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Redefining the digital divide

For most people, the “digital divide” represents the gap between those who have access to information and communications technologies and those who don’t. It deals with socioeconomics, infrastructure, fairness, and opportunity. Although that digital divide is certainly not to be taken lightly, another one is emerging in the world of business. This new digital divide is the widening gap between businesses that understand how to drive true value from new digital technologies, and those that don’t. 

While companies in the technology and software industries certainly understand how to “be digital,” the story is different for the other 90%+ of businesses in the economy. For them, only a relative minority “get” digital. “Digital mastery matters,” said George Westerman, Research Scientist at the MIT Sloan Initiative on the Digital Economy (IDE).  “It matters in every industry. And any company can build the DNA of digital masters if its leaders have the will to do so.”

Westerman, along with Didier Bonnet, Senior Vice President at Capgemini Consulting, and MIT IDE Principal Research Scientist Andrew McAfee, studied more than four hundred global firms to understand how they transformed their organizations through digital technology. These businesses include some surprising—and some less surprising—names, including Asian Paints, Burberry, Caesars Entertainment, Codelco, Lloyds Banking Group, Nike, and Pernod Ricard. Westerman, Bonnet, and McAfee call these companies “digital masters." They present these visionary organizations, along with an extensive step-by-step transformation playbook, in their forthcoming book, Leading Digital: Turning Technology into Business Transformation.

Learning from digital masters

The companies Westerman and his colleagues highlight have moved far beyond having a website, a Facebook page, and Twitter promotions. They have adopted social media, mobile, and analytics to transform the way they work. They:

  • Engage better with their customers
  • Digitally enhance operations
  • Create a digital vision
  • Govern digital activities

For example, Caesars combined mobile and analytics with its award-winning loyalty program, Total Rewards, to transform its customer engagement.  The Digital Leaders book details components of this initiative, which includes Texpress, a service to check in via SMS, and smartphone apps to book rooms, view real-time event information, and receive personalized services. Its mobile couponing process sends customers special offers based on their Total rewards profile, current location in the property, and the offers the customer chose earlier that day. In this way, the company can reach customers in real time on the casino floor, where most of their decisions happen. In essence, Caesars has placed a personal concierge in the pocket of every customer. 
This is not an isolated case. Codelco is fundamentally reimagining the process of mining. Asian Paints is moving from a set of regional paint providers in India to an integrated global competitor. Nike is linking marketing, manufacturing, and product design to launch new business models and transform its engagement with customers. 

If you think that the Caesars “experience” is just about gaming, or that Nike just makes sporting apparel, you may be on the wrong side of the new digital divide. The authors’ research shows that digital masters are 26% more profitable than their industry competitors. Can you afford to end up on the wrong side of this widening gap? 

George Westerman is a Research Scientist in the MIT Sloan Initiative on the Digital Economy. He teaches in Essential IT for Non-IT Executives at MIT Sloan Executive Education.

Comments (1)

Lucia Gradinariu

Posted: 5 years and 1 month and 29 days ago

Congratulations to MIT Sloan for addressing the gap between Business and Operational (digital) Technologies as yet another expression of the Digital Divide. One that announces itself as very difficult to overcome because it is not a matter of top down almost charitable investment but a bottom up, risk taking business transformation. One hypothesis may be tested for the 90%+ of businesses in the economy which can not understand how to be digital: did the business administration practice of growth through "lean thinking" and accounting sublimate precisely the core competencies that are the foundation of digital companies?

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