U.S. companies are often perceived as the world's digital leaders. But new research from Accenture reveals a different picture: U.S. companies, while strong on the financial front, are falling behind their global peers when it comes to digital performance.
Their current financial strength, however, holds the key to their future success as digitally driven organizations. Strong profitability is the very engine that will allow U.S. companies to "rotate to the new," if they have the courage to act—now.
New research from Accenture reveals that American companies achieve only average scores for digital performance when compared with their peers globally.
We learned this by analyzing the interplay between digital and financial performance for 180 U.S. companies across 12 industries. To help companies better understand the former, we created a Digital Performance Index. The index tracks 42 business activities and more than 100 detailed metrics across all areas of the business. We then combined and compared the results with Accenture's High Performance Business framework—our method of evaluating business performance against industry peers.
What we found is that most U.S. companies in our sample have much room for improvement on both digital and financial performance.
Digital High Performers are the companies that combine high business performance with a high digital index score. But, this group made up only 6 percent of U.S. businesses in our study.
SIONS TO GET RIGHT
A significant gulf exists between most U.S. companies and the true high performers of the digital world across four key dimensions.
Our study found Digital High Performers, the companies that combine high business performance with a high digital index score, not only exhibit a "digital first" mind-set across how they plan, make, sell and manage—but they also take the action to follow through. They invest in balanced digital strategies and especially outperform in improving digital processes and skills that will prepare them for future growth. This sets them apart from most U.S. companies.
To help ensure their future financial health, U.S. companies must increase their investments in four key areas of their operations and embrace a new set of no-regret capabilities:
Planning and executing digital strategies
Digital High Performers dedicate considerable time, resources and leadership to creating and executing a digital strategy. As part of this strategy, they immerse themselves in emerging digital ecosystems. U.S. Business Leaders, in contrast, fall short in building meaningful relationships with the wider ecosystem—be that establishing a social media presence, collaboration with industry partners or partnering with start-ups.
Designing and making digital products and services
While many U.S. businesses are creating digital products and services, relatively few are fundamentally changing how they design and make them. The approaches to innovation, R&D and managing production and supply chains remain much the same as they are in the analog world. More companies could look to crowdsourcing and partnerships for new ideas, and make use of the Internet of Things to streamline the supply chain.
Digital marketing, sales and customer service
Digital capabilities create new possibilities for interacting one-to-one with consumers. Yet relatively few Business Leaders are exploring the potential of personalizing the entire cycle of customer experience management, such as using location-based technologies to customize offers to consumers. Digital customer service is another area of opportunity. In contrast, Digital High Performers are using digital channels to create unique interactive experiences that are designed to grab—and retain—their customers' attention.
Building digital culture and operations
Digital High Performers are also digital on the inside. They continuously optimize their technology infrastructure and architecture, nurture and renew their culture, and support their people with skills development needed to better compete in the digital age. Business Leaders significantly underperform in this area, lagging in training their people with digital skills and on digital platforms as well as using digital channels to outsource work and projects.
Silicon Valley's digital culture and the rapid growth of digital native companies contribute to perception of the United States as the global locus for digital innovation.
But these companies are only one piece of the diverse U.S. business landscape. It is not about emulating Silicon Valley, but about encouraging and inspiring established Business Leaders of today to leverage their legacy businesses and grow into organizations that are future-ready.
Business Leaders have the tools and ability to change their fate. Their current financial strength holds the key to their future success as digitally driven organizations. Profitability today provides them with the engine that will allow them to "rotate to the new": a conscious and deliberate act of renewing and transforming the core business, while growing into new businesses and industries.
But that's if, and only if, they make a clear and deliberate commitment to targeted digital investments that support their longer-term strategic ambitions. Business Leaders are uniquely positioned to pivot wisely by balancing investments between near term and long term, between the core and the new businesses. This requires a higher degree of decisiveness and courage to act.
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The Digital High Performance research sought to analyze the interplay between digital and financial performance for 180 U.S. companies across 15 industries.
headquartered in the U.S.
11 Industry cuts include:
Communications, Electronics & High Tech, Media & Entertainment, Banking, Insurance, Travel Services, Industrial, Consumer Goods & Services, Retail, Energy, and Utilities.
Over 40,000 Data Points assessing performance and activities + financial performance data.
The Accenture Digital Performance Index tracks 42 business activities and more than 100 detailed metrics across all areas of the business, including strategy R&D, manufacturing, supply chain, marketing, sales, customer service, internal culture and operations. We then combined and compared the results with Accenture's High Performance Business framework—our method of evaluating business performance against industry peers. To support the framework, Accenture also evaluated 42 additional business activities and 117 detailed behavior metrics.
Learn more about the Digital Performance Index and view the global and industry results.
ACCENTURE DIGITAL PERFORMANCE INDEX
A cross-industry assessment framework based on a comprehensive review of publicly available information contained in investor materials, articles, interviews and corporate websites to check for evidence of digital enablement in specific activities and metrics within each of four business dimensions: plan, make, sell and manage.
HIGH PERFORMANCE BUSINESS FRAMEWORK
Comprises five components, each measured with a further set of equally weighted metrics.
Positioning for the future