PWC recently published the 18th edition of their annual CEO survey. Even if the field is much broader than digital economy and transformation it’s an insightful document regarding to these hot issues.
The title (A marketplace without boundaries – responding to disruption) tells nothing we don’t know but confirms that globalization and ability to keep the pace of change are at the heart of all strategic reflexions.
CEOs have many concerns and if those related to digital are ubiquitous, the speed at which technology evolves is far from being on the top of the list. It lags behind over-regulation and talent availability.
My POVÂ : That’s logical. Technology is not the problem today, it’s the ability to make something out of it.
As a matter of fact the four most important disruption factors are regulation, the increasing number of competitors and, only then, new customer behaviors and distribution channels.
my POV : it’s 3 out of 4 directly related to the digital economy if we consider that the new competitors are often digital pure players.
[quote_right]54% of CEOs have entered new sectors[/quote_right]Even more interesting : 54% of CEOS said they entered new sectors and, when many people expect Apple or IBM to enter the car market, banks and insurance companies try to invest in new territories and the French Postal Services want to help us to manage our connected objects, that’s a point worth being noticed. According to PWC this move is cause by a new focus on the customer and not on the sector anymore : businesses try to build a complete and seamless customer relationship and so they “follow” their customers in new fields.
My POV : I’ll discuss this point in a specific post one of these days but I strongly believe that companies that decide to become “experience companies” instead of “product companies” are more likely to build a global and seamless relationship with their customers and successfully become cross-sectors players. Experience + customer relationship : it’s easy to see how digital impacts this trend. There’s also no doubt that the more a player will have a “digital” offering the easier it will to to – as said in theÂ survey – build a single extended value chain instead of multiple ones. Moreover 32% of CEOS think that their future competitors will come from the technology sector.
[quote_left]New technologies are useless with old models[/quote_left]So let’s have a look at the technology part. There’s no doubt businesses want to understand technology and weave it in the fabric of their organization (and not at the periphery anymore). Technology has changed the way customers perceive value and it makes business focus on personalized and ongoing experiences. It’s about responsiveness, innovation and customization. There’s a shared acknowledgement : it’s not about incremental change anymore but business models reinvention. New technologies are useless in an old model. So businesses have to re-start from the original problems and find new solutions based on what’s possible now.
The first challenge of digital transformation is to understand the customers. What logically raise questions related to data mining and engagement points with the customer (mobile and IoT). We should notice that “wearable”, robots and 3D printing come at the end of the priority list. What is consistent with Gartner’s IT spending predictions.
My POV: I don’t know what to think about the 65% that expect a lot from “socially enabled business processes”. Considering what’s really going on in the workplace and how hard it is to enter this territory rigidified by ERPs, that’s a lot. That’s the Grail very few businesses have reached so far. On the other hand, considering the requirements of customer orientation in terms of agility that’s not a lot and the lack of such processes may become a real burden in the future. One can’t be responsive in front of the customer and rigid inside.
Another major dimension, but a poorly tapped one, is analytics. The multiplication of touch points and interactions lead to more and more data and a major part of digital transformation is to use these data for better decision making.
CEOs are aware that, to be successful in their digital transformation, they need a clearly stated vision and plan 86% of them also think they have to personify this transformation through their mastery of digital technologies.
[quote_right]20% of businesses have a good digital IQ[/quote_right]But more than mastering technology, CEOs consider that the most important factor is to be able to perceive the opportunities it makes possible. And even if nearly every business has started its digital transformation, only 20% think they have a good “Digital IQ” (understanding the value of technology and embed it in the heart of operations).
My POV : I said that regarding to social collaboration and it’s still true for digital transformation : the personal involvement of leaders and their ability to personify change is a key success or failure factor. However, despite of this high number, it seems to be that there’s still a big gap between intention and action. Any digital transformation initiative requires a (often long) acculturation period for the C-Suite but few give it the time it requires.
After technology, another major point is partnerships. Businesses will need to partner with companies from other sectors to create synergies between complementary know-hows, even if the result is very unlikely alliances. Such partnerships may also involve clients.
My POV : Let’s call it the service or experience economy, no offer can be thought and designed in a silo but must integrate product and services in a transversal approach. That’s the big strength of digital pure players that disrupt “old” industries. Established businesses must acquire this “polymathy” through these alliances. But I’d also like to add that before considering external partnerships they’d better improve their internal ones, too many opportunities being lost because divisions are not capable of talking to each other and working together.
[quote_left]Talent diversity is mandatory to think differently[/quote_left]Last big challenge : diversity. It’s seen as a means to find new ways to work and think. 84% of CEOs believe it impacts the bottom line. What matters is to find the right mix of talent and adjust it depending on business opportunities. It’s also about about having people able to adapt the way they work to circumstances.
Businesses need a wide range of competences and, first of all, digital ones.
However, 33% admit their company have no strategy to address the need for diversity (use of multiple recruitment channels, search for new competences, training…)
My POV: Once again it’s about internal polymathy. When no individual can know, think and articulate things in many fields (not everybody is Steve Jobs or De Vinci), this capability must become collective.
Conclusion : businesses must develop new customer-oriented capabilities based on technology, partnerships and diversity.