A huge digital gulf is emerging between Canadian companies

Firms must keep up with digital transformations or risk falling behind

You don’t have to dig too deep to find the companies that managed the best through the global pandemic.

They are the companies that were investing in digital before COVID-19 and continued investing during the crisis. These digital leaders, a mere four in 10 in Canada, according to our research, had mapped out their digital transformation strategy pre-pandemic, enabling them to adapt and adjust throughout the uncertainty, lockdowns and economic upheaval when their peers either scaled back or iced their plans. When the dust settles on COVID-19, we’ll find they not only invested the most but also grew the most.

In the decade following the 2008 global financial crisis, new technology investments were key in driving productivity gains, according to the World Economic Forum. But the gains weren’t uniform. They were driven by the top 20 per cent in each industry, with the majority seeing their productivity drop.

As the country emerges from the pandemic, Canadian companies can’t afford to fall behind.

Already we are seeing the chasm deepen between digital leaders and everyone else, and not only between Canadian companies and their global competitors, but, worryingly, within and across sectors in Canada.

Soon, the gap between the “digital haves” and “digital have-nots” will become too wide to bridge, with digital leaders setting up a winner-takesall-market, leaving the “havenots” in a vulnerable market position.

A recent Harvey Nash / KPMG CIO Survey, the largest technology leadership survey of its kind in the world, shows that digital leaders typically spend 25 per cent to 50 per cent more on technology than their competitors.

These digital companies aren’t just spending more and doing better. They are lapping the competition.

The results are striking. The benefits are clear: Digital leaders are two times better at gaining customer trust, three times better at creating positive customer and employee experiences and increasing their stock price, 3.5 times better at boosting revenue and profit, four times better at improving operational efficiency and five times faster to launch new products or services.

The most-mature organizations reimagined their information technology, or IT, operating model to be agile, flexible and dynamic in order to adapt at varying speeds and scale to in-house and market demands.

When we speak of the marketspeed operating model, it covers everything from how people are organized and governed through to the technology architecture that supports it, designed around specific streams of business.

This model rests upon three clear principles: one, it’s intrinsically aligned to the business purpose, vision, values and goals; two, pivoting from siloed, inflexible and archaic architectures to a modern automated tech stack, built on open-source standards and designed to deliver quickly and securely against business needs; and, three, it’s about transforming with intention — meaning sequencing, scaling and aligning changes to the operating model through investments targeted at specific business outcomes.

Too many organizations try to boil the ocean.

They create complexity and lose momentum early in the attempt to transform. Knowing how to achieve the desired outcome is more important than forcing it into a standard cookie-cutter digital model.

Those who are truly digital leaders avoid the one-size-fitsall models. Instead, they apply targeted, nimble and flexible architectures, tool chains, policies, and agile ways of working.

But digital is far more than technology. It’s a mindset. Digital is fundamentally a new way of thinking.

Digital leaders map technology to corporate priorities. They shape their ecosystem to be future ready by deciding which tasks or aspects of tasks are better done through automation or by humans.

Digital leaders rank talent risk among the most-significant operational risks facing their organization.

Digital is far more than technology.

It’s fundamentally a new way of thinking

They view every employee as a technologist, capable of leveraging tools and data to impact a business outcome. Their workforce is both technically capable and has the right blend of business acumen and empathy to shape technology around the customer journey.

These leaders increasingly include their chief information officer, chief technology officer, or chief digital officer on their boards to ensure digital is baked into their strategies and into their corporate DNA.

In short: Human led. Tech powered.

In the post-pandemic economy, we can expect the shift toward new technology-powered products and business models will become even more pronounced.

It is no longer a question of pursuing a digital agenda or not. It is a must-do.

Can the six in 10 Canadian organizations catch up? Can they bridge the gap?

We believe they can. But they must start now.

If they don’t step up, they risk joining the legions of Canadian companies that no one remembers.