Mar 31, 2016 -- Most established leading companies all over the world find difficult to understand and reap the benefits out of digitization. Most of them have lost their leading positions to new disruptive players entering the market, making it increasingly important to figure out the right strategy to counter this competition.
The company’s success in digitization however cannot be ascertained by following what established leaders are doing. It is important for any organization looking for digital transformation to clarify the strategies that works right for them. And, for this, companies must first understand what ‘digital’ actually means for them and where exactly they are in the journey towards digital maturity.
McKinsey & Company performed an assessment on the digital maturity of big corporations, revealing wide range of performance based on the “ Digital Quotient” metric.
The survey reveals that disruptive players in the market like Uber, Spotify and others are very few in numbers. Moreover, the ecosystem shapers who set the standards on the hyperscaling digital platforms are very rare.
Digital success of the company as such depends on the ability to invest in relevant digital capabilities that are well aligned with the strategy, as well as a culture that supports this mechanism. Also, it is important to align the organization structures, talent and funding systems along with KPIs (Key Performance Indicators) with the digital strategy chosen.
The stemming requirement from the entire survey is thus developing a strategy that can enable companies to transform digitally and make better and faster business decisions.
Developing the Right Strategy
It is important for all the decision making executives of the company to arrive at a common understanding on what “digital” means for them. Once identified, the next step is to define the digital strategy that completely integrates organizational objectives.
To develop the right strategy, there are few important points to be considered, such as:
- Identifying the areas where most interesting opportunities and threats from digitization will open up
- Identifying how quickly and on what scale the digital disruption is likely to occur
- Determining the responses to utilize the opportunities and reallocating the resources away from the threats
The next step is to implement the strategy for small scale disruption in the existing business model and gradually start redefining the existing one. As an example, consider a building product manufacturing company dealing in doors and windows manufacturing. In its conventional business model, the manufacturer collects information from the customer, makes use of conventional 2D design tools to develop the door/window design, which is used by the shop floor for actual manufacturing. To disrupt the conventional process, the company makes use of advanced CAD tools that directly connects with the PLM system, keeping all the teams across the department informed right from raw material procurement to product delivery.
To begin implementing the change without disturbing the process, manufacturer first implements the change for one product and measures the performance out of it. This approach either helps in applying the process for rest of the products, or optimizing the approach further for better benefits.
One of the important factors in the journey towards digital transformation is to also develop a collaborative culture both internally and externally. From the survey, it was found that less than 30% of the 150 companies only had a good collaborative culture. This can be improved by using cloud-based virtual environments to connect teams together and experiment collaboratively for innovation by making decisions from customer experiences. It is also important for companies to consider collaborating externally with customers, technology providers and suppliers and bring better ideas to the table from distributed talent sharing similar interest and purpose.
However, to implement digitization in the organization requires digital leaders who can recognize the digital quotient of the company and put the right amount of efforts in the right direction to raise the quotient further. These leaders must have the ability to separate opportunities from threats and identify actual collaborators and competitors from pretenders. The pursuit to digital maturity needs a holistic commitment from the leaders and a sustainable investment in people, capabilities, technology and cultural change. This requires that the organization should remain honest about their actual digital quotient, clear about the long-term strategies and open to revamping the processes and solutions.
Gaurang Trivedi is engineering consultant at Hi-Tech Outsourcing Services. Besides, donning multiple hats, as a website manager and marketing in charge, he also oversees the editorial content, coordinating and managing the website, its news sections, blogs and social media promotions as well.