For established companies in an increasingly digital world, making incremental changes to long-standing business models isn’t enough to succeed. To sustain growth in the face of disruptive threats from digital challengers, incumbent companies must overcome two challenges at the same time: innovating with new digital businesses while also digitizing core holdings. The findings of multiple McKinsey Global Surveys on digitization show the defining elements of strategies and operating models that are built for this duality of digital.
Balancing the dual imperatives of digital can be difficult but exceptionally rewarding. According to respondents to a McKinsey survey on digital strategy, digitized incumbents—companies that are more than 20 percent digital and are launching new digital businesses while transforming the core—are twice as likely as traditional incumbents to experience organic-revenue growth of 25 percent or higher (see sidebar, “The digital landscape”).
What’s more, respondents at digitized incumbents say that their organizations have a strong position in terms of market share. Digitized incumbents command a 20 percent share, on average, of their core markets. That is five percentage points more than what respondents at traditional incumbents report, and four times what respondents at digital natives do.
The best economic performers—that is, companies with organic revenue growth of 25 percent or higher during the past three years—are more likely than other companies to work on creating new digital businesses, according to a separate survey. While not all digitized incumbents are top economic performers, they are much more likely to be in that elite group than traditional incumbents are.
Credits: McKinsey & Company