What It Means to be Competitive in the Age of Digitalization
Editor’s Note: This article was originally published on coinpost.jp, and has been translated into English.
Synopsis: It is not enough to digitalize data and processes to become competitive. Organizations should take advantage of digital solutions to monitor threats and opportunities, make sure that digitalization benefits the intended users, and evolve into a truly digital operation.
Digitalization involves the use of computers, digitized data and processes, the internet, social media, web-enabled devices, and other things that are non-analog. However, real digital transformation transcends all of these. To be competitive, it is not enough to simply use digital tools and solutions.
Research by McKinsey & Company shows that 70% of complex, large-scale digital change programs fail to achieve their goals. This failure is typically attributed to insufficient support from the management, the absence of employee engagement, non-accountability, and inadequate cross-functional collaboration. Also, organizations are unable to sustain their digital transformation because they lack cultural change. “Sustaining a transformation’s impact typically requires a major reset in mind-sets and behaviors — something that few leaders know how to achieve,” the McKinsey research notes.
Aside from the need to address the pitfalls, it is necessary to ascertain that digitalization achieves one of its aims: competitiveness. This is possible by doing the following.
Being watchful of threats and opportunities
In a research report on McKinsey Quarterly, Martin Hirt and Paul Willmott cited several benefits of digital transformation. These include the easing of barriers, dismantling of barriers between sectors, and the disaggregation of value chains due to the plug-and-play nature of digital systems and properties. “Digital capabilities increasingly will determine which companies create or lose value. Those shifts take place in the context of industry evolution, which isn’t monolithic but can follow a well-worn path,” Hirt and Willmott wrote.
There are inherent advantages in going digital, but these alone do not guarantee competitiveness. Companies need to take full advantage of digitalization by keeping a close eye on threats and opportunities. Big Data, real-time information, machine learning, automation, and other related technologies need to be put to good use to monitor possible problems and spot chances to engage in more profitable ventures.
Additionally, a study on arbitrage by Jubilee Ace shows how the digital ecosystem creates significant advantages and opportunities, but investors also need to be strategic and decisive in their actions. “For some, spotting such opportunities may be challenging, that’s why some traders take advantage of automated systems to easily spot arbitrage opportunities. Like all kinds of trading, traders must take necessary precautions since there are also risks involved in arbitrage.”
Focusing on people instead of technology
“Contrary to popular belief, digital transformation is less about technology and more about people,” write Becky Frankiewicz and Tomas Chamorro-Premuzic in a case study on the Harvard Business Review. Technology is a significant factor, but it is not the be-all and end-all of digital transformation. The most important piece in solving the digitalization puzzle will always be the people — how members of an organization embrace and adopt digital tools, processes, and media.
Digital technology becomes useless if the intended users fail to take advantage of it because of the bad learning curve or the frequency of errors affecting the system. No matter how advanced, secure, and future-proof a digital system is, it is people who will determine its success. Some employees may end up complaining about the new digital system they are asked to use if the processes become perceivably more complicated and tedious. Likewise, it would be reasonable for them to ditch digital systems that are fraught with technical problems, glitches, and illogical procedures.
On the other hand, it is vital to take customer response into account. Digitalizing products and services in line with the growing demand for digital solutions is not as simple as it sounds. Procter & Gamble, Ford, and GE have high-profile stories of digital transformation failures mainly because they overestimated the demand, failed to examine what the competitors are offering, and launched too early and vastly.
There is no doubt that the demand for digital solutions exists, but this does not guarantee hit products especially when competitors offer something better and more practical. Ultimately, it is people who will use technology. Before choosing a digital platform, system, concept, or strategy to implement, it is a must to ascertain that people are not only amenable to using them but eager to switch to the new digital options.
Evolving and becoming dynamic
Moreover, digitalization should be met with a corresponding change in organization culture, mindset, and attitudes. “Part of any successful transformation is having the appropriate tone at the top to champion it. It also requires support and buy-in by those in other levels of the organization,” notes Carey Oven, a Deloitte Risk and Financial Advisory partner.
A digital metamorphosis is most likely going to be unproductive and uncompetitive if people and the organization itself do not evolve. This means employees need to stop going back to analog and antiquated methods when there are more efficient systems for them to utilize. Similarly, a company’s branding has to manifest the digitalization. Imagine the irony of refusing to use more online and social media marketing and selling after a company invested in having a professional website, ecommerce shop, and AI customer service bots.
Digitalization enables more significant agility in responding to threats and opportunities. A company cannot exploit this advantage if it is stuck to using analog backup plans, meetings and brainstorming that require personal presence, and procedures that necessitate traditional signatures or modes of approval or suspension.
Digitalization breeds new trends and disruptive new players. Businesses that fail to anticipate these trends and new market entrants are bound to be left in the dust. It is only logical to make the most out of the plethora of timely information made available by digitalization and to take advantage of the scalability and agility it affords.
Image: Pixabay.com
