Digital transformation report sweden july 2017

Digital
Transformation
Report 2017
Going Digital-First
Digital Transformation in
Major Swedish Companies
JULY 2017 — THIS DIGITAL TRANSFORMATION REPORT IS COMMISSIONED BY MICROSOFT

Contents
Foreword 5
Key Highlights 7
Participating Companies 13
Why? 19
Importance of Digital Transformation 20
Business Focus and Strategic Focus in Regard to Digital Transformation 20
Digital Transformation Maturity 24
What? 25
Engaging Customers and End-Users 27
Transforming Products and Services 27
Optimizing Operations 27
Empowering Employees 27
How? 33
Capability 1: Digital Leadership 37
Capability 2: Functional Clarity 41
Capability 3: Way of Working 47
Capability 4: Competencies 51
Capability 5: Governance and Performance 55
Capability 6: Technology Development 59
Capability 7: External Collaboration 65
Conclusion 69
Contributors 71

4 THE DIGITAL TRANSFORMATION REPORT 2017

THE DIGITAL TRANSFORMATION REPORT 2017 5
Foreword
The world is changing faster than ever, and Sweden is in the
epicenter of that change. We are widely considered one of the
most prolific technology hubs in the world. Together, we are
riding the wave of the fourth industrial revolution powered
by the cloud – with the outset of changing not only the digital
domain, but the physical and the biological domains as well.
We see customers engaging in new ways and demonstrating
completely new behaviors. New business models are arising in
ways that challenge the current models at their core. Product
innovation is happening with an ease that was previously
impossible. And the traditional definition of an organization
– the notion of mobilizing a set of human resources to pull in
the same direction – is disappearing as companies are forced
to adapt to the digital world and employees to new ways of
working.
To navigate in the era of digital transformation, we need
to understand both the motions and the key drivers that
enable us to respond to the digitization of our society and our
businesses. We have already spent some time understanding
the ‘what’ of digital transformation. But for us to adapt to new
business models and new ways of strategizing, we also need
to understand the ‘how’.

We have initiated this report to create a benchmark; to learn
from the digital leaders in Sweden. By studying their best
practices, we can learn from their experience – and we can
create a framework to better understand the initiatives and
the progress we are making toward the new world.
I hope you will find the insights of this report useful and
inspirational in your business’ continued journey of digital
transformation.
– Joacim Damgard, CEO, Microsoft Sweden

Key Highlights
Across all the participating companies, interviewed executives
make it abundantly clear that digitalization has claimed a highly
important position on the executive management agenda.
The strategic importance of leveraging digital technologies to
stay relevant in the value chain and improve performance has
been acknowledged. Transforming organizations to execute
on the promises of digitalization is one of the most important
challenges to address in this new era.
Driven by this new digital opportunity space as well as the
accompanying threats to the status quo, executives are hard
at work identifying the most effective internal structures to
facilitate their digital transformation journey.
This report serves to shed light on how top executives in
Sweden perceive the business landscape changing as a result
of digitalization, and how companies operationalize their
efforts to succeed in reaping the benefits. In addition, it aims
to highlight best practices for the benefit of learning from
companies in other industries that have reached a higher
degree of maturity in a particular area of digitalization.

Key Highlights
There is absolutely no doubt – digitalization brings
a host of opportunities to companies in virtually all
industries. Across Swedish companies, executives
are realizing the fundamental impact digitalization
has on their businesses. There is broad recognition
that the effects are real, and that the pace and
transformational power of digital developments
will only increase as we move forward.
Executives are continuously trying to understand
how they can adapt and manage their firms to fully
leverage digital opportunities, and how they can
gain sustainable impact through engaging with
customers, transforming the product or service of-
ferings, improving operating efficiency, or further
empowering their employees. Furthermore, there
is a broad appreciation for the need to make signif-
icant changes to existing organizational structures
to realize the potential from getting digital trans-
formation right in the new-look digital reality.
Digital Transformation Has Moved to
the Top of the Strategic Agenda
In 19 of the 20 companies interviewed for this re-
port, executives indicate that digitalization is either
the ‘most important’ (7) or a ‘very important’ (12)
strategic priority. Additionally, it becomes clear that
digitalization generally has strong support with top
management across industries. Senior stakehold-
ers such as the CEO or even the board of directors
often take a role in driving or actively supporting
the digital agenda.
Most of all, interviewed company executives expect
digitalization to impact their core business and its
downstream and upstream value chain relations –
which does not come as a great surprise. Though, it
is interesting to note that many B2B companies that
have traditionally not interacted on any large scale
with their end customers/users see digitalization as
an opportunity to create services adjacent to their
current offering – moving them significantly closer
to both the customers and end users.
Awareness of How and Where Impact
Will Happen Has Increased Significantly
Almost all company executives say that a lot has
happened in the past few years, and expectations
for the near future are high and continuously rising.
Several executives tell stories about how the dia-
logue around digitalization was almost non-existent
just a couple of years ago while it is now discussed
in almost every context. Executives are becoming
more and more convinced as to how they believe
digitalization will hit their particular business and
transform their organizations. The first priority in
running digital initiatives is often to engage cus-
tomers on a deeper and more meaningful level; 13
out of the 20 executives rate this at least as impor-
tant or more important than any other area within
digitalization. The related transformation of prod-
ucts and services as well as increased internal op-
erating efficiency are also seen as highly important
parts of the digital transformation agendas.
All Companies Engage in Digital Initiatives,
but Most Struggle with the Overarching
Transformation
This report sets out to highlight differences be-
tween companies and industries as well as best
practice examples of digital initiatives encountered
in one industry that can be transferred to anoth-
er industry. One obvious common denominator
among the companies is the focus on digital in
some shape or form, ranging from overall trans-
formation programs to niche projects in specific
functional or business areas. Not surprisingly,
companies in more tech-savvy industries, such as
telecommunications or media, as well as industries
with a large share of consumer-facing services tend

to work with digitalization in a more integrated way
on an everyday basis. However, it also holds true
that companies within more traditional industries
have a clear focus on digitalization and significant
ambitions for the future. Generally, the focus for
these companies tends to be skewed toward op-
erational efficiency rather than e.g. transforming
products and services. That being said, regardless
of industry, most companies are still struggling with
how to drive digital transformation, and have a
long way to go before fully harnessing the power of
becoming digital-first companies.
Successful Digital Transformation Requires
Balancing Management’s Long-Term Vision
with the Line Organization’s Ability to Innovate
and Execute
While executives have realized the strategic impor-
tance of getting digitalization right, the implica-
tions on how to adjust the organization to enable
more agile and innovative internal processes are
less clear. Only 5 out of the 20 companies feel that
they have a reasonably high degree of clarity con-
cerning what business unit – or which manager or
executive – is in charge of articulating a company-
wide direction for digitalization or executing on
that direction to ensure agility and speed in driving
digital initiatives. Meanwhile, emerging digital
methods are often allowed to co-exist with the tra-
ditional ways of working to ensure that organiza-
tional creativity and sense of ownership is not lost.
The recipe for success seems to be to set a clear
future vision and instill a sense of corporate-wide
responsibility for driving innovation and improving
day-to-day operations, while having a central func-
tion acting as a catalyst for driving digital initiatives
and rolling out best practices.
Infusing an Already Strong Brand with
Digital Is Enough to Attract Talent, but
More Is Required to Retain It
Capabilities required to master the digital world
are increasingly similar across industry lines. While
deep industry knowledge is still as important as
ever, digital natives move freely between industries
at an unprecedented rate for most of the inter-
viewed companies. The nature of the job market
and the ever-increasing demand for their services
mean that the war for talent is fiercer than ever
before. This has several implications for companies;
it requires them to become more agile in adapting
their company culture, how they organize them-
selves to create attractive environments and the
ways of working. Even so, this might not be enough
to sustain talent over time. Hence, companies are
turning more and more toward partnerships to
grow ecosystems and source-critical capabilities
externally.

1-5 scale with 1 being "Not an important driver at all"
and 5 being "A very important driver".
Importance Maturity
Importance Maturity
4.5 2.8
Digital Leadership
‘Executive sponsorship and digital leadership’ is the one transformation
capability that business leaders across industries agree is in the most
mature state
Steadfast backing of the digital agenda by senior management is one of the
most important drivers for successfully running digital transformation. This
ideally entails getting the full executive team to take ownership of the digital
transformation agenda, where especially the CEO plays an important part, and
engage actively in driving and ensuring the progress of digital transformation
initiatives – both personally and through dedicated, next-level leaders with deep
digital competencies. Most companies have the right intentions, but many face
challenges in conveying the importance of digital initiatives as information as
cascaded to the line organization. Hence, ensuring agility and speed of execution
across organizational silos can be an issue even though leaders at the most senior
level are committed.
Functional Clarity
Difficult to strike the right balance between a centrally organized
coherent digital direction and local execution responsibility to ensure
speed and agility
Almost all interviewed companies have a challenge in combining top-down
coherent transformation with innovative and agile local execution. This often
leads to a struggle as to what digital initiative responsibility should reside
where in the organization. Only a rare few of the 20 companies seem to have
found a winning formula for this, particularly in relation to clarifying the digital
role and mandate on Group level. There is, however, no one-size-fits-all recipe
for solving this. Some companies experiment with digital innovation hubs
outside the regular line organization, while others seek to establish a culture
where thinking is permeated by digital awareness every bit of the way.
Competencies
New competencies are scarce and difficult to attract – but even more
difficult to nurture and retain
The companies generally have strong employer brands in the job market place
and are skilled at identifying and attracting new digital competencies. They are,
however, much less proficient at retaining and assimilating them into the core
of operations. With only 2 of the 20 companies considered as being skilled at
both attracting and retaining personnel critical to digital development, there is
certainly large room for improvement.
Way of Working
Many companies experiment with running agile projects and using
social collaboration platforms, but there is still a long way to go
from theory to practice
All companies partaking in this report acknowledge the importance of
adapting new approaches and methodologies in the workplace, and almost
all companies are able to point to some best practice examples where a
lean startup approach that is more explorative and iterative has been used.
However, the majority of respondents still indicate that there is a long way
to go to fully realize the potential from working in new ways, with existing
organizational structures and unwillingness to change in parts of the
organization as two of the major obstacles yet to surmount.
4.7 3.6
Digital Leadership
Executive
Sponsorship
Importance Maturity
4.5 3.0
“Speed” “Coherence”
Startup mindset Scale with confidence
Importance Maturity
4.4 3.0
Identify Attract Retain

