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DIGITIZATION – Redefining the Rhythm of Competition in Businesses



Most executives have a powerful, intuitive feel for the rhythm of their businesses. They know how hard and fast to pull strategic levers, move their organization, and drive execution to achieve their objectives. Or at least they did. Digitization has intensified the rhythm of competition in many industries, leaving executives adrift, with information-gathering systems that are too slow or disconnected, direction-setting approaches that are too timid, and talent-management norms that are misaligned and incremental.

These leaders know their companies must adjust and accelerate. Digital is putting pressure on profit pools as it transfers an increasing share of value to consumers. Furthermore, those profit pools are bleeding across traditional industry lines as advanced technologies enable companies to forge into adjacencies, changing who in the value chain is making money, what share of the pie they capture, and how. The slow and inefficient are left behind, competing for scraps.

What is unclear to these executives, however, is how much and how fast to adapt their business rhythms. The exhortation to “change at the speed of digital” generates more anxiety than answers. Digital leaders appear to keep up a drumbeat in their businesses that can be four times faster, and twice as powerful, as those of their peers.

Moving four times faster: The beat of the company

You can’t quicken the pace of an organization by fiat. You have to build it by accelerating the frequency of manageable practices that are integral to achieving key goals, such as serving the customer or driving internal efficiency. These “light-touch” actions are low risk and low investment, but they can provide high-yield returns. They have been grouped them into two buckets that can help mold incumbents into digital players.

Learn, engage, and share

How often does your organization analyze customer data to look proactively for new ways of delighting your customers? How frequently do your senior business leaders take time to investigate and understand new digital technologies so that they recognize which ones are truly relevant to their areas of the business? How quickly and consistently does your company share lessons acquired from test-and-learn experiments performed by those on the front lines? If you are like most organizations, you aren’t performing these tasks fast enough:

  • Learning: From quarterly to monthly. Top-performing companies are voracious opportunists, and it starts at the top. Senior leaders take time to tune up their understanding of the digital tools and practices their businesses need to stay ahead. That happens monthly (often, more frequently) at the best performers, compared with quarterly at the lower performers. Much faster than average companies, top companies scan for digitally enabled productivity opportunities and for external-environment shifts that are changing the economics and boundaries of their businesses.
  • Engaging with data: From monthly to weekly. Nearly half (44 percent) of digital leaders collect and analyze customer data weekly (or more frequently) to identify new ways of winning over buyers, compared with just 16 percent of laggards, which, on average, dig into customer data only monthly. And the drive for urgency is omnipresent.
  • Sharing results: From quarterly to monthly—or even weekly. To ensure that results such as those in the previous example permeate the organization, top-performing companies encourage employees to share their lessons from lower-performing tests and successes from better-performing ones. As basic as this practice might seem, top-decile performers are five times more likely than others to do this weekly. And top performers are committed to sharing with the broader organization what has been gleaned from any test-and-learn activities. They do this about three to four times faster than their peers do—at least monthly, rather than the quarterly frequency seen in other companies—with the very highest performers sharing knowledge weekly.

Why do these particular actions matter so much? As Gandhi said, “Your actions become your habits; your habits become your values; your values become your destiny.” It goes back to the elements of organizational culture—risk taking, customer focus, silo busting—that our previous research revealed as core to digital effectiveness. Focusing on frequent inputs about what your customers are wanting, and how new technologies can help you deliver that, drives both a more customer-centric view and a greater confidence about what direction to take new offers. Sharing insights about what is working and what is not beyond the team that launched a particular initiative helps break down siloed views of both the business and the customers, and it can spur calculated risk taking in other parts of the organization. As Gandhi knew well, small but frequent actions can lead to big and meaningful changes.

