Regardless of the country or industry, the digital transformation agenda is now a top priority for CEOs across the Asia-Pacific region. According to a recent Cognizant study, "Asia Rising: Digital Driving", 62% of CEOs surveyed are directly involved in making and executing digital transformation strategies for their organisations.
The study highlights the fact that 98% of CEOs surveyed are well on their way to digitally transforming their businesses. Nevertheless, the transformation agenda introduces challenges, in the form of new investments, organisational structures, internal skills, change management, and roles and responsibilities of companies. CEOs need to handle these challenges well.
Leading from the front: The centre of gravity is shifting from big, legacy companies to smaller, more agile businesses that can innovate faster and embrace the power of digital platforms. For instance, the payments arena that accounts for 20-25% of bank revenue is undergoing a profound transition as new digital entrants such as Mint Wireless (Australia), Alipay (China) and Paytm (India), among others, challenge long-established incumbents. In fact, 63% of CEOs surveyed are highly concerned with the increased competition from new disruptive startups capturing customer attention.
The cost of inaction can be huge for companies. While 67% of CEOs believe that the pace of digital transformation in their firms is relatively slower than the market changes, they are increasingly taking the transformation agenda in their own hands to shape the future.
They are recalibrating their business models to create new products and services, improve revenue growth and drive new operational efficiencies. In particular, they aim at providing seamless multi-channel, multi-device interactions and embedding the data (from social networks, mobile devices, sensors and devices) into products and services to offer personalisation to customers.
Digital transformation is a journey: In spite of promises that digital technologies offer, 53% of CEOs believe that their digital transformation initiatives are the results of an "as-needed" approach rather than a strategic vision, the study highlights. CEOs must understand that their businesses have already entered the permanent cycle of change as market dynamics and business rules are constantly changing and knee-jerk reactions to those changes may produce more challenges in the long run.
Digital transformation will fundamentally change the business models (products, services, value proposition, etc) of many firms, and CEOs need to embrace a holistic approach in making their company digital-first.
CEOs will need to overcome four key challenges (in no particular order) to reap the full benefits of digital:
lack of vision or communication failure, change-resistant culture and lack of urgency;
lack of organisational structures, internal skills and partnerships;
lack of digital expertise and skills, and lack of collaboration across business units;
insufficient budget and lack of resources, poorly defined roles and responsibilities;
It's true that for many traditional companies the transformation will not be easy. However, it is a journey that CEOs and their teams will have to make together.
The digital leadership mandate: While it is encouraging to see that CEOs are driving digital transformation strategies for their organisations, they can't achieve the end objective all by themselves. A charter to transform the business typically resides with the chief information officer or chief marketing officer as an added responsibility.
Moreover, 43% of CEOs reported no plans to appoint dedicated senior executives to lead their digital transformation strategies. This approach is flawed as business transformation can't be achieved as a part-time responsibility.
A business cannot think "outside the box" in the absence of a strong digital leadership role. If CIOs/CTOs or CMOs are well-equipped to lead the transformation, they should give up their current roles; if not, the business should hire someone to lead the charge.
CEOs need to bring a digital leadership mandate to break down organisation silos, change the company's culture, realign employee incentives, rewards and growth plans, and address the myriad challenges that companies face as digital transformation agenda accelerates. For instance, ANZ Bank has created a new executive role to lead transformation efforts with the aim to bring together bank's disparate digital efforts under one umbrella.
CEOs have an opportunity to rewrite the strategies of their traditional companies with the digital ink to avoid a Kodak-like moment for their businesses. They must stop trying to "fix the problem" with digital and instead "fix the path" that leads to a successful business transformation.
Switched-on leaders recognise the need to transform the very essence of business value generation, as well as their own vision surrounding technology, work and the global economy. The present CEOs who understand this will be the CEOs of tomorrow.
Manish Bahl is Senior Director of the Center for the Future of Work at Cognizant