Business leaders certainly recognize the power of digital technology to transform their organizations for future growth. Yet we talk to many executives whose companies still struggle to determine where and how to embrace digital to make themselves more competitive and prosperous. These companies know they need to be “more digital” to grow, but they don’t know what “more digital” actually means. More fundamentally, they can’t truly measure their progress.
Recently our team established an empirical link between deep and broad penetration of digital technologies in businesses and economies—what we call “Digital Density”—and quantifiable improvements in productivity that can accelerate competitiveness and economic growth. Crucially, our research also shows how to strategically approach investment in digital to achieve those results, and provides a framework for measuring the ultimate impact of digital investments.
This Digital Density Index is a comprehensive scorecard of more than 50 key indicators across four equally weighted areas of digitally led economic activity: Making Markets, Running Enterprises, Sourcing Inputs, and Fostering Enablers (see figure below). A higher score on the Digital Density Index reflects a broader and deeper adoption of digital technologies, as well as the skills, ways of working, and mindset shifts needed to realize their economic potential. We found that boosting a company’s score on the Digital Density Index can lead to greater productivity and, other things being equal, faster growth.
Areas of economic activity measured by the Digital Density index
The index also can be an important tool to help guide companies make key decisions about the countries and regions in which they should operate and target for new investments. Consider the figure below, which shows our research team’s ranking of 17 leading economies according to their Digital Density scores. The five most digitally dense countries are the Netherlands, the United States, Sweden, South Korea, and the United Kingdom. They would be more attractive than countries such as France, Italy and India to companies whose growth strategy is heavily reliant on the use of digital.
In other words, a bank that wants to drive aggressive adoption of its online banking capabilities or a manufacturer that intends to use the Industrial Internet of Things to monitor and optimize its assets would favor countries with greater Digital Density.
In fact, a strong digital business infrastructure across a region’s markets, supply chains and talent has become a critical criterion for companies seeking to expand or relocate. It’s just as important as access to natural resources, a good transportation system, and skilled people. That’s especially true as governments begin to seek to actively boost Digital Density to increase growth and national competitiveness of their economies. And for businesses whose prospects are closely tied to GDP, Digital Density may be a leading indicator of growth hotspots.
Digital Density scores for 17 leading economies
Leaders know they need to embrace digital technology as a source of growth and increased competitiveness. The question always has been, “Where and how much?” Accenture’s Digital Density Index can help show where companies should focus their digital strategy going forward and how they can get the best return on their digital technology investments.
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