If the US were to operate at its full potential, it would add $2 trillion to the overall economy.
The Big Payoff
Investing in digital tech/infrastructure is the single most powerful predictor of business growth and ROI. These correlations are direct and clear. While the U.S. is among top IT world leaders, recent research by McKinsey Global Institute shows that the U.S. economy operates at only 18% of its digital potential (a figure based on how the economy as a whole compares with high performance companies that maximize their digital infrastructure). –According to McKinsey Global, if our economy were to operate at its full digital potential, it would add $2 trillion to the overall economy.
While most organizations long ago integrated digital tech into their operations, there is a widening gap between the ‘haves’ and ‘have mores’ (the latter, a term describing companies that leverage digital tech to its highest potential). The post Great Recession US economy is the strongest in the developed world, though we are once again skating on thin ice. Reaching our digital potential would not only reduce the risk of a new recession, but could help stem the growing decline in the world economy. The world continues to look to the U.S. for tech leadership and related transferable innovations to boost their economies.
Digital “Haves” And “Have Mores”
Most organizations don’t invest enough in IT. In the past two decades, leading “have more” sectors have increased their digital budgets by an astounding 400%. –This describes high tech, media, financial services, professional services, advertising, digital payments and social media organizations. Critical breakthroughs are especially evident in workplace task digitization and employee tech aids. — This explains how ‘have-more’ companies have gained powerful competitive advantages that are putting lagging companies out of business.
Interestingly, ‘have-mores’ are not limited to new companies with high tech roots. For example, long-established corporations like GE and Nike have transformed their operations and strategies leaving their ‘have’ competitors at a distinct disadvantage.
Companies investing in digital tech at low or moderate levels have experienced stagnant, even declining levels of innovation, productivity and profit. Among slow growth sectors are government, health care, local services, hospitality and construction–with some ‘bright spot’ exceptions found in each.
Leveraging Future Potential
The ‘have mores’ have learned to develop products and services faster and cheaper. There will be growing pressure on lagging organizations to digitize their physical assets to take advantage of Big Data and exploding Internet of Things connectivity, smart buildings, driverless cars as well as emerging AI-dominated manufacturing and mining.