“Companies have always relied on technology to innovate and improve productivity, but over the last few years, we’ve seen an explosion of technologies such as mobile and social media and big data,” McKinsey director Paul Willmott describes. “In turn, that’s creating huge new opportunities—and threats—for most enterprises.”
Your consumers are willing to purchase goods online, via their smartphones, tablets or desktops. They’re not just willing – they are increasingly demanding it. This digitalisation will challenge companies’ traditional operating procedures and business models.
Enterprises that are hesitant to change, preferring to adopt a ‘wait-and-see’ approach, failing to grasp the opportunities that this inevitable change will bring, could find it detrimental to their businesses.
In MIT’s 2013 digital transformation survey, results indicated that 85% of executives believed digitalisation was a top organisational priority.
What could me more worrisome for business leaders, though, is the rise of disruptors who are able to offer differentiated value propositions for consumers. It’s paramount for executives to add digital as a top priority on the agenda. Here’s why:
The challenge for enterprises
What are the challenges facing enterprises?
Willmott describes three main concerns for CEOs.
How can we match the agility of digital-savvy start-ups?
“Start-ups tend to move at a very different rate and are able to innovate the customer proposition very quickly,” explains Wilmott. “And large, incumbent businesses with legacy systems tend to have a problem moving at that rate.”
How do we build digital skills across the enterprise?
To compete effectively, your enterprises will require digital skills across multiple areas of the business, from marketing and sales to operations and the value chain, Willmott advises. Finding talented resources to assist with this could prove difficult and enterprises will need to look towards outsourcing where required.
Who will be accountable for digital?
Companies who have prioritised their digital journey have created a new role of chief digital officer, while others are driving digitalisation from an IT perspective. “But, increasingly, we’re seeing that the firms that are really making a difference are doing so because the chief executive is getting personally involved,” notes Willmott.
Becoming a digital enterprise
To becoming a fully digital business, you should view digitalisation as not simply just a refresh of current business operations. Digitalisation requires a completely new business model and operating procedure. This is no small feat and successful change of your organisation will require bold thinking, remembering that the risks of not adopting a digital strategy far outweigh the risks of change.
Willmott advises that key to digital success is prioritising what needs to be done in your digital portfolio, and focusing on your most important areas.
Start with your people and culture
First and foremost, it is critical to get buy-in from your employees on becoming a digital enterprise, as it will be your teams that will drive the digital transformation.
Often organisations tend to be siloed across departments and geographical locations, however your customers will expect a seamless experience from you – regardless of which department is handling the stage in their customer journey. This will require you to think carefully about your governance structures and your systems and processes.
Take an end-to-end view
“Take an end-to-end view, ensuring that customers receive a seamless experience from end-to-end and that all functions are working together,” advises Willmott. “And then, finally, look at your portfolio of businesses and understand what impact digital may have on valuations.” It is important to focus on what your needed capabilities are and how the portfolio needs to be rebalanced accordingly.
“The “combined value” to society and industry of the digitization that is already occurring in every industry could generate upwards of $100 trillion over the next 10 years.” – The World Economic Forum