It has been revealed that financial services companies lead the way when it comes to digital sustainability outpacing those in the technology industry.
The study is a measure of a business’s ability to adapt effectively and continuously to keep up with the rise of digital.
The research shows a correlation between digital sustainability and profitability, with high performers in the Index enjoying a 5.6 percentage point increase in profit margin (EBITDA) compared to low performers. For a mid-cap company with revenue of $7 billion, this could potentially represent a difference of $392 million.
“Financial companies have, for some time, had the compelling commercial drive to shift culture, processes and practices – seeking to protect customer data and market share while meeting new customer and talent demands,” said Michael Franzino, President, Korn Ferry Global Financial Services Practice. “Increasing global investment in fintech and intense competition from fintech hybrids have also triggered definitive action.”
Surprisingly, the technology industry did not make the top spot in the Korn Ferry Digital Sustainability Index, coming in at No. 2.
“The technology sector is not only made up of the high-growth ‘unicorns’ and disruptors of the world, but also decades-old legacy tech giants in need of structural, cultural and work process reform,” said Werner Penk, president, Korn Ferry Global Technology Practice. “The more traditional firms – once pioneers of the industry – now need to overhaul their strategies and work processes to ensure future survival.”
Rounding out the industry rankings for the Index, in order, are: Life Sciences & Healthcare (No. 3), and Industrials (No.4). Consumer companies, including retail, came in last at No. 5.
“Consumer companies are at a crossroads. Many have one foot in the digital world and one foot in the traditional storefront,” said Craig Rowley, Korn Ferry senior partner, Consumer and Retail.
“Companies have adapted to e-commerce and have reduced time to delivery, but many are still playing catch up rather than anticipating what customers will want next. Leaders need to look way beyond the now and move as quickly as the industry is evolving.”
Based on the dimensions within the Index, researchers found that the United Kingdom ranked second in Digital Sustainability.
Stephen Griffiths, senior partner at Korn Ferry commented: “The traditional dominance of the UK as a digital leader could be under threat from rising global players, such as the Netherlands, unless steps are taken to invest strategically, build a skilled, specialised workforce, and develop enviable networks, at home and abroad. The economic and political uncertainty caused by Brexit is a concern for many companies and industries in Britain, which have built success on access to both the EU market and labour force. Now more than ever, the government needs to consider increasing connections beyond UK borders to drive partnerships, strengthen global trade alliances and share ideas and learnings.”
“However, British industry has always demonstrated resilience and innovation during periods of uncertainty. The country has a strong creative services sector, where many of the skills which support digital sustainability are found. Add to this the concentration of Venture Capitalists in London, and the abundance of investors into the UK start up scene, and we have a rich environment for digital innovation – something businesses of all sizes should continue to benefit from.”
The United States ranked first out of the 14 nations analysed for digital sustainability.
However, experts warn that to keep its top spot, US companies must look beyond pure-play technology to the human side of maintaining success.
“US organisations must focus on improving the people aspect of their business operations if they are to continue as digital sustainability leaders and gain the long-term financial advantages associated with it,” said Karin Lucas, president, North America Korn Ferry Hay Group.
The three countries that were at the bottom of the list on the Korn Ferry Digital Sustainability Index were Mexico (No. 12), Brazil (No. 13) and Turkey (No. 14).
“Clearly there are vast discrepancies in organisations’ capacity to continuously adapt to the digital economy across industries and regions,” said Swift. “But even for those companies that rank highly in the study, continuous improvement in this area is critical not only for success, but for survival.”