Are digital (and AI) leaders leaving others behind? Here's how and where

The creation of expertise in digital technologies leads to the generation of real value and cumulative performance benefits: the assumption is well known and recurs with every acceleration in the adoption process of innovative solutions. It happened in the pandemic period, it is happening today with the boom of artificial intelligence. A new report by McKinsey & Company, entitled 'Rewired and running ahead: Digital and AI leaders are leaving the rest behind', which analysed the testimonies of more than 20 thousand managers representing around a thousand companies active globally and across all sectors.

The analysts' findings have brought into focus several aspects of the issue, most notably the vast difference in results - the range goes from two to six times - achieved in total shareholder return by companies with cutting-edge digital and AI skills and those so-called 'laggards'. In other words, by comparing the degree of maturity of different organisations on the components under study and measuring their management capabilities essential to capturing value, the outcome of the comparison is without history and cuts across every sector analysed. And not only that. The gap between the most innovative leaders and the laggards, as stated in the note introducing the study, is widening for two reasons: on the one hand, the functionalities and specialised skills in which companies have invested continue to improve; on the other hand, digital and artificial intelligence solutions, if well implemented, offer cumulative advantages. It should come as no surprise, then, that the average gap in technology maturity scores between the top and bottom performers jumped by 60 per cent between the two periods observed by McKinsey, from 10 points in 2016-19 to 16 points in 2020-22.

Confirming what should not be understood as a theoretical trend - the creation of digital skills generates real value - but rather an established habit, are the direct experiences of the surveyed companies. The study tells us, for example, that digital leaders in the insurance sector contribute six times more total shareholder return growth over five years than companies lagging behind in developing technology skills, while leaders in consumer packaged goods and retail triple their performance. Less evident, however, is the differential between 'virtuous' and 'laggard' companies in the energy, materials and agriculture sectors, where the results achieved by the former are double those of the latter. The greatest benefits, the report further confirms, have been recorded in the high tech, banking and insurance sectors, where the underlying business models have particularly benefited from the use of data and intelligent software applications. Finally, the rate of transformation in the media and entertainment and healthcare industries was particularly pronounced, and partly accelerated by the need for enhanced functionality during lockdown periods, when more digital content was consumed at home and digital services were more frequently relied upon in the medical field.

The key factor that rewards the organisations (and their management) most sensitive to the importance of skills in ambio tech can be traced back to the important distinction that exists between the creation of a digital channel and the translation into value from the use of that channel. From 2018 to 2022, McKinsey experts point out in this regard, all companies have increased their adoption of mobile apps, but it is the leading companies that have maintained an edge (e.g. in online sales) by better integrating new technologies and artificial intelligence into the customer journey and reducing friction points as a result. And again: the gap with the laggards remained in the profit-and-loss calculations also due to a greater speed in the development of omnichannel interactions with customers, and to having leveraged process automation and data analysis tools to drastically reduce cost-to-serve, to the benefit of a significant (over)performance return for shareholders.

The way to reverse the trend, putting oneself in the shoes of the laggard companies, is challenging but not obviously impossible. It is not necessary, the experts explain, for an organisation to be necessarily exceptional in each dimension, but it is necessary for it to reach a basic level in all. And the reason is quickly explained: we are talking about mutually reinforcing competencies and it is no coincidence that the biggest gaps are in the creation of a strategic roadmap to realise value and the scalability of that value, rather than in technology tout court. Succeeding in digital and AI, in other words, depends not so much on technology tools as such, but on the ability of business leaders to align the organisation. What, then, must the 'laggards' do to regain ground and achieve better results? The first step is to focus on the most effective ways to implement digital and artificial intelligence innovations in their business, and to build the skills needed to capture value quickly, efficiently and consistently. The data, once again, shows how companies dedicated to this level of change can achieve significant gains (15-20% on average) in digital maturity and increase operating margins by 10-20% in their target industries in two to three years.