Governance and Performance
The new, fast-moving digital reality creates a clear need for companies to
rethink existing governance models that have emphasized stability and
predictability above all else
Often, interviewed executives point out that the governance models that have
been used in the past will not work in the future. Instead, new governance
models characterized by a higher degree of decision-making autonomy
and based on a broader range of evaluation criteria, including metrics that
are customer-centric and/or focused on initiative progress, will be required.
Despite this, most respondents feel that too often, traditional governance
models are used when assessing large-scale digital initiatives, which results in
suboptimal assessments of business impact.
Importance Maturity
4.3 2.7
Foresight&facts
Ambiguity & risk
Technology Development
Enabling fast-tracking of selected parts of the digital development
without compromising the operational IT is a critical aspect of
succeeding in digital transformation
The majority of respondents acknowledge the need for a two-speed
technology setup, and many find it challenging to cope with the high
pace of development, especially to ensure coherence across initiatives and
traceability of developments done, while handling rigid legacy IT systems.
Some do, however, consider themselves successful at ensuring an agile digital
development process while at the same time efficiently operating day-to-day
IT. Most companies also leverage some form of external resources to gain
access to newest technology developments, which could be difficult to attain if
development was fully insourced.
Full-stack Inhouse
Two-speed IT
Outsourced
Importance Maturity
4.3 2.9
External Collaboration
Leading organizations have managed to create collaborative ecosystems
to create a dynamic and innovative culture, strengthen digital capability
needs, and access otherwise unattainable experiences
Impressively, the frontrunners have already managed to create ecosystems
across country borders and industry lines, including companies of all sizes, from
startups to international conglomerates. Often, companies that are relatively
smaller in the industry are able to use their agility to leapfrog the competition in
this area. There are also a few examples of companies running open innovation
initiatives such as incubator programs with access to internal venture capital.
However, although there are some great examples among the interviewed
companies, the majority still have a long way to go and primarily use external
collaborators as ‘vendors’ that provide input and contribute to specific projects
– rather than seeking value via unlike partners in totally new domains.
Importance Maturity
4.0 2.9
Inspiration
from
outside
vendors
Value-creating
partnerships
Multiple
unexpected
collaborations

‘Digitization brings fundamental change
to all business areas and the competitive
landscape is increasingly complex as a lot
of innovation is driven by other companies
than the traditional incumbents. SEB has
managed to partly get out ahead of this
and is well positioned to capture business
opportunities internally and through
external partnerships.’
– SEB

Participating
Companies
The purpose of this study is not to determine the importance
of digital transformation – we all know that digital transfor-
mation is key to staying relevant and growing your business
in the future. This study takes a more practical approach.
The purpose is to get a thorough understanding of the what,
why, and how of digital transformation among some of the
major players in the Swedish market.
To this end, we have spoken to corporate executives in some
of the major Swedish companies about what they do to gear
their companies for the future, and how they build digital-
first companies from a business perspective. How do they
use digital transformation to address the challenges they
face in a variety of areas?

Major Swedish Companies
The focus of this study is on the transformation
process itself rather than on the status quo. It is
therefore much more interesting to look at what the
well-established companies are doing to adapt to
the new world than to look at what the new digital
players are doing right.
For the purpose of this study, we approached 20
large Swedish companies and talked in-depth with
their executives about their digital transformation
efforts.
These are the companies with the most resources to
drive major digital transformations, and where the
potential impact is largest. Furthermore, these are
large and complex organizations, where a digital
transformation is a major undertaking that is not
completed overnight, but something that requires
significant dedication and C-level buy-in to succeed.
The companies surveyed are very important for
Sweden. One third of the 20 largest Swedish com-
panies are included in the report.
Broad Industry Coverage
Disruptions play a major role in some industries. In
the financial sector, for example, technology is dras-
tically reshaping the industry both inside and out.
In other industries, digitalization does not happen
at the same pace; perhaps specific legislation causes
roadblocks, perhaps the industry dynamics do not
lend themselves as naturally to digitalization, or
perhaps the benefits are just not that clear yet.
However, all industries and companies see technol-
ogy as a critical strategic enabler as well as a force to
be acutely aware of with respect to preserving exist-
ing business domains and competitive advantages.
This study therefore covers seven major Swedish
industries ranging from construction and manu-
facturing to media and finance. The companies’
respective digital transformation processes are in
different maturity stages; some have been frontrun-
ners, and some are still trying to jump from idea to
implementation.
Seven Major Industries
Covered in the Study
Major Swedish Companies with
Significant Revenues Included
Consumer products
Services
Construction
Finance
Industry &
manufacturing
Transport
& energy
Telco &
media
Participating
Companies
Total combined revenue:
SEK > 1,000 billion

Digital Responsibility Resides in Different
Functions Across Companies
In this report, we examine digital transformation
from a business perspective. We have interviewed
executives from the participating companies with
the aim of talking to the people with the highest
organizational rank and a dedicated responsibility
for managing digital transformation in the compa-
ny or another high-ranking person with compre-
hensive insight into and knowledge of the compa-
ny’s digital transformation process.
In 7 out of the 20 companies, this led us to a com-
mercial function (e.g. CEO or marketing), and in
another 7 companies, we met with people from
group strategy functions and/or business devel-
opment functions. In 5 companies, we spoke to an
executive with specific responsibility for digital (e.g.
CDO). Only in one case did we talk to a CIO. The
interviewees are senior executives in their respec-
tive companies. Almost all respondents report to
the executive office; 12 report directly to the CEO,
6 directly to a C-suite member other than the CEO,
and 2 report one level below.
A Comprehensive Study at the Executive Level
This study is among the most comprehensive stud-
ies of digital transformation conducted at an exec-
utive level among the largest companies in Sweden.
The participating companies have been very posi-
tive about the study. They have not only provided
insights for us; they have also gained in-depth
knowledge of their own maturity and progress in
comparison to the market and their peers, and they
can draw inspiration and get ideas from each other
as well.
Majority of Interview Respondents
Report to the CEO
Representation Primarily Comes from
Commercial and Strategy Functions
Commercial Strategy Digital
function
Business
develop-
ment
IT
13 report to the CEO
4 report to Executive Committee
3 report to Top Management
8
6
4
1 1

Participating
Companies
Länsförsäkringar
SKF
MTG
Telia
Vattenfall
SEB
Electrolux
SAS
ÅF
Telenor
Folksam
Ovako
PostNord
Coor
Schibsted
Swedbank
Brothers
NCC
Sandvik Coromant
Circle K

The media industry has been part of spearheading the glob-
al digitalization. Its products and services lend themselves
naturally to digital transformation, and the possibilities for
new thinking and development are almost endless. Disrup-
tion has become the norm, and the industry is in constant
motion forcing players to be truly agile and adaptable to
keep up and stay relevant in the
markets.
At its core, MTG has always been
a frontrunner. From the establish-
ment of the first commercial and
privately-owned TV channel in the
Nordic region 30 years ago, to the
current position as a leader in dig-
ital entertainment with multiple
distribution channels, the compa-
ny has been in constant motion
to stay at the edge of new trends and challenge the status
quo. Along with new entrants and competitors, consumers
are putting a lot of pressure on the industry; they want to
be able to choose what to consume, how to consume, and
when to consume it, at higher quality and lower prices.
As part of their digital transformation strategy, MTG focus-
es on being innovative and digitalizing the core business
end-to-end, e.g. by digitalizing operations and reshaping
traditional products and services into new digital formats
(e.g. Viaplay, Viafree, etc.), but also by complementing the
internal innovation with what they call ‘Ventures’. The sole
purpose of Ventures is to sniff out
promising new digital businesses
that match MTG’s overall strate-
gy and have the potential to add
additional value to their service
offerings. Once they have been
identified, the new businesses are
screened and assessed before
MTG decides whether to invest in
them. Through this strategy, MTG
tries to combine swift internal
innovation with what is available
in the market, and has broadened their product range to
include the next generation of entertainment experiences
in e-sports, gaming, and multiplatform networks among
others.
MTG’s ambition of being frontrunners in the media industry
development has led them to drive many internal digital
transformation initiatives, but also to create a completely
new focus area called Ventures. It is basically an M&A ma-
chine that identifies, screens, and invests in digital businesses
in line with the overall MTG strategy to broaden and improve
their service offerings.
About MTG
MTG is a leading international digital
entertainment group headquartered
in Stockholm. MTG started out as
Scandinavia’s first commercial TV channel
in 1987, but their brands now span TV,
radio, and entertainment experiences
in e-sports, digital video networks, and
online gaming.
‘The transformation pace has increased a lot lately, especially in our busi-
ness where you really can’t talk about digital transformation; it is more daily
business, and the pace of transformation will accelerate further’
‘The ambition is to be the
leading digital player in
every market, and the
CEO has taken personal
responsibility for this’
MTG
Case Study

