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New digital entrants and reinvented legacy companies contribute more or less equally to the erosion of growth at established companies.
Eroding
Worried about the effect of new digital entrants on your industry and markets? Reinvented incumbents may be an equal threat.
The legacy threat
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The best response to digital disruption
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The best response to digital disruption
Why legacy companies must reinvent—or die
Why legacy companies must reinvent—or die
Fortune
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Why legacy companies must reinvent—or die
Why legacy companies must reinvent—or die
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The spoils
Reinvented incumbents boast better economic returns than their traditional counterparts.
The case for digital reinvention
The case for digital reinvention
Article - McKinsey Quarterly
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Traditional companies can reinvent themselves too, by addressing the magnitude and the scope of their digital investments.
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Why legacy companies must reinvent—
or die
Why legacy companies must reinvent—
or die
Fortune
The case for digital reinvention
The case for digital reinvention
Article - McKinsey Quarterly
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Savings
COGS
EBITDA
EBITDA
20
17
11
Average EBITDA margin, %
COGS
0.4
0.1
–0.1
Annual reduction in cost of goods sold, %
5
4
2
Annual procurement savings, %
Savings
Procurement followers
Middle of the pack
Procurement
leaders
complexifying
The best response to digital disruption
A next-generation operating model for source-to-pay
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40%
to traditional incumbents
to digital new entrants
30%
to reinvented incumbents
30%
Revenue and profit growth from digital
Digitize
Acquire
Disrupt
Cannibalize
Cannibalize
more likely to have cannibalized their own core
~2x
Disrupt
more likely to use AI at scale in at least 1 business unit
~4x
Acquire
more likely to have acquired a digital business
~2.5x
Digitize
more investment in digital
~3x
Traditional incumbents
Reinvented incumbents
Reinvented incumbents vs. traditional ones
Cannibals
Reinvented legacy companies invest and acquire in digital, disrupt more readily, and more willingly cannibalize their core.
better ROI on digital
~2x
better EBIT growth
~2x
better revenue growth
~2.5x
Reinvented incumbents vs. traditional ones
86
11
78
11
80
21
70
22
Products and distribution
Ecosystems
Processes
Supply chains
Winners
Others
% of respondents citing a high level of strategic response to digital change in …
The best response to digital disruption
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