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People and culture must come before the technology to unlock the full potential of digital.
The companies have been transforming for the last 30-40 years using technology and we have seen many phases of development and transformation to respond to the changing business climate. However, what is different today is that in the recent past, the pace, cost, and volume of technical innovation has accelerated the way businesses adopt technology and hence today’s transformation is happening via tools, processes, and data that is driven through digital channels.
With a new breed of online companies providing enhanced customer experience using new online marketing channels, providing digitally-enhanced products, and utilising cloud technology to engage and service customers utilising data-driven insights, and customers embracing the same has put pressure on traditional businesses to respond to the "uberification" of their industries.
At the stage we are in now, innovation and application have become so pervasive that it is "just the way we do things now" for many companies.
There are technology and cultural challenges. The pace of technology change has outstripped our abilities to select and adopt the relevant components suitable for our environment. So, in many cases, companies simply do not know what ‘digital’ means to their business and how they should go about selecting the right technology.
Driving digital initiatives should ideally result in accelerating business change in areas like customer experience, operations, and business model. Companies simply do not have the right skills and latitude to evaluate technical options and drive digital initiatives in various verticals of the front office and back office and horizontally right from strategy to operations to impact business outcomes.
Many Vietnamese companies have been following traditional organisation hierarchies where IT is still a support function and is not part of the core board of management. There may be stubborn senior executives who do not like change, there may be employees who simply do not want to embrace new systems, tools or processes because they prefer to do things the way they have always been doing them. When it comes to successful digital transformation, people, rather than technology, may be the biggest inhibitor. They can challenge and even impede tech adoption on multiple levels and the "we have always done it that way" attitude really thwarts business development of any kind, let alone digital transformation. Businesses can harness the full benefits of technology adoption only by encouraging buy-in from all levels of the organisation, and from all people involved.
The first step is to define what digital really means for the organisation and there needs to be strategic clarity on how the consumer or the customer prefers to interact and consume the products or services. Thus, the leaders need to take a step back, gather and align their leadership team to define the end state of their digital journey in clear business outcomes—and deciding whether it means more flexibility in supply chain, reducing cycle time, reducing inventory and costs or iudentifying the growth areas to increase revenue.
Once you are clear on your end state, then you can go and think about tools to drive those concepts—the tools are not about technology but how to enable expected business outcomes and give customers an experience that will keep them coming back, improve market share and loyalty.
Thereon, companies should start by putting a chief digital officer in charge of the full digital agenda. He/she should have full freedom in building the right team with the right mindset, good communication skills, and a clear understanding of the digitisation strategy as these are key to the speed and effectiveness of the digital transformation. Employees that are empowered by digital leaders and have received the right training feel more encouraged and enabled to embrace technology and data-driven decision-making.
Data is key to transformation, too. Adopting digital technologies that will unify multiple data sources into a single version of the truth significantly improves business intelligence and insight. Data analysts need to experiment and bring fact, data, and evidence to the table on what is going to work that should complement if not precede the experience that influences the strategic decision-making process.
A warning: this kind of a cultural shift where “evidence will prevail upon opinions” shifts the power structure in a business. Decisions that had previously been deferred to those with years of experience will now be assigned to data analysts and there will be undercurrents of resistance.
What we forget is that technology is merely an ‘enabler’ for change far more important than technology from a business perspective—change, that have to do with employees, customers, and the overall company culture. While a strong digital strategy is critical, you need a culture conducive to its execution.
Truly changing the culture, moreover, requires support for a digital reinvention flow through the management hierarchy right down to every front-line employee, so that the full organisational pyramid is tuned towards digitalisation. All leaders need to shift their style from top-down decision-maker to coaching and it is easier said than done. There are various cultural blockers that have been put in place, intentionally or inadvertently, within an organisation. As Jeff Bezos of Amazon says, "as companies get larger and more complex, there is a tendency to manage to proxies, and gives the example of the process as proxy".
It is extremely important to look at these proxies as cultural inhibitors—things such as processes and KPIs that are geared towards risk aversion, systems and people-to-people relations, politics, and budget which are organised in territorial and hierarchal ways. Writing business plans and financial reviews for projections is another such inhibitor that does not allow people to experiment and make people innovation-averse.
There needs to be complete transparency in creating new incentives, job descriptions, role descriptions, leadership behaviours, and innovation goals which will get people motivated to experiment, fail fast and fail often, iterate, and learn. If you do not put all of this on the table, you will have undercurrent resistance coming from people who are afraid of transparency. It is said, “In the digital age “I” in ROI stands for ignorance,” so ignore these softer aspects and businesses have a painful transformation journey ahead.
As you look two or three years into the future, what technologies are you the most excited about and which ones are beginning to make their way onto your roadmap?
Traditional IT is going from being a system of records to I3—Information (outside in from inside out), Innovation, and Integration (create and manage the ecosystem of players that will deliver value to the customer).
We are moving away from traditional client-server monolithic applications to a whole host of new app analytics platform-based applications that are running on in-memory engine and seamlessly integrate with APIs to third parties’ apps on the cloud. So, these app analytics technologies are going to make implementing and maintaining enterprise systems easier. Adoption of the cloud for large and small-scale businesses has already started happening and it is only going to become mainstream.
Artificial intelligence and image recognition combined with big data are providing new insights into marketing and sales. In manufacturing space IIOT is an interesting space to watch out for as IOT, Big Data, and machine learning are converging into integrated platforms provided by big platform providers and will make the transition easier for companies already using enterprise ERP. Also, the 3D printing's ability to reduce cycle times for part making will help in potentially virtualising inventory. Block chain emerged as an important technology in the financial sector in 2017. Smart tech, iBeacons, and large-scale NFC readers coupled with innovations in blockchain technology open up opportunities in asset tracking and fraud detection. Robotics process automation (RPA) will make a huge impact on business process management.
I recently heard that VIPs (Vietnam, Indonesia, the Philippines) will be the next growth drivers of a world economy and this is a great platform for Vietnamese companies to shine as the world looks at us to lead the global growth.
However, as the country is moving away from the traditional low-cost manufacturing-based growth, Vietnamese companies have to start looking at digital solutions to drive growth. We still have developing market challenges such as the lack of standards, talent pool, and technology infrastructure. Unwillingness to share and store data in a transparent manner using technology, organisation, and process lethargy are also common issues at SMEs.
There is a lot of buzz around Industrial Revolution 4.0 and the new age digital technologies that I mentioned. With SAAS and cloud-based apps, it is easier to get started on the digital path and some functions or leaders have a tendency to buy software on their own. Many leaders simply want to buy shiny new toys and expect their employees to do a better job using it. This is a recipe for failure as they have to deal with a maze of different tools, workflows, and methods of storing and accessing data. Change is about people.
Digital transformation is about change, right? And the key is to change people's minds without telling them they have to change their minds, because that puts people on the defensive. First create the right environment: get a documented digital strategy, get governance in place.
Identify a lighthouse project that will become a call to action for other initiatives. Do not overreach. What are the major pain areas? Pick those 2-3 areas and start to innovate and iterate. Be bold. Test the ideas that resonate and kill the ones that donot work and instil a "cradle to grave" collaboration between IT and business functions.
While the technology will always underpin digital transformation—businesses must remember that there are more important factors that will shape the future: people and the values they possess. People and culture must come before technology to unlock the full potential of digital solutions.
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