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A major research initiative at the MIT Sloan School of Management 
“The Vision Thing”: Developing a 
Transformative Digital Vision
2 
We had a vision, and 
the vision was to be the 
first company to be fully 
digital end to end. 
- Angela Ahrendts, 
CEO Burberry 
Introduction 
“We had a vision, and the vision was to 
be the fi rst company to be fully digital 
end-to-end. The [resulting] experience 
would be that a customer will have 
access to Burberry across all devices, 
anywhere in the world.”1 
With this vision, CEO Angela Ahrendts 
drove a digital transformation within 
Burberry, a 155-year-old fashion company 
and an iconic UK brand. Burberry’s 
executive team used the power of digital 
technologies to reinvigorate the brand, 
create a consistent customer experience 
on a global scale and deliver consistently 
healthy fi nancial results. 
Digital technologies are having a 
pervasive infl uence on business, 
transforming the customer experience, 
enhancing productivity in operations 
and improving the way employees 
collaborate. Yet, many organizations 
fail to capture the full potential of digital 
technologies because their leaders lack 
a transformative vision. Executives with 
an incremental vision get what they aim 
for – incremental improvement. Those 
who realize the transformative power of 
digital can achieve much more. 
A bottom-up approach does not deliver 
successful digital transformation. 
Only the top layer of a company can 
create a compelling vision of the future 
and communicate it throughout the 
organization. Often, the real benefi ts 
of transformation come from seeing 
potential synergies across silos, and then 
creating the conditions through which 
everyone can begin to unlock that value. 
Only senior executives are positioned to 
drive this level of change. 
Over the last three years, Capgemini 
Consulting and the MIT Center for 
Digital Business have been researching 
the impact of digital technologies 
on the reach and the performance 
of organizations. We identifi ed two 
key dimensions for successful digital 
transformation: the “What” and the 
“How.” The “What” represents digital 
intensity, a measure of the strength 
of digital activities of an organization. 
The “How” represents transformation 
management intensity, a measure of 
an organization’s vision, governance, 
and skills. Companies that are strong 
in digital intensity conduct numerous 
digital initiatives, but only effective 
transformation management helps them 
identify and deliver digital investments 
in a powerful and well-coordinated way. 
We call companies that excel in both 
dimensions the “Digirati” (see Figure 1).
3 
Transformation Management Intensity 
Figure 1: Four levels of Digital Mastery 
Source: Capgemini Consulting and MIT Center for Digital Business – “Digital Transformation: A roadmap for billion-dollar organizations”1 
Executives with an 
incremental vision get 
what they aim for 
– incremental 
improvement. 
Digital Intensity 
Beginners 
 Management sceptical of the business value of 
advanced digital technologies 
 May be carrying out some experiments 
 Immature digital culture 
Digirati 
 Strong overarching digital vision 
 Good governance 
 Many digital initiatives generating business 
value in measurable ways 
 Strong digital culture 
Conservatives 
 Overarching digital vision exists, but may be 
underdeveloped 
 Few advanced digital features, though traditional 
digital capabilities may be mature 
 Strong digital governance across silos 
 Taking active steps to build digital skills and culture 
Fashionistas 
 Many advanced digital features (such as social, 
mobile) in silos 
 No overarching vision 
 Underdeveloped coordination 
 Digital culture may exist in silos 
Digital intensity measures how advanced digital 
initiatives are within an organization. This includes 
investments in customer experience, operational 
processes, business model transformation, as well 
as digital capabilities. 
Transformation management intensity measures 
senior executives’ capability to drive change 
throughout the organization. This includes creating 
and communicating a clear vision, establishing 
governance mechanisms, facilitating cross-silo 
coordination, and building a digital-ready culture. 
While executives within the Digirati 
have integrated the power of digital 
transformation into their vision and 
strategies, too few organizations today 
understand what it means to have a 
transformative digital vision. Therefore, 
we set out to answer three critical 
questions: 
 Are executives paying increasing 
attention to digital technologies? 
 How are executives expressing their 
digital visions? 
 How can executives frame a 
transformative digital vision?
Are executives paying increasing attention 
to digital technologies? 
We analyzed the annual reports of the 
Forbes Global 100 companies from 
2009-2011. Based on our analysis, 
we found that awareness of “digital” 
has grown by 19% between 2009 
and 2011 (see appendix on research 
methodology). In 2011, 43% of Forbes 
100 companies referenced “digital” in 
their annual reports, compared with 36% 
in 2009 (see Figure 2). This growth in 
digital awareness shows that executives 
are paying increasing attention to the 
potential impact of digital transformation. 
Digital awareness also differs by 
geography. More than half of Fortune 
Global 100 companies in North America 
emphasized “digital” in their annual 
reports while fewer companies in the 
rest of the world were digitally aware (see 
Figure 3). 
But, awareness of the digital trend is 
not suffi cient to drive transformational 
change. The true question is “how many 
organizations have encapsulated this 
trend within a transformative vision for 
their company?” Among the Digirati, 
82% of respondents agreed that their 
senior leaders shared a common vision 
of digital transformation. A majority also 
noted that leaders’ visions involve radical 
change and that a roadmap exists 
to turn that transformative vision into 
reality (see Figure 4). The picture is quite 
different in the other categories. Less 
than half of respondents agreed that 
their senior leaders shared a common 
vision for digital transformation and only 
17% stated that a roadmap existed. 
Are digital technologies gaining 
increased attention from large-company 
executives? Yes, and North American 
fi rms appear to be ahead of the curve. 
