1、 2022 Boston Consulting Group1Are Digital Natives Losing Sight of the DigitalBasics?NOVEMBER 30,2022 By Patrick Forth,Romain de Laubier,Michael Grebe,Amanda Luther,and Tauseef CharanyaMany of the original architects of digital disruption are slowing down,squeezed between a new class of digital incum

2、bents that are gaining tractionand a younger crop of speedy digital innovators.To get back on track,theyneed a renewed focus on the factors that drove their initial success.They may be only in their early twenties,but the older digital natives are feelingtheir age.The 2022 tech selloff has taken the

3、 air out of premium valuations,and 2022 Boston Consulting Group2behind the market retreat,many former high-fliers now appear vulnerable tobusiness disruption themselves.Just two decades ago,the dominant businessparadigm saw digital natives driving sluggish incumbent companies intoextinction,with str

4、iking examples in media,retail,and travel.Now a resurgentclass of digital incumbents are fighting back,and aging digital natives areexhibiting legacy behaviors themselves.BCG research involving more than 950 companies worldwide found that digitalnatives born before 2005the same upstarts that turned“

5、digital disruption”into acause for boardroom alarmare subject to many of the limiting factors thatconstrain growth at legacy companies.As they“moved fast and broke things,”these companies oen failed to embed into their organizations and cultures thecapabilitiesboth human and technologicalthat sustai

6、n innovation and growth.Theres little question that superior digital capabilities will underpin many aspectsof future competitive advantage.Older digital natives(and younger companies,too)need to maintain a tight focus on the five essential attributes that have driventheir success:Our survey of the

7、extent to which companies possess these attributes suggests thatolder digital natives are starting to lag both their younger counterparts and leadingincumbents that are building their own digital capabilities.All companies aresubject to the encumbering effects of age and size(what may be thought of

8、as akind of entropy or decay).Its becoming clear that older natives,in particular,needto get back to digital basics.Leadership with a purposeful digital strategy A culture that promotes innovation An agile operating model The ability to attract,retain,and develop world-class digital talent Open-arch

9、itecture technology and data platforms 2022 Boston Consulting Group3Shiing FortunesBefore the 2022 technology selloff,digital natives broadly produced highershareholder returns than incumbents,with investors giving them credit for fasterrevenue growth.Still,a number of traditional companies were cat

10、ching up.As wereported in December 2021,incumbents that successfully executed a digitaltransformation improved EBIT by 21%,compared with only 10%for those that didnot,and this performance translated into shareholder value.Examples includeDominos Pizza and John Deere,which produced three-year shareho

11、lder returns of31%and 32%,respectively,between December 31,2018,and December 31,2021.This trend has continued.In February 2022,we observed that a new class of digitalincumbentstraditional companies that are making progress in systematicallybuilding digital capabilitieswere pulling away from their le

12、gacy counterparts andclosing in on digital natives in terms of ability and performance.(See the sidebar,The Corporate Digital Categories.)As of July 31,2022,these companies hadessentially closed the gap,as investors downgraded tech stocks in an inflationaryenvironment and rewarded digital incumbents

13、 for improved operationalperformance.(See Exhibit 1.)Both digital natives and digital incumbents alsolagged the so-called hyperscalers(the dozen or so companies such as Amazon andGoogle that provide cloud,networking,and internet infrastructure at unmatchedscale)but again,this gap closed post-selloff

14、.2022 Boston Consulting Group4Significant dichotomies are also emerging in the digital capabilities(assessed onthe basis of the five attributes described above)between digital natives and digitalincumbentsand between natives founded before 2005 and their youngercounterparts.(See Exhibit 2.)Younger,p

15、ost-2005 natives exhibit better digitalcapabilities,reflecting their emergence in an era characterized by cloud-basedtechnology architectures and more widespread adoption of agile ways of working.Older digital natives,in contrast,have(to varying degrees)succumbed toorganizational complexity and tech

16、nical debt,among other factors.2022 Boston Consulting Group5Building Digital CapabilitiesWe asked senior leaders to score their companies digital capabilities on a scale of0(low)to 10(high).In addition to spotlighting the rise of digital incumbents,theresearch revealed that among digital natives,old

17、er companies trail their youngercounterparts by wide margins on the five attributes that are most important fordigital success.(See Exhibit 3.)2022 Boston Consulting Group6LEADERSHIP WITH A PURPOSEFUL DIGITAL STRATEGYVisionary,entrepreneurial founders oen give digital natives an advantage overincumb

