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The tidal wave of digital transformation has restructured global industrial operations. In a pandemic-affected world, digital transformation has moved beyond the “nice to have” boardroom jargon to a “must-have” imperative. Organizations were forced to adapt with agility and flexibility to this new normal and accelerate industrial innovation. Established practices and business models were disrupted and destroyed, but destruction led to reconstruction and new ways to resolve challenges.
Defining “digital transformation” is complex as it encompasses the gamut of technologies, processes, and collaboration across teams and geographies. ARC Advisory Group defines digital transformation as: “The integration of digital technology into all areas of business, fundamentally changing the way companies operate and deliver value to customers. The organization is typically charged to innovate and improve across multiple dimensions such as digital/disruptive technologies, culture and leadership, operational agility, workforce engagement, customer experience, environmental, social and governance, and competitive performance.”
ARC has been tracking the digital transformation initiatives of companies by conducting surveys and analyses for the last 5-7 years. All this information has been collated and the Top 25 global industrial digital transformation leaders, across multiple industries and geographies, have been identified. This is the first in a series of blogs on the leaders in the digital transformation space.
Tesla
Tesla’s fundamental philosophy internally and externally is to shift perception. Prior to Tesla, the market perception of electric vehicles was a slow, ugly juiced-up car with little range. Tesla shifted this perception to one of being a sleek high performance and accelerated mode of transformation. This same strategy is used inside the organization to gain buy-in for digital initiatives and processes. For example, when Tesla sets out to automate its internal processes, they try to build it better from the start rather than start a clunky project and hope to get better on revision 4 or 5. This orientation is fundamental in determining what KPIs the company 
values, as many of them are far different from metrics managed by manufacturers relying on traditional views of success.
By showing value from the start and having internal stakeholders support initiatives, internal employee resistance is minimized. As ARC sees it, this is an example of a company that is comfortable with digital transformation and adapts to business challenges with greater ease quickly. Tesla’s digital connectivity has allowed the company to deliver more value to consumers. Their business model is built on the tenet that the vehicles are more like interactive computers with wheels, leading to the creation of an intelligent data platform and connected ecosystem, enabling Tesla to learn from and serve its customers.
In Q3 2021, Tesla has publicly stated it plans to grow manufacturing capacity as quickly as possible. Over a multi-year horizon, Tesla expects to achieve 50 percent average annual growth in vehicle deliveries. This rate of growth will depend on Tesla’s equipment capacity, operational efficiency, and the capacity and stability of the supply chain.
Going Forward
The prevailing philosophy behind digital transformation has been that this transformation naturally translates to success. ARC will continue its research in all areas related to digital transformation to learn more about what is working – and what isn’t – as companies pursue their unique digital transformation activities. The Industrial Digital Transformation Top 25 report will be published annually. With this being the first issue, your feedback is very important to investigate new approaches and measures to adjust our methodology, identify successful digital transformation initiatives, and help the industry as a whole digitally transform. To download the final report, please click here.