Adapt and deploy

Top-performing companies are just as opportunistic when it comes to redistributing talent. This often comes through the formation, dissolution, reformulation, and work of agile teams, whose many small, low-risk steps enable swift progress, rapid talent reallocation, and massive change. At agile companies, incrementalism enables breakthroughs by lowering the risks at each step:

  • Talent reallocation: From yearly to quarterly. On average, leading companies reallocate digital talent more than five times faster than their peers do, doing so on a quarterly or faster basis. Most companies wait a year or more to reallocate talent. This large spread is likely to grow as more companies expand their use of agile methodology beyond IT. Agile ensures that organizations bring together small multidisciplinary teams aligned on common goals. These groups make iterative progress on—and continuously manage their backlogs of—those activities that matter most in achieving critical outcomes. Their work enables rapid, large-scale reprioritization of digital initiatives and has the added merit of lowering the risk on bold moves.
  • Agility in action: From every two months to every two weeks. An agile workplace allows companies to reinvent the way it serves customers. People increasingly use a variety of channels for financial services: branches, smartphone apps, laptops. They want every one of those experiences to be seamless.

Agility accelerates everything. Reallocation of talent must be executed swiftly, with focus on value.

Driving strategy with twice the power

It is clear that digital leaders undertake big strategic initiatives more often—and more successfully—than their peers do. They are more likely to develop entirely new digital offerings or to launch new businesses. Their digital transformations are more likely to be deep, organization-wide efforts than experiments conducted on the fringes.

Big moves that turbocharge digital effectiveness are underpinned by strategic clarity and adaptability. The two go hand in hand because keen insights and a view of the future are more powerful when combined with learning through experimentation. Companies with both have the confidence to make big calls when others are frozen in wait-and-see mode.

Two of the most important such calls are major acquisitions and capital bets. Not only are these two of the five big moves shown by other research to be the greatest contributors to exceptional corporate-performance improvement, they also loomed large in the findings—powerful differentiators that separates digital leaders from laggards.

Strategic power and rapid pace are mutually reinforcing. When digital leaders launch initiatives at a greater rate than peers do, they create opportunities to collect data, analyze them, and learn faster than other companies. That learning about the evolution of markets, consumer attitudes, and behavior, in turn, sets those companies up to make bigger, better, faster acquisition and capital-expenditure decisions—which, in turn, fuel new initiatives and more learning.

Accelerating the digital drumbeat: A checklist for companies

The speed and power with which digital leaders move are best engaging the following:

  • Seeking real-time digital learning

The executive teams need to become both deeply knowledgeable about the advanced technologies their units are starting to deploy and be able to think, in real time, about the strategic implications of technologies and tools.

  • Sharing insights at the pace of digital

Sharing insights is important among teams as it helps to bridge the operations that are siloed in disconnected groups. This helps to unify data among other teams and reconcile findings to help divisions to work on same-purposes. When insights are shared directly with business-unit heads, it helps drive alignment at the executive level and ensures that everyone is on the same page as to what the problems are and what solutions need to be working at.

  • Deploying digital talent with agility

Talent is a bottleneck holding back the pursuit of digital initiative in some organizations. Matters are made worse by the many different ways individual divisions are deployed, prioritized, and ran the operating expenses associated with digital talent. Resources in some companies are truly agile only within silos, not across the organization, and divisions review talent allocation at wildly different intervals.

To get this right, senior-leadership team must formulate a consistent set of criteria for prioritizing the deployment of digital talent. These criteria must be reconsidered every quarter, and changed as the company learn more about the efficacy of different elements of the digital strategy. The reallocation, however, must be done weekly, in keeping with the urgency of digital initiatives and competitive threats.

  • Reallocating resources flexibly

Traditionally, a company can look at reallocation once a year when given a great leeway to each division head. But, with these kinds of digital discoveries happening often and everywhere, the annual process has to be drastically reconfigured and move steadily toward a new direction.

  • Shifting the culture

The frequent sharing of insights, successes, and failures buoys the confidence of key leaders. And on the front lines, the freedom to make many small moves quickly diminishes risks and starts shifting the culture: managers and employees become less afraid of failure as they pursue digital initiatives.

