We read this everywhere; World Bank’s reported that Malaysia’s Digital Economy is still lagging in many ASEAN countries as of late 2021. 77% of Malaysia’s Small and Medium-sized Enterprises (SMEs) remained at the basic stage of digitalisation.
Then I came across MDEC’s (Malaysia Digital Economy Corporation) report that Malaysian companies have increased their adoption of digital technologies and platforms for day-to-day operations. Their data has shown an increase from 19 per cent in 2020 to 48 per cent in 2021. I suppose one of the increases was due to the push factor from the lockdown during the pandemic.
Chicken or egg comes first.
We cannot deny that the pandemic was unprecedented, and it does help many enterprises to accelerate their business with new technologies and even change their business model. It’s probably good signs that companies invested and increased their digital adoption. This shows their readiness and gearing their momentum to transform.
While many companies felt that upgrading their infrastructure or technologies is the priority to transform, however, for some, will look at the entire organisation’s ecosystem, identify their problem statement and decide the business outcome they like to achieve.
While the idea is to have an integrated technology for the business so that the business can provide value to its stakeholders. However, what does it take for the business to be digitally transformed in the right manner? As such for many organisations, it is a situation as whether chicken or egg comes first.
According to Forbes, many enterprises’ digital transformation journeys are still at the initial stage. Many of these enterprises experience a lack of expertise to lead. They were challenged to drive the journey, overcoming the complexity, and the massive undertaking required to reshape the overall organisation and the holistic corporate landscape.
Changing the way, we think
Simeon Preston of Bupa quoted that “The biggest part of Digital Transformation is changing the way we think”? How relevant is this statement?
This led me to read the Malaysia Digital Economy Blueprint. There is a lot to digest, but one particularly captures my attention is having 100% of civil servants possess digital literacy by 2025. I am sure this is a well-thought-through and crafted blueprint as they understand the need of having all civil servants possess digital literacy.
For consumption purposes, acquiring digital literacy means one needs to learn the 5Ws and 1 H to be digitally literate.
I echoed this totally as this is one of the key factors why many organisations fail to transform. Everyone needs to understand the fundamental of digital and its business transformation and its journey. To do that, they need to understand that once the organisation can digitally transform, it can help them to achieve its targeted business outcome.
Therefore, to be a digital business transformation organisation, one must acknowledge that it is not a short-term program or project, it is a long-haul journey. One must be able to comprehend that this digital business transformation is not about utilising digital tools to improve efficiency and productivity alone. Digital Business Transformation is all about the people understanding one’s needs and how to navigate and transform the organisation throughout the digital journey.
It starts from the top
It’s critical to understand that the key importance in starting the journey is from the top, the acceptance from all levels, and having everyone in the organisation with a growth mindset and being digital. The changing mindset is so critical for one to accelerate the enterprise to transform.
Coincidently, I came across Mary Kate Loftus’s quote, “Digital becoming people’s business”. Mary Kate added that in those days’ digital used to be about IT and coding. However today it’s become people’s business as an organisation need to equip themselves with the right resources and talent to create and promote a digital culture with customer-centric in mind. It is all about customer experiences as what your stakeholders want and need. The stakeholders can be the investors, internal or external customers, users, and even your strategic partners.
Overcoming the way people think
The key fundamental issue many faces is the way people think. Typically, many employees will think about digitalisation as
- Upgrading the infrastructure and technologies
- Improving the process
- The continual improvement initiatives
- Upgrading the systems, the application, infrastructure, and technologies
- Waiting for bosses to initiate it
- Not their mandate and not in their job description
- Generating revenue superseded everything
- It’s all about data, AI, and smart technologies
- It’s all about new applications or mobility
The list goes on and on. They are not entirely wrong, but they miss the fact that the key to initiating a digital business transformation journey is all about changing the way the business operates today to create more value for its stakeholders. It’s not solely about technological change alone, it is all about changing mindsets and cultural shifts.
Don’t ignore the fundamentals
Before, I proceed further on this topic, allow me to share the fundamentals about going or being digital. To start the digital transformation journey, the first fundamental for one to start is to understand exactly what is being digital.
John Rossman, the author of “think like Amazon” wrote, that being digital is all about speed and agility. He further elaborates it as wrapping speed and agility thinking and approach to the new business model. In my simplest term, start thinking about a collaborative solution wrapped around using technologies to provide speed and agility with customers’ experiences in mind.
There are many constructive, insightful, and useful data-driven reports in the market as to why enterprises find it challenging to transform. Everyone is encouraged to read those reports to help them to scale, however, in this article I will stress more reality from the ground but on a disclaimer note, it may not apply to every organisation.
But first let me demarcate the two types of organisations, the startup, and the day 2 organisations which are known as “business-as-usual” companies.
There are at least 100 million start-ups globally and new start-up emerges almost every other day. Most startups today are the accelerators of digital transformation as they come with a new business model and believe they probably have adopted new technologies linked to the digital revolution that change society today.
Deterring from hero to zero
While we see lots of successful startups, some startups failed to scale. CB Insights cited that there is as high as a 90% failure rate for tech startups. Those who managed to sustain will be more likely to scale.
The once known lean startup starts to expand and established its footing in the market, it will probably explore to obtain more venture capital investors to scale its business so that it can expand to multiple marketplaces or go global to become one of the pioneers in its industry.
So, they successfully get their venture capitalist; they then transit from a small startup to an organisation with growth in sales and revenue thus an increase in employees and assets. While some may be successful for the initial few years, some face some challenges to overcome unforeseen market conditions or face fierce competition.
Hence, they will strive and continue to strategise to explore different opportunities with different innovations and this again will probably require more funding or employees.
This is where a once startup becomes a day two organisation as their organisations have evolved to business-as-usual mode. The demand for additional resources or employees increases, and they continuously strive to find the right fit for the organisation. New employees joined the force, different mindset arises thus different cultures expanded from a different pool of management and operational team.
The more the business-as-usual mindset started to kick in, and more challenges ahead as they need to continuously concerned about staying afloat due to the influx of operating expenditures, meeting customer demands, acquiring and retaining customers, adopting new technology and improved processes, adhering to regulatory compliances, the governance of the business intellectual property, the infrastructure, the technologies, and cyber security risk and most important of all is to stay competitive. Some face more challenges as their fund are running out, or they realised they are capturing the wrong market, or even experiencing partnership issues.
Some will hang on to the glory days, some are contented, some refuse to address the elephant in the room and many more.
Start the transformation journey on the right track
Hence, the organisation decided to transform and top leaders went around exploring new innovative solutions in the market. They visualise the new demands, they are impressed with the newer technology penetrating the market, and they became excited that these newer technologies are going to disrupt the business world. They commit to transforms within the next three to five years.
But as an organisation, are they ready? So, what should the organisation do then?
Being digital needs a drastic change from the organisation. Everyone needs to work collaboratively and harmoniously. However, as a Day 2 organisation, they have lots of bureaucracy issues that need to be addressed. Is the organisation ready to address these issues? Does the organisation have the right fit to lead this journey?
K. Raman of Microsoft Malaysia cited that Malaysian businesses fail to embrace digital transformation due to a lack of technical knowledge and operating in silo mode. I like to add to his perspective, it is the typical local culture of waiting for the right driver to lead the journey. Regardless, business needs to transform and evolve as going digital is the future. If one fails to transform, the legacy way of business will potentially face never-ending fierce competition.
Therefore, Digital Business Transformation is not just looking externally with the new technologies and solutions to transform. John Rossman added that it is about the external customers, the market, and the internal users within the organisation.