18、ents.But it can be difficult for older natives to make the transition fromthese charismatic leaders to a more structured and diverse management team.In our survey,only 20%of senior executives at digital natives founded before 2005reported that their companies leaders and middle managers are empowere

19、d totake risks,compared with 40%of respondents at post-2005 natives and 48%atdigital incumbents.Similarly,only 27%of senior leaders at pre-2005 natives saidtheir leaders are player-coaches(who both lead and play an active role in thebusiness),versus 45%of respondents at post-2005 natives.A third of

20、seniorexecutives at pre-2005 natives(compared with 60%of those at post-2005companies)said their leaders raise the performance bar with every hire andpromotion and recognize exceptional talent,purposefully elevating these peopleacross the organization.“As weve grown through M&A,weve lost some of thee

21、xecutive-level edge due to differing leadership styles and the size and geographic 2022 Boston Consulting Group7reach of the organization,”one executive at an aging digital-native company toldus.A CULTURE THAT PROMOTES INNOVATIONA culture of innovation is generally assumed to be a strength of digita

22、l natives,butthis is not always the case.These companies oen begin with a healthy focus on asingle product or value proposition,but banking on early success can turn into alack of boldness and an inability to innovate as the product matures and themarket evolves.Our research shows that the entrepren

23、eurial spirit is significantlytested over time by this kind of overreliance on the original innovation.Executives at only 7%of companies founded before 2005 reported usingtechnology to push the boundaries of innovation,versus 48%at post-2005 firms.Digital natives are credited with inventing methods

24、of rapid testing,learning,and iteration using customer feedback loops.But senior leaders at only 25%ofpre-2005 companies said thatthese methods have beenadopted in all parts of theorganization,compared with90%at hyperscalers andnearly 50%at digitalincumbents.Only 20%ofdigital natives(both pre-andpos

25、t-2005)reported having anincentive system in place thatrewards innovation and valuegeneration,compared with40%of digital incumbentsand 70%of hyperscalers.It appears that digital incumbents and hyperscalers have taken the time to designoperating models and incentives that promote innovation,while man

26、y digitalnatives lack the same rigor and oen assume that continued innovation willAmong digital natives,oldercompanies trail their youngercounterparts by wide marginson the five attributes that aremost important for digitalsuccess.2022 Boston Consulting Group8happen of its own accord.The cultural co

27、mponents of innovation(such asencouraging employees to fail fast and learn,formally recognizing growth andtalent over tenure,and taking big bets on employee-generated ideas)are lessevident among pre-2005 natives.“We have focused on revenue growth as a resultof investor discussions and deprioritized

28、both innovation for productivity andinnovation into new opportunities,”said the CEO of one pre-2005 digital native.AN AGILE OPERATING MODELThe agile-oriented product teams and platform organizations commonly associatedwith digital-native companies oen work well only at hyperscalers and youngernative

29、s.Only 20%of pre-2005 natives consider themselves a“products company,”with an organizational structure comprising integrated teams of business and techstaff with end-to-end responsibility for digital products or solutions.In contrast,60%of post-2005 natives and 70%of hyperscalers operate with this s

30、ort ofstructure.Agility appears to subside with increasing organizational scale and complexity.Executives at only 13%of digital natives founded before 2005 reported havingsmall,decentralized,multidisciplinary teams that own and run what they build,compared with leaders at 45%of post-2005 natives,40%

31、of digital incumbents,and70%of hyperscalers.The CEO of a younger digital native captured her companysagile spirit this way:“We have an advantaged NLP natural language processingcapability and have experimented intensely with different use cases,pivoting ourproduct teams as we learn more about what r

32、eally drives value for our clients.Customer-led innovation is our secret for success.”ABILITY TO ATTRACT,RETAIN,AND DEVELOP WORLD-CLASS DIGITALTALENTDigital natives usually have strong employee value propositions(EVPs)driven bycharismatic leaders,flexible work models,and rapid market deployment;inad

33、dition,they allow employees to take on important responsibilities early in theircareers and give them the chance to share in high valuations and a“cool”2022 Boston Consulting Group9environment.But an attractive EVP can become tarnished unless leaders continueto invest in it.Only a third of pre-2005

