of AI, automation, and digitization.
These technologies have paved the way for new business opportunities as the productivity gains made get cycled into the same economies thus leading to expansion. Digitization has a visible impact on finance, media, pharmaceuticals, and large manufacturing.
3. Digital Giants are Rising Beyond US and China
When talking about digital giants in the U.S. one doesn't need to look further than the big four: Apple, Facebook, Amazon, and Google. China has its big three which includes Tencent, Baidu, and Alibaba. These digital superstars are the key players in the global digital community and they fuel the creation of hyper-scale businesses.
Digitization has also made it possible for other countries to compete for the space that was originally controlled exclusively by these giants. Currently, about 200 million corporations are populating the world economy. In fact, the top 10 percent of the leading traditional companies account for about 80 percent of total digital revenue generated in their respective sectors.
4. Agile Is the New Kid on the Block
Startups are not only increasing the number of competitors in their respective sectors, but they are competing more profitably than the established companies sharing the marketplace. Why is this so? Startups tend to be more agile in using digitization in developing and growing businesses than long-time incumbents.
5. Digital Natives are in the Driver's Seat
Competition is not only rising among the giants. Digitization has raised a new breed of startups, run by a cohort of digital natives, which are effectively giving the "big boys" a run for their money.
The U.S. is leading in channeling money to digital-forward startups, the amount which currently stands at 220 U.S. dollars per capita of investment. This is far above that of their runner-up, Sweden with an investment of only 120 U.S. dollars per capita.
The rise to prominence for these digital natives is evidenced in the sheer number of startups whose businesses have attained the 1 billion U.S. dollars of value benchmark.
Digital transformation has totally changed the global business landscape. However, even when you have the right digital strategy, the way you execute it matters just as much if not more. When done well, you'll reap the benefits, otherwise, your business may end up in the analog dust.
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ref: Twenty-Five Years of Digitization: Ten Insights into How to Play it Right, McKinsey Global Institute