But only the Digirati are distinguishing 
themselves from their peers by translating 
that awareness into a transformational 
vision of the future. 
4 
Figure 2: Percentage of Digitally-Aware Companies: Measured by Mention 
of “Digital” in Annual Reports, Forbes Global 100 Companies, 2009-2011 
36% 
40% 
2009 2010 
43% 
2011 
Source: Capgemini Consulting analysis, Forbes, Company annual reports 
Figure 3: Percentage of Companies in key Geographies that are Digitally 
Aware, Forbes Global 100 Companies, 2011 
55% 
43% 
30% 
North America Europe Rest of world 
Source: Capgemini Consulting analysis based on 2011 Forbes Global 100 list, 
Company annual reports
5 
Figure 4: Having a transformational vision distinguishes the Digirati from their peers 
Senior executives share a 
common vision of how 
the business should 
change through digital 
technologies 
Non-Digirati* Digirati 
Senior executives have a 
digital transformation vision 
that crosses internal 
organizational units 
Senior executives have a 
digital transformation vision 
that involves radical 
changes compared to the 
way we have traditionally 
done business 
Senior executives and 
middle managers share a 
common vision of digital 
transformation 
18% 
82% 
25% 
67% 
26% 
71% 
47% 
28% 
25% 
15% 
82% 
51% 
25% 
24% 
18% 
25% 57% 
62% 
17% 
21% 
Agree Neutral Disagree 
*Fashionistas, Conservatives and Beginners 
Source: Capgemini Consulting – MIT Center for Digital Business Research, Survey of 391 firms, 2012 
Among the Digirati, 82% of respondents agreed that their senior leaders shared a 
common vision of digital transformation. For other firms, this figure is less than half.
How are executives 
expressing their digital visions? 
In our research, we interviewed over 150 
executives to understand how they were 
integrating digital transformation into their 
strategic visions. Our results showed 
that leaders typically express a digital 
vision from one of three perspectives: 
digitizing operational processes, 
digitizing customer experience or a 
combination of the two. These different 
approaches refl ect both the priorities 
of the organization and the nature of 
competition in a given industry. 
Boeing believes the future 
of the aviation industry 
lies in “the digital 
airline.” 
Digitizing Operational 
Processes 
Organizations whose fortunes are 
closely tied to the performance of their 
supply chain and core operations often 
start with this approach. The business 
drivers of such digital visions are often 
productivity/effi ciency and the need 
to integrate disparate operations. 
The intent is to increase visibility and 
decision-making speed or to collaborate 
across silos. 
For example, Boeing crafted a vision that 
is focused on operational excellence and 
how digital technologies and data can 
help the company improve: 
“Boeing believes the future of the 
aviation industry lies in ‘the digital airline.’ 
To succeed in the marketplace, airlines 
and their engineering and IT teams 
must take advantage of the increasing 
amount of data coming off of airplanes, 
6 
using advanced analytics and airplane 
technology to take operational effi ciency 
to the next level.”2 
Boeing goes one step further by clearly 
defi ning what a “digital airline” means in 
practice: 
“The key to the digital airline is delivering 
secure, detailed operational and 
maintenance information to the people 
who need it most, when they need it 
most. That means that engineering will 
share data with IT, but also with the 
fi nance, accounting, operational and 
executive functions.”3 
Designing a vision based on operational 
excellence is by no means limited 
to manufacturing and engineering 
companies. For instance, in 2009, 
Procter & Gamble put operational 
excellence at the center of its digital 
vision: 
“Centralization and digitization will 
improve productivity and create 
deeper, more sustainable organizational 
capabilities. Digitizing P&G will enable 
us to manage the business in real time 
and on a demand-driven basis. We’ll 
be able to collaborate more effectively 
and effi ciently, inside and outside the 
company.”4 
Digitizing Customer 
Experience 
Many organizations have chosen the 
customer experience as the focal point 
of their digital transformation. These 
organizations focus their digital efforts 
on improving understanding of customer 
behavior through better use of analytics 
and digital channels. There are three key 
drivers for a customer experience-driven 
digital vision: delivering an integrated 
customer experience, using digital 
to establish a better connection with 
consumers and using digital tools to 
understand customer behavior. 
Organizations that focus on delivering 
an integrated customer experience tend 
to focus on multi-channel coherence 
and a personalized experience for the 
customer. For instance, an executive 
at an apparel company states that a 
digital customer experience will impact, 
“the way that the consumer accesses 
our brand, gives us feedback on it and 
expects a tailored experience…our 
products, where they buy them, how 
they buy them – I think it’s going to be a 
revolution.”5 
The second driver is to use digital as a 
means to establish stronger connections 
with consumers. For instance, Adam 
Brotman, Chief Digital Offi cer of 
Starbucks, shared this vision: 
“Digital has to be the way we can tell 
our story, build our brand and have a 
Digital has to be the way relationship with our customer.”6 
we can tell our story, 
build our brand and have 
a relationship with our 
customer. 
