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The Digital Leadership Gap

Part 1 of a 2-part post

New research reveals an alarming reality. Digital disruption is upon us, yet a significant percentage of organizations are doing nothing to increase their digital abilities.

Digital Disruption Is ImminentEighty percent of nearly 800 business leaders surveyed by Harvard Business Review Analytic Services say their industry will be disrupted by digital trends, and most of those said their industry has either passed the tipping point of disruption (28%) or will by 2020 (56%). However, nearly a quarter of respondents to the Microsoft-sponsored research have done little or nothing to become more digital. These non-digital companies recognize that change is coming – nearly three-quarters say their industry will be disrupted, and 60% of those say that is likely to happen in the next three years. Yet only a quarter have developed a strategy for the digital future or say their business leaders have a clear vision of which business models will drive success in 2020 and beyond. In contrast, digital leaders are almost three times as likely to have a strategy in place and to say their business leaders have a clear vision of success for 2020.

It’s not hard to imagine how this will play out. Digital leaders are developing not only the vision and strategy but the capabilities (skills, culture, organizational structures and processes) to successfully compete in the digital economy. There is, of course, some variation by industry, with technology and financial services companies leading the way. Government, healthcare and retail are the least likely to have a digital strategy, at 27%, 34% and 39%, respectively. We do see this changing, especially in retail, as consumers demand a more integrated multi-channel shopping experience. The point is, within industries, there will be winners and losers, and the timeframe is pretty short.

Opportunity versus Threat

The word disruption generally connotes some kind of threat. It is interesting, then, that most respondents (86%) view disruption in their industry as an opportunity. And while they see their traditional business models becoming obsolete, they anticipate managing both the old and the new for some period of time. This makes things complicated operationally, with people working in matrixes and doing double duty for now. Once the new models reach critical mass, they will be funded and resourced more fully. But managing the timing and details of the transition will be critical.

While full-on digital transformation requires having a vision and strategy and leadership from the top, business and IT leaders whose organizations lack that needn’t feel stymied. Indeed, the key to getting started is in your hands. All it takes is a good idea about how to better serve customers or increase efficiency, and an IT or line of business counterpart (depending on your own position) to co-develop and make the business case for the new idea. Once you’ve proved the value, a compelling first initiative can be an effective catalyst into a more strategic digital future.

In part two we explore what sets digital leaders apart and where developing organizations should focus their efforts. You can download a copy of the full report, "Competing in 2020: Winners and Losers in the Digital Economy"

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