A new study has found huge disparities in the outcomes of businesses that invest in new digital solutions and those that do not.
For small- and medium-sized businesses, digitalisation is becoming an essential ingredient for growth.
A recent study published by Virgin MediaO2 Business and the Centre for Economics and Business Research has laid out the huge gaps in growth, turnover and productivity experienced by firms which embrace new digital technologies and those that do not.
In this article, we take a closer look at the different outcomes experienced by Digital Leaders and Digital Followers and what obstacles might stand in the way of those looking to transform their business and grow.
Productivity, turnover and employment growth
One of the report’s key findings was that between 2021 and 2023, businesses that actively invested in digital solutions experienced productivity growth over twice that of those that were not actively improving their digital capabilities. These so-called “Digital Leaders” also saw turnover grow by 11.9% compared to only 5.6% experienced by those lagging behind.
But it was not just productivity growth that saw a marked increase for Digital Leaders. Employment growth for small businesses that increased their utilisation of digital technologies stood at 3.3% against 1.8% for those that did not.
This gap becomes a gulf for medium sized companies, with Digital Leaders benefiting from an 8.9% lead (9.6% vs 0.7%) over organisations that were not increasing their digital capabilities.
This all suggests that small to medium-sized companies have a lot to lose from inaction, and that the biggest prizes in today’s economy go to those small to medium-sized businesses that effectively embrace digitalisation.
Work smarter with collaboration tools
The same study also found that Digital Leaders that experienced stronger growth and productivity were far more likely to have adopted technologies that transformed how their organisation operates.
With one third having “experienced a permanent change in at least one area of their organisation’s operations” against just a fifth of Digital Followers who reported the same, we can see a clear relationship between digitalisation and successful organisational transformation.
Indeed, the areas in which Digital Leaders really excelled against their counterparts was in their use of digital collaboration tools and platforms, with 34.2% having made permanent improvements here against just 14.9% of digital followers. By allowing remote, asynchronous teams to work together on shared projects, tools like Figma, Miro, Slack, Trello and Microsoft Teams could be one of the key ingredients for business growth. Their power lies in their ability to increase productivity by simplifying how your team works together on both large-scale and small-scale projects.
The two barriers to Digital Transformation
Adopting new digital technologies and integrating them into your current business model is not an easy job, especially when you are faced with the task of leading your business, managing staff and navigating daily challenges.
If you’re struggling to implement innovative new tools into your business then you are certainly not alone, however the main barrier that businesses in this study identified differed, depending on whether their organisation had a strong or weak digital culture. For those with a strong digital culture, data privacy and security concerns were cited as the main challenges, while organisations with weak digital cultures identified “cultural resistance to change” as the main barrier.
This suggests that the road to digital transformation possess two key hurdles. Before taking on the technical or practical aspects of implementation, your business first needs to tackle cultural change.
Grow your business: Getting started
In order to grow your business, you need to identify where opportunities lie and what is currently holding you back. To do this, you will need to take a step back from your business, even if that might seem counter-intuitive at first. This offers you an opportunity to get a fuller perspective of your business so that you can identify where your strengths are, and where there is room for improvement.
From here you are better placed to identify the challenges that you might face as you implement new digital technologies (whether they are related to implementation or cultural change) and can select the strategies that will allow you to play to your organisational strengths.
If you need more guidance on how to grow your business and take on the challenges of the market, The Help to Grow Management Course gives you this opportunity to step back while also benefiting from the guidance of experts who can offer their perspective on the challenges that your business faces.
The Help to Grow Management Course is a flexible program designed to give SME managers and leaders in the Greater Manchester area new insights, skills and strategies that can boost growth and build the confidence required to steer a company to success.
If you’re interested, you can find out more about Help to Grow here.
The next cohort of the 12-week management course begins on 28 January 2025.