With the advent of more and more advanced technologies such as Artificial Intelligence, Internet of Things, Machine Learning, and etc., many businesses and their strategies are inevitably affected. It is essential for company leaders to develop their company’s digital infrastructure to cope with the challenges of tomorrow.
It is not about having a digital strategy but a strategy in a digital world.
What follows is a summary and excerpts of a research paper titled “Transforming Your Company into a Digital-Driven Business” published by Bridges Business Consultancy Int and PerformanceWorks International. The research was conducted from November 2018 to January 2019 across three continents: Asia Pacific, Europe and North America. Most of the responders are senior leaders of their respective corporations.
Here are most striking outcomes:
- Almost half of all leaders interviewed are not prepared for digital transformation.
Results indicated little readiness and even hinted at complacency among leaders which is concerning, as digital transformation will increase in momentum in 2019 as the cost of adopting its different aspects decreases and its impact on companies’ offers to their customers increases.
- Digital is leveling the competitive playing field in the three continents researched.
Advances in technology made in North America and Europe are now mostly irrelevant. Meanwhile, Asia Pacific (and other markets) are leapfrogging into adopting digital. Consider how China is leading in becoming a cashless society. While once lagging behind in payment due to the low uptake of credit cards and no central crediting institute, China solved this problem digitally—by adopting a cashless payment system.
- Bureaucracy in Western companies is hindering their digital transformation.
Generally, companies in Asia Pacific are younger than in Europe and North America, as most markets are either emerging or just emerged as developed economies. Thus, young companies can leapfrog their counterparts through appropriate and up-to-date technology investments. Western companies, on the other hand, are more burdened by hierarchy and bureaucracy due to the fact that businesses are more established and have built in more layers and procedures.
- Alarm bells should be ringing in boardrooms.
This year will see the trend of automation and leveraging of Big Data penetrate many more aspects of business, accentuating the urgency for companies to transform. Just tweaking the current way of working isn’t enough. As leaders prepare their organizations and employees for change, a whole shift in the company’s business model is required.
Three Continents: Asia Pacific, Europe and North America
It is interesting to see how companies in the three continents are performing in undergoing digital transformation. Based on the research, we learn companies from one continent are doing better in some areas than the other two.
For example, when asked “Does your company have a digital vision for the future?” 65% of the responders in North America answered Yes while only 51% of the responders from Europe answered affirmatively. Despite digital being integrated across many industries to varying degrees, it is surprising to see that there are still 40% of the companies researched across all three continents do not have a digital vision.
Besides having more digital vision for future, companies in North America also perform better in such areas of digital transformation: High level of leadership commitment to digital transformation; More leaders in North America include cyber security and customer data protection as part of their core strategy; Companies in North America are more tolerant of failures (which are unavoidable as digital execution requires new approaches and experiments); Companies in the three continents all perform poorly in the area of utilizing data visualization to aid decision making, which is important as human brain processes visuals 60,000 times faster than text. Companies in North America do slightly better.
Compared with companies in the other two continents, European companies are slightly better prepared to shift to working in smaller, more agile, empowered and connected teams. They are also slightly better in measuring and tracking their digital objectives. When asked “Is your company using big data and prescriptive data to make business decisions?” 45% of the leaders in European companies answered Yes. (The percentage in North America and Asia Pacific is 43% and 42% respectively.) It is worth pointing out that adoption of Big Data needs dramatically improve as it is part of the DNA of digital transformation and powerful tool for managing the business. For example, General Electric generates $1 billion from data and is rapidly developing the “Industrial Internet”—its internal term for the Internet of Things.
As more and more emerging companies are in Asia Pacific, it is not surprising to see that companies in this continent are doing well in many categories of digital transformation based on the survey: Companies in this region are better prepared to digitally transform (and the leaders adopt a greater understanding and discipline around the challenges of digital transformation). More companies in Asia Pacific believe they need to transform fast in order to remain competitive. The most agile companies will transform and win, while the slow starters and procrastinators risk losing customers, markets, and revenue. It is also worth noting that the speed for implementing digital varies, depending on the company’s strategy and industry.
- Fast- e.g., banking and telecoms
- Medium – e.g., manufacturing and utilities
- Slow – e.g., luxury and mining
More leaders in Asia Pacific are also more prepared to upgrading its technology and investing more in new technologies that are needed for digital strategy.
Professionals in Asia Pacific displayed a stronger readiness to transform their culture into a “digital culture”. Changing a company’s culture is extremely hard, which is another reason the digital transformation failure rate is high.
Alarmingly, all three continents showed a serious lack of willingness for people to change the way they currently think and act (e.g., learn how to create algorithms, participate in hackathons and adopt design thinking). Asia Pacific does slightly better with 6 out of 10 people are willing to change their way of think and act.
“Design thinking” is a primary means for transforming the company toward becoming customer centric, and it’s a core fundamental of digital transformation. Disturbingly, only 4 in 10 companies in Asia Pacific have adopted this methodology for their employees, which is already the highest rate among three continents. Leaders are not ready to embrace the customer experience changes required in digital transformation.
“What needs to happen” for companies who are in the process of digital transformation
- Leaders and board members need to immediately identify the opportunities and threats of digitalization to their business and then steer their company, where required, toward a digital vision that benefits customers and employees alike.
- Leaders need a different attitude and approach for digital transformation so they don’t repeat fast mistakes (which they are already doing).
- Leaders need to adopt a greater understanding and discipline around the challenges of digital transformation.
- Leaders need to assess their current strategic position by looking internally and externally. Then they need to determine the right speed for their company’s digital transformation.
- Leaders, in collaboration with their boards, need to allocate funding for investments in new technologies after they create the strategy.
- Leaders need to recognize that because digital transformation impacts the whole company business model, by default, it results in a culture change (most of the time).
- Many companies need to work on improving the human touch within digital transformation to ensure employees are skilled for the journey and willing to participate.
- Leaders must start their digital transformation journey with customer centricity in the lead.
- Leaders need to identify the right approach for leading their workforce and be open to restructuring.
- Data security must be integral to every company’s strategy and not treated as an afterthought.
- Leaders need to create a culture within the company in which failure is acceptable but within certain parameters.
- Transforming a company to digital can be very expensive. Leaders have a responsibility to track performance and the return on the investment.
- Adoption of Big Data needs to dramatically improve as it is part of the DNA of digital transformation and a powerful tool for managing the business.
- Companies need to train both the leaders and the employees while introducing the tools to transform the way data is used.
Digital Transformation-11-step Ticking Clock Model
Finally, the following 11-step Ticking Clock Model will to a certain extent provide some guidance to your company as your company are undergoing crucial strategy implementation in today’s digital world.
Copyright © Bridges Business Consultancy Int & PerformanceWorks International
About the author
Robin Speculand is also a faculty of Duke Global Educator Network and he has been working with Duke Kunshan University Executive Education for years, offering courses in Strategy Implementation, Digital Transformation, Strategic Thinking, etc.
Copyright © Bridges Business Consultancy Int & PerformanceWorks International, 2019. All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopy, recording, or any information storage and retrieval system, without permission in writing from the publisher.