Leading Digital_ Turning Technology into Business Transformation ( PDFDrive )

What Is Digital Mastery? 19
Digital Capability and Revenue Generation
Companies with stronger digital capabilities are better at driving
revenue with their physical assets. On a basket of measures including
Ârevenue per employee and fixed-asset turnover, Fashionistas and
Digital Masters outperform average industry performance by 6 and
9 percent, respectively. Meanwhile, Beginners and Conservatives, both
of which lag in their digital capabilities, trail their industry competitors
by 4 and 10 percent, respectively.
These differences between high and low digital capability make
sense; digital activities can improve and extend the reach of physical
ones. With e-commerce, companies big and small now have access to
a global marketplace for their goods and services. Digital business can
help companies to manage more volume with a unit of existing physical
capacity. And digital capabilities can also help companies grow revenue
by reaching out to new customers or engaging with existing customers
in new ways. Nike’s ability to generate buzz through social media, or
Asian Paint’s use of call centers and mobile devices to leverage its salespeople,
helps these companies grow revenue without investing in more
employees or facilities.
The revenue-generation difference is substantial. For example,
Fashionistas—strong on digital investment but not on leadership—gain
16 percent more revenue per unit of human and physical assets than
Conservatives do, and 10 percent more than Beginners. Conservatives,
being weak on digital investment, have lower revenue leverage, but they
excel in other ways.
Leadership Capability and Profitability
Moving in the other dimension, companies that excel in leadership
capability are significantly more profitable than their peers. On average,
Conservatives and Digital Masters are, respectively, 9 and 26 percent
more profitable than their average industry competitors on a basket of
measures including EBIT (earnings before interest and taxes) margin