One of the key insights of the Digital Transformation Framework presented in this blog is that the “Transformation” part is as -if not more- important than “Digital”. A team at the MIT Center for Digital Business proved the point.

They studied over 400 large firms in a two years of study and “found that most large firms are already taking action. They are using technologies like social media, mobile, analytics and embedded devices to change their customer engagement, internal operations and even their business models. Our research points to a real ‘digital advantage’ to those that do.“

In The Digital Advantage: How digital leaders outperform their peers in every industry, they developed a digital maturity model to show how different companies are reacting to technological opportunity, and cleverly analyzed how business invest in Technology, but more importantly, how the true leaders create the leadership capabilities necessary to drive change, which they called transformation management intensity.

The numbers speak by themselves, with the truly transformational leaders achieving 9% more revenue, 26% more profits and a 12% valuation premium versus their industry peers.

Particularly illuminating is how the Digital and Transformation variables of the equation work differently: Digital Intensity generally drives up revenue, while Transformation Intensity trickles down to the bottom line and impacts profits.

A must read.