Throughout our history, there has been a need to commu-
nicate across distances and send messages and items from
one place to another. In the 17th century, sending a letter
from Stockholm to Gothenburg entailed an adventurous
trip of at least seven days. Today, we live in a time of con-
stantly accelerating desires for safe and quick cross-border
communication and logistics.
The process of communicating
messages from one end of the
world to another has been im-
proved greatly with major disrup-
tions to the postal industry, first
with the invention of the telegraph
and telephone, and later with the
introduction of the internet. How-
ever, there is still a great need for
shipping physical products across
distances – and in today’s business
climate, it needs to be done with
speed and reliability.
In 2016, PostNord delivered 5
billion letters and shipments and 142 million parcels to the
Nordic region’s 25 million residents and two million busi-
nesses. Through their expertise and unique distribution net-
work, PostNord are changing the landscape for tomorrow’s
communication, e-commerce, distribution, and logistics.
Digitalization is increasingly being integrated into all
systems and services, and digital initiatives are changing
how PostNord do things across the value chain. This has a
created a need for developing new digital functionalities
with a much more agile way of working where PostNord
successfully has applied an MVP-mindset. The results
have been really good, one fruitful project has been the
new consumer app which has
gained widespread adoption.
Another successful example
has been the creation of a
portal, which allows the cus-
tomers to keep track of their
shipments in real time. In
the portal, customer can see
where each shipment is, when
it is expected to be delivered, if
it has been collected yet, and
much more. This allows large
customers, like H&M for ex-
ample, to know exactly when
their products will be in stock,
and whether some parcels are
flagged as delayed. This in turn enables them to provide
a better service to their own customers as they can keep
them apprised of the situation. Throughout the chain of
customers, information is the key to good service.
‘Earlier, we always worked to create new services or products that were 100%
complete and tested; now we launch, change, and build functionality over
time, which is a completely different way of working’
‘We are focusing a lot on
trying to co-create solutions
together with our custom-
ers – we do so to learn more
about the full value chain
and typically, we can find
win-win solutions’
PostNord is rolling out a customer portal in which their
customers have a complete overview of all their shipments
in real time. This digital service is offered to all customers
and integrates PostNord’s system with the customers’
interfaces, allowing the customers to track their shipments
at all times, which puts them in a position to offer a better
service to their own customers.
PostNord
Case Study
About PostNord
PostNord offers communication and logistics
solutions to, from, and within the Nordic region.
PostNord AB was established in 2009 through
the merger of Post Danmark A/S and Posten AB.
The parent company, PostNord AB, is a Swedish
public limited company with headquarters in
Solna, Sweden. PostNord is owned 40% by the
Danish State and 60% by the Swedish State.

Why?
Is digital transformation a strategic
priority in its own right or merely
a tool in a strategy toolbox? Do
companies use it as a pillar to
support their current business or
as a key to their future business
capable of unlocking adjacent or
even entirely new business areas?
And for which of their strategic
objectives do companies believe
that leveraging digitalization will be
most important?
In this section, we investigate how
digital transformation is prioritized
and perceived in the participating
companies and how far they have
come in maturing their digital
strategies, initiatives, and efforts.

Importance of Digital Transformation
Digitalization is vitally important for companies, and
the executives know it. This study confirms that digital
transformation is considered one of the most impor-
tant focus areas for the executive management.
Seven of the interviewed companies single out digital
transformation as the highest priority on their list, and
12 other companies mention it as one of their most
important priorities ranked equally with a few other
areas. Only one com-
pany considers digital
transformation impor-
tant, but ranks other
areas as higher priorities.
This confirms the theory
that digital transfor-
mation is no longer an
IT issue or a small part
of the overall company agenda, but a top priority
for the management team. As companies strive to
become increasingly digital in some areas, the digital
transformation agenda progressively becomes more
integrated into the overall business agenda. Some
companies already think you cannot talk about digital
transformation per se, since it has become an inte-
grated part of day-to-day business.
Business Focus and Strategic Focus in
Regard to Digital Transformation
We took a close look at where the business executives
aim their digital transformation efforts to create more
impact. Do they focus on the core business using
digital to improve their current products and service
offerings and gain efficiencies in their operations? Do
they seek to open up new revenue streams and gen-
erate growth in adjacent business areas? Or do they
spend their energy and resources on completely new
business areas and even
reshape their business
models completely?
Because of the current
business climate where
newcomers and smaller
digital players are con-
stantly emerging and
capturing business and
market shares from the large incumbents, one might
think that the participating companies would be as
focused on leveraging digitalization to develop in
adjacent and new business areas as they are on im-
proving the core business.
However, what we see is that companies believe that
digitalization can be leveraged to create high im-
Most important
7
12
1
0 0
Very importantImportantLess importantNot important
The Importance of the Digital Transformation Agenda at the Highest Executive Level
Create business
from the core
Create business in
adjacent areas
Create new
business(es)
1: ‘Digital’
articulated as not
important
2: ‘Digital’ not
articulated as part
of top management
agenda
4: ‘Digital’ among a
wider range of top
strategic priorities
3: ‘Digital’ less
important than other
priorities on the top
management agenda
5: ‘Digital’ singled out
as one of ‘top three’
most important
strategic priorities
Why?

pact in their core business. What is perhaps more
surprising is that a large share of the responding
companies do not believe that digitalization will be
a key lever for creating impact in business areas that
are entirely new to the company; as a matter of fact,
only one company responded that digitalization is a
very important lever to this area.
Disruptive opportunities and development of new
business models are the most common discussion
topics regarding how to leverage digitalization in
companies. Yet almost all participating companies
anticipate that digitalization will mainly affect their
core business. Across industries and irrespective of
the companies’ digital maturity, this is the general
opinion. What we do see is that companies that are
focused more on new/adjacent business areas typ-
ically come from B2B industries and want to extend
their offerings, e.g. from products to services.
Furthermore, the majority of the responding com-
panies believe that digitalization is a key lever to
staying relevant and defending their current market
position against competition as well as to improving
their internal efficiency. In addition, about a quarter
of the respondents believe that digitalization is a
very important lever for generating significant rev-
enue growth in the coming two-year period while
the other three quarters do not have quite the same
opinion.
How much do you currently focus your digital transformation efforts and
resources on each of the following areas?
Core business
Adjacent business
New business
To which degree are the digital
transformation efforts focused on
creating impact in the core of the
company’s current business?
transformation efforts focused on creating
impact in business areas that sit on the
border of the company’s current business?
transformation efforts focused on
creating impact in business areas that
are entirely new to the company?
Not at all Low degree Some degree High degree Very
high degree
Avg.
Prioritization
Avg.
Prioritization
(only 18 responding companies, 2 answers N/A)
(only 18 responding companies, 2 answers N/A)
Avg.
Prioritization
4.7
3.4
2.4
high degree
high degree

8 out of 20
7 out of 20
Digital Transformation
Maturity Curve
Digital ambition
articulated.
Sporadic initiatives
launched.
Explorative mindset
and approach.
Digital still treated in
conventional way.
Many ‘islands’ of
digital activity.
Frontrunner in
selective areas.
Tolerance of new
ways of working.
Still limited business
impact from digital.
Transformationalsophistication
Mobilized
Incubated

4 out of 20
1 out of 20
Emerging collective
digital experience.
Digital enabling of
core activities.
Translation of digital to
tangible results.
Clarity of digital game
plan and priorities.
Company thinks and
acts ‘digital-first’.
Digital impact in adjacent
and new business areas.
Core business
model(s) reinvented.
Appreciation of
exponential speed.
Accelerated
Integrated

Digital Transformation Maturity
Most of the companies are still at the beginning of
the digital transformation journey.
Only one of the participating companies is
considered ‘integrated’, meaning that they have a
digital-first approach to the entire organization.
This entails their core business being optimized
digitally, them leveraging new digital opportunities
in adjacent and new business areas, and their
business model being changed to fit the new reality.
Digitalization is embedded in their processes from
product development to end-customer.
Four of the companies are in the ‘accelerated’
phase. They develop their core offering as well
as new or adjacent business areas through
digital initiatives, and they are able to translate
digitalization into tangible results. They have a
clear digital ambition, which is anchored broadly in
specific priorities and goals.
Seven of the companies are in the ‘incubated’
phase. They drive digitalization in selected areas,
and they might even be frontrunners in some
of them. They are open to new ways of working,
but have yet to implement a cross-organizational
digital strategy, and the benefits they reap from
digitalization are still limited.
The final eight companies are still in the phase we
call ‘mobilized’. They have an explorative mindset,
they have recognized digitalization as a strong
driving force, and they have articulated digital
ambitions. However, they often revert to ‘business
as usual’ when it comes to making strong bets, and
their efforts are more sporadic and less coherent,
with lower impact as a result.
‘Digitization brings fundamental change to all business
areas and the competitive landscape is increasingly complex
as a lot of innovation is driven by other companies than
the traditional incumbents. SEB has managed to partly get
out ahead of this and is well positioned to capture business
opportunities internally and through external partnerships.’
Why?
— SEB

What?
The interviewed executives from the
participating companies all agree
that digital transformation is a major
priority going forward. Even so, do
they actually use digitalization to
engage their end customers, transform
their products and services, optimize
their operations, and empower their
employees? We now look at which
areas the companies focus their
efforts on to become digital-first.

Engage your
customers
Digital
Transformation
Domains
Empower your
employees
Transform your
products and services
Optimize your
operations
A company’s ability to change internally can be
studied by deep-diving into its strategy, people,
processes, and technology. These four domains
allow for the creation of feedback loops, which can
help the companies draw insights from data and
convert them into actions.
Our study examines how intensely the companies
focus on each domain. This systems-based ap-
proach helps us understand how they prioritize
when it comes to extracting value from digitaliza-
tion, and how mature they are when it comes to a
holistic and systematic digital approach across all
domains.
Each company’s transformation process and matu-
rity tells a story of how it impacts its industry and
operational environment.
Harnessing data for a complete view on
the customer journey, drawing action-
able customer insights, and delivering
personalized, differentiated customer
experiences at scale.
Providing insights to employees to drive
faster and better decisions and creating
productive workplaces where things get
done while protecting the organization,
data and people from critical risks.
Accelerating business responsiveness,
improving service levels, reducing costs by
moving processes from analog to digital,
and anticipating the future with
intelligent processes.
Optimizing delivery mechanisms,
adding value-adding services,
personalizing content, differentiating
deliveries, etc. to improve value
propositions and capture emerging
revenue opportunities.
‘We have spent the majority of our effort on driving digital initiatives to
further engage the customer, which among other things have resulted in
a successful app that has been awarded multiple times’
What?
— LÄNSFÖRSÄKRINGAR

