Some Industries Are ahead in the Digital Race (and Need to Be)

Our research found that companies in certain industries are racing faster than others to reach digital maturity. Of course, the speed at which companies can develop new digital muscles and gain competitive advantage depends partly on the goals they set for themselves. Some companies may initially seek to enhance the efficiency of their communication with customers or encourage collaboration among employees. Others may look to harness the power of Big Data and analytics tools to improve decisions in vital areas of the business. Other companies start on a grander scale: making a wholesale digital transformation, reshaping their business model, and trying to leapfrog nondigitally savvy competition.

However, our research suggests that in industries where digital technology is having the most profound impact, companies that hesitate to enter the digital waters are putting themselves at big risk. Crowded by the emergence of so many digital technologies, from social media to mobile platforms to Big Data, they can soon find themselves cornered into facing a stark choice: adapt or risk becoming irrelevant. Former executives at Blockbuster, Kodak, and Borders Group would have to acknowledge that today. More digitally adept startups, unencumbered by legacy business models and legacy technology, can come seemingly out of nowhere to take control of a market.

Our survey found that media companies, in particular, feel they’re highly at risk of digital disruption. And as we’ll explain in this section, they should: Their fundamental product – a movie, newspaper, TV show, magazine, book, advertisement, and so on – can be 100% digitized and distributed online without the need for paper, delivery trucks, stores, newsstands, movie theaters, or even TV channels. All that’s needed is a digital device and an internet connection (broadband for the video content). Many of the world’s most prestigious media companies know this. A recent New York Times report on its own digital initiative urged management to “rethink print-centric traditions…We have to look hard at our traditions and push ourselves in ways that make us ncomfortable.”19

So which of the 13 industries believe digital technology could make or break them over the rest of the decade? When we asked executives to rate the importance of their digital initiatives to overall company success over the next five years, the media and entertainment sector was far in front. Ninety percent of them see their digital initiatives as the most important or a major factor in success (see Exhibit III-1). Four industries are in the next tier: high tech (77%), retail (76%), telecommunications (76%), and (surprisingly) consumer packaged goods (76%).

That the media industry is at the top of the most concerned list is not a shock. No media company wants to relive the horrors of Blockbuster or Borders Group. The fact that the telecommunications sector has digital religion is no surprise either. Consider just how much call traffic has been siphoned away by internet telecom carriers Skype (about $2 billion annually)20 and Vonage.

The top industries that believe their digital initiatives are likely to have less impact on success are utilities (51% see them as the key or major success factor), automotive (61%), and healthcare (62%). But this is all relative; the majority of executives surveyed in these sectors believe their digital efforts are a key success factor – just not as many of them as you can find in the media industry.

Pages: 1 2

So What Should Your Digital Strategy Be?
Reaping the Benefits That They Need