How Digital is Your Industry?

Prashant Gandhi, Somesh Khanna and Sree Ramaswamy in the Harvard Business Review:

…what are the key attributes of a digital leader? And how can companies benchmark themselves against competitors? We looked at 27 indicators that fall into three broad categories: digital assets, digital usage, and digital workers. Our research shows that the latter two categories make the crucial difference.

Digital assets across the entire economy doubled over the past 15 years, as firms invested not just in IT but in digitizing their physical assets. Digital usage in the form of transactions, customer and supplier interactions, and internal business processes, grew almost fivefold — and over the entire period, the leading sectors maintained an enormous lead in usage over everyone else. But the biggest differentiator of all comes from having a digitally empowered workforce. Over the past two decades, the leading sectors’ performance on various digital labor metrics — such as the share of tasks involving digital tools and the number of new digital occupations — rose eightfold, while the rest of the economy barely ran in place…

The technology sector comes out on top — no surprise there. Right behind it are media, finance, and professional services, all of which have far more sophisticated digital capabilities than the rest of the economy. On top of these macro-level differences, we see that even lagging sectors may have standout firms that are pushing the frontier forward for everyone else.