Engaging Customers and End-Users
The most important digital focus area for the par-
ticipating companies is engaging customers and
end-users. Only six of the participating companies
indicated this to be less than to a ‘High degree’.
Knowing the needs of customers is a prerequisite
for offering the best products and services to the
customers, and the customer experience – B2B as
well as B2C – is critically important to staying rel-
evant and maintaining a competitive position. It is
therefore no surprise that digital efforts with this
aim are a high priority for companies. Furthermore,
there is a tendency for companies in some indus-
tries to move from being B2B-focused to engaging
more with end-users through various digitally
enabled services.
Transforming Products and Services
The next important area is the transformation of
products and services, which covers everything
from developing and improving existing products
through new features and functions to developing
entirely new products, services, business models,
and platforms. 10 of the 20 companies rank this
aspect as either to a ‘High degree’ or to a ‘Very
high degree’. Largely, companies focus on trans-
forming existing products and services to work in a
digital environment rather than rethinking existing
products and services to make a more transforma-
tive change. This is partially a consequence of many
respondents still being in the early stages of digital
transformation.
Optimizing Operations
Tied with transformation of products and services
is optimizing operations. Most companies have
worked on automating and digitalizing operations
for some time now, and are getting better at gen-
erating data across the value chain and using it in
their production, while other companies are still at
the beginning of their journey in this respect. Com-
panies with traditional lines of business are often
frontrunners in looking to digital transformation
for optimizing operations and increasing efficiency.
Empowering Employees
The lowest priority among the respondents is
empowering employees. Only seven companies
mention this as an area they focus highly on. Many
seem unsure of how digital initiatives can play a role
in empowering employees, and many say that this
area has simply been down-prioritized in the light
of matters that are more urgent. Frontrunners have
realized that using digital initiatives in this area leads
to higher employee satisfaction, which increases
productivity and reduces employee turnover.
‘We have launched a strong global brand for our
customers – now we also want our employer brand
to become equally strong’
— CIRCLE K

28 THE DIGITAL TRANSFORMATION REPORT 201728 THE DIGITAL TRANSFORMATION REPORT 2017
Focus on the Digital
Transformation Domains
Domains
Engaging customers
and end-users
The degree to which the company prioritizes digital-enabled
initiatives to engage customers and end-users, e.g. by
using concepts such as big data, self-service, VR/AR and AI
to create customer insights, personalize interactions, and
improve the customer experience.
Empowering
employees
Transforming
products and services
Optimizing
operations
The degree to which the company prioritizes digital initiatives
targeted towards empowering employees, e.g. by using
digital tools and platforms to enable better communication,
closer collaboration, and improved employee productivity
and flexibility.
The degree to which the company prioritizes leveraging
digitalization in order to transform their products and services,
e.g. by augmenting existing products and services with digital
features and functionalities, and developing entirely new
products, services, platforms, and business models.
The degree to which the company prioritizes the use of
digital-enabled initiatives to optimize internal operations,
e.g. by enabling process automation, real-time monitoring of
operations and predictive modelling to anticipate customer
support requests, etc.

THE DIGITAL TRANSFORMATION REPORT 2017 29THE DIGITAL TRANSFORMATION REPORT 2017 29
4.0
3.1
Avg.
Prioritization
Avg.
Prioritization
3.7
3.7
Avg.
Prioritization
Avg.
Prioritization
Not at all Low degree Some degree High degree Very high degree
Prioritization

What?
What digital leaders do to rethink product and service
transformation
• Build digital service wrappers around traditional products and services.
• Create new business models and go-to-market strategies by
embracing emerging trends and rethinking the existing value
proposition to fit in a digital world.
• Make data-driven product design decisions based on capturing
and analyzing end-user data and data from other open sources.
What digital leaders do to rethink customer engagement
• Develop products and services with the intimate understanding of their
own business in mind, and create meaningful long-term relationships
where the customers are in control of their own experiences.
• Master big data analytics to draw unique customer insights, gain a
complete view on the customer journey, and ultimately create segments
with tailored offerings.
• Consider how new technologies such as machine learning or artificial
intelligence can be used to deliver personalized service experiences to
stand out from competition in the next years.

What digital leaders do to rethink employee empowerment
• Create a culture supporting employees to innovate, adapt, and go after
business opportunities in real time without cumbersome hierarchical processes.
• Establish a flexible and collaborative working environment empowered
by open communication, creativity, and multiple touchpoints for employees to
interact on.
• Enable a data-driven way of working with easy access to data from multiple
digital sources for both internal and external strategic decision-making.
What digital leaders do to rethink operations optimization
• Adapt new technology and gain efficiency from connected devices in
the whole value chain, impacting factory productivity, sales efficiency, and
customer satisfaction.
• Optimize output based on demand forecasts and predictive modeling
anticipating and solving customer issues before they become critical.
• Automate procedures and processes to increase quality and delivery of
speed, improve service levels, and reduce operational costs.

Automation and digitalization are not new concepts for
the manufacturing industry. They have for a long time
been ingrained in the manufacturing process, making
this more efficient and leading to higher quality outputs.
While this transformative work earlier has been focused
on the manufacturing process itself, digitalization is
now seriously disrupting the industry on a bigger scale.
It is changing entire value
chains, impacting everything
from design and factories
to sales and marketing.
Manufacturing companies
need to get on board and
figure out what role they
should take in the value
chain and how to leverage
experience and know-how in
the digital world.
Sandvik Coromant is in the
process of adjusting for
the future; they believe that digital initiatives hold great
revenue potentials, but the investments and efforts need to
be made now. The development efforts are focused on two
specific areas: operational excellence on the one hand and
transformation of value proposition, products, and services
on the other.
The former is about digitalizing and further automating
the core operations and the internal know-how. The latter
means – by building on the digitalized know-how – moving
more into providing services with attractive offerings that
are understandable for
customers and improve for
example their efficiency
and down-time rates.
Sandvik Coromant
works on and offers
digital solutions in three
areas; pre-machining,
in-machining and
post-machining. With
integrated IT systems,
Sandvik Coromant can
e.g. collect real-time data
from customers on their
machining performance and immediately turn it into
actions, which can result in much more targeted (and
lowered overall) maintenance and repairs, thus reducing
down-time by up to 50% in customer operations.
About Sandvik
Coromant
Sandvik Coromant is the world’s leading
supplier of tools, tooling solutions, and
know-how to the metalworking industry.
With extensive investments in research
and development, they create unique
innovations and set new productivity
standards together with the customers,
who include the world’s major automotive,
aerospace, and energy industries. Sandvik
Coromant has 8,000 employees and is
represented in 130 countries.
‘The amount of built-in knowledge in this company is huge and an important com-
petitive edge; the challenge is to digitalize and leverage it more in the design of
future services and customer interfaces while protecting it from e.g. cyber attacks’
‘We have automated and digitalized
our operations over the last decades,
so this is not new; however, the shift
we see now is more fundamental
and creates a bigger clash between
the old and the new’
The shift in focus from mainly selling products to selling
extensive services and know-how is a natural step for Sand-
vik Coromant. If the customers are willing to participate in
the process early on and share information, Sandvik Coro-
mant can collect data in real time and significantly improve
operations on the customer’s machines. By using integrated
IT systems, the tools, machines, and data work together to
create even better solutions.
Sandvik Coromant
Case Study

How?
Digital transformation is a delicate
balancing act between the old and
the new.
Executives and companies
constantly walk a thin line between
optimizing their current business
and preparing their business
model for future disruption.
Between engaging and motivating
their employees and developing
technologies that could potentially
replace them.
What do they do to stay on the
digital transformation tightrope
when they do not yet know where
it leads? Let us dive into the nitty
gritty and take a closer look
at digital transformation at an
operational level.

34 THE DIGITAL TRANSFORMATION REPORT 201734 THE DIGITAL TRANSFORMATION REPORT 2017
Identification and Scoring of
Seven Key ‘How’ Capabilities
Capabilities
Digital Leadership
1 To what degree do you have executive sponsorship and broad,
capable digital leadership of your digital transformation agenda?
Functional Clarity
2
To what degree do you have clarity of the functional responsibility for
articulating a company-wide direction and for executing operational
digital initiatives to secure agility and speed?
Way of Working
3
To what degree is a startup mindset and methodologies (processes,
tools, etc.) adopted into the relevant parts of the business (and
corporate working practices)?
Competencies4
To what degree are you able to identify, attract, assimilate, and
retain the necessary competencies to succeed with your digital
transformation agenda?
Technology
Development6
To what degree do you have an agile technology development setup
that ensures fast tracking of build and scale development activities
without compromising your operational IT?
External
Collaboration7 To what degree do you leverage complementary resources in open and
collaborative ecosystems to enhance your transformative capacity?
Governance and
Performance5
To what degree does your governance model support the desired future
mindset, new way of working, and agile decision-making process
necessary to succeed with your digital transformation agenda?

THE DIGITAL TRANSFORMATION REPORT 2017 35THE DIGITAL TRANSFORMATION REPORT 2017 35
1. Not at all
Avg. ImportanceAvg. Maturity
4.7
4.5
2. Low degree 3. Some degree 4. High degree 5. Very high degree
4.3
4.0
4.3
4.4
4.5
3.0
2.9
2.8
2.8
3.0
2.7
3.6

The travel industry used to be all about papers. Tickets, itin-
eraries, boarding passes, guidebooks, in-flight magazines,
you name it. This has certainly
changed in recent years, but SAS
has gone above and beyond.
SAS believes that innovation and
focus on the customer experience
is the key to generating new
revenues, so they set up a new
department called Customer
Journey & Loyalty. Within the
department they also started
the SAS Lab – an innovation lab
which aims to equip the compa-
ny with the digital capabilities
that will help it reimagine the
future of transportation. The Lab
uses new technology to make
life easier for travelers. A major innovation is the SAS app,
which lets you book your tickets, check in, and board the
plane using your phone. It had such a great impact that it
was chosen as the best European airline app. But it provides
much more than the most common travel necessities. It
also features airport maps,
weather forecasts, and an inte-
grated guidebook, where you
can create your own maps, rec-
ommend destination sights and
restaurants, and ask for advice
from your friends.
In terms of pioneering digital
transformation, however, the
app’s most significant feature is
the integrated ‘suggestion box’.
Nobody knows the travelers’
needs better than the travelers,
and through the app, the SAS
Lab gets feedback and devel-
opment ideas in real time. This puts the airline in a unique
position to pioneer digital transformation in the industry.
SAS set up the SAS Lab to be industry pioneers in digital
transformation. They are working on electronic bag
tags, biometric scans, wearable technology, microchips,
and virtual reality.
About SAS
SAS is Scandinavia’s leading airline.
In 2014/2015, a total of 28.1 million
passengers traveled with SAS to 119
destinations in Europe, the US, and Asia.
SAS is a member of Star Alliance, which
provides customers with access to a
far-reaching network. Altogether, Star
Alliance offers more than 18,500 daily
departures to 1,330 destinations in 192
countries around the world.
‘SAS’ commercial vision is to make life easier for Scandinavia’s frequent
travelers. Being at the forefront of digital development and delivering
new digital solutions is instrumental to realizing this vision’
‘SAS’ travelers love
our app because
it makes life easier
for them’
SAS
Case Study

Capability 1:
Digital
Leadership
The success of digital trans-
formation is highly dependent
on executive sponsorship and
digital leadership – but it is
apparently easier said than done
Leading Practice
Someone from the executive management fully owns the
digital transformation agenda and is responsible and held
accountable for its continued progress. Dedicated next-level
digital leaders with the right competencies relentlessly drive
the digital transformation initiatives.

