In conjunction with renowned macroeconomic research firm Roubini ThoughtLab, we surveyed 800 senior executives across Europe as part of a global study to understand the changing nature of work. Respondents overwhelmingly believe that injecting “digital” into everyday aspects of process work could significantly improve customer relationships, create new types of business models, increase revenue streams and radically lower cost structures. In fact, we believe that new digital technologies and ways of working could spark an entirely new economy in Europe; an economy powered by platforms, data, algorithms, “bots” and connected “things.”
The Work Ahead — Europe — Digital Future
Highlights from our findings include:
Digital technologies spurred a 5% uplift in revenue for respondents in the last year alone (equivalent to $150 billion).
European executives expect the total potential revenue impact of digital technologies to grow the revenue pie by 8% between now and 2018.
Companies that are behind the digital curve will pay a “laggard penalty.” Our calculations put this at $808 billion in total value by 2018.
Figure 1
When asked which digital technologies will most influence their working lives by 2020, respondents resoundingly ranked big data and analytics first and foremost. Artificial intelligence ranks a close second, as the message continues to spread that AI is growing in the things that surround us.
Of course, it’s not all plain sailing to our digital destiny. Security fears (24%), budget constraints (21%) and talent gaps (14%) are bumps on the road that need fixing. Managerial respondents also cited a worrying lack of clarity around digital strategies at the top of their organizations (37%), a lack of urgency (35%) and a need for stronger direction.
Making the Digital Shift
To make the necessary digital shift, leaders need to proactively prime their organizations for the work ahead. Leadership behaviors forged last century need updating for the 21st century: Sharing, collaborating, iterating and experimenting are watchwords for business today. Stodgy cycles of innovation need fixing — inside, outside and across organizations.
Winning digital business models pivot around a platform. See the platform as layers of software that gather and synthesize data. Large “incumbent” businesses are starting to build and organize knowledge work around platforms and drive innovation and value through them.
Leaders need to step forward and prime their organizations for the work ahead. Here are some good places to start:
Generate your own digital dividend. Know how your organization is performing against others in your industry, and get an idea of whether you are leaving money on the table to fuel your own digital journey.
Prioritize, prioritize and then prioritize some more. The world is quickly becoming "digital first." Whether it's upgrading a simple sales interface in the supply chain, or digitizing the customer journey from end to end, it's vital for your current game plan to bring the physical and the virtual together.
Match words with deeds. Map investment priorities with digital opportunities. If your company’s investment profile is not in line with analytics, AI and platforms that drive innovation, then you’re playing by yesterday’s business rules.
Reset the dynamics of power and decision-making. Command-and-control structures, elongated decision cycles and silo-based mentalities will kill digital; accessing, teaming and co-creating with disparate talents across a value chain or industry will not work in complex, hierarchical environments.
European businesses are poised to capture economic momentum, and establish the region as a digital powerhouse. We believe Europe’s business and political leaders must seize this once-in-a-generation opportunity to re-engineer and revitalize Europe’s role in an increasingly hyper-connected global marketplace.
This report – the latest installment in The Work Ahead series – focuses exclusively on the responses from European respondents. For the full report, see "Europe’s Digital Imperative.” Also see our overview report, “Mastering the Digital Economy,” and our close-up view of Asia-Pacific, “The Future of Business and Jobs in Asia Pacific’s Digital Economy.”