Just under half of all business leaders do not have a digital vision for the future and are not even prepared to make the investment into technology necessary for such a transformation.
Yet the adoption of digital undermines any historical competitive advantage North America or Europe might have had allowing leaders in the emerging economies to leapfrog their peers.
Those are the findings of Transforming your company into a digital-driven business, a research paper into the state of readiness of leaders to transform their companies in the face of technological change, written by Jeremy Blain and Robin Speculand.
The co-authors’ solution is an 11-step plan that they compare to the Doomsday Clock – the symbol representing the proximity of the world to global catastrophe – in the urgency with which leaders need to respond.
“We had anticipated that transforming to digital would be high on the leaders’ agenda for this year. But the results indicated little readiness and even hinted at complacency among leaders,” says Blain, founder of leadership consultancy Performance Works.
The apparent false sense of security coincides with the arrival of technologies, such as AI and blockchain, where all companies begin from the same starting place irrelevant of any infrastructure, skills or customers built up over years.
“More accessible and affordable technologies are levelling the competitive playing field. Emerging regions and countries are no longer reliant on learning from the corporate evolution journey taken in the West,” adds Blain.
The paper echoes recent research by Odgers Berndtson first reported on Forbes.com. Leadership Disrupted showed that leaders in the Americas and Europe should be listening to their peers in Asia who are dealing with the pace of technology adoption faster than anywhere else in the world.
Despite complacency in the face of growing competition, more than two-thirds of leaders are aware that they need to change rapidly and bring about a significant transformation within their company if they are to achieve it.
In response, Blain and Speculand, who surveyed over 1800 leaders on three continents, used the engagement with leaders to identify the 11 steps taken by those who are transforming their companies.
Step 1: establish a digital vision
The leadership team explores how digital will reshape its product or service by analysing its current position both internally and externally.
The strategy must steer the company towards a digital vision that benefits customers and employees alike. But the pace of change should be set by the sector within which the company operates.
Blain and Speculand give the example of one of their clients, a technology provider in Europe, and another client, a supplier of seeds to farmers, headquartered in Thailand.
“The technology provider had to move very fast while the agriculture provider was able to move more slowly.”
Yet 40% of companies across North America, Europe and Asia Pacific do not have a digital vision.
Step 2: develop a leadership digital mindset
Leaders need to be fully committed to embracing ways of working and to literally transforming themselves before their organisation.
Bridges’ own research from 2016 showed that leaders spend only one day a month discussing the implementation of their digital strategy.
Step 3: establish a digital-first culture
Digital transformation is not about tweaking the current business model piecemeal but requires a whole business model transformation end-to-end.
“It is not about having a digital strategy but a strategy in a digital world.”
Asia Pacific leaders are significantly ahead of their peers in North America and Europe.
Step 4: create a cross-functional customer-centric organisation model
Corporates have traditionally been organised into large, mono-functional teams which often leave them siloed both from customer-facing colleagues within the organisation.
A modern company, whether a digital-first one or a startup, works in small, cross-functional teams so that marketing, sales, IT, customers services and even finance rub up against their customers, hearing what they really want.
Eric Ries sums up the difference between an old-fashioned and a modern company in The Startup Way.
Step 5: adopt design thinking
The startup approach to innovation has delivered over a decade of new products and services many of which have become household names. It does not presume to deliver a finished product but tests an idea and pivots ruthlessly depending on customer feedback.
Corporates, which have been selling the same product or services to their customers for years, find design thinking a challenge because it overturns so many of their assumptions and certainties around culture, process and technology.
One key indicator that a corporate has made the shift is to gauge whether failure is acceptable. Less than half have done so.
Step 6: empower employees
“Digital transformation requires employees to learn new skills such as how to create algorithms, participate in hackathons and adopt design thinking,” says Blain.
“Leaders need to point their employees in the right direction, set the parameters for empowerment and then step back, allowing employees to take the right actions. When they make mistakes, they are present to support them.”
European companies lag way behind North America and Asia Pacific with around half their employees unenthusiastic to make the necessary changes and learn new skills to bring about digital transformation.
Step 7 Learn to experience and co-create
Leaders need to allow employees to respond quickly to customer needs and make decisions which is only possible within small, multi-functional teams.
Companies in North America and Europe are better prepared.
Step 8 Protect your customers’ trust
Protecting your customers’ data is key to maintaining their trust, following highly publicised cyber-breaches of high profile global multi-nationals.
“Data security is hugely important in any company and needs to be part of the initial planning and not an afterthought. This is why we asked if customer data protection and cybersecurity was part of core strategy,” says Blain.
North America at 60% was most conscious and active on cybersecurity followed by Europe at 58%. Asia Pacific was last with 53%.
Step 9 Evolve legacy technology systems and adopt new systems
The most competitive companies are adopting new technologies, such as AI or blockchain, to give customers a better product or service and to free up leaders and their teams from operational task to focus on strategy and people (see research by Microsoft, the University of St Gallen and Altimeter Group first reported in Forbes.com).
European leaders lag markedly behind their Asia Pacific and North American peers in their preparedness to make the necessary upgrades to technology, according to Blain and Speculand.
Step 10: become data-driven and visualise data
The final two steps ensure sustainability requiring new digital measures to track performance and new ways to present a large amount of data.
Step 11: make digital strategy measurable
Transforming a company to digital can be very expensive. Leaders have a responsibility to track performance and the return on the investment.