Digital Transformation in a VUCA world
Digital Transformation has remained a global executive priority over the last decade. Industry 4.0 revolution, also called 4IR has envisioned closer physical and digital capabilities and their intertwined coexistence that can transform businesses in a VUCA (Volatility, Uncertainty, Complexity and Ambiguity) world. A plethora of such proven digital technologies as cloud computing, artificial intelligence, quantum computing, digital twins, augmented reality, virtual reality, internet of things, blockchain, low code no code platforms, business analytics, meta verse, robotic process automation etc. created bountiful of opportunities in the marketplace.
Integrated digital marketing campaigns, advanced analytics, design thinking led personalised – journeys, products, services and channels, nimble and learning organisation structure, digital processes encompassing such digital capabilities and revamped ways of working, change management, and agile program management – form part of the consultative orchestration and co-creation of the strategic roadmap for a large digital transformation exercise.
Digital native firms and conventional businesses have embraced the digital transformation journey, irrespective of their current state of maturity. While digital technologies enable innovation, customer journey-centric business models underpinned by human desirability, business viability, and resource feasibility are crucial for innovation and for the success of digital transformation initiatives. Unflinching support from the leadership, clarity of vision, strategy and strategic objectives; suitable organisation structure often decentralised and empowering with defined measurement criteria e.g., balance scorecard including metrics on digital transformation benefits, building people capabilities through innovation and incubations labs, hackathons and similar organic means, percolating a culture that fosters both disruptive and incremental innovation at scale harbinger a successful digital transformation journey.
A successful digital transformation vision cuts across organisation silos, embracing the value chain, value streams, and key functions like finance, human resource, marketing, information technology, supply chain et al. The hyper-sensing and learning organisation thus do not shy away from reimagining its business canvases breeding new core competencies, and expanding markets, customers and streams of revenues. Once an online retailer, Amazon today is the market leader in cloud computing through the Amazon Web Services (AWS) platform, a distinctly different line of business.
Design thinking based products, services, channels, touch-points, processes and organisation design and methodically embedding that in customer journeys is an art and science of significant proposition. This creates personalised products, services, ambience, touch-points, channels etc. holistically enriching customer experience. Starbucks’ convolution from a coffee and snack retailer to an ambience marketing organisation that hears customers’ feedback by engaging fans, customers and communities through its digital channels, and continually revamping its ambience, product and service design, digital features and capabilities is an apt case in point where open innovation preceded digital technology related prowess.
Conventional sectors like manufacturing, retail, supply chain, banking and financial services, telecom, etc. revamped their offerings, and way of working and rapidly embraced digital at scale. In the Indian context, call taxi provider, Ola owing to disruption by ride-share providers has developed a ride-share platform and now gearing up to multiple offerings like food and grocery delivery, payments etc. A conglomerate business like the Tata group has come up with Tata Neu, a super app that touches various facets of an individual’s lifestyle and journeys.
In the retrospect, a few renowned global companies like Kodak, Blackberry, Blockbuster, and Nokia could barely sustain themselves sans the capability to hyper-sense opportunities and disruptions in the marketplace. For example, Kodak though has been privy to digital camera technology, resisted seizing the opportunity, wary about the impact on its then profitable camera rills business. Blockbuster declined the Netflix deal to collaborate on the video streaming segment, probably owing to its complacency, related to its market leadership in the DVD rental business. Lack of clarity of vision, and strategy, internal resistance to digitalisation, lack of executive buy-ins, ineffective change planning, and centralised decision-making are some of the hindrances to a successful digital transformation.
Digital native firms like Google, Amazon, Netflix, Apple, LinkedIn and Facebook (GANALF) have revolutionised their respective business models and set new benchmarks of innovation. While the business models of these large tech firms remained undisputed, lucrative and plausibly insinuated from challenges by far, now stressed. ChatGPT, though a nascent openAI based platform, looks at the search from reinforced learning algorithms, natural language processing chatbots perspective, which is different from Google’s MUM (Multitask Unified Model) and other AI-based integrated search ranking algorithms. While Google has NLP know-how, only time will if this is a missed opportunity for Google!
Banking, financial services and the insurance sector witnessed a paradigm shift in how customers consume banking. Be it retail, small businesses, a family office-based wealth management or corporate banking, lending or payments – the entire value chain has embraced reimagined ways of devising banking products, services and channels. Arguably PhonePe, Paytm and the likes of UPI payment apps garner more transaction volume than any large bank. Younger customers and prospective customers are digitally savvy and often look for alternative asset classes like cryptocurrencies, concerned with sustainability and hence green bonds or alike products. More and more banks are transforming their core systems from a monolithic architecture to open ecosystem-based architecture; making banking more invisible and embedded across customer lifestyle journeys. Differentiated and AI-enabled credit appraisal creates more social inclusion as people and small businesses are getting funding in spite of their lack of credit history. DBS, the world’s best bank has continually made banking more invisible thanks to its successful digital transformation program.
We are at a point of inflexion from a people capability point as the requirement of global firms fast-evolving with the market need. About 60-70% of an individual’s job description changes over a decade of time, entailing emphasis on continual learning and skills enhancement. Industry 5.0, built upon the industry 4.0 concepts, envision a workplace where humans work with their digital counterparts like robots. Ensuing COVID-19 pandemic has proven the virtual collaborative hybrid workplace, productivity and global endorsements of such a digital-physical ecosystem.As professionals, the resilient and adaptive ones with complex cognitive problem-solving capabilities are in need of the market, who potentially morph as a centaur in the industry 5.0 era!