How ‘Superstar’ Companies Tackle Digital Transformation
With the dawn of the internet came visions of an idealized society: knowledge would be accessible to all, power would become decentralized, and businesses of all sizes and regions would be positioned to succeed.
The internet spawned an optimism that, as we see now, did not pan out as expected.
Instead, the internet and subsequent technological developments enabled powerful companies to grow bigger and wealthier. With greater digital horsepower, they could scale more quickly and create powerful platform economies. The internet catalyzed the growth of “superstar” companies.
Today, superstars sit at the top of the economic power curve. They account for the top 10% of companies and hold 80% of positive economic profit. Superstars span all sectors and geographies.
And, aside from their high earnings, these companies share another common characteristic: their strategic digital transformation approach.
The ‘superstar’ strategy for digital transformation
Digital transformation has become a driving force in a company’s success in the digital age. It requires companies, bigand small, to be agile as they adopt new ways of improving their processes through digital means.
By 2019, global spending on digital transformation will rise to a staggering $1.7 trillion.
Superstar companies approach digital transformation by steering investments toward intangible assets like software, training, and employee development. These assets have become increasingly valuable as tangible ones (buildings, machinery, land) are becoming less important or profitable.
Of all of the US companies in the stock market in 1960, 85% of their market value was based on tangible assets. In 2000, that number decreased to 25%. More and more, companies are seeing the importance of intangible investments in their ability to succeed and realize a successful digital transformation.
Investments in advanced technology promote digital transformation success
Software is one of the most common intangible investments. While it takes significant time and money to develop, it can scale up in a way that tangible items, like machinery, cannot.
Organizations that have realized a successful digital transformation approach tend to deploy more technology than those that have not. According to a McKinsey survey, 81% of respondents who experienced successful digital transformation in their company said cloud-based technologies have become an integral part of the business strategy.
In addition to using cloud-based technology, they also are more likely to use more advanced digital assets, like artificial intelligence, automation, and machine learning techniques.
A digital adoption strategy is key to maximizing ROI
Though all companies have the ability to pursue advanced software implementations, superstar companies stay ahead of the curve by employing a superior strategy to maximizing their investments.
When deploying these technologies, superstars convert those investments into measurable returns for their business with a digital adoption strategy. In order for that technology or software investment to show value, it needs to be utilized correctly and as it was intended.
Superstar companies make talent development a top priority
A transformation is three times more likely to succeed when organizations invest in their digital talent.
When considering a digital transformation approach, it is important to see talent development and onboarding as a top priority. Your workforce needs a diverse set of digital skills in order to realize the full potential of your transformation.
More than half of executives — 60% — believe they will need to either replace or provide retraining to up to half of their employees in the next five years.
When employees can’t use new digital tools effectively, they become the bottleneck to successful digital transformation. Prioritizing digital adoption and providing the necessary support to enable employees to fully maximize software and apps is critical to business success.
Take the superstar approach and gain an edge
Superstar companies won’t easily loosen their grip on their share of the market. But they can definitely serve as an example for the right digital transformation approach: Investing in intangible assets, taking a talent-first approach, and ensuring employees have the right resources to maximize technology.