Digital capabilities, adoption, and usage are evolving at an extremely rapid pace. While most users struggle to keep pace with the relentless pace of innovation, sectors, companies and individuals at the digital frontier continue to push the boundaries of technology use and, as a result, reap disproportionate benefits.

The pronounced gap between the digital “haves” and the “have-nots” is a major factor shaping competition at all levels of the economy. Companies that lead the way win in the struggle for market share and profit growth; some change entire industries to their advantage. Workers with the most advanced digital skills are in such high demand that their salaries are well above the national average. Meanwhile, the opportunity cost for organizations and individuals who fall behind is rising.

Our new report from the McKinsey Global Institute (MGI), Digital America: A Tale of the Haves and Have-Nots, represents the first major attempt to measure the ongoing digitalization of the U.S. economy at the sector level. It introduces the MGI Industry Digitization Index, which combines dozens of indicators to provide a comprehensive picture of where and how companies are building digital assets, expanding their use of digital technologies, and creating a more digital workforce. In addition to the information and communications technology sector, media, financial services and professional services are growing rapidly, while others have significant growth potential.

The report also quantifies the significant gap between the most digitized sectors and the rest of the economy over time and finds that despite massive adoption, most sectors have barely closed the gap over the past decade. Lagging sectors are less than 15 percent more digitized than leading sectors (exhibit). In fact, because the less digitized sectors are among the largest in terms of contribution to GDP and employment, we found that the U.S. economy as a whole is only reaching 18 percent of its digital potential (defined as the upper bound of leading sectors’ utilization across various indicators).

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What is digitalization?

Domestic or industrial digital transformation is the process of introducing modern information technologies into the work of a company or enterprise. As a result, the organization reaches a new level of development and gets the opportunity to significantly increase profits in a short time.

Business digitalization involves not only the installation of additional equipment and software updates, but also a fundamental transformation of work processes. Thus, it is possible to introduce more effective management approaches, expand communication methods, and form a new corporate culture.

Business digitalization is possible not only at the beginning of its formation but also at later stages of its existence. In this case, entrepreneurs and employees enjoy the following benefits:

• Improved customer experience – with the help of appropriate technologies and tools, it is possible to maintain the most personalized interaction with customers and clients;
• Flexibility of various business processes, as well as their acceleration;
• The ability to use innovative tools – cloud technologies, Mobile First strategy tools and ready-made solutions greatly facilitate work in various areas;
• Ability to collect, analyze and store huge amounts of information.

Key areas of digitalization

Digital business transformation technologies are widely used in several areas:

• development of an improved business development model based on digitalization and the desire for modernization;
• development of digital services and goods or modernization of old ones for modern technologies;
• digitalization of business processes so that product life cycle management becomes easier and more accessible;
• automation of data collection, processing, and storage;
• digitalization for production process management;
• supply chain management;
• implementation of a number of administrative functions of the enterprise;
• efficient automation of manual labor of company employees through the introduction of robots and the use of electronic document management.

Depending on the goals of digitalization, the company or enterprise selects technologies that will increase the efficiency of its work processes.

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