- Adam Brotman, Chief 
Digital Officer, Starbucks
7 
Burberry’s CEO Angela Ahrendts has a 
similar vision with a focus on ubiquitous 
access to the brand: 
“To create a company where anyone 
who wanted to touch the brand could 
have access to it.”7 
Equally, cosmetics giant L’Oreal 
describes how digital capabilities 
can enhance the emotional link with 
consumers: 
“The digital world multiplies the ways 
our brands can create an emotion-filled 
relationship with their customers.”8 
The third driver for a customer 
experience-driven vision is using digital 
tools to understand and influence 
customer behavior. For instance, 
Novartis says in its annual report: 
“The technologies we use in our daily 
lives, such as smartphones and tablet 
devices, could make a real difference 
in helping patients to manage their own 
health. We are exploring ways to use 
these tools to improve compliance rates 
and enable healthcare professionals to 
monitor patient progress remotely.”9 
Similarly, Commonwealth Bank of 
Australia sees new digital technologies 
as a key way of integrating customer 
inputs in its co-creation efforts: 
“We are progressively applying new 
technology to enable customers to play 
a greater part in product design. That 
helps us create more intuitive products 
and services, readily understandable to 
our customers and more tailored to their 
individual needs.”10 
Changing Business Models 
A third category combines visions 
focused on operational process and 
customer experience to create new 
business models. Organizations 
with this approach embrace digital 
transformation, even if it represents 
a fundamental departure from their 
current mode of operation. There are 
broadly two motivations for transforming 
business models. 
The first is often defensive, focused on 
preserving long-term survival. Services 
and information-based industries 
are now going through fundamental 
structural changes. The rapid pace of 
change in these industries is forcing 
companies to redesign their business 
models. 
Take the case of the French directory 
services provider, Pages Jaunes. Facing 
a 10% annual decline in its core markets, 
the company was reliant on a dying 
business model based on thick yellow 
books. Pages Jaunes’ CEO articulated a 
clear vision of how the company would 
transform its business model through 
digital. The company was not in the 
business of producing paper directories; 
it was in the business of connecting small 
and medium-sized businesses to local 
customers. Paper is just an outdated 
technology; digital is a better one.11 
This vision set the stage for a radical 
redesign of the company and its 
products. The company’s strategic focus 
is now on digital advertising, website 
design and mobile directories, not thick 
paper books. 
Opportunity – not crisis – is the second 
driver of business model change. 
Companies with this type of vision seek 
to use digital technologies to extend their 
reach. Banco Santander, for instance, 
highlights a vision for how digital 
technologies can help it break into new 
market segments: 
“Our objective for the coming years is 
to exploit the growth opportunities in 
segments where the bank has a low 
presence, such as companies, insurance 
and cards. Specifically, we are making 
significant investments in IT systems 
and staff to be able to take advantage of 
these opportunities.”12 
Others go one step further, seeing digital 
visions as a way to prepare a company 
for the next long term shift in their 
industry. General Electric, for instance, 
focuses its vision on the coming wave of 
smart connected devices. 
“I don’t see GE as a software company. 
However, we will lead in the productivity 
of our installed products and their 
ecosystems. This will require leadership 
of the ‘Industrial Internet,’ making 
infrastructure systems more intelligent.”13 
According to our research, there is no one 
right way to express a vision for digital 
transformation. Executives articulated 
a vision based on the existing core 
capabilities of their organizations, and/or 
the specific industry context they faced. 
Nevertheless, our research shows that 
digirati craft an inspiring vision of the 
future in which digital technologies play 
a fundamental role.
How can executives frame 
a transformative digital vision? 
Digital transformation is a tectonic shift, 
causing companies to rethink how they 
structure themselves and compete in the 
market. Leaders can help negotiate this 
transition by proactively defi ning what a 
radically different, digital future will look 
like. To begin crafting this vision, leaders 
must fi rst identify the benefi ts they want 
to gain through digital technologies, and 
which strategies will engage customers, 
employees and investors. 
Creating a vision is never a completely 
linear process. However, our research 
shows that Digirati companies go 
through three distinct steps to formulate 
their digital visions: 
 Defi ne a clear target 
 Engage the organization 
 Evolve the vision over time 
Defi ne a Clear Target: 
First, executives need to lay out clearly 
the intent of the vision (what needs to 
change) as well as the outcome (the 
resulting benefi ts for the company, its 
customers and its employees). This 
will help employees visualize what the 
future of the organization will look like. 
Here, leaders should strive to be as 
8 
industrialization, the second on creating 
a customer-centric organization, and 
the third on automation. The original 
vision remains a key inspiration behind 
improvements in operations and the 
customer experience, even as the 
company has extended its vision through 
successive waves of capability. 
Evolve the Vision Over Time: 
Organizations in all industries are still 
struggling to understand the long-term 
impact of digital technologies. 
Moreover, the vision of the changed 
organization will evolve in concert with 
the new possibilities created by technical 
advances and improved capabilities. 
In 2009 Procter & Gamble started with 
a vision to be completely digitized. By 
2010, the company evolved its vision 
to create a real-time operating and 
decision-making environment. 
“We are accelerating innovation by using 
digital technology to create visibility from 
molecule-creation to the store shelf.”15 
A company’s digital vision is not the 
sole responsibility of its senior leaders. 
Nor should that vision remain static 
over time. Executives need to provide a 
direction that is clear enough to mobilize 
their organization, but that also allows 
employees to actively participate in its 
refi nement. In that way, the vision will 
evolve in concert with the implementation 
of the company’s digital transformation. 
Leaders need to keep 
the vision specific enough 
to give employees a clear 
direction, while giving 
them the flexibility 
to innovate and build 
upon it. 
specifi c as possible. For instance, Pages 
Jaunes’ CEO clearly stated his intent 
to move beyond thick paper directories 
while retaining the company’s valuable 
role in connecting small to medium 
businesses with local customers. He 
coupled that intent with a concrete 
outcome: the company would earn 
75% of its revenues from digital services 
within the next 3 to 5 years. This 
combination of intent and outcome gives 
everyone in the organization a clear set 
of guidelines to envision new ways of 
working. It also ensures that the focus 
of the transformative vision is not on 
the technology itself but on different 
ways of operating – identifying new 
ways for digital technology to improve 
performance and customer satisfaction. 
