Four Ways Digital Leaders are Accelerating Their Innovation Strategy

By Thomas Mller.

With many organizations feeling the heat to transform operations and demonstrate results, their digital investments are breaking records again this year.

Success and speed are important in today's world. More than 70% of executives say they need to change their operations in the next two years to compete.

The leaders of digital performance.

A small group of digital performance leaders are moving away from the rest.

8% of the survey sample is made up of organizations with executives who agree with them on digital initiatives. According to the respondents, they are more likely to beat the competition on digital investments.

Digital performance leaders are more likely to track their performance.

The first figure shows the financial impact of digital investments.

They have the secrets of their success.

Digital leaders have achieved outsized value creation by investing heavily in their teams and technology. Four key actions have been taken by leaders.

1. Focus digital investments on innovation and new products and services. Leaders report that their 2021 digital investments improved customer experiences (55%) and supported the launch of digital products and services (58%). And 48% say launching products and services will be a top goal for their investments.
2. Maintain a “fail fast,” agile culture. Forty percent of leaders, compared to 28% of others surveyed, say they maintain a fail-fast culture that encourages employees to experiment and allows for increased agility and speed over earlier processes.
3. Centralize operating models with a strong, outcome-driven incentive system. The vast majority (87%) take a centralized governance and oversight approach to benefits and costs. These companies maintain a clear incentive structure and measures of success. Nearly eight out of 10 (79%) leaders have a formal program to identify, measure, and report digital outcomes. Leaders create an outcome management office-style governance program with an agile operating model to provide rigor, speed, and meaning to investment decisions. This program can also track use and customer feedback with real-time dashboards to provide direct input into current and future strategies.
4. Empower team leads or change agents to socialize and champion digital projects requiring more scrutiny. A vast majority of leaders have taken to heart lessons of the pandemic: retaining flexibility in their workplace, developing new strategies to attract talent, and formalizing approaches to measure digital investment outcomes. Digital leaders distinguish themselves by assessing the impact of company culture on digital transformation strategies and initiatives: 46% say they consider culture changes when mapping digital strategies, compared to 31% of others. Leaders are also much less likely than others to cite talent and skills gaps and lack of alignment among organizational units as obstacles to achieving a high return on digital investment (RODI).

It's the next frontier.

Digital performance leaders use investments like acquisitions for market expansion and near-term financial gains to learn and experiment, strengthen existing customer relationships, and support cultural transformation.

The second figure shows the stages of digital investment maturity.

The progress of their investments in more sophisticated technologies is distinguished by the fact that they have reported full benefit realization of physical robotic and automation and artificial intelligence. While most companies plan to focus their investments on cloud and internet of things as they continue to build their data and analytic capabilities, leaders are more likely to invest in advanced technologies such as blockchain.

There is a link to total shareholder returns.

There is a correlation between total shareholder returns and digital activity.

According to a recent analysis of the Russell 3000, companies that made organic and inorganic investments in digital innovation were found.

The third figure shows the TSR, digital deal count, and digital innovation.

In turn, companies above the median of digital deal activity or digital innovation strength executed nearly four times as many digitally focused deals over the past four years as the lowest performing companies. Digital-focused patent family statistics are used to calculate innovation strength, which is a multidimensional metric.

The fourth figure shows the digital deal count and innovation strength.

There is a rapid innovation for tomorrow.

According to the Digital Investment Index, organizations that are now investing heavily in digital transformation must continue to measure their results. As they step up their investments in high priority projects, companies will need to focus on scaling technology solutions and realizing benefits.

The survey shows how important it is to choose the right mix of vehicles. Digital leaders that make the right choices will get a lot of money.

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Oxford Economics conducted a survey of senior executives from large companies around the world during the first half of the 21st century. Interviews with 1,500 global corporate executives about their digital strategies resulted in the results. Companies from more than 30 countries are included in the respondents.

The digital leader is Thomas Mller. There is a digital strategy and transactions principal at the company. The leader of the Asean group is Joongshik Wang. The views reflected in this article are those of the authors and do not represent the views of the globalEY organization or its member firms.