Regardless of 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 for the study are directly involved in making and executing digital transformation strategies for their organizations. The study highlights that 98% of CEOs surveyed for the study are well on their way to digitally transforming their businesses. Nevertheless, the transformation agenda introduces challenges, in the form of new investments, organizational structures, internal skills, change management, and roles and responsibilities for companies. CEOs need to handle these challenges well.
|Manish Bahl, Senior Director, Cognizant|
Leading from the front
The center 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 re-calibrating their business models to create new products and services, boost revenue growth, and drive new operational efficiencies across their organizations. 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 personalization 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 full benefits of digital:
- Lack of vision or communication failure; change-resistant culture; lack of urgency
- Lack of organizational structures, internal skills and partnerships
- Lack of digital expertise/skills, and collaboration across business units
- Insufficient budget and lack of resources; lack of 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.
Establish a strong digital leadership mandate
While it is encouraging to see that CEOs are driving digital transformation strategies for their organizations, they can’t achieve the end objective all by themselves. A charter to transform the business typically resides with the CIO/CTO or CMO 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.
The 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 organization 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 re-write 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 recognize 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.