Ten years ago, the companies that made up the FTSE 100 were very different, 40% of them are not there anymore. Digital transformation is a tricky task for all firms, particularly the biggest ones, a new report claims.
Larger companies, which make up only 0.1% of total business numbers but account for 48% of UK turnover and 40% of the total workforce, are struggling to embrace a digitally-driven future.
A joint report, ‘Bigger, Faster, Stronger’ by CBI and Oracle found that – despite their streams of resources – it’s the biggest firms who find it hardest to transform.
This is because they face a range of major digital issues as they were not ‘born’ digital, including skills scarcity, complex legacy systems and a 25% greater threat from cyberattacks.
By contrast, smaller start-up companies (albeit with their own obstacles) are more likely to adopt new technologies, while firms aged over 15 years are the least likely.
CBI also estimates that increasing innovation adoption would enable firms to more easily align their business to the demands of the future and be worth more than £100bn to UK GVA.
Digital transformation is a driver of growth and the size of the prize is bigger than ever. Global, widespread, successful transformation in the industrial sector alone is estimated to be worth £0.6 trillion, according to CBI.
It could also speed up this growth, 66% of technology adopters have maintained or increased their head count, while 94% of businesses view digital tech as a crucial driver of productivity.
“Many will assume that, with the resources at their disposal it’s easy for large firms to adopt new technology,” says Felicity Burch, CBI Director of Digital and Innovation. “But a host of challenges, from ageing legacy systems, cyber security threats and agile new challenger firms can make successful innovation feel like hitting a moving target.
“For the UK’s big hitters to secure their position as world leaders over the next 10 years, senior business leaders must be prepared to challenge their established ways of operating and cultivate an environment that encourages employees to seek innovative solutions to company-wide issues or these companies risk extinction,” she adds.
What action can big firms take? The report advises four ways to speed up innovation and the digital transformation process
- Bring it to the boardroom – business leaders must commit to addressing risks, sharing learnings across departments, and being strong advocates for digital transformation
- Digitally empower your people – make growing digital skills a company-wide initiative and focus on fostering communication to drive innovation
- Connect your silos – silos are a reality within any large business, but when connected to a wider strategy they can act as useful testing grounds for innovation
- Upgrade your kit – invest in systems and software that constantly update to help the business keep pace with disruption