Innovation
Article

The Rise of the Digital Incumbent

by
BCG
June 16, 2022
Photo by Markus Spiske on Pexels
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Photo by Markus Spiske on Pexels

Summary

How can companies keep up with digital natives and not get left behind in this fast pace digital environment? 

There’s a new player on the digital landscape. Digital (or digitalized) incumbents in traditional industries are joining digital natives and a small group of so-called digital hyperscalers in the congregation of companies that have developed the capabilities to disrupt existing business models and deliver the innovation and revenue growth that are rewarded by investors. But by our estimate, only about 30% of the companies in the S&P Global 1200 index are successfully transforming themselves into digital incumbents, leaving most legacy companies struggling to keep pace.

Digital incumbents enjoy multiple advantages. They outperform their less digital competitors, delivering more value to shareholders, customers, employees, and partners. Digital capabilities build resilience—the ability to adapt to adversity and changing market conditions. Achieving true bionic capacity—the point where human and technological capabilities combine to perform at a level that neither can achieve independently—requires a strong foundation of digital proficiency. But there’s also a flip side: incumbents that can’t transform will find themselves under expanding attack, and growth will be increasingly elusive.

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BCG
BCG

Boston Consulting Group is a global consulting firm that partners with leaders in business and society to tackle their most important challenges and capture their greatest opportunities. Our success depends on a spirit of deep collaboration and a global community of diverse individuals determined to make the world and each other better every day.

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