Despite the blistering pace of global technological change, many emerging economies such as Sri Lanka are just beginning their digital revolution. While the annual growth rate of Sri Lanka’s Internet population has surged by double digits over the past decade, only about 30% of the population is active online and on social media.
The stakes are particularly high for incumbents. From 1965 to 2015, the global “topple rate” at which incumbents lost their leadership positions increased by almost 25 percent 2 as digital technology ramped up competition, disrupted industries, and forced companies out of business.
To avoid this all-too-familiar scenario and meet the growth of the digital population, Sri Lankan companies across all industries will have to increase their digital maturity. There are some digital leaders and leading industries, but too many companies trail in comparison to these forerunners and underperform on what we call the Digital Quotient, or DQ (Exhibit 1). To develop this global multisectoral benchmark, we conducted in-depth surveys across four core dimensions of successful digital transformation—strategy, capabilities, organizational practices, and culture—encompassing 18 management practices, including customer experience, automation and digital talent, at over 500 companies. (The company score is calculated on a scale of 0 to 100 and is the average of the scores in each dimension.)
Digital maturity in Sri Lanka
In an analysis of about 50 Sri Lankan companies across multiple industries, 4 McKinsey found that the country’s DQ score of 35 places it slightly higher than the global median of 33
In comparison with other Asia Pacific emerging markets, Sri Lanka exhibits strengths in connectivity, digital marketing, investment in digital initiatives, and the ability to move quickly. Yet when compared with China, India, and more-developed countries, Sri Lanka is well behind. Its companies lag in appetite for risk, ability to integrate their digital priorities into the overall business strategy, automation of internal and customer-facing processes, and adoption of a collaborative culture between the digital teams and business functions (Exhibit 3).