How to Shape Businesses Through Digital in 2024

Amid the attention on generative artificial intelligence (genAI), leaders should keep an eye on where value can be generated in their organizations. 

The enthusiasm surrounding this technology poses the risk of diverting leaders' attention from actual business value creation. Therefore, it’s beneficial to briefly explore some elements that may not be receiving widespread attention but are helping to ensure value focus and increase the odds of success at scale. Some of these concepts relate to business fundamentals often overlooked under the stresses of day-to-day demands and technology buzz.

In the case of Mexico, currently ranked 58th in the Global Innovation Index 2023, a sustainable approach to technology to unlock business has the potential of shaping the future of organizations in the country. How companies navigate the technology world to achieve a lasting advantage is the defining business challenge of our time, so taking the lead now could mean outcompeting the market for years to come. 

Digital Transformation: A Permanent Mantra 

As technology continues to evolve, businesses will also develop to remain relevant. Most large businesses have already begun some form of transformation, with over $1 trillion invested in technology trends in 2022; however, this is not a one-off effort. Digital transformation should be viewed as an ongoing journey rather than a final destination, with the goal of continuously incorporating new technologies to increase competitiveness. 

As technology becomes increasingly important, the line between business and technology leaders will continue to blur, and all senior executives will need to understand how to leverage technology in their respective areas.

Ambitious Targets Aim for Value

It might sound like Business 101, but it’s surprising how often companies lose sight of it: The point of digital, AI, and tech isn’t getting better at digital, AI, and tech, it’s creating value.

One common reason for failing to meet financial targets during digital transformations is setting inadequate targets from the beginning. Companies should aim for ambitious goals and targets, as this encourages innovative thinking and leads to greater results. A comprehensive digital roadmap could improve EBITDA by at least 20%. 

Successful organizations that set ambitious goals and targets can deliver 2.7 times the estimated value and continuously renew their pipeline. The benefits of being a digital leader can be significant, with insurance leaders experiencing five-year growth in Total Shareholder Return that is six times higher than lagging companies. Consumer-packaged goods and retail leaders perform three times better than their sector peers, while energy, materials, and agriculture leaders perform twice as well.

Build New Products and Services Efficiently

Realizing this value often requires business leaders to effectively utilize technology to build businesses and digital products as part of their digital transformation. The cost of building new digital products and services is decreasing, and the tools available are becoming more user-friendly, enabling more individuals to become builders and streamlining the building process. McKinsey estimates that $30 trillion in corporate revenues will come from products yet to enter the market, and 70% of digital transformation leaders are already building their own software to gain market advantage. 

Although scaling remains a challenge, companies in Mexico and worldwide that can build, test, and adapt quickly will be best positioned to create value, especially as AI advances and technology-based innovation costs decrease. 

Scale: Key to Creating Value 

It's critical to remember that getting the full potential of technology requires the ability to scale, and over 40% of digital transformations stall out during the scaling phase. Even incumbents launching new businesses are not immune to this issue, with about 80% failing to scale.

Achieving scale requires building the necessary supporting capabilities and focusing on the specific processes and mechanisms that enable scale from the outset of any venture, whether it involves harnessing a technology or launching a new business. While the smaller scale of startups might make them nimbler than legacy businesses, even they should prioritize building capabilities that enable scale. Successful CEOs are as passionate about scale as they are about strategy.

The Human in the Loop

While tech breakthroughs hold the promise of productivity and new work opportunities, companies need to shift their focus to human breakthroughs in learning, reskilling, upskilling, and career management to enable their workforce to utilize technologies effectively. 

Take generative AI copilots, for example: productivity gains depend, among other things, on task complexity and the maturity of the copilot. But a key to success will be understanding the skills humans need to adapt to and better leverage their copilot's capabilities. GenAI makes natural language a new user interface, requiring people to learn how to communicate differently with machines.

In all of this, it's important to mind the gap between generations regarding their acquaintance with AI. While Gen Z Mexican talent shows greater trust in using AI for decision-making, followed by millennials and Gen X, 31% of baby boomers are worried about using the tool, according to the MX Internet Association study. 

Technology holds the double promise of growth and efficiency. Materializing this promise will depend on how effectively we adopt these innovations to truly transform businesses. The five elements described in this article can help to increase the odds of success in the digital era in Mexico and around the world.