34、natives claim to have a strong EVP,asopposed to more than 60%of post-2005 companies.Other,medium-term issues are talent and skill retention and upskilling.Digitalnatives tend to rely on“brought in”skills and have underdeveloped employeedevelopment programs.They use on-the-job training rather than de

35、signed coursesand curricula,which can lead to attrition and dilution of talent.The ability tomaintain and develop skills is a challenge for all digital natives,regardless of age.Only 28%of respondents at these companies reported having incentives foremployees to keep up with the latest advances in t

36、heir field,compared with 60%ofrespondents at hyperscalers.Only 27%of leaders at digital natives reported havingthe ability to identify comprehensive and personalized learning needs for reskillingand upskilling,versus 50%of respondents at digital incumbents and 60%athyperscalers.As one digital-native

37、 executive put it,“Were a pretty informal placeand you learn by rubbing shoulders with others.We dont have the time or theorganizational capacity to formalize training,but its on my radar screen as afuture priority.”OPEN-ARCHITECTURE TECH AND DATA PLATFORMSDigital natives are fortunate to have been

38、born into the era of cloud-basedtechnology architecture,whose modularity and interoperability provide anadvantage over the complexlegacy technology stacks ofincumbents.But cloud-basedplatforms and dataarchitectures have advanceddramatically over the last twodecades,and pre-2005 nativesnow wrestle wi

39、th their ownversions of legacytechnologies.In addition,Pre-2005 natives oenprioritize speed to marketover scalability.2022 Boston Consulting Group10these companies oen prioritize speed to market over scalability,and the lack ofappropriate governance and planning has caused an accumulation of technic

40、aldebt.Only 27%leaders at pre-2005 natives reported having open-architecture technologyand data platforms that provide the flexibility to introduce new products andfeatures quickly,compared with 55%of leaders at post-2005 natives and 70%athyperscalers.A tiny 7%of respondents at pre-2005 natives said

41、 their companieshave a strong data organization and a consistent approach to data management,and only 20%reported having codified data governance tools.One executive at along-tenured digital native said,“We set out with a strong commitment to buildour soware platform in a modular way so that code co

42、uld be reused.But then wepivoted the business model as we learned from releases in the market,andacquired another company as a faster way to incorporate new functionality.As wegained customer and transaction data,we wanted to add a data and analyticscapability,but we discovered that we had never rea

43、lly defined a clear,scalable datamodel,so the process for accessing well-formatted data was very complex.”Staying GroundedFor years,traditional incumbents looked to the example of digital natives in theirefforts to digitally transform their organizations and operating models.Now thetables have turne

44、d.The lessons for both the original digital natives and their younger counterparts areclear.Digital natives founded before 2005 need to assess whether and where legacytechnologies and ways of working are holding them back.Many may need astructured,programmatic approach to buildingor rebuildingthe ca

45、pabilitiesmost essential to digital maturity.Meanwhile,younger natives must be sure toinvest in those capabilities as they grow.Such investments may come naturally inthe early years,but over time,these companies leaders must be purposeful aboutadopting more formal processes to ensure that stultifyin

46、g legacy technologies andbehaviors do not take hold.2022 Boston Consulting Group11The race is on to determine which companies emerge as the successful digitalcompanies of the future.The pathways and required attributes are clear;the abilityto implement faster and better than others will be the real

47、differentiator.Thethreat of disruption applies to all companies,regardless of the era in which theywere born.AuthorsPatrick ForthManaging Director&Senior PartnerSydneyRomain de LaubierManaging Director&PartnerTokyoMichael GrebeManaging Director&Senior PartnerMunichAmanda LutherManaging Director&Part

48、nerAustinTauseef CharanyaProduct Senior ManagerNew JerseyABOUT BOSTON CONSULTING GROUP 2022 Boston Consulting Group12Boston Consulting Group partners with leaders in business and society to tackle theirmost important challenges and capture their greatest opportunities.BCG was thepioneer in business

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51、of the client organization,fueled by the goal of helping our clientsthrive and enabling them to make the world a better place.Boston Consulting Group 2022.All rights reserved.For information or permission to reprint,please contact BCG at .To find the latest BCG content and register to receive e-alerts on this topic or others,please visit .Follow Boston Consulting Group on Facebook and Twitter.2022 Boston Consulting Group13 2022 Boston Consulting Group14