4 Myths of Digital Transformation
We just published our latest whitepaper, Asia Rising: Digital Driving. For this study we spoke with well over 300 business and technology leaders across the region on the value of going digital. While it is evident from our study findings that digital is the primary C-suite agenda today, it also reflects the ongoing market confusion and possible fear surrounding digital transformation. I have had the opportunity to learn many interesting perspectives from our discussions with C-suite executives and would like to share four primary villains impacting value generation for companies:
Myth#1: Digital transformation is a technology-first approach.
Digital transformation is not a “technology-fenced” development, as nearly 40% of C-suite executives presume it to be. The biggest mistake that companies make is thinking that by investing in new, cool technologies, they will achieve the nirvana. Digital transformation has a clear agenda – “Simplify the business” – as I highlighted in this post. For example, digital transformation in the healthcare industry is intended to make people healthier and happier, but instead, healthcare companies often end up complicating wellness services for their customers.Companies must first simplify the complexity associated with digital transformation for their business, and then identify and implant the technology needed to get there. Get it right!
Myth#2: We don’t need a dedicated budget for transformation.
Many business leaders are uncertain about how much they should ideally budget for transformation, with 61% reporting no dedicated funds;they have no clue what’s working and what’s not. Well, it’s about transforming business for the future and the ad-hoc approach will just not work. We believe companies should allocate at least 2% of their annual revenue (outside of the IT budget) to transformation efforts for starters, and then increase their expenditure every year after that, based on the outcomes, vision, strategy and risk appetite of the organization. Furthermore, that spending needs to be tightly linked to clear business outcomes such as revenue growth and cost containment.The point is, leaders will need a sharp focus on transforming their company digitally – with real investment – and the sooner they start, the better.
Myth#3: Leadership doesn’t need to be digital savvy.
“Digital thinking” must be injected into a company’s core, and that extends to the social media presence of the company’s leaders. 70% of the business leaders we interviewed for the report were yet to open a Twitter account, while 40% are not on LinkedIn. We call this attitude the “lack of time syndrome” as leaders feel they have more strategic tasks to fulfill than managing their tweets. However, the failure to establish or expand their digital presence will impact the future of their own role and business, as personal participation in the digital realm is the key to understanding the digital consumer’s state of mind and unlocking digital’s real value. Leaders need to take their ideas and transform them with the power of digital, not in the hope of becoming a digital expert but simply to jettison old habits and paradigms, with the goal of leading a digital-first company.It’s time to say goodbye to analog leadership.
Myth#4: Our CIO/ CTO/ CMO is well equipped to lead the transformation as an added responsibility.
A charter to transform the business typically resides with the CIO/CTO or CMO as an added responsibility. I believe this approach is fundamentally flawed, as business transformation can’t be achieved through a half-time responsibility – digital leadership is not a part-time job.If the CIO/CTO or CMO is well-equipped to lead the transformation, he or she should give up his current role; if not, the business should hire someone to lead the change. Organizations cannot truly think “outside the box” until they establish a clear digital leadership mandate. The good news is that about 70% of companies already – or will soon — have a Chief Digital Officer role established in Asia Pacific.
While every company will follow a different path to digital transformation, consistent nuts-and-bolts lessons can be learned and applied from digital winners. The winners in this new digital world will challenge conventional thinking on product innovation, customer engagement, organizational structure, strategy and business models. Leadership must be willing to make significant organizational changes in line with a strategic digital vision, rather than the more common “as-needed/ad-hoc procurement/ tactical” approach.