Majority of organizations now have capabilities for DX success: Study

60% of organizations today say they have the digital capabilities required – up 24% from 2018. For leadership capabilities, 62% of organizations today, on average, say they have the leadership capabilities required, compared to 36% in 2012

Majority of organizations now have capabilities for DX success: Study - CIO&Leader

While all organizations have done better in their digital transformation journeys in 2020, digital masters – organizations with a high level of mastery across digital and leadership capabilities – are widening the gap with their competitors. COVID-19 has been a powerful accelerant, and, given the urgency for change, organizations have become more enthusiastic and optimistic about the maturity of their capabilities. Alongside this, organizations have taken time since 2018 to evaluate the challenges that stand in the way of success, increasing their investment in digital transformation and their adoption of emerging technologies and putting a renewed focus on talent and culture.

Most organizations today have the digital and leadership capabilities required

Organizations have indeed made significant progress on both the digital and leadership capabilities required for success. According to Capgemini’s Digital Mastery report, on average, 60% of organizations today say they have the digital capabilities required – up 24% from 2018. For leadership capabilities, 62% of organizations today, on average, say they have the leadership capabilities required, compared to 36% in 2012 (see Figure 1).

Figure 1: Organizations believing they have required digital and leadership capabilities: 2018 vs 2020

Source: Capgemini Research Institute

Sector evolution on digital and leadership capabilities

All sectors have progressed on both their digital and leadership capabilities in the past two years. In 2020, retail surpassed all other sectors, with 73% of organizations saying they have the digital capabilities required for transformation, up from 37% two years ago (see Figure 2). Retailers who have recognized the rising consumer demand for online and embraced ecommerce are driving this increase. Some retail sub-sectors are doing better in progressing digital capabilities than others. Home improvement retailers lead on digital capabilities (78%) followed by grocery retailers (76%) in 2020. The automotive sector increased the most in digital capabilities – 69% in 2020 versus 32% in 2018. After retail, the telecom sector follows with 71% of organizations saying they have the digital capabilities required. Telecom operators are reshaping the consumer value proposition by creating full-fledged digital experiences. The consumer products sector lags the most on digital capabilities. Within consumer products, the food and beverage manufacturing sub-sector leads in digital capabilities (57%), while apparel and footwear manufacturers lag behind all other sub-sectors (23%).

Figure 2: Organizations by sector believing they have required digital capabilities: 2018 vs 2020

Source: Capgemini Research Institute

On leadership capabilities, once again, retail leads the way with 76% of organizations saying they have the leadership capabilities required – up from 36% in 2018 and the greatest increase across all sectors. Similarly, the progress in leadership capabilities among consumer products lags behind the most (see Figure 3).

Figure 3: Organizations by sector believing they have required leadership capabilities: 2018 vs 2020

Source: Capgemini Research Institute

Talent and culture initiatives take precedence

The study revealed that the people dimension was a significant barrier to digital transformation, as organizations failed to bring employees along in the transformation journey. However, more organizations today involve employees in their digital initiatives: 63% in 2020, up from 36% in 2018. Despite this progress, when it comes to skill building, the study found less than half of organizations (48%) are investing in building soft skills such as emotional intelligence, adaptability, and collaboration.  The study also consistently found that culture is a top barrier to successful digital transformation, with some organizations, for example, not having a culture where new ideas and experimentation are valued.

Accelerating investments in sustainability is critical for digital transformation today

While organizations must keep their eye on factors such as customer experience, operations, and business technology, they should also place emphasis on sustainability and their broader purpose, which has become important for customers and employees alike. The reasons why sustainability is integral to digital transformation and thereby to be a digital master are:

  • Shifting consumer behavior: Consumers are increasingly concerned about environmental footprint and climate change impact and want to make a difference with their actions.
  • Employee preferences: People will also increasingly prefer to work for organizations that are creating positive environmental and social value.
  • Funding and credit requirements: Increasingly, demonstrating progress against sustainability-based metrics such as ESG (environmental, social, and governance) is getting critical for access to capital markets which ensures that business is credible and backed by a purpose.
  • Digital technologies reinforcing sustainability: Increasingly, scaling digital technologies and the resulting digital transformation are also viewed from the sustainability lens on their extent of contribution to sustainability-backed objectives such as saving resources or reducing waste. Sustainability can also serve as testing grounds for new digital technologies. Therefore, it not only fulfills a company purpose to do good for society but can accelerate the shift to applying new digital technologies such as AI.
  • Expectations from government: As more governments are beginning to take sustainability mainstream and setting targets, large organizations within the geographies are bound to be an integral part in achieving these goals.
  • More reporting on sustainability: More than 80% of Fortune 500 companies are currently reporting on sustainability. There are also reporting frameworks such as the Global Reporting Initiative (GRI) and the Sustainability Accounting Standards Board (SASB) that are providing frameworks for organizations to report sustainability-based KPIs. This underscores the growing importance of transparent communication to varied stakeholders on sustainability initiatives and progress.

The study reveals, however, that many organizations still lag in developing the necessary capabilities to fully prioritize sustainability investments. Only 45% of organizations say they are accelerating sustainability investments, projects, and commitment. Telecom organizations (59%) lead all sectors, followed by automotive (55%) (see Figure 4).

Figure 4: Telecom and automotive lead all sectors in accelerating sustainability investments

Source: Capgemini Research Institute

To advance their digital transformation journey further, the study recommends that organizations reinvent the employee experience, leveraging the fluid workforce and ensuring employees’ social contracts align with the digital age. In addition, they should build robust data and platform capabilities, scale new business and engagement models and embed purpose and sustainability as a core part of the business, making it part of the organizational culture and viewing technology from the twin aspects of digital transformation and sustainability.


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