By Ariel Quick, Partner and Head of Northeast US at Chaucer | BIP Group
From Brexit, to a pandemic, to a possible recession on the horizon, there is rising pressure on companies to be able to stay competitive and maintain their business growth in an increasingly disruptive environment. But how can they do that?
The answer is digital transformation. Digital transformation has been somewhat of a buzz-phrase over the recent years as organisations have sought to reinvigorate their business models and keep up with tech-driven market entrants. Now, however, it needs to be a vital part of a business’ strategy against future market disruption, with three core reasons why.
To compete in a continuously changing digital world, businesses must embrace innovation as a critical piece of the puzzle and part of their culture. There are many ways to do this, each of which involve re-defining operating models to bring innovative practices into the organisation.
Building these innovative practices, however, requires a specific team or person to drive this mission internally. Enter, the Chief Innovation Officer. Ten years ago, this role didn’t exist. The only CIO in the room was the Chief Information Officer, but now, as innovation becomes more of a board priority, we are increasingly seeing Chief Innovation Officers being appointed into senior leadership teams. In fact, a search on LinkedIn for ‘Chief Information Officer’ now pulls up over 12,000 people globally!
These vital leaders are appointed to not only highlight innovative internal practices within the business, but also to look externally for innovation inspiration and consider how others’ business models and solutions could be implemented successfully into their own organisation.
The key to using this inspiration successfully is to not replicate, but instead tailor the solutions used by others to your own organisation. Ultimately, this means trying not to push a solution that isn’t in line with your business’ strategy or culture even if it’s working for a competitor. This principle holds true whether the business opportunities are internal, or with external customers.
Recession-proofing your business
The latest World Economic Outlook from the IMF paints a bleak picture of the upcoming economic landscape, stating that “the world may soon be teetering on the edge of a global recession”.
Given the shifting geopolitical landscape in 2022 and the impact of Covid-19, businesses will have already been considering and acting on how to strengthen their business models – but now, this will be even more crucial.
Digital transformation can play a key role here, too. By using digital efficiencies to support the organisation at large, the digitally-led teams and capabilities within the business can become enablers of growth and revenue generation. This will allow the organisation to scale as needed and flex this growth based on the broader economic conditions globally, and within individual local markets. Transitioning an operating model to support digital as a revenue-driving business unit means that organisations can future-proof themselves against market shocks and disruption, and will also encourage ongoing digital transformation within the business itself.
Staying ahead of the curve
Transformation strategies can also help businesses to accelerate their growth and increase market share away from their competitors.
If transformation is at the forefront of a business’ company culture – particularly that which focuses on building awareness of digital capabilities – then these organisations will by their very nature be more agile. This means that they can incubate and accelerate new ideas and turn them into market-ready products and services faster than their competitors.
This continuous transformation will be a cultural shift for most organisations, but will be a vital step in staying ahead of the competition. This is particularly true in highly regulated industries like financial services or pharmaceuticals, where nimbler, tech-led challengers are making significant inroads into incumbents’ market share. Indeed, the World Retail Banking Report 2022 found that traditional banking customers are pivoting to fintech competitors who offer more personalised, bespoke experiences.
As customer acquisition and retention are now equally important, businesses must learn from their digitally-focused peers, embrace innovative business models and use digital transformation to not only keep ahead of the pack now, but ensure that they remain so in the future. Ultimately, rather than relying on these specific aspects as separate entities or looking solely to the CIO, it is the whole culture of a business that should embrace these ways of working to ensure that activities and efficiencies are progressed successfully overall.