Consumers, who have been educated by the likes of Apple, Amazon, and Google in the possibilities of digital technologies, have moved quickly up the adoption curve. Digital technologies make their lives easier and better, and they want more digital—and mobile—interaction from the companies and other organizations that they do business with. For the Millennial generation (18- to 34-year-olds) and billions of consumers in developing markets, the Internet experience is principally through the screens of their mobile devices. By 2017, according to Gartner, mobile-app downloads will have totaled 268 billion, and the pace will accelerate as more wearable devices come to market.
Companies are proving slower to adopt digital. In retail, big data and mobile are already disrupting the status quo, yet only 25 percent of respondents said that digital is having a notable impact—even as digital behemoths Amazon, Alibaba, and Tencent Holdings are reshaping the retail landscape. (See The Digital Future: A Game Plan for Consumer Packaged Goods, BCG report, August 2014.) A similar perspective exists in the automotive industry, in which only a small proportion of respondents said that big data (20 percent) and mobile (16 percent) are important. This is despite the fast-rising importance of software and connectivity for automakers. (See Accelerating Innovation: New Challenges for Automakers, BCG Focus, January 2014.)
Among nontechnology sectors, banks have used digital technology to reinvent the way they interact with customers—much to customers’ delight. Insurance has high expectations for digital technology as well. Insurance executives ranked the importance of big data and mobile higher than any other nontechnology industry executives do. Some insurance companies are using digital technologies to streamline customer interactions, such as policy management and claims processing, and a few are experimenting with the data generated by onboard chips and sensors to factor drivers’ practices into the rate-setting process. AIG’s new CEO recently told the Wall Street Journal of his ambitious plans and expectations for big data “to manage down the cost of risk.” But in general, consumers still give insurers—along with numerous other industries such as real estate, utilities, supermarkets, and telcos and cable—poor ratings for the speed with which they have embraced digital adoption and innovation. (See Delivering Digital Satisfaction: U.S. Consumers Raise the Ante, BCG Focus, May 2013.)
As of the first quarter of 2014, 30 percent of Fortune 500 companies did not have a mobile app, and less than half had a mobile website. Most companies are not targeting mobile products and capabilities in their innovation efforts. The B2B marketplace has also been slow to catch on. Digital and mobile are only gradually making their presence felt there. (See “Out in Front: Exploiting Digital Disruption in the B2B Value Chain,” BCG article, January 2014.)
We would expect to see the most intensive innovation focus in big data, given all the attention that has been devoted to the ability of digital data and advanced analytics to generate new products, markets, and revenue streams. Indeed, BCG research shows that big-data leaders generate 12 percent higher revenues than those who do not experiment with big data. They are also twice as likely as their peers (81 percent compared with 41 percent) to credit big data with making them more innovative. Pratt & Whitney announced plans in July 2014 to work with IBM to improve the performance of the company’s aircraft engines by monitoring the information its current fleet of engines generates. The company says a single engine can produce half a terabyte of data in one flight. Nordstrom has established Nordstrom Innovation Lab, which uses big data to drive product development. Its mission is “delighting customers through data-driven products.” It analyzes customer data along with input from personal stylists to design algorithms that better predict what people want to buy. Still, three-quarters of our respondents said that their companies are not targeting big data in their innovation programs.