Engage the Organization: 
After articulating the intent and outcome 
of a digital vision, the next step is to 
engage the organization in achieving that 
outcome. While they have the important 
task of sketching out a clear picture of the 
future, executives should let the broader 
organization fi ll in the details. Leaders 
need to keep the vision specifi c enough 
to give employees a clear direction, while 
giving them the fl exibility to innovate and 
build upon it. 
Asian Paints, India’s largest paint 
company, formulated a vision that 
combined operational effi ciency with 
developing new ways to serve its 
customers.14 This vision did not defi ne 
every step of the transformation. It 
provided a clear mandate for change 
while enabling people throughout the 
company to refi ne the details over 
time. The company embarked on its 
digital transformation several years ago 
and has been through three waves of 
transformation - each building on top 
of the other. The fi rst wave focused on
9 
Conclusion 
An inspiring digital vision is the 
cornerstone of successful digital 
transformation. Though many executives 
appear to be aware of its impact on their 
business, few have incorporated digital 
into a compelling strategic vision of the 
future. These visions do not focus simply 
on implementing new technologies. 
Instead, they illustrate how organizations 
can enhance the experience of their 
customers, streamline their operations 
or transform their business models. This 
is no small task, and it should not be left 
to senior leaders alone. Crafting a vision 
for digital transformation is a journey. 
Executives plant the seed at the top, 
but then they must engage people at all 
levels in the company to make the vision 
live and grow. 
Research Methodology 
This research is part of a three-year collaboration between the MIT Center for Digital Business and Capgemini Consulting aimed 
at investigating the ways in which large traditional companies around the world are managing – and benefi ting from – digital 
transformation. In Phase 1, we spoke to over 150 senior executives from large enterprises around the globe. For further details 
and insights from this research, please refer to Digital Transformation: A Road-Map for Billion-Dollar Organizations.16 This led to 
our insights about the importance and characteristics of transformative digital vision. In Phase 2, we extended our research to 
benchmark digital practices around the globe. We gathered surveys from 469 senior executives in 391 large companies around 
the world. For further details on the insights from this phase, please refer to The Digital Advantage: How digital leaders outperform 
their peers in every industry.17 
To gauge awareness of the digital phenomenon, we analyzed organizations in the Forbes Global 100 list. Using the 2012 list, we 
measured digital awareness as the number of times that an organization used the word ‘digital’ in its annual report in the period 
2009-2011 in the context of industry trends, company initiatives or the CEO/Chairman’s letters to shareholders.
References 
1 Angela Ahrendts video uploaded by SalesForce.com, August 2011 http://www.youtube.com/watch?v=tpjMWNF9JqY 
2 Company website - http://www.boeing.com/boeing/commercial/aviationservices/integrated-services/digital-airline.page 
3 Company website - http://www.boeing.com/boeing/commercial/aviationservices/integrated-services/digital-airline.page 
4 P&G CEO Robert McDonald in Annual Report 2011, Page 5 
5 Capgemini Consulting – MIT Center for Digital Business Research, 2012 
6 Venture Beat, “How Starbucks is turning itself into a tech company,” June 2012 
7 CNN, “Burberry’s Angela Ahrendts: High tech’s fashion model,” June 2012 
8 Capgemini Consulting Digital Leadership Series, An interview with Marc Menesguen, Managing Director, Strategic Marketing 
10 
for L’Oreal http://ebooks.capgemini-consulting.com/Marc-Menesguen-Interview/index.html 
9 Novartis CEO Joseph Jimenez in Annual Report 2012, Page 14 
10 Commonwealth Bank of Australia CEO Ian Narev in Annual Report 2012, Page 5 
11 Capgemini Consulting and MIT Center for Digital Business – “Digital Transformation: A roadmap for billion-dollar 
organizations” http://www.capgemini-consulting.com/digital-transformation-a-road-map-for-billion-dollar-organizations 
12 Banco Santander CEO Alfredo Saenz in Letter from CEO 2012, Page 17 
13 GE Chairman and CEO Jeffrey Immelt in Annual Report 2011, Page 7 
14 Capgemini Consulting Digital Leadership Series, An interview with Manish Choksi, Head of Strategy and Chief Information 
Officer of Asian Paints http://ebooks.capgemini-consulting.com/Manish-Choksi-Interview/index.html 
15 P&G CEO Robert McDonald in Annual Report 2011, Page 5 
16 Capgemini Consulting and MIT Center for Digital Business – “Digital Transformation: A roadmap for billion-dollar 
organizations” http://www.capgemini-consulting.com/digital-transformation-a-road-map-for-billion-dollar-organizations 
17 Capgemini Consulting and MIT Center for Digital Business –“The Digital Advantage: How digital leaders outperform their 
peers in every industry” http://www.capgemini-consulting.com/ebook/The-Digital-Advantage/index.html
Authors 
George Westerman 
Research Scientist at MIT Center for 
Digital Business 
georgew@mit.edu 
Michael Welch 
Visiting Scientist at MIT Center for 
Digital Business 
michael.welch@capgemini.com 
Didier Bonnet 
Global Head of Practices at 
Capgemini Consulting 
didier.bonnet@capgemini.com 
Digital Transformation 
Research Institute 
dtri.in@capgemini.com 
Jerome Buvat and Subrahmanyam KVJ from the Digital Transformati on Research Insti tute worked on this paper. 