To what degree do you have executive sponsorship and broad,
capable digital leadership of your digital transformation agenda?
‘Over the past 18 months, digitalization has been placed more centrally
on the agenda. The challenge is not to develop the digital strategy – it is
to understand how to execute and implement’’
Limited executive
sponsorship of the
digital transformation
agenda with relatively
vague digital leadership
focus and competencies
across the business.
High level of digital
transformation focus
among executive
management and the
leadership team, but
leadership profiles
and competencies still
very much focused on
“traditional” business.
Uncompromised
executive sponsorship
with a highly capable
digital leadership giving
full priority to digital
initiatives, often at the
expense of near-term
traditional business
priorities.
Not at all
0
2
8
6
4
Low degree Some degree High degree Very high degree
How?
Avg. Importance
Avg. Maturity
4.7
3.6
Digital Leadership
— TELENOR

Even if the ‘how’ dimension overall is relatively
immature compared to the other areas, it might
not come as a surprise that for the many business
leaders we have spoken with, the most mature
dimension is the sponsorship from the executive
management. This ideally entails getting the CEO
in a lead role setting an ambitious digital transfor-
mation agenda, taking ownership of the key pri-
orities, and taking part in driving and ensuring the
progress of digital transformation initiatives – both
in own actions and through dedicated, next-level
leaders with deep digital competencies.
Most, if not all, of the interviewed executives signal
that the majority of senior management in their
companies have the right intentions and focus
their efforts on how to succeed. However, many
also report that there are large differences in how
important digital transformation is considered,
especially when cascaded further down the organ-
ization. There are natural conflicts built in based
on current short-term profit goals and long-term
development goals as well as between the old and
the new. In addition, a number of companies men-
tion bridging the gap between senior management
and the rest of the organization as a challenge. This
of course points toward cultural aspects as well as
Digital Leadership
ExecutiveSponsorship
‘We have a clear direction! We are, however, not experts in
digitalization, but we are getting better and better’
‘We have very clear ambitions and direction from the
management team, which is a key starting point’
— SWEDBANK
— NCC

the importance of middle management and their
ability to keep pace with C-level impatience.
Even if CEOs and their executive peers are willing
to take on risk, go into unchartered territory, and
have the stamina to relentlessly drive efforts in
transforming their companies, a large challenge
seems to be to empower middle management in
their efforts as well as in finding and developing
next-level leaders who combine deep industry
insights and hands-on digital experience. Although
most companies recognize the need for leaders
who are both conversant across the current busi-
ness and digitally diligent, having such leaders is in
practice more often the exception rather than the
rule. The highlighted characteristics of the leader-
ship type that is sought after include the ability to
understand the intrinsic values of the business they
operate, and a visionary, daring mindset combined
with digitalization experience. The latter includes
having a detailed understanding of the new ways
of working, identifying the competencies necessary
to build digitally-minded teams – and establishing
the culture to attract these. In addition, having a
doer attitude is necessary to succeeding in an en-
vironment where speed of change is inevitable and
increasing.
Another highlighted challenge is how to secure
agility and speed of execution across organiza-
tional silos. It is proven difficult enough in projects
and of course even more so in the line organization
over time.
Recipe for Success:
• Executive sponsorship is a must have: Ensure full and strong executive
sponsorship from the CEO and the management team as a starting point for
your digital transformation journey
• Digital leaders are a new breed: Put efforts into employing and developing the right
profile(s) to spearhead and run the digital transformation execution in your organization,
from the top to the lowest level
• Get into the details: Most leaders are digitally savvy when it comes to strategic direction,
but speaking the digital language fluently requires hands-on experience and a much more
detailed understanding of what the digital transformation entails
How?

Capability 2:
Functional
Clarity
Coherent visions and
strong mandates to drive
digital transformation
Leading Practice
Speed, agility, and execution power are obtained through
coherent, company-wide digital transformation visions with
strategic priorities and a clear direction and strong responsi-
bility mandates for driving and carrying out the operational
digital business-line initiatives.

Functional Clarity
Limited clarity of ‘who
owns’ the responsibility
for setting the corporate
wide digital transforma-
tion direction, and some-
what unclear responsibil-
ities between the center
and local level.
Freedom to execute dig-
ital initiatives in business
units, but somewhat lack
of an overall direction
setting to ensure coher-
ence and company-wide
impact.
Optimal balance be-
tween center and local,
with a coherent digital
transformation vision
and direction, and suf-
ficient local power to
execute digitally in the
line of business.
To what degree do you have clarity of the functional responsibility for
articulating a company-wide direction and for executing operational
digital initiatives to secure agility and speed?
Avg. Importance
Avg. Maturity
4.5
3.0
Not at all
0
5
11
4
0
How?

There seems to be a wide variety in how companies
define responsibility for digital transformation.
Some companies do not have any appointed role
at all and try to ingrain responsibilities into each
P&L-responsible BU, while others have installed a
CDO or placed responsibility in the corporate strat-
egy function. In 7 of the interviewed companies, the
business responsibility for digital transformation
resides with the CDO or Group Strategy function,
while there is no formal role in the 13 other cases.
No matter the chosen model, almost all surveyed
companies seem to have a challenge in combining
the top-down, coherent transformation approach
with the more decentralized approach, which
creates local ownership close to actual business
decisions. There also seems to be a struggle in what
should reside in the line function vs the IT function,
and in how to prioritize initiatives across portfolios.
Anchoring the mandate and getting company-wide
acceptance for the responsibility is another chal-
lenge mentioned by the companies establishing a
CDO-like function.
Some companies address the challenges by es-
tablishing separate digital innovation units with
end-to-end responsibility outside the ordinary line
organization. The overall purpose is to overcome
the challenges inherited in the traditional organi-
zation structures. The mission varies between more
ambitious disruptive agendas and reinventing
certain products or processes. Others rely more on
the established organization by creating additional
structures and processes (formal or virtual) to make
sure alignment is created between BUs, IT, and the
corporate function.
‘We have installed a digitalization council to
keep track of initiatives and take decisions when
prioritizations are needed’
— POSTNORD

Recipe for Success:
• Assess your digital transformation maturity: Know your people, competencies, cross-
functional capabilities, etc. and understand where the greatest potentials are to get a
balanced view of the starting point vis-à-vis your overall target/vision and the required
change needed
• Define who should be responsible for the direction: Assess your need for central
direction, i.e. need for push if people do not do it themselves or need for corporate
coherence on the direction vs. need for exploration of opportunities from people close to the
market
• Define your execution setup: Distance from initiatives to regular business/operations
dictates need for decentral (BU) execution vs. execution in dedicated DT initiative unit (need
for coordination vs. execution)
• Communicate and revise: Make sure it is clear to everyone how responsibilities are divided
and how potential conflicts of interest are resolved, and do not underestimate the need
for repeated messaging as well as active and outspoken support for the direction and
the execution setup – be prepared to change the setup further down the road when the
organization becomes more mature or issues arise
How?
‘There is a strong entrepreneurial spirit in the organization providing a
foundation for leaders to own and drive digital transformation within
their own domains, as well as driving a strong central transformation
agenda – really the best of both worlds’
— ELECTROLUX

‘You cannot really talk about digital
transformation anymore. Its ingrained
in our day-to-day business and we
need to continuously reinvent ourselves
to stay on top given the pace of how
the industry is moving’
– MTG

No industry is excluded from the power and change of
digitalization. In construction, new digital solutions are
continuously entering the global market creating smarter
business and more efficient use of natural resources. Con-
structing companies are currently integrating virtual reality
solutions to show new products, buildings and prototypes
before they have even begun the
building process. The ongoing
adoption of 3D printers will also
revolutionize the market for
smaller projects, as minor players
will be able to construct products
on their own to lesser cost. Robot-
ics and automatization will also
transform the daily activities for
many construction workers. It is
only a matter of time and cost
versus benefit before these trends
will be fully adopted by the major-
ity of construction companies.
NCC decided to focus their first digital disruptive business
model around digital recycling connected to the handling
of surplus materials. Current handling is costly, time-con-
suming, wasteful and bad for the environment – so there
was much that could be done in the area.
The project was initiated as a startup to create the right
progressive atmosphere, able to attract the best startup
talent available. As an external entity, fully owned by NCC,
Loop Rocks is able to benefit from the startup culture as
well as a blue chip company’s financial stability and distri-
bution networks.
The business solution connects
those who are in need of material
with those who wants to get rid of
it. Both parties share the working
and transportation costs and
becomes a part of the new circular
sharing economy – like Tinder for
construction materials.
All Loop Rocks users benefit by
reducing time, costs, and envi-
ronmental impact by using less
virgin masses and unnecessary transportation resulting in
lower CO2 emissions and excavation impact, adding value
from both a financial and environmental standpoint. The
network opens up for anyone to connect to the ecosystem,
resulting in disruption for players that make money off
today’s inefficient handling of masses at the expense of the
environment. Loop Rocks provides transparency, working
to make the entire construction industry more circular.
About NCC
NCC is one of the leading construction and property
development companies in Northern Europe, with sales of SEK
53 billion and 16,800 employees in 2016. With the Nordic region
as its home market, NCC is active throughout the value chain
developing and building residential and commercial properties
and constructing industrial facilities and public buildings, roads,
civil engineering structures, and other types of infrastructure.
NCC also offers input materials used in construction and
accounts for paving and road services. NCC creates future
environments for working, living, and communicating based on
responsible construction operations that result in sustainable
interaction between people and the environment.
‘We are not experts in digitalization, but we are getting better and
better – we are good compared to the construction industry, but
average compared to other industries’
‘With Loop Rocks, we
are challenging players who
make money from today’s
inefficient handling and, at
the same time, opening up for
others to join the ecosystem’
Loop Rocks is an open platform and app for the
smarter and more efficient handling of rock,
earth, and other secondary construction masses
at construction sites, and between businesses and
private individuals. It is a user-centric app, which
simply connects supply and demand of construction
materials. Last year, Loop Rocks was one of the
finalists for Ecolab’s Circular Economy Digital
Disruptor award.
NCC
Case Study

Capability 3:
Way of
Working
While good ideas and new
concepts are aplenty, there
is still a long way to go from
theory to practice
Leading Practice
Corporate working practices increasingly adopt a startup
mindset and methodologies, which involve an uncompro-
mised focus on customer needs as the point of departure for
development activities and the application of the lean start-
up approach working with the concepts of minimal viable
products, sprints, fail fast, and build-measure-learn loops.

