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Monday, March 20, 2017

The case for digital reinvention 3









Instead, the survey indicates that distribution channels and marketing are the primary focus of digital strategies (and thus investments) at 49 percent of companies. That focus is sensible, given the extraordinary impact digitization has already had on customer interactions and the power of digital tools to target marketing investments precisely. By now, in fact, this critical dimension has become “table stakes” for staying in the game. Standing pat is not an option.

The question, it seems, looking at exhibits 4 and 5 in combination, is whether companies are overlooking emerging opportunities, such as those in supply chains, that are likely to have a major influence on future revenues and profits. That may call for resource reallocation. In general, companies that strategically shift resources create more value and deliver higher returns to shareholders. This general finding could be even more true as digitization progresses.

Our survey results also suggest companies are not sufficiently bold in the magnitude and scope of their investments (see sidebar “Structuring your digital reinvention”). Our research (Exhibit 6) suggests that the more aggressively they respond to the digitization of their industries—up to and including initiating digital disruption—the better the effect on their projected revenue and profit growth. The one exception is the ecosystem dimension: an overactive response to new hyperscale competitors actually lowers projected growth, perhaps because many incumbents lack the assets and capabilities necessary for platform strategies.



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