A war for talent is breaking out between consumer brands and tech companies. Brands and retailers looking to increase sales potential by unlocking digital initiatives are losing talent to the likes of Google in droves. L2’s latest Insight Report on The Digital Organization discovers a “digital talent quotient” by looking digital and e-commerce-specific talent relative to the number of employees. Surprisingly, L’Oréal Group’s digital quotient is higher than CPG giants Unilever and Procter & Gamble; 1.8% of L’Oréal employees have the “digital” or “e-commerce” in their title vs. just 0.9% for P&G and 0.6% for Unilever.

Screen Shot 2015-10-15 at 2.05.18 PMBut does that mean L’Oréal is more digitally forward than P&G and Unilever? Not necessarily. L2’s study also finds that more is not necessarily better when it comes to digital employees, and that no correlation exists between the talent quotient and digital competence. Kering, for example, has the highest talent quotient of all enterprises studied. Yet, its Digital IQ falls in the Average class in the Fashion Index and in the Feeble class in the ranking of Watches & Jewelry brands. In contrast, Estée Lauder has a media digital talent quotient and the best performance of the enterprises studies. It registered a Gifted portfolio in the 2014 Beauty Index and in the 2015 Hair Care and Color Index.

One of the challenges of organizations moving towards a digital future is capital allocation. Digital initiatives need incremental headcount, marketing spend, and channels to manage. The most efficient organizations reallocate capital vs. simply spending more.

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