New BCG survey on digitization: Nordic companies are falling significantly behind
Nordic companies need to be bolder, faster and bigger risk takers when it comes to digitization. That is the conclusion in a new survey investigating digital maturity in 1.300 Northern American and European companies, conducted by BCG. The results show how the Nordics are losing ground when it comes to the execution of digital strategies. That, in turn, takes its toll on both the digitization of the core business as well as building new businesses.
Oslo, November 7, 2017 - The Nordics are used to top rankings in international surveys on digitization, and Nordic companies have a great basis for harnessing the potentials in digitization.The countries have high e-intensity, high quality education, presence of global digital leaders, a strong innovation track record, and the companies have cash to spare. However, a new survey published today by the global management consultancy firm, Boston Consulting Group (BCG), shows otherwise. In reality, the rosy picture of the Nordics as being the digital frontrunners seems to be fading.
This is bad news for the Nordics as wells as the companies. BCG’s analysis shows that digital leaders are more profitable, and companies that move aggressively to digitize their core business, and develop new digital businesses, reduce costs substantially and outperform competitors in sales growth and margins. E.g. digital leaders’ gross margin is on average 18 percentage points higher than the poorest performing companies in digital transformation.
Nordic companies face an execution crisis
BCG has asked 1.300 large companies in Northern America and Europe, including 109 within the Nordics, how far they have come in terms of digitization. All in all, the survey shows that the Nordic companies struggle to convert their strong basis and strategies into action. Digital vision and strategy are the only areas in which the Nordics measure up to the other companies that take part in the survey. When it comes to digital execution, however, the Nordic companies are well below the global average. That poses a real threat to the Nordics’ ability to take part in the global digital race.
Gustav Gotteberg, Partner and Digital Lead at BCG’s Oslo office, explains that there are several reasons contributing to the major digital gap: ”We see a lack of a high level of ambition, a laser-clear focus, and the ability to execute. Cutting to the chase, the survey shows that while Nordic companies are well aware of the direction to go, they are falling significantly behind in execution.”
Underinvesting in the future
The companies’ digital investments clearly reflect the problem at hand. The survey shows that most investments in Nordic companies flow into short-term cost saving opportunities and small projects aiming for incremental developments and improvements. These investments happen at the expense of investing in building future businesses. Here, the Nordics fall well below the global average into the global bottom quartile.
“Companies in other parts of the world are better in terms of prioritizing a few bold, significant, and well-positioned investments in building future businesses. The Nordic companies need to revise their plans accordingly. A large portfolio of small projects focusing only on incremental development might be misleading or even harmful,” warns Gustav Gotteberg from BCG Oslo.
The digitization of customer engagement, e.g. digital pricing, data-driven marketing, is also lagging behind. The average Nordic company is just barely performing better than the poorest performing companies globally and is thus barely digitally literate within this area. The worst area is in digital pricing. This is a serious threat to companies’ revenue and, ultimately, their existence. Therefore, BCG encourages companies within the Nordics to think bigger, bolder and move faster in order for them to close the digital gap as soon as possible.
”It is time to move from planning to execution. Nordic companies should move aggressively to digitize their core, launch new digitally enabled businesses, and build the needed digital capabilities,” according to Gustav.
The full report is launched in Stockholm, November 7th, at the conference “The Future of Digital is here. Are you?”. Both experts and top executives will take part in discussing the results as well as the prospects of Digital Maturity within the Nordics.
A copy of the report can be downloaded here.
To arrange an interview with one of the authors, please contact Tommy Nodland
at +47 958 96 804 or firstname.lastname@example.org.
About The Boston Consulting Group
The Boston Consulting Group (BCG) is a global management consulting firm and the world’s leading advisor on business strategy. We partner with clients from the private, public, and not-for-profit sectors in all regions to identify their highest-value opportunities, address their most critical challenges, and transform their enterprises. Our customized approach combines deep insight into the dynamics of companies and markets with close collaboration at all levels of the client organization. This ensures that our clients achieve sustainable competitive advantage, build more capable organizations, and secure lasting results. Founded in 1963, BCG is a private company with more than 90 offices in 50 countries. For more information, please visit bcg.com.
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About the 2017 survey:
Detailed online survey. 1,300 responses from companies in Europe and North America. 109 Nordic companies participated with a majority of the respondents being CEOs or one level below. The companies represent several industries such as Consumer & Retail, Energy, FI, PI &PE, Health Care, Industrial Goods, Public Sector, and TMT. Results were processed to generate scores on BCG’s Digital acceleration index (Dai).
Selected key findings:
Nordic top quartile is as strong on vision and strategy as the global top quartile
Nordic average with regards to digitizing customer engagement is only a little better than global bottom quartile and barely digital literate
Nordic average fall below the global bottom quartile with regards to building new digital businessesl
Nordic average fall below the global average on building digital capabilities but are well into the “digital literate” stage
Nordic companies (top, average and bottom) fall behind the global peers with regards to transforming technology and operations
Tommy NodlandMarketing & Communications+47 958 96 804Nodland.Tommy@bcg.com
Om The Boston Consulting Group
+47 21 04 68 00http://www.bcg.com/about_bcg/offices/oslo.aspx
About The Boston Consulting Group
The Boston Consulting Group (BCG) is a global management consulting firm and
the world’s leading advisor on business strategy. We partner with clients from the
private, public, and not-for-profit sectors in all regions to identify their highestvalue
opportunities, address their most critical challenges, and transform their
enterprises. Our customized approach combines deep insight into the dynamics of
companies and markets with close collaboration at all levels of the client
organization. This ensures that our clients achieve sustainable competitive
advantage, build more capable organizations, and secure lasting results. Founded
in 1963, BCG is a private company with more than 90 offices in 50 countries. For
more information, please visit bcg.com
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