In today’s fast-paced digital landscape, some companies—known as digitized incumbents—are leading the way. A recent McKinsey survey on digital strategy revealed that these companies, which are more than 20% digital and actively launching new digital ventures while transforming their core operations, are twice as likely as traditional incumbents to achieve organic revenue growth of 25% or more. Another survey identified four critical strategic moves that distinguish top economic performers from their less successful peers among digitized incumbents.
1. Allocating Digital Capital Wisely
Top performers strategically allocate their digital capital by dividing it equally between digitizing their core businesses and developing new digital ventures. In contrast, other companies tend to invest more heavily in digitizing their legacy operations. This balanced approach allows top performers to innovate while ensuring their core operations remain competitive.
2. Ensuring Strong IT Capabilities
While digitizing the core business is essential, its financial returns may seem modest compared to other initiatives. However, companies with top performance in core IT tasks have made significant progress toward becoming fully digital and mastering key digital activities. Strong IT capabilities are the backbone of successful digital transformation, enabling companies to seamlessly integrate new technologies and processes.
3. Leveraging Digital Technologies Across the Enterprise
Successful digitized incumbents don’t just adopt digital technologies—they integrate them across the entire enterprise. For instance, among companies that have embedded or piloted AI in one or more business units, 78% report that it has created significant or moderate value. The use of both basic and advanced digital technologies across the organization is a hallmark of top performers.
4. Integrating Digital Technologies into Day-to-Day Processes
Companies that successfully integrate digital technologies into their day-to-day operations often see sustained improvements in performance. These organizations report that their digital transformations were not only successful but also instrumental in driving long-term performance gains. By making digital technologies a core part of their daily processes, these companies have turned digital transformation into a continuous improvement journey.
Becoming a Digital Powerhouse
Every company has its own definition of digital innovation and faces unique competitive threats. A successful digital strategy should reflect these individual challenges and opportunities. By adopting a dual strategy of building innovative new digital businesses while digitizing legacy operations—and by focusing on these four critical moves—any company can position itself as a digital powerhouse.
For help determining your digital strategy, get in touch with Pipol.
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