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Developing a growth catalyst that funds itself



To drive growth, one has to first find the fuel—and for many companies, that’s not so straightforward. Internal and external obstacles, including onerous approval processes, and short-term stock-market impact, can make it hard to fund promising ventures. But that doesn’t have to be the case.

Research shows that many companies that consistently post top-line growth operate with what we call an investor mind-set. They continually squeeze funds from underperforming areas and allocate the savings to new ventures or existing programs that have the potential to scale. In other words, they fund their own growth.

As simple as that might sound, this investor approach is a significant departure for many executives, who tend to be consumed with cutting costs and playing it safe by banking marginal gains. They fall victim to a common behaviour that drives only short-term profit: taking the savings from often highly disciplined cost-cutting programs and dropping the cash to the bottom line.

Growth leaders are different. They constantly scour for savings across the business. They know exactly where each incremental dollar of savings should be reinvested to drive new growth, and they know the ROI of every dollar invested. In our experience, it often takes a significant event, such as a new CEO or business-unit leader, an acquisition, or a transformation to turn around a declining business, to jolt the business into action. While these catalysts are effective motivators, business leaders intent on driving growth (and in some industries or sectors facing stiff headwinds, investing only in growth might not be the best option) don’t have to wait for them to occur to build the Investor DNA into their organization.

This Investor approach is most effective as part of a purposeful and diversified approach to driving growth (Exhibit 1).

The Performer approach, where businesses continually optimize commercial functions (marketing, sales, and pricing) can yield a massive source of investment funding. The Creator approach pours those investments into new products, services, or business models to drive future growth.

Thinking and Acting like an Investor

For companies looking to jump-start their growth ambitions, the Investor approach can be a fast way to achieve results. Investing in proven winners—initiatives that are already driving growth but may be underfunded—can put points on the board quickly. Sustaining that, however, requires leaders to be intentional in making the necessary commitments to change the business’s growth trajectory. That includes making a number of “big moves to improve productivity and dynamically reallocate funds. It also requires putting in place new processes and using data to make better decisions. In fact, data and analytics are the top differentiating capabilities between high-growth Investor companies and their peers, according research (Exhibit 2).


Investor companies can uncover hundreds of millions of dollars in savings. This isn’t some theoretical pot of money that will materialize in the distant future; often, companies can begin banking the new funds in a matter of weeks or months. Here are three steps high-performing companies take to find the biggest savings opportunities:

Get real about transparency

For growth leaders, there’s no such thing as black-box spending, in which you invest money in a service or program and wait to see how it works out. Instead, these companies insist on radical transparency, demanding to know the exact purpose of each dollar spent as well as the anticipated return. They put in place processes, metrics, and simple dashboards that allow them to get a clearer view of how their ‘spend’ is performing.

Drive maximum productivity

Just as underperforming programs sometimes continue to receive funding out of inertia, some processes may continue to churn along even though there are faster, cheaper alternatives. High-performing Investor companies continually scour their organization for outdated, inefficient ways of operating. To get the full benefits of productivity, each process should be in the top 30 percent for the industry.

A few of the most promising areas of focus are:

  • Efficiency. Leading companies engage in detailed process mapping, looking for opportunities to streamline operations, eliminate redundant processes, and hunt down opportunities to rationalize partnerships. Advanced analytics has emerged as a powerful capability in driving new levels of efficiency. Simplification can also be useful in improving efficiency.
  • Procurement. Adding rigor to procurement of products and services by benchmarking prices, soliciting bids, moving some services in house, and driving for transparency can unlock significant savings. When it comes to marketing, it’s been found that by analysing ongoing costs such as agency and overhead, companies can uncover savings of 10 to 20 percent on marketing spend. Digital has the potential to radically increase savings as well.
  • Automation. Advances in analytics have allowed companies to unlock significant efficiencies, resulting in enormous savings through reduced time, errors, and personnel costs (often while also improving the customer experience and overall performance). Robotic process automation, for example, is able to cut policy conversion time by 50 percent for insurance companies.

