“Digital disruption is not only a possibility for your company’s future but the only possibility.”James McQuivey
Here’s the snapshot from Forester Research’s major study, The Future of Business is Digital
- In 17 industry sectors from insurance bracket [86%] to industrial products [60%] executives agree that digital technologies will disrupt their business in the next 12 months.
- 76% of executives believe they have a digital strategy: 16% to have the skills to execute the strategy.
Is your business built to survive in today’s digital marketplace?
This is the critical question facing executives globally!
Digital disruption requires rapid change and agile adaptation on many different levels of the organization, both strategic and tactical. It demands a digital transformation strategy to survive and realize a sustainable future. Though the transition to digital in many industries is slow, companies can realize first mover positioning as a digital leader and gain competitive advantage.
The GCC countries, with their rapidly expanding population, high standard of living and education, are facing the challenges of the digital revolution in communication, culture and commerce. Digital advancement and the challenges that come along with it will only accelerate in the next five years. “Those businesses that fail to realize that innovation, flexibility, and speed of execution are core to remaining afloat in a digital economy, will not survive the next wave of digital transformation.” Group VP Middle East, Turkey and Africa at global ICT
Booz & Company’s study, Youth in the GCC Countries, noted that the current population in the Gulf is approximate 50% youth; they suggested ‘Rather than viewing their young people only as passive receptacles, acquiring their culture and values, adults should regard youth as change agents with contributions to make.’ Gulf youth are highly literate, tech savvy, and trust the Internet and social media as a source of information. They communicate differently, buy through different sources and expect a different variety of products and customer service. These same millennials have a great interest in entrepreneurship; they will grow to be managers and executives bringing their digital mindset and global perspective to the business sector. Digital is not an add-on to this major demographic, but their mindset and lifestyle.
Here are six strategic Digital Transformation priorities that translate for the Gulf region.
- Integrate company-wide digital strategy
Most executives see that digital will have a strong impact the next 12 months in the area of Marketing (66%) but considerably less see that it will affect Finance (20%) and Human Resources (16%). Often, companies begin their digital journey by adding-on social media (e.g., Instagram, Facebook, Twitter) and not integrating these tools into a comprehensive business strategy. They focus on short-term outreach and lead generation and not on maximizing the customer experience and the internal operations and efficiencies that will contribute to competitive advantage.
As GCC companies have followed the Western traditional business model of siloed and competitive functional areas, they will realize that this “piecemeal strategy of bolting on digital channels or methods is no longer sufficient. Instead, you must think of your company as part of a dynamic ecosystem of value that connects digital resources inside and outside the company as needed to compete.” Furthermore, Forester and Russell Reynolds 2014 digital business study supported this finding suggesting that that companies must “harness digital technologies, both to deliver a superior customer experience and to drive the agility and operational efficiency you need to stay competitive.”
- Adapt business model
With the dynamic changes in customer expectations, channels of communication and delivery systems, the evolution of the business model becomes a necessity. In the telecom industry, digital transformation has become integral to their evolution, “to the extent that they need to innovate and respond to changing consumer preferences with new business models; lest they perish or, at best, be limited to becoming a commoditized provider of low-cost bandwidth.” The availability of high-speed broadband is changing customers’ expectations and desire for basic services like SMS and voice, in favor of experiencing richer digital connections.
In the case of the GCC banking industry, it is very progressive looking at consumer’s adoption of online, mobile payment and 24/7 banking from around the world and its effect on their business model. “Most banks who want to acquire the gen Y and even gen X customers, who are more digital savvy, have no choice but to adopt and move ahead with digital technology, it’s not a question of choice.” Suvo Sarkar, General Manager –Emirates NBD.
- Develop partnerships
Traditional companies will benefit from developing partnerships in order to compete with companies that grow out of the digital revolution. For the many companies that do not have the skill-set and capacity to adopt a digital strategy, it’s more efficient and cost-effective to partner with a digital specialist in their technology hub (e.g., Silicon Valley) or outsource it internationally (e.g., Asia). Outsourcing this need via partnerships requires a carefully designed strategy to tread the path to digital transformation harnessing their strengths while addressing their inherent challenges. They need to combine strategic assets to compete successfully in the digital marketplace.
- Focus on customer-centric experience
With the digital revolution comes transparent communication and user generated content. The prioritizing of the customer experience [CX] becomes a critical element in gaining competitive advantage. Highly relevant in both B2B and B2C companies, the reorienting of the marketing strategy to a customer-centric approach is key. The National Bank of Oman reflects this transformation. It is committed to delivering excellence across all its customer touch points. Its marketing strategy incorporates new and innovative services that will seek to enhance customers’ experience to become the bank of choice.
To respond to the changing customer experience, the retail banking world is going through four major revolutions, “banks are becoming online retailers, core banking will have to move to cloud, banking is now low margin and customers are no longer loyal. Banks who are suffering the restraints of legacy systems, those that are not equipped to compete with new competitors or keep up with technological advancements face becoming obsolete,” said John Schlesinger, Chief Enterprise Architect, Temenos. He believes that banks must invest in innovation to remain competitive and satisfy the increasing expectations of tech-savvy customers.
- Transform brand engagement through expanded social media
Most companies see digital in terms of social tools. But the tool is only the vehicle for transforming brand engagement. Millennials are a growing force in the Gulf; they live in the digital space, and so will their business ventures.
“Social media driven digital engagement is a disrupting force that is among the most significant factors driving business today,” suggested Trixee Loh, Senior VP, Dubai World Trade Centre. “Users are more empowered and vocal than ever, which presents unique opportunities and completely redefines the concept of ‘business as usual’. The pressure to adapt (digitally) is immense.”
- Expand digital distribution
The traditional concept of the “4P’s” as a pillar of marketing is totally out-of-date. Digital distribution in all forms is creating hybrid distribution models. For example, look at the futuristic branch banking in the United Arab Emirates. Mashreq Bank has recently opened an E Cubed branch in a shopping mall in Dubai. The E Cubed branches are equipped with the latest technology (tablets, interactive screens using the Microsoft Kinect solution) and it’s completely paperless. Mashreq Bank plans to transform 12 of its branches into E Cubed branches, at a cost of $50,000 per branch.
While no sector can hide from digital disruption, companies are faced with a plethora of tasks in adopting and executing a digital strategy. Many lie in the digital preparedness of the executive team’s digital mindset and the organization’s capacity to execute digital as a strategic priority to realize competitive advantage. In the GCC digital disruption is imminent with the growing youth population and the impact of digital technologies on the region. The challenge for businesses is a timely and comprehensive response to acknowledge the changes and respond effectively.
In the words of Karl-Heinz Land, digital transformation expert,“Digital Darwinism is: When technology and society change faster than businesses are able to adapt, then the result is extinction”