Like teenage sex, digital business still appears to be a lot more talk than action, according to a new report by Capgemini Consulting. Its survey of more than 270 senior executives at 135 companies in 28 countries conducted in collaboration with the MIT Center for Digital Business found that the payoffs of organizing a company around digital technologies are substantial, but the organizational barriers to doing so are daunting.

In fact, Capgemini classified only seven percent of the companies it studied as “self-reinforcing” digital businesses, meaning that they are able to rapidly organize around new digital opportunities while achieving the highest level of customer satisfaction, operational efficiency and workforce enablement.

More than half of the companies in the study were barely past first base, digitally speaking. They’re starting to develop digital capabilities but aren’t yet seeing much payoff. About one in six were classified as “stalling,” meaning that they are unclear about even how to put digital technology to work in their businesses.

Win-win proposition

In many cases, operational efficiency and customer satisfaction go hand-in-hand, Capgemini said. One example is Lloyds Banking Group PLC, which cut the number of unique business processes from 700 to 23 and reduced the time required to close old accounts from 30 minutes to three. In the process, Lloyds not only achieved annual savings of more than £350 million but also improved customer service.

Another example is Starbucks Corp., which united its customer loyalty and digital marketing groups to create a successful mobile app program that today drives seven million transactions per week. Starbucks not only saves money and reduces error rates but also serve customers more quickly as a result.

Digital organization have four principal characteristics, according to the report.

1. They seek digital solutions first to every problem.
2. They infuse technology throughout their operations.
3. They develop digital skills at all levels of the organization.
4. They encourage data sharing and collaboration to eliminate silos.

Organizations that are high on the digital literacy scale not only consider themselves to be world-class in customer satisfaction at a much higher rate than less-savvy companies, but that also enjoy greater success with employee recruitment and retention.

The report suggests three steps to digitizing practices effectively. They start with reimagining operations from the ground up using digital solutions at the forefront. Digital technology needs to be adopted, not just deployed, which requires executive sponsorship and training investments. Finally, new work practices must be institutionalized, with decisions based upon sound data and transparent processes.