In episode 62 of the Leadership Minute, Tony Uphoff digs into recent research from Deloitte on digital transformation, which looked at a decade’s worth of data from more than 4,600 companies, with the goal of assessing what impact, if any, digital transformation initiatives have on enterprise value as determined by market capitalization.
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00:40 — Tony says that the hardest part of any digital transformation is not in deciding whether or not to do it; it’s in determining whether or not you’re going to get a return on your investment.
01:13 — Deloitte’s research covered three main areas: How firms implemented a digital strategy, whether or not their technology investments were aligned with their strategy, and what efforts they made to prepare their people and processes for digital transformation.
01:42 — According to the analysis, the right combination of digital transformation actions can unlock as much as $1.25 trillion in additional market capitalization across all Fortune 500 companies. But the wrong combinations can erode market value, putting more than $1.5 trillion in market value at risk. Tony says that getting digital transformation right takes more than just ambition and bold investments.
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02:35 — Deloitte found three main areas that contribute to positive valuation: a clear digital strategy, technology investments aligned to strategy, and digital change. The research also shows that discrete technology investments aligned to strategy can drive twice the competitive market capitalization than simply “having” a digital strategy, and that certain technologies are quicker to yield value than others.
03:01 — Because it serves as a forcing function from the strategy to the operating model changes that come with adoption, cloud is the leading indicator that technology will drive returns if properly deployed, according to the research.
03:18 — If you can only do one thing, you should focus your efforts on technologies aligned to strategy because doing so will drive superior market value. Rest assured that the ROI is there, but execution is key, says Tony; it’s the link between strategy and action that is the determining factor in a company’s ability to derive the most value from its digital transformation.
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