In one of his last keynote speeches before his retirement, John Chambers, Cisco’s CEO of 20 years, predicted that more than a third of businesses today will be dead in 10 years, stating “the only ones that will survive will turn their companies into digital, techie versions of themselves, and many will fail trying.”
Furthermore, American research firm Gartner predicts that by 2020, 80 per cent of today’s business products or processes will have been reinvented, eliminated or digitised. However, these apocalyptic message are cushioned by one truth: we are all capable of operating digitally and the barriers to entry are falling away all the time.
Digital transformation is not an end state. It is an ongoing revolution - against business-as-usual in favour of continuous improvement, agility, automation and transparency - that will help organisations grow stronger products and services better, and make customers happier.
The current climate
As a global consultancy that works to help clients achieve comprehensive digital transformation across financial, technology, retail and logistics sectors, North Highland wanted to enact research that took a snapshot of the current situation. Therefore in August 2016, more than 200 C-suite-level business leaders in the U.S. and U.K. were asked about their digitisation efforts.
In terms of the findings, it was reassuring to discover that 83 per cent reported that digitisation is a primary decision driver, with 83 per cent stating that it is “very important” or “extremely important” for their organisation to achieve an increased level over the next five years. Though encouraging, it is sobering to think that statistically it is likely that many in this category of digitisation-enthusiasts will be part of organisations who will not successfully embrace the concept which will threaten both their market share, and possibly event their existence. As will be examined further below, digitisation of one’s business is a bandwagon that can be jumped onto, there are far too many casualties that evidence this, having failed to embrace the concept meaningfully across their business.
Diving deeper into the survey, organisations reported that digitisation is driven by three primary business goals: reducing costs, streamlining work and satisfying or engaging customers. Today, winning organisations optimise digital tools and services to enable informed decision-making, internal collaboration and meaningful customer engagement. Though often business goals can be seen as lofty and even burdensome targets that will be difficult to achieve in increasingly competitive markets, ultimately there are drivers are responsible for meaningful business advancement and progression.
On the subject of reducing costs, the primary driver at 67 per cent, many will leapfrog to the conclusion that human jobs or responsibilities will be replaced by digital technology. While there is an element of truth in this, a conscientious organisation is one that will think long and hard about the integration of digital processes and how the potential of employees may be leveraged alongside them.
When it came to respondents’ views on obstacles to digitisation, almost half listed funding as the main obstacle, followed by cross-department cooperation and siloed efforts without organisation without organisation-wide perspective. Inevitably, all of these can be said to stem from a lack of communication and organised operations management, which are particularly impactful from a cost-efficiency point of view. The latter two obstacles are inextricably linked, with a general lack of connectivity and communication within an organisation leading to employee capacity being wasted as siloed departments try to connect which each other.
However perhaps one the most insightful findings of our research was that 67 per cent of respondents surveyed stated their IT department is primarily responsible for executing digitisation. Though this may make complete sense from a technology installation point of view, with IT professionals integral to getting various tools up and running, the responsibility for execution of an organisation wide should not lie within one department. Company leaders must be involved throughout the process to ensure that the transformation, which can take time, remains aligned with wider business goals.
In this sense, as business evolves the traditional role of all departments, IT included, must be continuously reassessed to ensure they are being deployed in the most effective way possible.
A truly digital future
Today’s most successful companies – those that sowed the foundations of the trillion dollar start-up being talked about today – are innately digital, and they’re slated for continued success well into 2020. These companies don’t have silos or internal hand-offs and they operate at near-zero latency, minimising work-in progress and the stagnation that comes with it. They are lean, with a higher ratio of hours clocked to “doing” rather than planning, reporting or communicating around existing silos.
Many operate like the Apple App Store, which has 2 million apps, 130 billion downloads and in excess of $20 billion in sales in 2015, all run through an algorithm driven system that vets new apps and dictates where they appear in the storefront based on downloads, popularity, and keywords. Human intervention in a company that gives authority to data and empowers it to inform short-cycle feedback loops is by exception. They render human and manual interference unnecessary in the sale and delivery of products and services, and even in the creation of new ones.
Though rendering human “interference” is quite rightly not on the agenda of many companies, whose main commodity of their people, the model on which this new breed of start-ups must provide food for thought for those wishing to compete at the top level. Much of this can be achieved by an organisation-wide commitment to digital transformation, one that includes all departments and employees at all levels, connecting people, process and technology across an enterprise and empowering them all to operate digitally.
This “culture” shift, one that is critical for responding to quickly changing requirements and moving organisations forwards, requires hard work, persistence and patience. Those that engage in this transition fully, will get to join the 2020 club, surviving the decade and becoming part of the digital future of business.
Ben Grinnell, Global Head of Technology & Digital at North Highland
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