By Sanjay Sachdev, Partner, Grant Thornton Thailand
The reluctance is understandable. Your business has showed good signs of health for years (or decades), in large part because you’ve concentrated on creating value in the field you know best. Within a short span of time, you’ve begun to hear plenty of talk about the need for businesses to transform themselves for entry into the digital world.
To be sure, companies like Amazon and Facebook are making a fortune in this new realm, but it’s hard to see how their success relates to your business. You produce real-world products and services, which don’t seem to be a natural fit for the fast and furious ecosystem of online commerce. Do you really need to radically alter the business plan of your company, just to adapt it to the new world of business online?
Digital transformation may offer no guarantee of success, but stagnating in a changing world is a blueprint for failure. Newspaper and book publishers have either moved into online space, or been left behind by a society that did. Car manufacturers are discovering that they can evolve into the world of electric vehicles with cameras, sensors and autopilot features, or be out-competed by companies that do.
Eleven short years ago, Nokia was the king of mobile phone companies, and sitting on its laurels was the cause of its downfall. Hotels are losing to AirBnB, taxis are falling to Uber, brick-and-mortar stores are closing due to Amazon. These are all real-world products and industries that didn’t seem to be a natural fit for the online world either, and they’ve been upended in the blink of an eye.
The real question isn’t about whether to adapt. It’s about how. An effectively managed move into online space can result in a genuine reversal of fortune for your company, putting you at the forefront of your industry and making you the envy of your competitors. But everything depends on how well you understand the potential for improvement, and how committed you are to achieving it.
What Successful Adaptation Looks Like
Consider the world of retailing before society moved online. Every time a new customer walked in the door, they would be a complete stranger. You wouldn’t know what they were looking for, and they didn’t know the layout of your shop or warehouse. The customer would need to drive from one store to another, sitting in traffic and looking for a parking space on the blind chance that they would find a better deal with your competitor.
With the integrated customer profiling information that online shopping allows, your system can receive an instant report on the personal background and interests of any visitor who clicks through to your website. You’ll know which ad they used to find you, and the types of products they tend to buy. Your entire catalog will be easily searchable and at their fingertips, with an artificial intelligence algorithm carefully highlighting suggested purchases based on each customer’s data profile.
Indeed, a well-designed, fully-functioning digital interface offers a level of convenience that can feel almost magical for both customer and seller alike. But behind that magic there must be a solid plan for creating it. An effective online presence means far more than just adding video to your website, or setting up a Facebook account for your business. It requires a complete re-think of the relationship you have with your customers. Realising the true possibilities of the digital realm involves – from the very beginning – strategy.
First Steps Toward an Effective Digital Transformation
Your customers are already online. To join them there, the essential questions to ask at the outset are:
- How will your industry change in the next 5-10 years to fit the new paradigm?
- What should the new ideal customer interface look like?
- What innovations will arise to improve customer service?
These questions require analysis of the current state of competition across industries, as well as some blue-sky thinking to improve the customer experience in your own field. For most businesses, no technological breakthrough will be necessary – only a clever adaptation of existing technology into a new interface that is designed to improve the speed and quality of the services you provide.
After deciding on a vision, there are two main barriers that generally prevent companies from following through on their initial ideas: Money, and expertise.
As part of their initial research into digital transformation, businesses should not only predict which new elements will appear in the future, but also which current elements will disappear. Newspaper publishers, for example, may calculate that print will become increasingly irrelevant in the online age. In such a case, they would be wise to follow the current rather than trying to fight it. Closing down printing presses can free up money which can then be used to develop a cutting-edge online interface.
Note that such entities can make this leap only if they see themselves as selling information, rather than merely selling newspapers. Likewise, if oil companies see themselves as just oil companies, they will keep digging even when the wells begin to dry. By contrast, if they look at themselves as energy companies, they will have no trouble moving to other forms of energy production when circumstances favor such a change.
The lesson here is: Rather than focusing on your products, consider instead the functions that your products fulfill. Now expand that line of thinking to encompass your entire company. When you identify processes that are on the way to becoming obsolete in the new world of online business, you have found your chance. Phase them out, and use the savings to fund your digital transformation.
The question of expertise is another challenging one, and it is no less essential than the question of funding. Most companies will need to search externally to find a leader with the technical skills and market awareness to take charge of your digital transformation. This person, once taken aboard, will need to wield considerable power within your organisation – perhaps as a Chief Digital Officer – in order to make the sweeping changes that are necessary.
It is natural to hesitate before relinquishing such authority to an outsider who has not had the time to develop a deep feeling for the company, especially considering that the other employees could feel uneasy at seeing such rapid changes. For this reason, strong communication skills are crucial at all levels of the company, beginning with management. Everyone needs to be informed of the new company vision moving forward, and everyone should be invited to participate in crafting it.
Managing Progress and Leadership in the Online Age
A Project Management Office should be created to handle issues relating to the digital transformation, and all areas of the company should be represented within it. Top-down bureaucracy is ill-equipped to handle this new atmosphere of emerging technology, creative design and rapid change in a fast-paced economy. De-centralised command allows departments and offices to work toward a common goal at the necessary speed, but this approach can work only when the entire company is fully briefed at the outset and continuously kept in the loop when new developments arise.
Within the PMO, new ideas need to be encouraged – particularly the identification of flashpoints where technology can interact positively with your company offering. Always remember that the goal of digital investment should be to optimise the customer’s ‘journey’ through the new system, from finding and inquiring about your product, to purchasing it with ease, to receiving quality after-sales service.
Through the course of such changes, old market niches may disappear as new ones suddenly form within reach. Data analytics, in addition to improving your company’s products and services themselves, can also be put to good use when evaluating your progress towards the goals your company has set.
The digital economy, to be sure, contains many bumps in the road – but it is nevertheless the only road that goes forward. Technical issues constantly arise, as the world of digital marketing and interface maintenance both contain steep learning curves, and elaborate company training sessions will be necessary to bring your team up to speed and onto the same page. New security concerns must also be taken very seriously; the digital universe must contend with hacking efforts and other related dangers that can bring a thriving company to its knees in a matter of hours.
But the world of business has always had its challenges. To partake in the rewards requires courage, preparation, strong guidance and precise execution at all levels of a company. A change in direction is always a difficult step for a company – but a necessary one when the wider society changes direction first.