• Brave new world

    As digital technology continues to shake up the modern marketplace, how are business leaders embracing tech-driven transformation within their companies?

    Brave new world

    One year is a long time in business. It’s even longer in tech. In its 2016 South African CEO Outlook survey, published in June last year, financial services firm KPMG claimed that it was ‘now or never’ for CEOs who were focused on making transformative change in their companies. One long, eventful year later, how are those business leaders performing?

    ‘In the year since, many top executives have clearly made progress toward achieving their goals,’ Makgotso Letsitsi, executive director: KPMG South Africa, said in a statement. ‘But those 12 months have also seen new waves of uncertainty that are compelling CEOs to think in fresh ways about the disruptive forces impacting their businesses. Our advice of “now or never” still stands, but the CEOs we have spoken to are telling us that in the face of new challenges and uncertainties, they are feeling the urgency to “disrupt and grow”.’

    Technology, by its very nature, is one of the most disruptive forces in modern business – and it’s no coincidence that, according to the survey’s findings, implementing disruptive tech is a top-three strategic priority for CEOs. While some CEOs report feeling more confident about their business’ core technology architecture than they are about its digital capabilities, some 82% of respondents admitted that it’s likely their organisation isn’t disrupting business models as much as it should. How, then, are modern business leaders embracing tech in their companies? The answer, in many cases in South Africa at least, is cautiously.

    ‘Traditionally, “agility” was not usually a word readily associated with Africa’s technology market,’ Danny Drew, MD for South Africa at multinational tech company Avaya, writes in a recent opinion piece.

    ‘The continent was seen as lagging far behind others in adopting new solutions. Today, however, the drive for mobile solutions and digital transformation, especially in the South African market, is forcing changes in mindset. Companies are increasingly realising that they need to offer consumers the services they want, at the time they want them – or risk losing their custom.’

    Drew notes that agile processes are imperative to the success of any business looking at competing successfully in a rapidly changing environment, adding that: ‘Organisations that are unable to change quickly will be slow to capture market shifts and face the threat of becoming irrelevant.’

    The global edition of KPMG’s 2017 CEO Outlook survey found that, rather than seeing transformation as a discrete programme, with an abrupt transition from one incarnation of the business to the next, many businesses across the world have now accepted transformation as being part of ‘business as usual’. The ability to disrupt a market, to innovate within an organisation’s established structures, or even to keep up with the ever-changing demands of the market, is – as the survey authors note – ‘closely linked to a business’ understanding of emerging technologies and their potential application’.

    This leaves business leaders in a delicate position. ‘With continued pressure to deliver on the bottom line, CEOs are keenly focused on managing their business’ core strengths while transforming the way they create value,’ wrote Letsitsi.

    ‘Operating in a more complex and rapidly changing environment is also challenging CEOs like never before, with an expanding breadth of skills and expertise needed to lead their organisations. CEOs need to stimulate innovation, oversee new types of customer relationships, manage heightened reputational risks and make bold decisions about their investments in technology. In the wake of these challenges, it isn’t surprising that a significant number of the CEOs we spoke to say they are working to develop new skills and capabilities, as well as exploring new ideas and influences, so as to drive essential change across their business.’

    According to Alison Jacobson, strategy and digital consulting MD at Gauteng-based tech firm Britehouse Digital: ‘To avoid a superficial or narrow focus, your digital transformation journey must address customer touch points as well as operations, logistics and supply chain. You have to cross the divide between your websites, branches, contact centres, sales teams and your operations and support through automation, big data and analytics, and enterprise mobility applications.’

    Jacobson argues that the companies that truly embrace technology are the ones that transform their enterprise from within to become truly digital. ‘Your digital strategy needs to be flexible, and your organisation needs to be flexible in order to drive digital,’ she says. ‘You have to become dynamic and responsive to market feedback. Your digital strategy is as much about organisational transformation as it is about serving an increasingly digital customer.

    ‘Digital isn’t something you do. It’s something you are,’ she says, adding that effective organisational design for digital is agile and self-organising. Jacobson says that digital businesses have highly effective sense-and-respond capabilities, more so than traditional command-and-control hierarchies, and the organisational transformation required for this kind of digital transformation is a digital operating system for your business, not just a business plan with digital added in.

    ‘Your digital operating system has to focus, not just on technology or marketing, but on the whole range of people, processes and policies that will allow you to operate your business successfully in a digital world,’ she says.

    The key lies not only in leadership buy-in, but in direct leadership involvement – with CEOs, chief technology officers and the entire leadership team driving that organisational change. ‘Digital transformation is a whole business activity, and as such it requires leadership to take a hands-on approach. In today’s world of digital, there is no business as usual. Everything is up for grabs as digitally fluent disruptors make their way into every industry, eating away at the margins of slower, less-responsive businesses. You need to constantly reassess your position so that you can refine, adjust or replace as needed. As such, digitally enabled business-model innovation has to become a core competency at an executive level,’ she says.

    That executive isn’t necessarily the CEO. A recent survey by Forrester Research asked who the most important senior leader is in driving business transformation. The top answer – ahead even of the CEO – was the chief information officer (CIO). At the same time, a Deloitte survey of 1 200 technology leaders in 48 countries suggested that CIOs now have the opportunity to drive business strategy in a way that has not been possible before, as businesses increasingly use technology to achieve their goals.

    ‘Although this may sound surprising, it all comes down to the fact that we are living in an era of unprecedented digital change. Because with a growing range of technology to choose from, the risk of using the wrong one is high,’ Nathan Nayagar, MD for Lexmark – South Africa and English-speaking Africa, said recently.

    Drew argues that moving a business into the digital age by adopting an agile process is only possible if your technology platform has three characteristics, which he labels as open, modular and easily extensible. ‘Your platform should support the design, creation and deployment of advanced applications, without developers having to acquire specialised communications expertise,’ he says.

    ‘By being open, the platform will be much easier for your organisation to leverage and integrate with virtually any third-party data and applications. Being modular means the platform allows you to select a range of capabilities over time to meet your company’s goals and initiatives and drive business results that will change over time. Extensible means having a platform on which your organisation can expand and adapt as your business changes, shaping new, innovative and differentiated customer and employee experiences, as well as accommodating new and future requirements.’

    That future may be a month, a year, or a decade away. Either way, business leaders must make sure their organisations are adequately prepared for it. Or, as Nasdaq CEO Adena Friedman told KPMG’s global survey: ‘As a CEO you have to recognise that your business will be radically different in the next five to 10 years, and then build and lead a team to succeed in that new world.’

    By Mark van Dijk
    Images: Gallo/Getty Images