BDC’s analysis follows a methodology developed by the Massachusetts Institute of Technology (MIT) to investigate the relationship between digital maturity and financial performance.
In collaboration with Capgemini Consulting, the MIT Centre of Digital Business developed a digital maturity model. The goal was to investigate the relationship between each stage of a company’s digital maturity as it relates to revenue generation, profitability and market valuation. The model evaluates companies on two dimensions: digital intensity and transformation management intensity.
The study showed that investing in digital technologies drives revenue, but transformation management capabilities drive profits. After studying 400 large companies over two years, they found that intensive use of digital technologies was not enough for a business to become more profitable; businesses must appropriately manage these assets to gain a real advantage. They concluded that businesses with higher digital maturity outperformed less mature firms on multiple financial measurements.
We wanted to find out if these conclusions also applied to small and mid-sized businesses in Canada. To do so, we adapted MIT’s model to the realities of smaller businesses (their approach only looked at multinational corporations and large organizations).
Source: Westerman et al. The Digital Advantage: How Digital Leaders Outperform Their Peers in Every Industry, Capgemini Consulting, MIT Sloan Management, 2016.