Does digital transformation pay off? We all seem to believe so. It helps us to close the IT delivery gap, to better serve our customers’ needs and to set ourselves apart from our competition. If your digital transformation worked out well, you may even turn into one of today’s giants that sits down at the same dinner table as Elon, Richard or Mark. That’d be cool… But I digress. Does digital transformation pay off, financially speaking? Well, a recent study posted on Harvard Business Review proved that it does. Let’s look at the findings below.
About the study
Truth be told: the investigators of the study in question didn’t mean to look into the direct impact of digital innovation on financial performance. They looked into the influence of diversity on digital innovation and financial performance. You’ll soon find out why this is still relevant. Anyway, they surveyed over 1,700 companies in eight countries (U.S., France, Germany, China, Brazil, India, Switzerland, and Austria), where they examined diversity in management positions. Diversity was measured with respect to gender, age, national origin, career path, industry background, and education.
“The most diverse enterprises were also the most innovative, and innovative companies turned out to be more profitable too”
Innovative companies are more profitable
So far for the details. The main conclusion of the study was that there’s indeed a significant relationship between diversity and innovation in all eight countries. The most diverse enterprises were also the most innovative, and surprise surprise: innovative companies turned out to be more profitable too. From all types of diversity, diversity in terms of industry, nation of origin, and gender turned out to be most decisive for innovativeness of companies and their profitability. And the higher the digital innovation level, the higher the impact of diversity on performance. This means digital innovation is a catalyst for the impact of diversity of financial success.
“There’s tons of possibilities in the field on digital technology that provide a competitive advantage to those who manage to incorporate it in their business activities”
The link between digital innovation and diversity and their impact on performance is not surprising. Globalization and new technologies have created an environment in which businesses have to be creative and inventive to provide their customers with the best products and services while saving out on costs. As a result, companies that operate globally and invest in new technologies are above-average successful, which is also reflected in this study. This is thanks to the fact that digital technology has both a high innovation potential and low maturity. In other words: there’s tons of possibilities in the field on digital technology that provide a competitive advantage to those who manage to incorporate it in their business activities. And as globally operating companies can put together teams from different countries and cultural backgrounds more easily, they create a level of diversity that in turn improves performance. It goes without saying that this diversity should be managed properly, so that everyone feels free to contribute and to look at projects from their own perspective and background.
What does this mean for your business?
The HBR study proves that following a digital strategy not only helps you become a modern proof organization; the results show that investing in digital innovation strengthens the impact of diversity on financial performance and profitability. This diversity can be achieved by hiring people from different cultures and age groups, but you can also look beyond the walls of your sector and get people on board that have experience in different industries. I’d like to summarize the outcomes of this study in two tips. First, you should invest in diversity, especially in the field of industry, nation of origin, and gender. Second, you should invest in digital innovation. This is a winning combination that has proven to help companies in becoming more financially successful in both the short and the long run.
Where do I start?
We can’t tell you who to hire (well, apart from us obviously), but we can tell you how to start your digital transformation. If you ask us, this should be set up with these building blocks:
- DevOps, NoOps, and pluggable adaptive Stacks
- APIs connecting the outside world to the inside world
- Service integration and routing by using an ESB
- IAM to protect you and your information
- Analytics to find out what is going on
- IoT to increase customer intimacy
Together, these building blocks form a whole, creating a solid IT backbone that transforms you into a modern-proof player that combines user experience with efficiency and a fast time to market with optimal safety.