Capgemini Consulting is the global strategy and transformation 
consulting organization of the Capgemini Group, specializing 
in advising and supporting enterprises in significant 
transformation, from innovative strategy to execution and with 
an unstinting focus on results. With the new digital economy 
creating significant disruptions and opportunities, our global 
team of over 3,600 talented individuals work with leading 
companies and governments to master Digital Transformation, 
drawing on our understanding of the digital economy and 
our leadership in business transformation and organizational 
change. 
Find out more at: 
http://www.capgemini-consulting.com/ 
Rightshore® is a trademark belonging to Capgemini 
About Capgemini and the 
Collaborative Business Experience 
With more than 125,000 people in 44 countries, Capgemini 
is one of the world’s foremost providers of consulting, 
technology and outsourcing services. The Group reported 2012 
global revenues of EUR 10.3 billion. Together with its clients, 
Capgemini creates and delivers business and technology 
solutions that fi t their needs and drive the results they want. A 
deeply multicultural organisation, Capgemini has developed its 
own way of working, the Collaborative Business ExperienceTM, 
and draws on Rightshore®, its worldwide delivery model. 
Learn more about us at www.uk.capgemini.com 
Capgemini Consulting is the strategy and transformation consulting brand of Capgemini Group. The information contained in this document is proprietary. 
© 2013 Capgemini. All rights reserved.

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“The vision thing” developing a transformative digital vision - capgemini consulting - digital transformation

  • 1. 101011010010 101011010010 101011010010 A major research initiative at the MIT Sloan School of Management “The Vision Thing”: Developing a Transformative Digital Vision
  • 2. 2 We had a vision, and the vision was to be the first company to be fully digital end to end. - Angela Ahrendts, CEO Burberry Introduction “We had a vision, and the vision was to be the fi rst company to be fully digital end-to-end. The [resulting] experience would be that a customer will have access to Burberry across all devices, anywhere in the world.”1 With this vision, CEO Angela Ahrendts drove a digital transformation within Burberry, a 155-year-old fashion company and an iconic UK brand. Burberry’s executive team used the power of digital technologies to reinvigorate the brand, create a consistent customer experience on a global scale and deliver consistently healthy fi nancial results. Digital technologies are having a pervasive infl uence on business, transforming the customer experience, enhancing productivity in operations and improving the way employees collaborate. Yet, many organizations fail to capture the full potential of digital technologies because their leaders lack a transformative vision. Executives with an incremental vision get what they aim for – incremental improvement. Those who realize the transformative power of digital can achieve much more. A bottom-up approach does not deliver successful digital transformation. Only the top layer of a company can create a compelling vision of the future and communicate it throughout the organization. Often, the real benefi ts of transformation come from seeing potential synergies across silos, and then creating the conditions through which everyone can begin to unlock that value. Only senior executives are positioned to drive this level of change. Over the last three years, Capgemini Consulting and the MIT Center for Digital Business have been researching the impact of digital technologies on the reach and the performance of organizations. We identifi ed two key dimensions for successful digital transformation: the “What” and the “How.” The “What” represents digital intensity, a measure of the strength of digital activities of an organization. The “How” represents transformation management intensity, a measure of an organization’s vision, governance, and skills. Companies that are strong in digital intensity conduct numerous digital initiatives, but only effective transformation management helps them identify and deliver digital investments in a powerful and well-coordinated way. We call companies that excel in both dimensions the “Digirati” (see Figure 1).
  • 3. 3 Transformation Management Intensity Figure 1: Four levels of Digital Mastery Source: Capgemini Consulting and MIT Center for Digital Business – “Digital Transformation: A roadmap for billion-dollar organizations”1 Executives with an incremental vision get what they aim for – incremental improvement. Digital Intensity Beginners  Management sceptical of the business value of advanced digital technologies  May be carrying out some experiments  Immature digital culture Digirati  Strong overarching digital vision  Good governance  Many digital initiatives generating business value in measurable ways  Strong digital culture Conservatives  Overarching digital vision exists, but may be underdeveloped  Few advanced digital features, though traditional digital capabilities may be mature  Strong digital governance across silos  Taking active steps to build digital skills and culture Fashionistas  Many advanced digital features (such as social, mobile) in silos  No overarching vision  Underdeveloped coordination  Digital culture may exist in silos Digital intensity measures how advanced digital initiatives are within an organization. This includes investments in customer experience, operational processes, business model transformation, as well as digital capabilities. Transformation management intensity measures senior executives’ capability to drive change throughout the organization. This includes creating and communicating a clear vision, establishing governance mechanisms, facilitating cross-silo coordination, and building a digital-ready culture. While executives within the Digirati have integrated the power of digital transformation into their vision and strategies, too few organizations today understand what it means to have a transformative digital vision. Therefore, we set out to answer three critical questions:  Are executives paying increasing attention to digital technologies?  How are executives expressing their digital visions?  How can executives frame a transformative digital vision?
