Some 65 percent of digital leaders have a culture that isn’t afraid of risks, and have a high tolerance for bold initiatives
The digital revolution has given rise to a networked world that binds customers, employees, managers, and systems together.
Making sense of those connections and building value requires a digital strategy integrated into the strategic-planning process.
Digital strategy is a core element of business strategy today, used to enter new markets and redefine how to compete through price, experience, or product, and to compete at lower prices across more channels and at scale.
Effective digital strategies prioritise interventions where the business can exploit opportunities and crafting a digitally enabled business model around them.
Mckinsey research reveals that improving customer journeys can reap substantial rewards: increasing customer satisfaction by up to 20 percent and revenue growth by 10 to 15 percent, and lowering the cost to serve by 15 to 20 percent.
The challenge is to have a structure that is agile, flexible, and exploiting collaborative engagement
An energy company, for example, reduced by 40 percent churn among customers who moved houses by making service renewal a simple two-click process. Similarly, a bank cut its cost per new mortgage by 70 percent and shortened pre-approval times down to just one minute by digitising its mortgage-application and decision processes.
Nike has long recognised the need for direct-to-consumer digital initiatives, and Nike’s efforts have paid off with double-digit e-commerce revenue growth rates and annual web sales topping $1 billion in summer 2015.
Technological adoption is key in accelerating speed to market and lower costs for profitable results.
Business-process automation can result in competitive advantage because can help scale quickly without substantial additional costs.
Over time, cost performance can improve by as much as 90 percent as the automation effort scales across formerly siloed functions, reducing redundant processes.
Becoming digital often requires reinventing the entire business process to cut out steps or reduce the number of documents required.
In addition, organisations must share any scarce resources across business functions to drive impact, and ensure coordination with IT as it seeks to keep up with the technical advances.
That could lead to creating a new way for customers to purchase a product, moving into new businesses, or exploiting competitive advantages such as proprietary data in new ways.
Making things work together
People and the Business Model: Shorten the Critical Path to Value Maximisation and Growth
In business there are barriers to growth- erosion of market share, legislation change, poor profitability, threatening technology – some are external, other are internal, both hindering performance.
Barriers can be moved… and you have to do the moving with practices and strategies that make a positive impact on the organisation and deliver business results.
High performing companies focus on digital initiatives that deliver on business priorities by:
- Creating clarity on enterprise strategy and on where digital services can quickly enable sustainable value creation.
- Deploying specialised talent and cross-functional teams to support each one.
To execute new businesses models aimed at achieving an organisation’s strategic objectives requires having certain business capabilities, in terms of skills, and know-how.
Strategy Execution and Alignment
Successful strategy execution poses real challenges for many firms.
Changes in the business environment occur at a speedy pace, and the ability to execute strategy depends on how fast they respond to those changes.
It includes the strategic planning process and the process of aligning the human capital management plan with the strategic plan.
This entails acquiring digitally oriented talent who combine business expertise, and the leadership skills necessary to lead transformation.It also entails rethinking and streamlining governance, performance management, and budgeting processes so that the organisation can move quickly and innovate. This calls for a streamlined governance approach and flexible roles and responsibilities for speeding decisions.High performing companies make use of versatile Management Tools:
- Value Maximisation
- Risk Management
- Sales & Marketing
- Pricing & Profitability
Depending on factors including depth and breadth of existing digital capabilities, process for prioritising investments, and strength of executive alignment and support, there are many factors that drive business success, such as focusing on customer needs, engaging and inspiring talent and having successful relationships with suppliers and partners.
Finally, finding ways for new businesses models to emerge through collaboration between small businesses and larger established corporates can enhance the prospects of both entities.
Collaboration between businesses – established ones with capital, and start ups with innovative ideas, will generate value both for the businesses.
The start-up can be given the funds and tools to scale-up and the larger corporate benefit from sharing new innovations and mindsets.
The increased importance of human capital within organisations, as well as its links to the other organisational resources that drive business value, is essential.
Understanding critical business processes will enable HR professionals of the future to become true business leaders.
For most organisations, people are the greatest asset and also the biggest cost.
Traditional performance measures will only go so far in supporting the new culture and ways of work.
Performance management is becoming much more real time, tailored to each level of the organisation.
As business analytics and HR metrics evolve, we encounter an increased focus on measurement and performance accountability. Therefore, they must be viewed and fully utilised as critical investments in an organisation’s future.
HR can and should play a key role in helping companies realise their goals, through active involvement in influencing employee behaviour, such as rewards, learning, and performance management, to help strategy execution and alignment.
We need metrics that focus on the customer journey, such as customer lifetime value, behavior, and share of influence across the decision journey, and analytics to turn data output into actionable business insights.
However the metrics need to be revised. Some measures, such as short-term return on investment, may discourage innovation by discouraging employees from taking risks and it may inhibit collaborative engagement.
By tracing the dynamics through which customers, employees, and processes interact, a company will be pursuing value creation while avoiding the impediments of managing by a set of narrow financial measures to drive profitable growth.
Next, enterprise-wide reporting must shift to being more real time
Managers of the Finance, HR, or IT functions often develop stand alone business cases to justify implementing a new system. With real time visibility across the organisation, managers will be able to balance their efforts on the one hand, and corporate strategy and shareholder expectations on the other.
As part of its digitisation process, a manufacturer pulled together a range of indicators—from batch quality and inventory availability to total full-time employees involved in delivery—into a single, enterprise-wide, real-time dashboard. Management could then divert resources to struggling areas. For example, when a local transformation failed to improve batch quality, leaders could fly in experts from other facilities to resolve the issue, and the enterprise-wide, real-time visibility created a quest for line managers to deliver sustainable results.