Way of Working
Early stage understand-
ing of the need for a
startup mindset, but very
limited actual experi-
ence in the business and
a general tendency to
work in the ‘old way’ with
digital development.
Emerging experience
with working in the
‘new way’, with a startup
mindset and with several
of the actual concepts in-
volved, but still limited to
selected organizational
environments.
Broad appreciation of
a startup mindset, dis-
carding the ‘traditional
way’ of working with an
increasing experience
across the organization
in applying a lean start-
up approach.
Not at all
0 3
1
To what degree is a startup mindset and methodologies
(processes, tools, etc.) adopted into the relevant parts of
the business (and corporate working practices)?
Avg. Importance
Avg. Maturity
4.5
2.8
7
9
How?

Inspired by emerging and successful startup chal-
lengers in many industries, new ways of working
are generally gaining recognition among estab-
lished companies. Since the beginning of the 21st
century, the lean startup approach, rooted in the
lean manufacturing methodology and particularly
relevant in relation to digital transformation, has
become highly regarded both academically and
by corporate frontrunners such as GE, Coca-Cola,
Cisco, etc. In contrast to traditional ways of defin-
ing and running projects – ‘big design’ up front
and waterfall-based – the lean startup approach
is more explorative and iterative, and moreover
often pragmatic. The main characteristics of these
processes, which include minimum viable products,
sprints, fail fast, and build-measure-learn loops, are
the strong focus on customers and users and the
high speed and agility of digital development.
All companies in this study acknowledge the im-
portance of adopting these new approaches and
methodologies, and most of them have to some
extent introduced one or several of the new and
more agile ways of working. Within some of the
frontrunner companies, the new approaches have
gained a strong foothold on the digitalization
agenda, and a ‘digital first’ mindset has started
to develop with a point of departure in customer
needs rather than in existing products and solu-
tions.
However, the majority of respondents still indi-
cate that there is a long way to go before the new
working practices are fully adopted into the daily
routines. Most companies are still in the very early
stages of testing out new concepts like sprints,
pilots, and MVPs in pockets of the organization.
Startup mindset Scale with confidence
‘We have a very entrepreneurial setup in our way of driving the digital
initiatives. We work in sprints, and if the business case is positive and we
believe in the idea, we have a short time to market’
— COOR

How?
Recipe for Success:
• Highlight potential: Identify business benefits from new ways of working, e.g. from sprints,
MVPs, and similar new working practices
• Set the team: Ensure a talented cross-functional and multi-capable team with an exploratory
mindset and a relevant mandate that can get things done
• Set the structure: Set up the structure for how to run the new ways of working, including
how to ensure not to lose oversight, and make sure paper trails and learnings are captured for
future developments
• Test and prove concepts: Be pragmatic and seek short-term results by turning issues into
outputs through pilots or prototyping within weeks or maximum a few months
‘We are moving rapidly toward an “iterate and learn” mindset across
both IT and business functions. We are not fully there yet but the speed
and value this approach brings to our enterprise is clear to all’
The limited adoption rate of new ways of working
can often be linked to an unwillingness or inability
among many employees to change. In order to en-
courage a positive attitude toward new initiatives,
many companies actively seek to highlight internal
examples where new and more agile ways of work-
ing have enabled the successful development of
concrete solutions. Such examples are necessary to
boost internal change readiness and the facilitation
of increased cross-functional collaboration – both
are key success factors in driving digital transfor-
mation. In addition, many indicate the challenges
with the integration and co-existence of traditional
and new ways of working where many state that
both are needed for the foreseeable future.
— ELECTROLUX

Capability 4:
Competencies
The war for talent is intense,
and companies are fighting first
to attract and then to retain the
strongest digital competencies,
which to an increasing extent
move between industries
Leading Practice
A prerequisite to successful digital transformation is the abil-
ity to identify, attract, develop, and retain new competency
profiles such as designers, tech developers, data scientists,
and entrepreneurs. A further necessity is the ability to assim-
ilate these new competencies into the core of the business
to create digitally enabled teams that combine and integrate
new functional competencies and deep industry experience.

Competencies
Limited clarity of
which new competencies
to seek and how
to integrate them into
to the business, leaving
a bias clearly tilted
towards traditional
competency profiles
in leading positions.
Understanding of which
competencies to seek
and attract, but a yet
unproven track record
in retaining the new
competencies due to
challenges with integrat-
ing them into core of the
business.
Strong ability to not only
attract but also retain
new competency profiles
by actively engaging
relevant communities,
configuring effective
teams, creating desirable
working environments,
etc.
Not at all
0
0
13
3
To what degree are you able to identify, attract, assimilate, and retain the
necessary competencies to succeed with your digital transformation agenda?
Avg. Importance
Avg. Maturity
4.4
3.0
4
How?

Identifying, attracting, developing, and retaining
the right competence profiles is one of the most
important drivers of getting digital transformation
right; however, the high demand for specialized
digital competencies makes the war for talent
a key challenge for all companies. Competition
comes not only from traditional larger players, but
also from smaller-scale startups, which can often
offer a work culture that is more attractive to the
sought-after profiles.
The participating companies generally have good
employer brands in the market and appear to be
skilled in both identifying and attracting new digi-
tal competencies. However, they are less proficient
in retaining and assimilating them into the core
of operations as well as integrating them with the
more ‘traditional’ functional and industry-related
expertise. With only two companies assessing
themselves as having a high degree of success in
both attracting and retaining new essential digital
competencies, this is a digital transformation driver
with a lot of improvement potential.
Generally, the supply side of talent is currently
falling short of the growing demand for emerging
competency profiles. Additionally, the sought-
after profiles tend to value fast-growing and less
established work settings and cultures, meaning
the established corporations not only fight each
other for these profiles, but also the smaller-scaled
companies and startups. Companies in this survey
point out that key drivers of getting the right com-
petencies are environments that foster creativity
and innovation, digitally savvy managers who can
speak the language and attract younger talents,
and a clear and exciting description of the digital
transformation journey the company is on. This
appears to be easier said than done.
To supplement in-house digital competencies,
companies are relying heavily on external resourc-
es to provide specialized digital knowledge and fill
potential capability gaps, and some companies are
struggling to find the right balance between inter-
nal and external resources. External competencies
allow for highly specialized and up-to-date capa-
bilities that are often too expensive to build inter-
nally. However, by relying too heavily on external
competencies, a company’s internal digital capa-
bility level may remain underdeveloped, and the
Identify Attract Retain
‘We are able to attract talented people with a high level of digital
competence; the challenge is always to retain them given the
numerous options they have across industries’
— BROTHERS

How?
Recipe for Success:
• Understand competence requirements: Invest in understanding the possibilities of
bringing new skills on board and map how valuable they are to the company (hire digital
leaders who understand this)
• Balance internal and external competencies: Decide which skills to have in-house and
which to outsource
• Create an attractive environment: Establish environments to attract and nurture new
profiles, if necessary via independent units
• Communicate the journey: Define, describe, and communicate the digital journey your
company is on/about to embark on to attract the necessary talent
‘Sometimes, it is beneficial to hire a junior person with a new
perspective rather than someone bringing deep knowledge within
one specific area – of course, we try to get the right mix’
knowledge transfer from development initiatives to
line organizations responsible for implementation
becomes limited.
It is highly important to find the right mix of inter-
nal and external digital competencies. The key is
to be conscious of where to allocate which kind of
resources to ensure agility, speed, and up-to-date
knowledge while at the same time maintaining
and developing the internal competence level.
Some companies are dependent on strong inter-
nal control of operational systems and processes
and rely on external competencies only for the
development of new systems, whereas others are
comfortable outsourcing operational systems and
allocating internal resources to digital develop-
ment initiatives.
Many companies are actively responding to the
need for establishing more entrepreneurial work
environments. Some, such as Telia and NCC, have
established separate divisions for building new dig-
ital enterprises. Large exposure to executive man-
agement has generally proven to be a prerequisite
for these separate units to ensure traction given
the uneven balance between 10-20 people working
with future ideas and many thousands of people
focusing on existing business.
— SWEDBANK

Capability 5:
Governance and
Performance
Digital development requires a
flexible governance structure with
room for and focus on exploration
of new ideas and new priorities
Leading Practice
A governance model that supports the digital agenda and
ensures that the company ‘stands its ground’ when facing
tough prioritization dilemmas. This necessitates a govern-
ance model that tolerates uncertainty and supports a more
exploratory mindset and new ways of working. It includes
a strong mandate to the people responsible for the digi-
tal transformation, decision-making processes structured
around the desired way of working to ensure speed and
agility, and the use of relevant evaluation and prioritization
metrics for development activities focusing also on custom-
er/end-user engagement and initiative progress.

