Digital Germany

Digital Germany

          
Article image

Digital Germany

  • Add To Interests
  • SAVE CONTENT
  • PRINT
  • PDF

  • Related Articles

    Digital Germany Today

    It is the question every company in every industry is asking: How do we win in the digital era? But there is another question that businesses should—but too often don’t—ask first: Are we even positioned to win? For many established companies, success in the digital age will require change, not just in how they work but often with whom they work as well. It will mean adopting unfamiliar approaches. And it will mean taking new risks to avoid the biggest risk of all: being mired in old ways of operating and thinking, while more nimble competitors take the lead.

    As many companies are discovering, those nimble competitors are already making their mark and gaining ground. And in keeping with the pace of the digital era, they’re doing so quickly. How are German businesses positioned to win? In many cases, not as well as they could be. But the good news is, that can change.

    To help German companies understand how they stand relative to global best practices and what they should be thinking about as they move forward, BCG developed a digital index to identify the industries that are leading the digital charge, those that are lagging behind, and those that fall somewhere in between. Our analysis also assessed how digital is expected to affect the future of the seven major industry sectors we examined. (See “Our Methodology.”) The goal was to drill down on where different sectors have demonstrated strengths and weaknesses, where they need to keep the momentum going, and where they have to fill in the gaps.

    OUR METHODOLOGY

    BCG’s index focuses on two key dimensions of digital’s impact on German industries:

    • Digital Maturity. How do specific industries compare with global best practices? Are there sectors where Germany already leads—or has fallen worrisomely behind? For each industry, we looked at four core elements that together give a good picture of how the country is positioned to leverage digital: the customer interface; innovation; operations and processes; and corporate functions and IT platforms.
    • Future Digital Impact. How will digitization change individual sectors to 2020? Which industries can expect the most dramatic transformation?

    We evaluated seven German industries, covering some 70 to 80 percent of the DAX and MDAX stock indexes:

    • Retail and consumer goods
    • Automotive
    • Health care and pharmaceuticals
    • Financial services
    • Logistics and transportation
    • Industrial goods and engineering
    • Telecommunications, information, media, and entertainment

    For each industry, we followed a common methodology. We compared practices observed in Germany—everything from how digital channels are being used to improve the customer experience to the extent to which digital trends are being translated into new business models—with global best practices. We also interviewed nearly two dozen global experts and looked at hundreds of company assessments, country rankings in market studies, and data from industry organizations, statistical institutes, and global research and advisory firms.

    We scored the industries, on a scale from 0 to 100, on each element of digital maturity, with the grades representing how close each sector approaches the current global leader. The scores for future impact (also on a scale from 0 to 100) reflect how much change digital is expected to spur by 2020.

    As expected, the seven industries did not score equally. (See Exhibit 1.) Germany’s automotive sector and logistics and transportation industry are already well positioned from a digital perspective, although they will need to work to maintain that edge. But health care and pharmaceuticals, financial services, and the telecommunications, information, media, and entertainment (TIME) industry lag well behind global best practices and will require significant effort just to catch up. (See Exhibit 2.)

    exhibit
    exhibit

    There were differences, too, in the potential future impact of digital on the seven industries examined. We anticipate further upheaval in the TIME sector, which has already experienced dramatic change. Financial services, health care and pharmaceuticals, and retail and consumer goods should likewise undergo notable shifts. Logistics and transportation is likely to see the smallest degree of change, in part because this sector already makes heavy use of digital technologies and processes, but also because much of its value creation lies in the movement of physical goods.

    The sectors where digital maturity is relatively low but the potential future impact is high will be under the greatest pressure to step up their game. Thus, companies in financial services, retail and consumer goods, and TIME will have to act quickly if they are to adapt to the coming changes, defend against new challengers, and exploit the opportunities that will be theirs to seize.

  • Add To Interests
  • SAVE CONTENT
  • PRINT
  • PDF