The digital spending and digital revenue numbers alone don’t sufficiently explain what leaders are doing differently than followers. Yes, leaders are more likely to have digital off erings than followers. And they do generate more revenue from those digital offerings. Leaders also spend far more on their overall digital initiatives than followers do – whether they’ve brought digital products and services to market or simply improved their non-digital traditional offerings by attaching digital sensors to them, monitoring customer comments on social media, and other means.
But that doesn’t answer why leaders project that they will generate more than three times the revenue from their digital initiatives than followers. And for companies that have brought new digitally based offerings to market, why do leaders believe they’ll generate 126% more revenue on average from those products than followers?
To shed light on this, we looked at a range of data in the study. In particular, we looked at the business capabilities that leaders and followers had achieved from their digital initiatives. (In all, we asked survey participants to tell us about whether, through their digital initiatives, they had achieved one or more of 27 capabilities – from new ways to price their products, to the ability to monitor how customers are using their products, or new ways of segmenting customers.)
In fact, leaders were far more likely to desire these 27 capabilities – and to have already gained some of them. We group those 27 capabilities into six broad categories:
- Business model
- Products and services
- Business processes
- Customer segmentation
- Channels to market
- Workplace environment
A greater percentage of followers than leaders sought to gain business capabilities in 19 of the 27 areas. But when asked whether they had actually achieved those capabilities, a higher percentage of leaders had done so than followers in all but one of the 27 areas. We believe this is a significant finding. It suggests to us that companies whose digital initiatives will have the greatest revenue impact – the ‘leaders’ – focus their initiatives on creating fewer capabilities than the followers do. By focusing on fewer capabilities, leaders appear more likely to achieve them. Followers, in contrast, with many more goals for their digital initiatives, have achieved far less than leaders.
Exhibit IV-7 shows that industries with higher digital intensity are different in other ways. They tend to:
- Spend more on their digital initiatives this year than most other sectors (as a percentage of revenue)
- Have a much higher percentage of respondents with digital offerings
- Generate more revenue from those digital offerings (as a percentage of total revenue)