Governance and Performance
To what degree does your governance model support the desired future mindset,
new way of working, and agile decision-making process necessary to succeed with
your digital transformation agenda?
Traditional governance
model with a gravitation
towards linear thinking
and a tendency to push
the company back to
regular processes and
decision criteria.
Introduction of new
governance mecha-
nisms including decision
processes and bodies,
evaluation metrics, etc.,
but difficulty in making it
work in conjunction with
the traditional govern-
ance model.
Digital transformation
ambition clearly sup-
ported by a new gener-
ation governance model
including minimum
interference decision
gate models, light de-
cision bodies, progress
metrics, etc.
Not at all
1
8
7
Avg. Importance
Avg. Maturity
4.3
2.7
0
4
How?

Traditionally, companies have been organized with
an emphasis on ensuring stability and predicta-
bility. However, today’s fast-paced digital reality
requires companies to rethink and set up more
adaptive governance models that spur explorative
approaches, allow for iterative processes, and tol-
erate failures – while at the same time allowing for
overall control of the company direction.
The adaptive governance approach is characterized
by a higher degree of decision-making autonomy
and relies on a broader range of evaluation crite-
ria that – in addition to traditional top- and bot-
tom-line metrics (e.g. ROI and payback time) – also
focus on metrics that are more customer-centric
and focused on initiative progress (e.g. number of
solution releases, number of attempts/failures, and
real-time customer experience feedback).
In general, there is strong recognition among
the surveyed companies that current governance
models need modification in order to cope effec-
tively with digitalization. Companies have different
starting points; some, for example, establish CDOs
with strong mandates while others push mandates
down to the line organization with the challenge
of ensuring cross-company coordination. However,
while there is intent to get this right, many execu-
tives admit that it is difficult to establish the right
organizational setup that supports the desired
agility and speed while at the same time making
sure it works for the whole company. The dilemma
is often centered on how to establish a governance
setup that allows for the freedom and autonomy
of digital units to carry out development initiatives
independently to ensure speed, while at the same
time exercising some degree of control to ensure
coherence with the overall strategy and contin-
uously verifying the concrete value and business
optimization potential of digital initiatives. This
balance is difficult to strike, but highly critical.
Viability
Desirability
Possibility
Digital Scorecard
Foresight&facts
Ambiguity & risk
“Old
World”
“New
World”
‘We have worked a lot with incentives and leading by
example – every manager has some form of digital target;
however, we are not 100% there yet’
— MTG

How?
Recipe for Success:
• Establish governance setup that balances speed, agility, and control: Set clear
directional guidelines (coherent with strategy) including outspoken ambitions and customer-
centric measures, ensure that the people responsible have the power, mandate, and budget
to get things done (at the right speed), and make sure the company-wide agenda has traction
• Promote alternative evaluation metrics: Build metrics that determine progress and value,
especially in relation to the customer, e.g. number of new customers onboarded, customer
instant response, activation rate, and behavior
• Ensure organizational ownership: Make sure people buy into the new solution, and hold
on to it even under pressure
Although most companies have a clear digital
vision and have already embarked on multiple
ambitious digital initiatives, there still appears to be
a tendency to fall back on (or continue to use) the
more traditional governance model when assessing
large-scale digital initiatives. Consequently, the
majority of respondents acknowledge the need for
adjusting or supplementing their governance setup
as well as their evaluation and prioritization metrics
to better prepare for the digital world, particularly
relating to digital initiatives characterized by high
uncertainty. Therefore, it is very important that
the governance principles and mindset are well
anchored and bought into all the way to the top
as well as horizontally across business functions
and units. This is even more important if the re-
sponsibility is organized in a central or separate
function since the impact and funding most likely
will happen in an existing BU, and hence – in order
to maintain speed – an agile governance model is
paramount.
‘Our traditional business models are not adapted to handle what
digitalization might entail, also creating challenges for driving digital
initiatives across the company’
— NCC

Capability 6:
Technology
Development
Companies are struggling with rigid
and complex legacy IT infrastructures
which often hinder speed and focus
on digital exploration activities
Leading Practice
Establishing a bi-modal technology capacity with the ability
to combine stable operations with development efforts
driving digital transformation while continuously ensuring a
constructive dialogue between two domains to enable later
integration. This requires the ability to work around complex
IT legacy infrastructure by creating some form of separation
between exploratory development initiatives and daily
operational processes.

Technology Development
Technology develop-
ment process primarily
based on a ‘one mode’
approach with limited
infrastructure support-
ing agile build and scale
development activities.
Two-mode technology
development setup fit
for both legacy and ex-
ploratory development,
but with significant com-
plexities when integrat-
ing and/or migrating the
two modes.
Enterprise-wide capa-
bility to operate two
separate but coherent
technology modes, one
focused on predictability
and the other focused on
exploration, to catalyze
digital transformation.
Not at all
6
4
0
To what degree do you have an agile technology development setup that ensures
fast-tracking of build and scale development activities without compromising your
operational IT?
10
Avg. Importance
Avg. Maturity
4.3
2.9
0
How?

Ensuring an agile digital development setup that
enables fast-tracking of development activities
without compromising the operational IT is a crit-
ical aspect of succeeding with the digital transfor-
mation agenda. Almost all companies in this study
acknowledge the need for a two-speed technology
setup, and a majority of the interviewed companies
find it challenging to cope with the high pace of
development while handling rigid complex leg-
acy IT systems that have evolved over time into a
patchwork of separate systems. The ability to work
in two speeds to ensure the agility of digital devel-
opment initiatives is therefore seen as inescapable
for established companies to be able to efficiently
execute digital initiatives.
The majority of respondents currently work with
some version of a two-speed technology setup,
and some consider themselves somewhat success-
ful at ensuring an agile digital development pro-
cess while at the same time effectively operating
day-to-day IT. However, many put forward chal-
lenges in legacy systems requiring a lot of attention
and resources, in getting their technology platform
and environment to be sufficiently agile and capa-
ble, in how to put in place a balanced prioritization
process, and in ensuring traceability, common
definitions, and adequate documentation of the
faster-paced development efforts at the same time.
Another frequently mentioned issue is the com-
plexity related to integrating solutions and systems
from the two technology development speeds.
This is particularly prevalent when an organization
‘We have put a lot of efforts into creating an agile development
setup, and we are running two-speed IT development – it is
paying off and we are really on the right track’
Full-stack Inhouse
Two-speed
Outsourced
Single-speed
— VATTENFALL

How?
sits on old core legacy systems that limit the agility
when it comes to developing solutions that depend
on integration to back-end systems and platforms
holding transaction data, billing data, etc.
Most companies leverage external technology
development resources to strengthen agility and
to stay focused on their own core, non-technology
activities. Working together with the right partners
and knowing what tasks and responsibilities to
outsource can provide improved overall perfor-
mance while at the same time giving access to the
newest technology developments, which would be
harder to attain if technology developments were
completely insourced.
‘We are at a very good level in R&D, creating solutions to customers and
with new technology in general through our decentralized approach. In
addition, we have a central PMO that prioritizes development initiatives,
but agility and speed need to improve further’
Recipe for Success:
• Run your IT at two speeds: Separate the exploratory mode from the predictable mode, but
take subsequent integration (e.g. to transaction data, billing, etc.) into account early on
• Coordinate and calibrate: Create a clear view of development initiatives and prioritizations,
and keep a close and strong collaboration between the developers, operational IT resources,
and business
• Leverage external capabilities: Outsource selected areas to external resources for agility and
speed to keep maximum focus on the core business
— ÅF

‘The energy system is in the middle of
a fundamental transformation with
significant effects on both society at
large and the players in the industry.
Energy production is getting more small-
scaled and distributed, which leads to
a need for increased intelligence in the
distribution network as well as new ways
of communicating between the growing
number of production units. Vattenfall is a
key player in this ecosystem and we need
to be in the forefront of understanding
and driving this development, especially
from a digital perspective’
– VATTENFALL

The banking industry is caught in the middle of a global
disruption. New products and services such as Bitcoins
and peer-to-peer lending have changed the standard
banking practices, and the old players need to change to
stay relevant in the new industry.
One of the potential threats to the
traditional banks are the small
FinTech startups. They are taking
over niche by niche starting with
the crossroad between customer
pains and revenue pools. Their
strength is in their focus. The
banks are still stuck in their groove
trying to cover the whole market,
whereas the small enterprises can
perfect and launch their niche
products immediately.
Digital transformation is high on SEB’s list of priorities.
They are working throughout their value chain by
connecting customers in the front end, automating their
operations, creating data and insights, and focusing on
innovation. They have set up an internal innovation lab,
but they have also chosen an old, but proven strategy for
countering the competition from startups: if you can’t beat
‘em, join ‘em. That is why they invested SEK 85 million in
the Tink savings app.
For SEB, partnering with the best
and most promising FinTech
startups like Tink is part of a
grander strategy. Instead of
going through the internal
design, approval, development,
and testing, they invest in a
turnkey solution for a product
their customers want and need –
which can be further developed
and integrated into their own
traditional banking services. With
the investment from SEB, Tink
has upgraded the app to Tink 2.0 and included more of the
services you expect from a bank; for example, you can now
pay your bills or transfer money in the app. This strategy
benefits both SEB, Tink, and the customers; it is a win-win-
win situation.
About SEB
SEB is a leading Nordic financial services
group. In Sweden and the Baltic states,
SEB offers financial advice and a wide
range of financial services. In Denmark,
Finland, Norway, and Germany, the
bank’s operations have a strong focus on
corporate and investment banking based
on a full-service offering to corporate and
institutional clients.
‘Our position makes us a popular FinTech collaboration partner, but
even so, we still lose a lot of great opportunities because there are
simply so many to compete for’
‘This is what our
customers want today.
Our customers expect us
to provide the very best in
the market, and we want
to be able to deliver’
For SEB, the SEK 85 million investment in the Tink savings app was
only a small step in their new strategy. SEB is involved in several
FinTech partnerships, drawing on the expertise of external partners
to deliver on what their customers want. The startups create strong
niche products, which can be strengthened further through SEB’s
capital and integration of traditional services.
SEB
Case Study

Capability 7:
External
Collaboration
Companies have started to
collaborate with external partners
to gain inspiration, strengthen
delivery, and access new and
exploratory business domains
Leading Practice
Clear acknowledgement that the organization should not –
and cannot – do everything itself. Leading practitioners col-
laborate with digital natives and complementary resources
in open ecosystems to gain external inspiration and support,
and to stay challenged. Among other things, this can involve
running open innovation initiatives such as hackathons and
accelerator programs, and working closely with startup com-
panies, venture development firms, and academia on devel-
opment activities. Additionally, external collaboration can fa-
cilitate a structured approach to continuously challenging the
organization, e.g. through external digital advisory boards.