  • 4. Are executives paying increasing attention to digital technologies? We analyzed the annual reports of the Forbes Global 100 companies from 2009-2011. Based on our analysis, we found that awareness of “digital” has grown by 19% between 2009 and 2011 (see appendix on research methodology). In 2011, 43% of Forbes 100 companies referenced “digital” in their annual reports, compared with 36% in 2009 (see Figure 2). This growth in digital awareness shows that executives are paying increasing attention to the potential impact of digital transformation. Digital awareness also differs by geography. More than half of Fortune Global 100 companies in North America emphasized “digital” in their annual reports while fewer companies in the rest of the world were digitally aware (see Figure 3). But, awareness of the digital trend is not suffi cient to drive transformational change. The true question is “how many organizations have encapsulated this trend within a transformative vision for their company?” Among the Digirati, 82% of respondents agreed that their senior leaders shared a common vision of digital transformation. A majority also noted that leaders’ visions involve radical change and that a roadmap exists to turn that transformative vision into reality (see Figure 4). The picture is quite different in the other categories. Less than half of respondents agreed that their senior leaders shared a common vision for digital transformation and only 17% stated that a roadmap existed. Are digital technologies gaining increased attention from large-company executives? Yes, and North American fi rms appear to be ahead of the curve. But only the Digirati are distinguishing themselves from their peers by translating that awareness into a transformational vision of the future. 4 Figure 2: Percentage of Digitally-Aware Companies: Measured by Mention of “Digital” in Annual Reports, Forbes Global 100 Companies, 2009-2011 36% 40% 2009 2010 43% 2011 Source: Capgemini Consulting analysis, Forbes, Company annual reports Figure 3: Percentage of Companies in key Geographies that are Digitally Aware, Forbes Global 100 Companies, 2011 55% 43% 30% North America Europe Rest of world Source: Capgemini Consulting analysis based on 2011 Forbes Global 100 list, Company annual reports
  • 5. 5 Figure 4: Having a transformational vision distinguishes the Digirati from their peers Senior executives share a common vision of how the business should change through digital technologies Non-Digirati* Digirati Senior executives have a digital transformation vision that crosses internal organizational units Senior executives have a digital transformation vision that involves radical changes compared to the way we have traditionally done business Senior executives and middle managers share a common vision of digital transformation 18% 82% 25% 67% 26% 71% 47% 28% 25% 15% 82% 51% 25% 24% 18% 25% 57% 62% 17% 21% Agree Neutral Disagree *Fashionistas, Conservatives and Beginners Source: Capgemini Consulting – MIT Center for Digital Business Research, Survey of 391 firms, 2012 Among the Digirati, 82% of respondents agreed that their senior leaders shared a common vision of digital transformation. For other firms, this figure is less than half.
  • 6. How are executives expressing their digital visions? In our research, we interviewed over 150 executives to understand how they were integrating digital transformation into their strategic visions. Our results showed that leaders typically express a digital vision from one of three perspectives: digitizing operational processes, digitizing customer experience or a combination of the two. These different approaches refl ect both the priorities of the organization and the nature of competition in a given industry. Boeing believes the future of the aviation industry lies in “the digital airline.” Digitizing Operational Processes Organizations whose fortunes are closely tied to the performance of their supply chain and core operations often start with this approach. The business drivers of such digital visions are often productivity/effi ciency and the need to integrate disparate operations. The intent is to increase visibility and decision-making speed or to collaborate across silos. For example, Boeing crafted a vision that is focused on operational excellence and how digital technologies and data can help the company improve: “Boeing believes the future of the aviation industry lies in ‘the digital airline.’ To succeed in the marketplace, airlines and their engineering and IT teams must take advantage of the increasing amount of data coming off of airplanes, 6 using advanced analytics and airplane technology to take operational effi ciency to the next level.”2 Boeing goes one step further by clearly defi ning what a “digital airline” means in practice: “The key to the digital airline is delivering secure, detailed operational and maintenance information to the people who need it most, when they need it most. That means that engineering will share data with IT, but also with the fi nance, accounting, operational and executive functions.”3 Designing a vision based on operational excellence is by no means limited to manufacturing and engineering companies. For instance, in 2009, Procter & Gamble put operational excellence at the center of its digital vision: “Centralization and digitization will improve productivity and create deeper, more sustainable organizational capabilities. Digitizing P&G will enable us to manage the business in real time and on a demand-driven basis. We’ll be able to collaborate more effectively and effi ciently, inside and outside the company.”4 Digitizing Customer Experience Many organizations have chosen the customer experience as the focal point of their digital transformation. These organizations focus their digital efforts on improving understanding of customer behavior through better use of analytics and digital channels. There are three key drivers for a customer experience-driven digital vision: delivering an integrated customer experience, using digital to establish a better connection with consumers and using digital tools to understand customer behavior. Organizations that focus on delivering an integrated customer experience tend to focus on multi-channel coherence and a personalized experience for the customer. For instance, an executive at an apparel company states that a digital customer experience will impact, “the way that the consumer accesses our brand, gives us feedback on it and expects a tailored experience…our products, where they buy them, how they buy them – I think it’s going to be a revolution.”5 The second driver is to use digital as a means to establish stronger connections with consumers. For instance, Adam Brotman, Chief Digital Offi cer of Starbucks, shared this vision: “Digital has to be the way we can tell our story, build our brand and have a Digital has to be the way relationship with our customer.”6 we can tell our story, build our brand and have a relationship with our customer. - Adam Brotman, Chief Digital Officer, Starbucks
  • 7. 7 Burberry’s CEO Angela Ahrendts has a similar vision with a focus on ubiquitous access to the brand: “To create a company where anyone who wanted to touch the brand could have access to it.”7 Equally, cosmetics giant L’Oreal describes how digital capabilities can enhance the emotional link with consumers: “The digital world multiplies the ways our brands can create an emotion-filled relationship with their customers.”8 The third driver for a customer experience-driven vision is using digital tools to understand and influence customer behavior. For instance, Novartis says in its annual report: “The technologies we use in our daily lives, such as smartphones and tablet devices, could make a real difference in helping patients to manage their own health. We are exploring ways to use these tools to improve compliance rates and enable healthcare professionals to monitor patient progress remotely.”9 Similarly, Commonwealth Bank of Australia sees new digital technologies as a key way of integrating customer inputs in its co-creation efforts: “We are progressively applying new technology to enable customers to play a greater part in product design. That helps us create more intuitive products and services, readily understandable to our customers and more tailored to their individual needs.”10 Changing Business Models A third category combines visions focused on operational process and customer experience to create new business models. Organizations with this approach embrace digital transformation, even if it represents a fundamental departure from their current mode of operation. There are broadly two motivations for transforming business