Digital, for All of Us

Seven Takeaways from BCG's European Strategy Leadership Summit

More than 120 senior Euro 500 executives from 19 countries, representing a wide range of industries, gathered in Barcelona on April 23 and 24 for BCG's sixth European Strategy Leadership Summit. The theme was "Digital, for All of Us," in recognition of the growing importance of technology for all companies—not just tech companies. Here are seven takeaways.

1. The character of digital disruption is changing. Keynote speaker Philip Evans kicked off the gathering. Using diverse examples—the Google Car, genomics, and transport optimization in the Ivory Coast—he sketched out the rise of a pervasive, always-on digital ecosystem fueled by the explosion of data from the dramatic rise in sensors, and made ubiquitous by mobility. He argued that "the world, and our digital representation of it, are merging" and that "this self-interpreting world will be massively disruptive," echoing the themes of his latest essay, "Borges' Map," coauthored with the summit's dinner speaker, Patrick Forth, leader of BCG's Technology, Media, and Telecom practice—and released at the start of the summit. He sketched out three successive waves of digital disruption: the dot-com boom that revolutionized distribution; the Web 2.0 era in which communities, for certain activities, proved to have advantaged economics over traditional companies; and the current wave, in which the ideal scale of other activities is growing beyond the reach of even the largest corporations. And he argued that together these waves would change the structures of many industries.

2. There are fewer and fewer "hardware" industries. BCG's Philipp Gerbert, among others, made the point that the rise of the Internet of Things is blurring the boundaries between traditional and technology businesses. Gerbert, who leads BCG's Strategy practice in Central Europe, the Middle East, and Africa, argued that cars today are as much about software as about mechanical and electrical engineering. With initiatives like the Google Car, tech companies are projecting "horizontal," cross-industry expertise into non-IT sectors. Similarly, the energy business is as much about analytics as it is about turbines. And so manufacturing industries are being transformed. Incumbent players need to decide how to win in an increasingly complex environment in which the key question is where to compete—and where to partner—with IT firms.

3. Big data is a big deal. Presenters from Vodafone, Google, and BCG underscored the signal importance of big data to competitive advantage. BCG's Evans argued that because of the massive scale economies in data center operations, and the fact that larger data sets yield better insights, data will evolve from something "owned" by individual companies to shared infrastructure. As a consequence, competitive advantage will turn not on the possession of data but on an organization's ability to make sense of data and rapidly develop actionable insights from it. BCG's Elias Baltassis, a big-data expert based in Paris, concurred: "Data is important but only part of the picture," he observed. "Organizations need to develop a big-data vision that prioritizes initiatives and then develop the necessary capabilities and technologies to drive insight through advanced analytics." He also discussed the importance of earning consumer trust.

4. “Computers are starting to learn…this is big!” So said Guillaume Bacuvier, Google's EMEA managing director for advertising solutions. The observation that machines are getting smarter and, in some spheres, smarter than humans, and that these smarter machines are now venturing out into the real world was a key idea across several sessions. The theme was most fully developed in a session on trends in robotics led by Alison Sander, leader of BCG's Center for Sensing and Mining the Future. She traced the The Evolution of Robotics over time and then focused on recent key trends like collaborative robotics, which allows humans and robots to work together. Given the speed at which the technology is evolving, she argued that it is critical for companies to stay abreast of the shifting capabilities and economics of robotics lest they miss the "tipping point" for their industry and find themselves disrupted.

5. Digital is fueling a go-to-market revolution. Several speakers discussed the impact of digital on customer power and the customer interface. Robert Hackl, commercial operations officer at Vodafone, remarked that "there is a new level of impatience among today’s digitally empowered customers.” In fact, with the rise of social media and the greater likelihood that customers will share their negative than their positive experiences, what happens in Vegas no longer necessarily stays in Vegas. These technological and customer trends are driving a Growth for Free: Embracing the Go-to-Market Revolution. As BCG's Just Schürmann, who leads the firm's Marketing and Sales practice for Central Europe, the Middle East, and Africa, commented, "The expectation for an 'anywhere, anytime' customer shopping experience is rising by the day…. Any company that doesn't master the multichannel presence will become obsolete.” For many organizations, adapting to this new world will demand a broad-based digital transformation of marketing capabilities and organization. And given that the digital revolution has empowered attackers by radically reducing start-up and experimentation costs, time is of the essence.

6. It's not easy, but traditional companies can—and must—succeed in the new game. Joerg Hessenmueller, CFO of Poland's mBank, shared the compelling story of how his company leveraged an innovative, digital-first model to transform itself from a primarily traditional commercial bank to the fourth largest Polish retail bank, globally recognized as a banking innovation leader and the profitability and efficiency leader in its market. And BCG's Vanessa Lyon and Philippe Trichet related the story of how Schneider Electric embraced digital to create a lean and agile business architecture. Michael Brigl, a BCG expert on corporate venture capital, shared his research on how companies are embracing incubators and accelerators as new approaches to disruptive innovation. As Google's Bacuvier remarked when citing the importance of fast-cycle experimentation and learning in this new environment, "The biggest notion that big companies have to overcome is accepting failure” on the path to success. And BCG's Karalee Close shared her thoughts on how companies need to embrace the The Digital Imperative.

7. Winning demands more than new skills, it also calls for different approaches to strategy and leadership. Martin Reeves, who leads BCG's Bruce Henderson Institute, joined Knut Haanaes, the leader of the firm's Strategy practice, in delivering the closing plenary. Drawing on ideas from their upcoming book, Your Strategy Needs a Strategy, Martin observed that the rise of digital is "stretching businesses across a wider set of conditions—and that this requires different approaches to strategy in different businesses." He described five distinct styles of strategy appropriate to different competitive environments and argued that increasingly, today's leaders need to be ambidextrous, simultaneously running and reinventing their businesses, deftly balancing exploitation and exploration, and mindfully managing multiple styles across their portfolio of business units. As Haanaes remarked in his closing comments, "Today, strategy without digital is like digital without strategy: deadly."