An intentional focus on digital change can be essential to a digital transformation’s success. How can leaders calibrate these capabilities to help drive market value?
Many organisations are operating in a similarly disruptive digital environment: economic headwinds,i rapid tech consumerism (i.e., generative AI),ii evolving tech policies,iii an expanded workforce ecosystem,iv and a push for sustainable, ethical tech.v In this market, digital transformation can be high-stakes often with pressure to gain value from related investments.
Many organisations view “digital change” as part of the value equation, but often think it’s just about change management. Building a true digital change capability is about so much more. Digital change includes the strategy for rearchitecting work, engaging the ecosystem to unleash the power of the workforce and redesigning the organisation for hybrid work with the right mindset, skills, agile practices and measures.vi
These efforts are tied to many digital initiatives - and can be a make-or-break factor in successful digital transformations. When these capabilities are aligned with digital strategies and technology investments, organisations report as much as a 14% market cap differential as compared to when they’re not. vii That equates to approximately US$2.75 trillion for Fortune 500 firms alone. However, embracing change for change’s sake is not the answer: organisations focused on change alone report three times less market cap than with only a digital strategy. (figure 1)
As leaders calibrate their digital change capabilities, Deloitte Global analysis of 4,600 companies’ 10K filings and financial statements over the last five years underscores which digital change themes are trending up and down across a “digital change” agenda that is only continuing to grow in prominence, breadth and importance.viii As the data shows, getting digital change right matters, validated by the notable possible lift in market cap if done right and potential damage if done wrong.
Over the period from 2016-2022, digital change capability keywords appeared over 600 times in the business filings Deloitte Global analysed. Our analysis found that 55% of the digital change keywords trended upward, 31% remained static as persistent priorities and only 13% decreased. (figure 2)
This demonstrates that digital change capabilities continue to have a prominent place on business leaders’ core agenda - an agenda that is only getting bigger among the set of companies and statements reviewed during this analysis.
As shown in figure 3, the top trends related to digital changeix have remained consistent over the last six years, with each topic analysed growing in importance. (figure 3)
The greatest frequency of digital change terms has been related to digitising the customer relationship (which showed a +253% increase), operations in relation to disruptive technologies, (a +168% increase) and operations that businesses can digitise (a +135% increase). Yet, what’s missing here is a focus on transforming those same customer experiences and operations. This is where leaders have an opportunity to better use digital change as a lever of their technology strategies and investments.
Given the recent attention on Generative AI solutions that can operationalise content creation across audio, text and video formats, this research asserts that digital change capabilities are essential. The right mindset and approach to the operating model, organisational design, skills and workforce will likely continue to be driving forces of value now and into the future.
Beyond the trends detailed in figure 3, each of the top 25 themes analysed for 2017-2019 remained top trends from 2020-2022 and displayed a continued upward trajectory. Leaders, therefore, should take action to ensure that they’re intentionally aligning digital change initiatives with their overarching digital strategies and technology investments accordingly.
While the increasing of frequency of digital change terms predominantly aligned with a consistent set of keywords, we found several sets of keywords that were previously less prominent starting to trend upward in the rate they’re mentioned.x (figure 4)
The most prevalent of these is bringing together organisational transformation and technology transformation in IT. Other prominent focus areas include tech-enabled and high-tech approaches, ESG, data and agility related to efforts to digitise, microservices and customer service and IP in relation to disruptive technologies. These topics are increasing at a rate of as much as 2300% as new topics emerge that require leaders’ attention. (figure 5).
Leaders’ ability to ingest and address these new topics on top of an already robust digital agenda may dictate whether they’re able to implement change programmes effectively. Particularly as pace of change shows no signs of slowing down.
We can see a slight downward trend related to topics like:
Given more topics are being added to the digital change agenda than removed, leaders likely won’t experience much relief and should therefore find ways to work across functions to connect the dots across these matters.
Regardless of an organisation’s size, digital transformation and a strong digital change capability to drive the organisation’s strategy and tech investments are considered essential.
As leaders look for numbers to give them confidence in their digital transformation decisions, all things are rarely equal. Therefore, organisations should look beyond the number to understand what is possible, what is probable and ground their decisions based on their own potential. There are many roads to value and an organisation’s ability to navigate that digital change effectively is the difference between the right path and the wrong one.