models. The first is often defensive, focused on preserving long-term survival. Services and information-based industries are now going through fundamental structural changes. The rapid pace of change in these industries is forcing companies to redesign their business models. Take the case of the French directory services provider, Pages Jaunes. Facing a 10% annual decline in its core markets, the company was reliant on a dying business model based on thick yellow books. Pages Jaunes’ CEO articulated a clear vision of how the company would transform its business model through digital. The company was not in the business of producing paper directories; it was in the business of connecting small and medium-sized businesses to local customers. Paper is just an outdated technology; digital is a better one.11 This vision set the stage for a radical redesign of the company and its products. The company’s strategic focus is now on digital advertising, website design and mobile directories, not thick paper books. Opportunity – not crisis – is the second driver of business model change. Companies with this type of vision seek to use digital technologies to extend their reach. Banco Santander, for instance, highlights a vision for how digital technologies can help it break into new market segments: “Our objective for the coming years is to exploit the growth opportunities in segments where the bank has a low presence, such as companies, insurance and cards. Specifically, we are making significant investments in IT systems and staff to be able to take advantage of these opportunities.”12 Others go one step further, seeing digital visions as a way to prepare a company for the next long term shift in their industry. General Electric, for instance, focuses its vision on the coming wave of smart connected devices. “I don’t see GE as a software company. However, we will lead in the productivity of our installed products and their ecosystems. This will require leadership of the ‘Industrial Internet,’ making infrastructure systems more intelligent.”13 According to our research, there is no one right way to express a vision for digital transformation. Executives articulated a vision based on the existing core capabilities of their organizations, and/or the specific industry context they faced. Nevertheless, our research shows that digirati craft an inspiring vision of the future in which digital technologies play a fundamental role.
  • 8. How can executives frame a transformative digital vision? Digital transformation is a tectonic shift, causing companies to rethink how they structure themselves and compete in the market. Leaders can help negotiate this transition by proactively defi ning what a radically different, digital future will look like. To begin crafting this vision, leaders must fi rst identify the benefi ts they want to gain through digital technologies, and which strategies will engage customers, employees and investors. Creating a vision is never a completely linear process. However, our research shows that Digirati companies go through three distinct steps to formulate their digital visions:  Defi ne a clear target  Engage the organization  Evolve the vision over time Defi ne a Clear Target: First, executives need to lay out clearly the intent of the vision (what needs to change) as well as the outcome (the resulting benefi ts for the company, its customers and its employees). This will help employees visualize what the future of the organization will look like. Here, leaders should strive to be as 8 industrialization, the second on creating a customer-centric organization, and the third on automation. The original vision remains a key inspiration behind improvements in operations and the customer experience, even as the company has extended its vision through successive waves of capability. Evolve the Vision Over Time: Organizations in all industries are still struggling to understand the long-term impact of digital technologies. Moreover, the vision of the changed organization will evolve in concert with the new possibilities created by technical advances and improved capabilities. In 2009 Procter & Gamble started with a vision to be completely digitized. By 2010, the company evolved its vision to create a real-time operating and decision-making environment. “We are accelerating innovation by using digital technology to create visibility from molecule-creation to the store shelf.”15 A company’s digital vision is not the sole responsibility of its senior leaders. Nor should that vision remain static over time. Executives need to provide a direction that is clear enough to mobilize their organization, but that also allows employees to actively participate in its refi nement. In that way, the vision will evolve in concert with the implementation of the company’s digital transformation. Leaders need to keep the vision specific enough to give employees a clear direction, while giving them the flexibility to innovate and build upon it. specifi c as possible. For instance, Pages Jaunes’ CEO clearly stated his intent to move beyond thick paper directories while retaining the company’s valuable role in connecting small to medium businesses with local customers. He coupled that intent with a concrete outcome: the company would earn 75% of its revenues from digital services within the next 3 to 5 years. This combination of intent and outcome gives everyone in the organization a clear set of guidelines to envision new ways of working. It also ensures that the focus of the transformative vision is not on the technology itself but on different ways of operating – identifying new ways for digital technology to improve performance and customer satisfaction. Engage the Organization: After articulating the intent and outcome of a digital vision, the next step is to engage the organization in achieving that outcome. While they have the important task of sketching out a clear picture of the future, executives should let the broader organization fi ll in the details. Leaders need to keep the vision specifi c enough to give employees a clear direction, while giving them the fl exibility to innovate and build upon it. Asian Paints, India’s largest paint company, formulated a vision that combined operational effi ciency with developing new ways to serve its customers.14 This vision did not defi ne every step of the transformation. It provided a clear mandate for change while enabling people throughout the company to refi ne the details over time. The company embarked on its digital transformation several years ago and has been through three waves of transformation - each building on top of the other. The fi rst wave focused on
  • 9. 9 Conclusion An inspiring digital vision is the cornerstone of successful digital transformation. Though many executives appear to be aware of its impact on their business, few have incorporated digital into a compelling strategic vision of the future. These visions do not focus simply on implementing new technologies. Instead, they illustrate how organizations can enhance the experience of their customers, streamline their operations or transform their business models. This is no small task, and it should not be left to senior leaders alone. Crafting a vision for digital transformation is a journey. Executives plant the seed at the top, but then they must engage people at all levels in the company to make the vision live and grow. Research Methodology This research is part of a three-year collaboration between the MIT Center for Digital Business and Capgemini Consulting aimed at investigating the ways in which large traditional companies around the world are managing – and benefi ting from – digital transformation. In Phase 1, we spoke to over 150 senior executives from large enterprises around the globe. For further details and insights from this research, please refer to Digital Transformation: A Road-Map for Billion-Dollar Organizations.16 This led to our insights about the importance and characteristics of transformative digital vision. In Phase 2, we extended our research to benchmark digital practices around the globe. We gathered surveys from 469 senior executives in 391 large companies around the world. For further details on the insights from this phase, please refer to The Digital Advantage: How digital leaders outperform their peers in every industry.17 To gauge awareness of the digital phenomenon, we analyzed organizations in the Forbes Global 100 list. Using the 2012 list, we measured digital awareness as the number of times that an organization used the word ‘digital’ in its annual report in the period 2009-2011 in the context of industry trends, company initiatives or the CEO/Chairman’s letters to shareholders.
