A new global survey reveals the top traits of companies who are disrupting their competitors and transforming into successful software-driven, digital businesses. Here's what you can learn from them.
Yes, I am the first to admit the term "industry disruption" has become very over-used. We have all heard the endless discussions about Uber, AirBnB, Netflix, Amazon and other major companies that have profoundly disrupted their industries. I also recently wrote about further disruption in the healthcare industry.
But how prevalent is this trend across other industries, and in different countries? Do we really know what distinguishes successful disrupters from everyone else? Is there anything we can learn from those who seem to be at advanced stages of their digital transformation efforts?
CA Technologies recently commissioned industry analyst firm Freeform Dynamics to find out. They conducted an online survey of 1,442 IT and business executives across 16 countries and 9 industries. They also augmented this with in-depth phone interviews with key industry executives. The revealing report Exploiting the Software Advantage: Lessons from Digital Disrupters examines the success organizations are having with their digital efforts with respect to both their market effectiveness and business metrics, and computes a Digital Effectiveness Index (DEI) to rank them.
The DEI clearly shows countries such as the US, Canada, France and Germany are leading with digital disruption, with other countries in Europe and most in Asia lagging behind. From an industry perspective, telecom, financial services, retail and consumer electronics are the most advanced, with consumer packaged goods and the public sector the farthest behind.
But these macro trends, while interesting, are not particularly helpful to organizations trying to understand how to navigate their own digital transformation. To provide some guidance here, Freeform Dynamics further segmented all 1,442 respondents into three broad categories based on where they fell on the DEI: the top performing Digital Disrupters (14% of the total), the Digital Achievers (32%) and the Mainstream (54%).
Here is where things get interesting. The Digital Disrupters truly are the top-performing organizations. They have 2.4 times higher revenue growth than the Mainstream (26% vs 11%) and 2.5 times higher profit growth (32% vs 13%). They also garner a higher percentage of their revenue from new business than the Mainstream – 37% vs 23%. Given their success, can we determine what the Digital Disrupters are doing differently?
By analyzing the answers of the three segments to the full survey, Freeform Dynamics was able to develop a set of common traits and behaviors that set the Digital Disrupters apart from the rest of the pack. These "Top 10 Traits" are fully detailed in the research paper mentioned earlier, and include such things as a high emphasis on emerging digital channels to the customer, an ability to experiment and fail quickly, and a conscious reallocation of resources to fund digital investments. But I wanted to specifically call out a few that I think are particularly illuminating and actionable:
■ Strong appreciation of the role of software and apps: Digital Disrupters are 3.5x more likely to recognize the importance of being a software-driven business (60% vs 17%). More than half (53%) also believe that In addition to their core business, they are also now a software company.
■ Focus on modern software development and delivery methods: Given the importance of software to digital transformation, it is understandable why Digital Disrupters are 2.5x more likely to use agile development techniques (77% vs 31%) and also 2.5x more likely to have implemented DevOps broadly in their organization (70% vs 28%). These approaches are essential to the rapid development and delivery of apps to support digital business.
■ Exploitation of APIs for internal speed and efficiency and to engage the developer ecosystem: The efficient use and management of APIs has become a critical component of any successful rapid app development strategy. Digital Disrupters are 2x more likely to leverage APIs for internal app development (68% vs 34%) and 2.8x more likely to use APIs to enable external developer access to their systems and data (66% vs 24%).
By examining the results from this research, a success path forward becomes clear. Your organization needs to assess their capabilities across all 10 areas identified as the top traits of the Digital Disrupters and then prioritize the specific steps you will take to ensure you become a digital disrupter and not a digital disruptee!
Jackie Kahle is VP, Research and Content Marketing, CA Technologies.