Surviving the struggle: true digital transformation requires a strategy
If boardroom walls could, talk they would share chatter of the growing threat of digitisation and its disruption of nearly all economic sectors. The ultimate question always stems from: how should they respond? Bend, bow or fight?
The origins of business strategy may be traced back to the origins of life itself. Biologist and evolutionist, Georgy Gause, first published the Competitive Exclusion Principle in his 1934 book, The Struggle of Existence, which states that two species within a niche habitat cannot coexist indefinitely. While the principle of competition is not new to business strategy, the playing field in which companies, live or die, is. New technologies and information are leveraged as the competitive environment evolves, each time ratifying a particular strand of strategy. The 60s and 70s saw an emphasis on corporate planning and diversification. The 80s and 90s steered less in the direction of hard competencies, but towards a consideration of how corporate culture and people should be leveraged for more effective management. Today, we identify how organisations should capitalise on data via an information systems strategy to compete and survive.
According to Industry Fellow in Computing and Information Systems Dr Rod Dilnutt at the University of Melbourne:
“Organisations need to understand the nature of this existential threat. Failure to do so will see them left behind.”
The Neo kid on the block
The banking industry offers a window into the dilemma organisations are facing. The rise of the neobank is threatening the long-held foothold of legacy banks. While at first dismissed, those in the boardroom see this disruption as less a threat to be quashed but rather an advantageous door to be opened. In 2018, McKinsey Global Institute (MGI) estimated an additional $13 trillion could be added to global GDP by 2030 through digitisation, automation, and Artificial Intelligence
Establishing a clear digital vision is key to the development of an effective digital transformation strategy, with a standard completion horizon of five to eight years. From here, long, and short-term objectives should be considered. Many organisations implement facelifts as a way of adhering to the slick customer experience expectations of today. While this digital lipstick serves as a short-term strategy, it merely buys time while a deeper transformation takes place.
While the consumer may not notice the difference, any success enjoyed by building on top of legacy systems will be short-lived, as these technologies developed in the 70s, impede agility. And whilst the average consumer may not distinguish between a neobank and a legacy bank with a slick interface, once open banking truly propels innovation within the category, the old systems will struggle to keep pace.
For many organisations, true digital reinvention requires self-cannibalisation. We’ve seen this play out in the UK banking industry, which is a few years ahead of us. According to Monzo founder, Tom Blomfied, legacy banks “are all taking the same strategy, which is to create a challenger brand with new technology and cannibalise themselves before someone else does”.
Agility is the cornerstone of success
The most effective digital transformation strategies are the ones that realise technology is really about people. Organisations that successfully transform their hardware and software, whilst simultaneously upskilling their people and innovating their culture, are more likely to succeed.
Courses, such as those created and run by Dr Dilnutt at the University of Melbourne, offer a proactive way to stay ahead. Referring to the Microcredential in Strategy in a Disruptive Environment, Dr Dilnutt says, “this MMC will build your understanding of how to rise to the challenges of developing strategy for rapid response in an ever-changing digital landscape.
The horizon anticipates unending disruption, and as such, true success will be enjoyed by those who recognise that the cornerstone for a future-ready organisation is agility, in both the technology, and the people who implement and operate it.
If you want to be in front of this change, rather than behind it, our Melbourne MicroCert in Strategy in a Disruptive Environment will provide you with the skills and knowledge required to examine the transformative impact technology is having on your industry, develop the critical thinking required to evolve ‘old power’ business models and consider and adapt emerging organisational structures.