Trim the excess

In most organizations, general and administration expenses (G&A) and personnel are likely to yield the biggest cost-saving opportunities. The most effective personnel savings are based on rethinking processes and ways you work as well as revisiting strategic priorities, rather than simply letting go of people. When done correctly, best-in-class businesses reduce overlaps in activities, eliminate inefficiencies, and focus personnel on growth activities. Cuts must be approached with care. G&A includes some critical activities, such as enabling innovation and developing talent. When done correctly, however, the impact can be profound.


The most successful companies prioritize the opportunities they uncover so that they can quickly allocate funds and people to them as they become available. Those opportunities generally come in two flavors: first are proven winners—existing programs that could outperform with greater investment. The second are promising new areas that require funding to acquire or launch. Every company’s growth drivers are different; the important thing is to find what drives growth for your company—and fund it.

To be ready to allocate funds quickly to the most promising opportunities, successful companies take the following steps:

Identify and fund the high-potential opportunities

Most companies have plenty of data on hand to pinpoint the areas of greatest potential. This should yield insights both on where to invest for immediate growth and where investments are most likely to pay off over the long term. As companies search for opportunities, they should also mine their frontline workers, who can be an important source of intelligence on trends and opportunities. Many businesses find it helpful to create an “opportunity map” of potentially lucrative hot spots. The best companies, however, run advanced analytics against internal and external data sets from a variety of sources to build a picture of the future opportunity, not the historical reality.

Reallocate funds and people dynamically

High-performing Investor companies have mastered the art of dynamic allocation. Research shows that dynamic reallocators, those that reallocate at least 49 percent of the previous year’s budget, achieve a compound annual growth rate in total return to shareholders of 10 percent, compared with just 6.1 percent for static allocators. It’s not just about putting funds to use; it’s about focusing your best talent on where the growth is. Effective allocation, however, requires discipline to follow through and a clear set of metrics that decision makers are aligned around. Leadership alignment on priority markets, in fact, is the top Investor activity for top-quartile growth companies.

Fund a continuous, systematic stream of acquisitions.

Programmatic M&A can be a powerful lever for growth. Companies that use it well invest up to 30 percent of their market cap each year in acquisitions that mesh with their strengths. To do that, however, requires constant work to maintain a healthy pipeline of target companies.

Be disciplined in prioritizing opportunities

To keep the process untainted by bias or territorial thinking, it must be rigorous and transparent, taking into account both the opportunities and the needs of the organization as a whole.


To fund your own growth, disciplined decision making must become the new normal rather than a one-off exercise. Here are some critical steps to take:

Build a rigorous budgeting process

Rigor in budgeting requires clarity about current budget performance and a commitment to allocating spend to drive growth. Zero-based budgeting (ZBB), for example, requires teams to rebuild their annual budgets from zero, with no carryover from the previous year. This process helps to identify small and not-so-small pockets of waste that can add up to big savings. While it is common for budget owners to use bottom-up budgeting, for truly breakthrough results, they need systematic visibility into budgets, clarity about what to measure, accountability for ambitious targets, and governance mechanisms to challenge budgets and reallocate resources.

Build mechanisms to surface investment opportunities

Finding opportunities to save and reinvest requires engagement from across the enterprise, from finance experts to product owners to business-unit leaders. But while the spirit of cooperation may be strong, without dedicated mechanisms to surface opportunities, those good intentions often amount to little.

Support data-driven decision-making

Investors of any sort are only as effective as the data they rely on. Many bring in data scientists to set up a robust analytics capability. Once they identify the highest-potential areas for investment, they use analytics to develop a more granular view of where—and how—to double down, investigating by city, segment, region, product, or even demographics, using a mix of methods. In developing effective analytics, it’s important to focus on rationalizing data and creating common standards (for KPIs, metrics) so that investment performance across activities is comparable.

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