  • 10. References 1 Angela Ahrendts video uploaded by SalesForce.com, August 2011 http://www.youtube.com/watch?v=tpjMWNF9JqY 2 Company website - http://www.boeing.com/boeing/commercial/aviationservices/integrated-services/digital-airline.page 3 Company website - http://www.boeing.com/boeing/commercial/aviationservices/integrated-services/digital-airline.page 4 P&G CEO Robert McDonald in Annual Report 2011, Page 5 5 Capgemini Consulting – MIT Center for Digital Business Research, 2012 6 Venture Beat, “How Starbucks is turning itself into a tech company,” June 2012 7 CNN, “Burberry’s Angela Ahrendts: High tech’s fashion model,” June 2012 8 Capgemini Consulting Digital Leadership Series, An interview with Marc Menesguen, Managing Director, Strategic Marketing 10 for L’Oreal http://ebooks.capgemini-consulting.com/Marc-Menesguen-Interview/index.html 9 Novartis CEO Joseph Jimenez in Annual Report 2012, Page 14 10 Commonwealth Bank of Australia CEO Ian Narev in Annual Report 2012, Page 5 11 Capgemini Consulting and MIT Center for Digital Business – “Digital Transformation: A roadmap for billion-dollar organizations” http://www.capgemini-consulting.com/digital-transformation-a-road-map-for-billion-dollar-organizations 12 Banco Santander CEO Alfredo Saenz in Letter from CEO 2012, Page 17 13 GE Chairman and CEO Jeffrey Immelt in Annual Report 2011, Page 7 14 Capgemini Consulting Digital Leadership Series, An interview with Manish Choksi, Head of Strategy and Chief Information Officer of Asian Paints http://ebooks.capgemini-consulting.com/Manish-Choksi-Interview/index.html 15 P&G CEO Robert McDonald in Annual Report 2011, Page 5 16 Capgemini Consulting and MIT Center for Digital Business – “Digital Transformation: A roadmap for billion-dollar organizations” http://www.capgemini-consulting.com/digital-transformation-a-road-map-for-billion-dollar-organizations 17 Capgemini Consulting and MIT Center for Digital Business –“The Digital Advantage: How digital leaders outperform their peers in every industry” http://www.capgemini-consulting.com/ebook/The-Digital-Advantage/index.html
  • 11. Authors George Westerman Research Scientist at MIT Center for Digital Business georgew@mit.edu Michael Welch Visiting Scientist at MIT Center for Digital Business michael.welch@capgemini.com Didier Bonnet Global Head of Practices at Capgemini Consulting didier.bonnet@capgemini.com Digital Transformation Research Institute dtri.in@capgemini.com Jerome Buvat and Subrahmanyam KVJ from the Digital Transformati on Research Insti tute worked on this paper. Capgemini Consulting is the global strategy and transformation consulting organization of the Capgemini Group, specializing in advising and supporting enterprises in significant transformation, from innovative strategy to execution and with an unstinting focus on results. With the new digital economy creating significant disruptions and opportunities, our global team of over 3,600 talented individuals work with leading companies and governments to master Digital Transformation, drawing on our understanding of the digital economy and our leadership in business transformation and organizational change. Find out more at: http://www.capgemini-consulting.com/ Rightshore® is a trademark belonging to Capgemini About Capgemini and the Collaborative Business Experience With more than 125,000 people in 44 countries, Capgemini is one of the world’s foremost providers of consulting, technology and outsourcing services. The Group reported 2012 global revenues of EUR 10.3 billion. Together with its clients, Capgemini creates and delivers business and technology solutions that fi t their needs and drive the results they want. A deeply multicultural organisation, Capgemini has developed its own way of working, the Collaborative Business ExperienceTM, and draws on Rightshore®, its worldwide delivery model. Learn more about us at www.uk.capgemini.com Capgemini Consulting is the strategy and transformation consulting brand of Capgemini Group. The information contained in this document is proprietary. © 2013 Capgemini. All rights reserved.