This document discusses digital transformation and digital mastery. It defines digital mastery as having strong capabilities in both technology-enabled customer and internal experiences as well as leadership capabilities like vision and governance. Companies are classified into four levels of digital mastery: digital masters, conservatives, fashionistas, and beginners. Digital masters achieve higher financial performance and market valuation through strategically focusing investments on key digital capabilities and leadership practices like having a chief digital officer. The document provides recommendations for companies to assess their digital maturity, develop a vision, build a digital roadmap, and engage their organization to drive successful digital transformation.

1. DIGITAL TRANSFORMATION
BEYOND THE HYPE

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What do these companies have in common?

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Digital Capability Leadership Capability
What is digital mastery?
Technology-enabled initiatives in:
 Customer Experience
 Internal Operations
Leadership capabilities including:
 Vision
 Governance
 Engagement
 IT-Business Relationships

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Mastering both dimensions is the key to achieving the digital
advantage
Nike: From Separate Initiatives to Firm-Level Transformation
Social Media
Digital Product
Design
Customized
Manufacturing
Digital Division:
Nike Digital Sport
1
2
DIGITAL CAPABILITY
LEADERSHIP CAPABILITY
 Digital marketing
 Digital product innovation/design
 Digital commerce (e/m-commerce)
 Digital technologies (GPS, mobile, etc.)
 Customer analytics
FIRM-LEVEL
TRANSFORMATION+

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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
Four levels of digital mastery
DigitalCapability
Leadership Capability
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
DIGITAL MASTERS
 Strong overarching digital vision
 Good governance
 Many digital initiatives generating
business value in measurable ways
 Strong digital culture

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Digital mastery varies widely
DIGITAL MASTERS
CONSERVATIVES
FASHIONISTAS
BEGINNERS

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Revenue Generation
Efficiency
Profitability Market Valuation
Digital Masters have significantly better financial performance
than their peers
+6% +9%
-4% -10%
Basket of indicators:
 Revenue / Employee
 Fixed Asset Turnover
-11% +26%
-24% +9%
Basket of indicators:
 EBIT Margin
 Net Profit Margin
-12% +12%
-7% +7%
Basket of indicators:
 Tobin’s Q Ratio
 Price / book ratio

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Some industries average higher mastery than others…
Average industry
digital mastery:
Banking
Consumer Packaged Goods
Insurance
Manufacturing
Pharmaceuticals
Retail
High
Technology
Telecoms
Travel and
hospitality
Utilities

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…but every industry already has digital masters
Percentage of firms in each industry by quadrant

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They invest in 100% of the elements of Leadership Capability…
Digital Masters have a common Digital DNA
 Transformative Vision
 Shared Vision
 Chief Digital Officer
 Shared Digital Units
 Investment Committees
 Promoting Change
 Employee Participation
 Investing in Skills
 Shared understanding between IT
and business executives on role of IT
“Digitising P&G will enable us to manage
the business in real time and on a
demand-driven basis. We’ll be able to
collaborate more effectively and efficiently,
inside and outside the Company”
Innovation challenges Digital Year
CDOs & Digital UnitChief Digital Officer
“The IT Team (...) now work hand in hand
with the Creative Media team.”
Vision
Governance Engagement
IT /
Business

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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
Digital Masters have a common Digital DNA
…and they make strategic decisions on where to excel with digital capabilities

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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
Engage the Organisation
 Signal the Change
 Mobilise at Scale
 Evolve Culture & Adapt Work Practices
How to drive digital transformation
Sustain Frame
Engage Focus

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In conclusion
DIGITAL MASTERY MATTERS
IT MATTERS IN EVERY INDUSTRY
ANY COMPANY CAN BUILD DIGITAL DNA
TAKE ACTION NOW TO
CREATE YOUR OWN DIGITAL ADVANTAGE

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15. The information contained in this presentation is proprietary.
© 2013 Capgemini. All rights reserved.
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