Given the pace at which digital innovation is disrupting industries globally, it’s not surprising that most management teams feel pressured to find and deploy the right technology as fast as their budgets will allow. Many are discovering, however, that becoming a digital leader isn’t simply a matter of technological savvy.
A common misconception is that if your address isn’t in Silicon Valley, your company is disadvantaged when it comes to capitalising on digital innovation. But most companies are already steeped in technology and learning fast about how it can transform their businesses.
Typically, teams in the field are well aware of the digital threats and opportunities within their area of the organisation — usually more so than the corporate centre. They have launched apps, deployed robotics, established partnerships with digital players or are using data to analyse their businesses and make better decisions.
The real challenge for leadership teams is chanelling this energy into high-impact initiatives that can be deployed at scale — and then doing this again and again amid a constantly shifting landscape.
That is less about technology than creating an organisation that is close enough to the market to detect what type of change is essential and agile enough to respond quickly.
Building that kind of agility will involve almost every aspect of how a company delivers results. But the first step is defining where change is needed most and freeing up resources to overwhelm the challenge.
Most firms we encounter are highly energised when it comes to using technology to improve customer experience, upgrade products or services and make processes more productive.
The problem is that these efforts tend to be ad hoc and uncoordinated. Without the proper framing and orchestration at overall company level, the best initiatives will fail to get the attention and investment they need.
While it is important to encourage local ownership of ideas and projects, turning them into game changers requires ruthless project prioritisation from the centre.
It is useful to apply a framework (we call it Digital 360), which guides corporate leaders to a holistic view of the digital threats and opportunities facing key parts of the business, linking them to an overall vision for how digital is reshaping the competitive landscape. This brings order to a chaos of initiatives and provides a clearer basis for narrowing down priorities and managing the cross-functional interdependencies that the best digital solutions often present.
Digital technology affects every company differently, but it tends to create or destroy value in four critical areas of the organisation: customer engagement, digital products and services, operational performance, and preparing for disruptive new business models. Developing a clear point of view on the opportunities or threats in each area will suggest which capabilities need the most attention.
But even the clearest digital strategy will fail if people are unprepared to embrace it. As critical as defining where you need change is setting up the capabilities and processes that will enable it.
Without the proper … orchestration at overall company level, the best initiatives will fail
Information technology, for example, is often the tightest digital choke point because it is mired in old processes and needs significant reshaping to link it more closely to strategy while creating a more agile approach to development. It is also essential to develop key capabilities in data analytics to make better decisions using the flood of new information flowing through the organisation.
Ensuring that change sticks involves defining new roles, adding new skills and adopting new ways of working. It is also important to carefully choreograph the change, defining who will lead the effort and how it will be sequenced.
Mobilising for this kind of change inevitably means shaking up the status quo and leaders need to be prepared to manage the company differently.
Consider the challenge companies face in the rapidly changing market for power train compressors. Increasingly, competing in this market means equipping compressors with hundreds of sensors that send information to the manufacturer about power consumption, vibration, wear and output.
Manufacturers then analyse the data remotely to predict problems their customers might face and offer solutions. Blending the hardware with digitally enabled services creates measurable customer value.
But taking full advantage of it requires significant cultural changes. Product development teams have to work with field maintenance and commercial teams. Data management teams must develop predictive algorithms to improve the customer experience in co-ordination with the customer-facing teams. Marketing, commercial and finance have to work together to develop new pricing models. All of this has to happen seamlessly and rapidly. The old system of passing possible solutions across silos isn’t fast enough.
Understanding these dependencies and managing them is an essential part of developing an agile model for accelerating innovation, which has to be the ultimate goal of any digital transition. But it starts with a recognition that at a time when technology is in flux, success isn’t about simply applying technology anywhere and everywhere.
It’s a matter of developing an agile and reconfigurable operating model — one that gives the company the capability to see what’s coming, prioritise the right solutions and deploy them faster than the competition.
• Diepeveen is a partner in Bain & Company’s Johannesburg office. Baculard is a partner in Bain & Company’s Paris office.
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