Digital capabilities help companies through economic crises

The Center for European Economic Studies, ZEW, found that companies with high digital capabilities survive economic crises, like the one in 2008, better than those with low digital capabilities. The researchers looked at a large number of companies within all industries and compared their productivity growth and their capability to innovate before and during the crisis. Their research shows that in many industries companies with a low degree of digital capabilities lost productivity, and their ability to innovate declined. On the other hand, companies with a high degree of digital capabilities lost a lot less productivity and generally kept their ability to innovate. Their ability to innovate around their processes has even increased. That means these companies were even able to save costs.


Why is that the case? The main hypothesis is that companies with strong digital capabilities are more flexible and agile, because they have already made their processes lean and well thought through. For any company to reap the benefits of digital transformation, it has to change its processes and organisational structure. Companies with strong digital capabilities change their culture. If they don't, there is very little return on investment for ICT or digital projects. 

Because they have already made themselves more agile, they can react to market changes a lot quicker and better, and can even innovate and grow in hostile market environments.


These are some of the most fundamental insights from successful digital transformation projects. Companies that treat digital transformation as IT or technology projects will not get the expected return on investment. Creating and implementing a holistic business model, and implementing it across the organisation, accompanied by cultural change and well structured change management, is essential for success. The model sometimes has to be radical to deliver sustainable benefits. Digital transformation has to be driven from the very top of the business. 


You might think now: Why would I care. The German economy is doing extremely well, and so is my business.


Yes, and that's the way it should remain. Now that your business is booming, you have the opportunity to invest in your future. Start your digital transformation now, so that the next economic crises is an opportunity for you, not a threat.

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