Everybody is going ‘digital’, but few agree on what it really means

Digital initiatives touch primarily on the marketing, sales and business processes, while ignoring people and cultural aspects

PUBLISHED : Friday, 03 June, 2016, 5:28pm
UPDATED : Friday, 03 June, 2016, 8:24pm

For over a decade companies have been urged to “digitalise” or risk being left behind. However, too often information about “digital” and its impact on business comes from experts and analysts, consultancies and the media.

While many business professionals accept this as a reality, the interesting question remains: what does digital truly mean to business people, and how is innovation in digital technologies impacting organisations around the world?

We spent a year researching the answer to this question. The findings, as well as 11 insights and 10 recommendations, have just been published in a report titled The Real Impact of Digital - As Seen From the ‘Virtual Coalface’, of which some key insights are shared here.

Of the 1,160 people surveyed – managers, executives and board members in companies of different sizes across industries, functions and regions (including Asia) – all are engaged in digital initiatives. There is no doubt that business across the globe is becoming digital – hence digital must be on everyone’s agenda, from board members down.

The meaning of “digital” differed significantly between organisations. It was not without a challenge that we were able to group the digital initiatives gathered into 21 main categories. One conclusion is clear: the number of business problems addressed by digital is both vast and varied.

The complexity of engagement was also wide-ranging. While some companies are effectively “defining industry 4.0”, others are still focusing on getting all their staff “on to email”. The term “digital” is clearly too vague and managers need to be specific about what they mean by digital in the context of the task at hand, or the company’s business objectives.

The digital initiatives companies engaged in touched primarily on the marketing, sales and business processes. Where China differed significantly from the rest of the world is in its high engagement in activities related to data management and analytics, laying a strong foundation for future competitive advantage in a world that is becoming increasingly data driven.

More than one third of our respondents indicated that their main digital initiative has delivered results or exceeded expectations; about 60 per cent stated it was too early to tell. Interestingly, among those that claimed success, just 12 per cent attributed it to the right technology.

It seems that despite often being positioned as a technology, digital is by and large the combination of a right vision, effective leadership, and a supportive culture that makes the difference between success and failure. This highlights the importance of initiatives related to people management and culture in a digitised world, yet the results from the study show that across the globe, the focus, when engaging in digital, is rarely in this area.

This is the case in China too, where zero per cent of digital initiatives reported by the respondents were related to people, management and culture. Focusing attention on the people and culture aspects when engaging in digital is likely to create a competitive advantage for Chinese companies looking to capitalise on the benefits brought about by digital.

The impact of digital should be measured in the context of the role it plays in achieving a company’s objectives, and not as a stand-alone initiative

The research revealed that at least one third of the organisations do not yet have a digital strategy in place, China being no exception. Companies’ engagement in digital appears driven not by an over-riding digital strategy, but by an assortment of business needs and ambitions that are both external and internal to the business.

In the majority of cases, these initiatives originated at a grass roots level, where digital is applied to reach specific business objectives. Organisations may therefore – and paradoxically – not need a digital strategy. The impact of digital should be measured in the context of the role it plays in achieving a company’s objectives, and not as a stand-alone initiative.

There is no “one-size-fits-all” or right way to do digital, nor has a corporate digital solution emerged to benchmark against. This raises the fundamental question as to whether a single digital form will indeed emerge around which organisations coalesce, or, at the other extreme, whether digital creates the opportunity for greater customisation of a company’s offering, business model and processes.

Capitalising on the opportunity to customise through solutions empowered by digital would allow for China’s numerous small players, many in remote provinces, to compete locally and also enter the global business arena – an option today mainly available to larger firms.

However, this does work both ways, and the opportunity also exists for global companies, as well as smaller players in unpredictable geographical locations, to reach customers in China through the use of digital solutions.

Digital technology is changing the business world in which companies operate, in China as well as the rest of the world, constantly pushing the limits of what is possible, and it will continue to do so at an even greater speed.

The winners will be organisations that understand what business in a digital age means, and who owns their digital journey by empowering their people to shape the company and create value accordingly, achieving the competitive advantage made possible by innovation in digital technologies.

Liri Andersson is the founder of This Fluid World, a boutique business and marketing consultancy. Ludo Van der Heyden is chaired professor of corporate governance and professor of technology and operations management at INSEAD.