External Collaboration
To what degree do you leverage complementary resources in open and
collaborative ecosystems to enhance your transformative capacity?
The use of external
collaboration partners
is primarily focused
on sourcing expertise
from external ‘vendors’
that provide input and
contribute to projects in
closed environments.
Openness towards value-
creating partnerships,
often in non-traditional
areas, to create leverage,
ensure execution speed,
and/or open new do-
mains that are otherwise
difficult to reach.
Full appreciation of op-
erating in ecosystems of
partners, often together
with competitors, to take
advantage of knowledge
and assets outside the
enterprise despite the
possible risks involved.
Not at all
0
5
1
4
10
Avg. Importance
Avg. Maturity
4.0
2.9
How?

Drawing on expertise from external partners in
an open and dynamic environment supports the
internal capacity to drive digital transformation.
Leading organizations have an open mindset and
collaborate with various types of external partners
in external networks and ecosystems. They do so
with a clear view of opportunities in the market,
how to best cooperate with partners, and what
value collaborations can bring to the business.
Across the surveyed companies, various forms of
collaborations have been initiated to assist in driv-
ing the digital transformation. Companies under-
score that they are unlikely to master everything
or to be able to employ all talent needed, and
therefore, external collaborations will be a key
success factor going forward. Almost all companies
surveyed also underline the increased importance
of more external collaboration due to the ever-
increasing development/innovation speed and
fast-paced emergence of new competitors.
Collaborations can take many forms, and the per-
ceived benefits for the incumbent companies are
clear. On the other hand, incumbent players have
certain advantages like large customer databases,
access to capital, and market intelligence – some-
thing which smaller firms or companies in different
industries lack. This provides for win-win situations.
Collaborations across industries are also increasing,
and some companies think it will be of strategic
importance to ‘lock in’ important players into co-
operation.
Inspiration from
outside vendors
Value-creating
partnerships
Multiple unexpected
collaborations
‘We are not large enough to have all capabilities in-house
so we have an “ecosystem” set-up in which we run digital
initiatives together with partners, customers and suppliers’
— COOR

How?
‘External collaborations have not been prioritized earlier, but
with our new setup, we aim to shift from ad-hoc to more
systematic collaborations and new ecosystems’
Recipe for Success:
• Get engaged: Understand what is out there and how to leverage external input to seek value
in new domains
• Build an open mindset: Collaborate externally through an open mindset and challenge
traditional collaborative partnership models
• Share successes: Communicate successful collaboration initiatives to build internal
momentum and reduce barriers for future external partnerships
However, the differences in focus and maturity are
currently relatively large, and most companies are
in the early phases of development. A few compa-
nies draw on startup capabilities, e.g. through the
organization of events such as hackathons, some
collaborate with academia, whereas others have
created a full ecosystem of partners with whom
they collaborate to innovate and stay on the front-
line of developments.
External collaboration is clearly an important area,
but many companies struggle to define the right
model for cooperation and engagement as well as
to stay focused/prioritize given the many oppor-
tunities. One specific challenge brought up that
hinders the development is the perceived issues
connected to handling ownership of data/IP.
— TELIA

Conclusion
In-depth discussions with executives that lead the
way in digitally transforming the largest Swedish
companies have given us a thorough understand-
ing of what they do to transform their businesses
and how they work to address concrete opportuni-
ties and challenges in approaching the unchartered
territory represented by digitalization.
Why?
Among the interviewed companies, 19 out of 20
characterize digitalization as one of the most im-
portant areas on the corporate strategic agenda.
This study thus confirms that digitalization has
become a key priority area for executives across
businesses. Quite a few also acknowledge that
they have seen a dramatic shift during the last two
years. It is clear that while digitalization is spreading
across several functional areas in the organizations,
the primary focus of executives in most interviewed
companies is to leverage digital opportunities to
develop the core business offering. However, for
some of the interviewed companies, especially
those that have traditionally been further back in
the value chain as pure B2B-companies, we ob-
serve a tendency to use digitalization initiatives
as a means of moving closer to the end-customer
through developing services and products adjacent
to the current offering – essentially moving toward
becoming B2B2C companies. Perhaps not too sur-
prisingly, for all the interviewed companies, using
digitalization to develop strictly new business is
not a priority, but rather something that is pursued
opportunistically.
A lot has happened in terms of awareness over the
past few years, and expectations for the next few
years are often high. However, despite the high
strategic importance of digitalization, most compa-
nies are still in the early stages of their digital trans-
formation journey when measured against global
digital-first benchmarks – the phases referred to
as ‘mobilized’ and ‘incubated’ – having only just
taken the initial steps in becoming digital-first
companies. Only four of the companies are con-
sidered to be in the ‘accelerated’ phase, and only
one company is considered to be in the ‘integrated’
phase – the most progressed phase on the Digital
Transformation Maturity Curve, which is character-
ized by a company thinking and acting digital-first
every step of the way.
What?
The use of digitalization for the purposes of engag-
ing customers clearly emerges in both quantitative
scoring and qualitative statements as the most
important of the digital transformation domains.
Companies realize the high potential in applying a
customer-centric approach to add value through
building new services and ultimately increasing
loyalty to the brand.
Operational efficiency is another area where exec-
utives see great potential in digital transformation.
Using robotics and machine learning to increase
output while at the same time improving the ser-
vice level and using data prescriptively rather than
descriptively is the newest frontier in increasing
efficiency. Concurrently, companies are transform-
ing their products and services as the feedback
loops are becoming shorter and more relevant.
Our interviews do, however, reveal that companies
have more differing views on the importance of
transforming products and services than on oper-
ational efficiency where they seem to agree on the
extraordinary potential across the board.
Perhaps somewhat surprisingly, companies have
thus far not spent a great deal of attention on using
digitalization as a means of empowering their em-
ployees. There is clearly a great potential to unleash

from increasing flexibility and building integrated
platforms that promote creativity and collabo-
ration. It is of course utterly important to have
empowered employees to underpin the increased
ambition in the customer experience and engage-
ment – if this happens, the focus and insights are
sure to follow.
How?
Companies are actively working toward designing
the right setup for succeeding with their digital
transformation agenda. Across the board, ‘digital
leadership’ remains strong at the executive level
meaning that companies give priority to digital
initiatives, perhaps even at the expense of near-
term business priorities. Whereas executive buy-in
is widespread, ‘functional clarity’ proves to be
more challenging. Many companies are still strug-
gling to find the right roles and responsibilities to
drive the agenda efficiently. Moreover, as digital
progress calls for internal processes that facilitate
rapid, cross-functional development speed, classic
governance models are up for evaluation. There are
many companies trying to correctly navigate how to
give business units the autonomy to be innovative,
while keeping the central control to ensure that best
practices are used across the organization.
Increasingly, companies are adopting new ways
of working to ensure agile digital development
processes. However, while the right concepts have
been introduced, full integration is often still far
away. Most companies are able to give best practice
examples of individual projects or units that have
performed well, but integrating these concepts into
everyday work practices across the organization will
still require a great degree of change management
and internal education. As complex legacy struc-
tures prevail across all industries, many executives
recognize that the facilitation of effective technolo-
gy development depends on the company’s ability
to set up two-speed digital transformation and on
finding ways to bypass old IT infrastructure to lever-
age the new ways of working.
The capabilities required to work in a high-paced,
constantly changing environment are relatively
similar across industries. Specialists are hence in
ever-higher demand as companies wage war to at-
tract the best talent. Across almost the entire board,
companies experience that they are able to attract
talent, but that they have a more difficult time
retaining that talent. This prompts a future where
talent is constantly on the move, and finding effec-
tive ways for digital specialists to work with persons
with deep industry knowledge will be of the utmost
importance to gain the most from the available
resources. Given the difficulty of attracting and
retaining digital talent, some companies are already
in the deep end of working with external partners
to create digital ecosystems, while other companies
look toward this as a natural evolution.
Thank You
This study is based on the experiences and view-
points of executives from leading Swedish com-
panies. We thank all the participating companies
for their reflections and sharing of best practices,
which have provided valuable perspectives on the
efforts toward getting digital transformation right.

All rights reserved, July, 2017 - Authors, QVARTZ, Microsoft
About the Authors
The report is authored by Joen
Averstad, Engagement Partner
with 10 years’ experience in top-
tier management consulting, and
Jacob Westerberg, Manager with
5 years’ experience from working
at QVARTZ.
Senior Consultant Mattias
Karlsson, a team from the com-
pany’s Digital Transformation
Practice as well as contributors
in QVARTZ’ other core markets,
Denmark and Norway, have
provided further support.
About QVARTZ
QVARTZ is a top-tier manage-
ment consulting company with
offices in Copenhagen, Stock-
holm, Oslo, Hamburg, and New
York working with top-level
management to solve strategic
challenges in leading companies.
Partners Jerker Rosander and
Johan Lemchen head QVARTZ’
Digital Transformation Practice
in Sweden as well as the partner-
ship with Microsoft delivering
digital strategy and transforma-
tion projects to clients.
About Microsoft
Microsoft has commissioned this
Digital Transformation report
to create a benchmark and en-
able the sharing of trends and
best practices among Swedish
companies. Microsoft is a global
leader in digital solutions, work-
ing to empower every person
and every organization on the
planet to achieve more.
Erik Bertman is COO in Microsoft
Sweden, and leads the unfold-
ing of Microsoft’s digitalization
strategy and approach in the
Swedish market.
Microsoft and QVARTZ have developed The Digital Transformation Report 2017.
Joen Averstad Jacob Westerberg Jerker Rosander Johan Lemchen Erik Bertman
Contributors

Digital
Transformation
Report 2017

Digital transformation report sweden july 2017

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