Transformation is not easy but the companies who have reached “Future Ready” have significantly higher financial performance. Know about the different pathways companies take in their attempt to achieve breakthrough performance via digitally enabled business transformation.
Digital changes everything – even in the cement business. In an effort to help their customers succeed in a complex and uncertain environment, the global cement company CEMEX became the first in the building materials industry to develop a multi-device customer integration platform. CEMEX Go provides services to streamline customer interactions including ordering, tracking shipments, and payment providing information and transparency to improve operational control, decision making, and productivity. Launched just over a year ago, CEMEX Go adoption raced to 20,000 active customers across 18 countries – a testimony to CEMEX’s ability to innovate and the need for change on building sites.
Like CEMEX, many companies plan to achieve breakthrough performance via digitally enabled business transformation. We call this journey becoming “Future Ready”. Future Ready companies are ambidextrous: on the one hand, they significantly improve their customers’ experience relative to competitors and on the other hand relentlessly reduce cost and simplify their operations. These Future Ready companies are much more agile reusing modular capabilities, make their data a strategic asset, and more easily partner to participate in digital ecosystems.
In this paper, we share insights from the journeys of 216 companies.1 We grouped these companies by whether they had completed more or less than 50% of their proposed digital business transformation journey finding large differences in performance. Companies whose transformation was at least 50% complete against target had 32% higher net margins and 67% higher revenue growth than competitor companies whose transformations were less than 50% complete.
About the Authors
Peter Weill, PhD, is an MIT senior research scientist and chair of the Center for Information Systems Research (CISR) at the MIT Sloan School of Management, which studies and works with companies on how to transform for success in the digital era. MIT CISR has approximately 100 company members globally who use, debate, support and participate in the research. Peter’s work centers on the role, value, and governance of digitization in enterprises and their ecosystems. Ziff Davis recognised Peter as #24 of “The Top 100 Most Influential People in IT” and the highest ranked academic.
Stephanie L. Woerner, PhD, is a research scientist at MIT CISR. Stephanie is an expert on how companies use technology and data to create more effective business models and manage the associated organisational change. She has a passion for measuring hard-to-assess digital factors such as connectivity and customer experience, and linking them to firm performance. Stephanie is the coauthor, withPeter, of What’s Your Digital Business Model? Six questions to help you build the next generation enterprise (Harvard Business Review Press, 2018).
Nick van der Meulen, PhD, is a research scientist at MIT CISR. He investigates digital business transformations, particularly concerning how leading organizations change decision rights and manage technology to enable new ways of working that drive performance.
1. MIT CISR 2017 Pathways to Digital Business Transformation Survey.
2. For more information on the development of this framework see Weill, Peter and Stephanie L. Woerner. “Is Your Company Ready for a Digital Future?” MIT Sloan Management Review, Winter 2018, 59(2): 20-25
3. The framework and pathway lines are based on series of informal interviews in 2015-7 on digital transformation with senior executives globally and financial performance identified via the MIT CISR 2017 Pathways to Digital Business Transformation survey (N=216).
4. “ING to spend EUR800 million on digital integration; shed 7000 jobs,” Finextra, October 3, 2016, https://www.finextra.com/newsarticle/29533/ing-to-spend-eur800-million-on-digital-integration-shed-7000-jobs.