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May 14, 2021

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Organizations struggle to tackle digital disruptions

IMD’s 2021 Digital Vortex Report reveals that 90 percent of executives across 14 industries surveyed are moving closer to the center of the vortex, where the velocity and magnitude of change is the highest. The report shows that we have hit a saturation point where major or transformative digital disruption is impacting all sectors, irrespective of size or location.

But there is a growing gap between knowing and doing and among different echelons of executives. When the first Digital Vortex Report came out in 2015, executives were still debating whether they should move forward with digital transformation. The issue facing organizations today is how should they move forward.

While it’s clear that companies have embraced digital strategies, the report shows that there is a big disconnect when it comes to formulating a cohesive, company-wide plan. More than 90 percent of respondents believed that digital disruption was a CxO-level concern, but 39 percent also stated that their organizations were not responding appropriately.

Vital execution

Furthermore, the percentage of respondents who reported having a fragmented digital strategy actually rose from 53 percent in 2019 to 61 percent in 2021. This is a strong indicator that while companies are pursuing digital projects, they are struggling with the execution, and they are most likely not getting all the benefits they hoped for from their digital investments.

The gap is also a problem within the structure of organizations

CxOs were more positive and optimistic about their digital strategy than lower-level executives. Higher level executives were much more likely to conclude that they were actively responding to digital disruption, while those lower down in the organization were more likely to say that the response was absent, inappropriate, or merely a copy of the competition. This perception gap widened between 2019 and 2021.

The Report this year includes a special section on COVID-19 and its impact on digital transformation. Data collected specifically on activities related to the pandemic confirms that the global crisis was a catalyst for many companies to accelerate their digital transformations.

The author is professor of Innovation and Strategy Cisco Chair in Digital Business Transformation at IMD. Copyright: IMD.


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