THE DIGITAL
ADVANTAGE
HOW DIGITAL LEADERS OUTPERFORM THEIR PEERS IN EVERY INDUSTRY
Transform to the power of digital

Copyright © 2012 MIT CDB and Capgemini Consulting
What is digital maturity?
Digital Intensity Transformation Management Intensity
Technology-enabled initiatives in:
• Customer Experience
• Internal Operations
Leadership capabilities including:
• Vision
• Governance
• Engagement
• IT-Business Relationships

Copyright © 2012 MIT CDB and Capgemini Consulting
Four levels of digital maturity
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Digitalintensity
Transformation management intensity
CONSERVATIVES
•Overarching digital vision exists, but
may be underdeveloped
•Few advanced digital features, but
traditional capabilities may be
•Strong governance across silos
•Taking active steps to build digital
skills and culture
BEGINNERS
•Management skeptical of the
business value of advanced digital
technologies
•May be carrying out some
experiments
•Immature digital culture
FASHIONISTAS
•Many advanced digital features
(such as social, mobile) in silos
•No overarching vision
•Underdeveloped coordination
•Digital culture may exist in silos
DIGIRATI
•Strong overarching digital vision
•Good governance
•Many digital initiatives generating
business value in measurable ways
•Strong digital culture

Copyright © 2012 MIT CDB and Capgemini Consulting
Mastering both dimensions is the key to achieve the digital advantage
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Social Media
Digital Product
Design
Customized
Manufacturing
Digital Division:
Nike Digital
Sport
1
2
DIGITAL INTENSITY
TRANSFORMATION MANAGEMENT INTENSITY
 Digital marketing
 Digital product innovation/design
 Digital commerce (e/m-commerce)
 Digital technologies (GPS, mobile, etc.)
 Customer analytics
FIRM-LEVEL
TRANSFORMATION+

Copyright © 2012 MIT CDB and Capgemini Consulting
DIGIRATI
CONSERVATIVES
FASHIONISTAS
BEGINNERS
Digital maturity varies widely*
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* Digital maturity of 391 companies in our sample

Copyright © 2012 MIT CDB and Capgemini Consulting
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+6% +9%
-4% -10%
Basket of indicators:
• Revenue / Employee
• Fixed Asset Turnover
Revenue Generation
Efficiency
-11% +26%
-24% +9%
Basket of indicators:
• EBIT Margin
• Net Profit Margin
Profitability
-12% +12%
-7% +7%
Basket of indicators:
• Tobin’s Q Ratio
• Price / book ratio
Market Valuation
Digitally-mature companies have significantly better financial performance*
Revenue generation, profitability and market valuation
* Average performance difference for firms in each quadrant versus the average performance of all large firms in the same industry
for the 184 publicly-traded companies in our sample

Copyright © 2012 MIT CDB and Capgemini Consulting
Some industries are more mature than others…
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Banking
Consumer
Packaged Goods
Insurance
Manufacturing
Pharmaceuticals
Retail
High
Technology
Telecoms
Travel and
hospitality
Utilities
Average industry
maturity:

Copyright © 2012 MIT CDB and Capgemini Consulting
…but every industry already has digirati
Percentage of firms in each industry by quadrant:
8

Copyright © 2012 MIT CDB and Capgemini Consulting
Innovation challenges
Digital Service
Unit
Digirati have a common Digital DNA
They invest in 100% of the Transformation Management elements…
Vision
IT/
Business
Governance
Engagement
• Transformative Vision
• Shared Vision
• Digital Tsar
• Digital Units
• Investment Committees
• Promoting Change
• Employee Participation
• Investing in Skills
• Shared understanding between IT
and business executives on role of IT
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Chief Digital Officer
at Starbucks Digital Year
“The IT Team (...) now work hand in hand with the Creative Media team.”
“Boeing believes that the future of the
aviation industry lies in the ‘digital airline’.
To succeed in the marketplace, airlines and
their engineering and IT teams must take
advantage of the increasing amount of
data coming off airplanes, using advanced
analytics and airplane technology to take
operational efficiency to the next level.”

Copyright © 2012 MIT CDB and Capgemini Consulting
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Digirati have a common Digital DNA
…and they make strategic decisions on where to excel digitally
Focus Investments
on Where they
Choose to Excel
Digitally
Combine Digital
Capabilities to
Exploit Synergies
+
Customer
Experience
Social
media
Mobile
channel
In-store
Online
Unified Processes/ Integrated Data
Process
Excellence
Supply-chain
Integration
Centralized
Ordering New business
models
Customer
experience
Unified Processes/ Integrated Data
Analytics
capabilities
Personalized Customer
experience
Unified Processes/ Integrated Data
On-premise
Online
BURBERRY
ASIAN PAINTS
CAESARS ENTERTAINMENT

Copyright © 2012 MIT CDB and Capgemini Consulting
How to drive digital transformation
Frame the Digital Challenge
•Understand the Impact
•Assess Digital Maturity
•Develop Vision & Align Around It
Focus Investments
•Build a Digital Roadmap
•Build Investment Case
•Set up Governance Model
Sustain the Transformation
•Build Capabilities
•Align Incentives & Rewards
•Measure, Monitor & Iterate
Frame
Focus
Sustain
Engage
Engage the Organization
•Signal the Change
•Mobilize at Scale
•Evolve Culture & Adapt Work Practices
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DIGITAL MATURITY MATTERS
IT MATTERS IN EVERY INDUSTRY
ANY COMPANY CAN BUILD DIGITAL DNA
TAKE ACTION NOW TO
CREATE YOUR OWN DIGITAL ADVANTAGE
Copyright © 2012 MIT CDB and Capgemini Consulting