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How to invest in and benefit from digital

By: Kari Kaario

”Our organization has not defined the word ‘digital’ and we are truly lacking a digital vision that would guide our way forward.” This authentic quote came up in one of my recent meetings with a CEO of a listed company. While I admired his honesty, I also felt very alarmed.

As with so many other transformational challenges, every organization needs a clear vision supported by leadership to be able to cope with upcoming and inevitable change driven by digital disruption. Unfortunately, the quote above is very common when meeting with executives. Many organizations are experimenting with digital solutions but too often these projects are isolated and driven from bottom up. On a short term, they might even produce expected results. But, going forward, customers are expecting a seamless experience which they will not get if digital development is not managed from the top.

As we know, the board is responsible for setting the strategy of any company. This is increasingly true when talking about Digital. Competition is global and in many cases coming from outside of the traditional industry players. Usually, these intruders are playing a different game with different rules compared to established companies. Each board member should ask themselves and, ultimately, the management team following questions:

  • How well do we understand threats and opportunities of Digital?

  • When is disruption hitting our company and how much of our revenues and profits are at stake?

  • What is our strategy: deny, defend, differentiate or disrupt?

  • Do we have the needed capabilities?

  • Are we investing enough?

Typically, the answers to these questions are as unclear as the digital vision for some executives and even board members. I have seen a few companies nominating CDO’s (Chief Digital Officer) and declaring that they are now ready to cope with Digital. Unfortunately, in most cases, this is not enough. Consumer behavior is now in the driver’s seat of almost any industry—this dictates that every company should be ready for "outside-in" business models. Most companies have been designed to plan, produce, sell and deliver their products and solutions to the market making them incompatible with the demand coming from the market. A CDO alone will not be able to solve the problem. Each and every business leader responsible should be capable of driving their own Digital agenda with alignment to the company-wide strategy.

New capabilities and structures are needed to perform this huge task. Adequate investments need to be made to be able to produce a customer experience that is comparable with Uber, ParkMan and other "magical" solutions. It might be ok to experiment with standalone mobile solutions but very quickly customer pressure will force you to integrate and align all customer-facing applications. This might call for renewal of current legacy and other systems. Besides requiring IT investments one also needs to make sure that the board, management team and middle management has right and adequate balance of needed talent.

Finally, one must agree on the level of investment. Traditionally, it has been easy to make decisions on investments that:

  • We have done before

  • End up in the balance sheet

  • Can be converted for other usage (e.g. retail store to warehouse or to sports arena)

  • Drive market share and top line

Unfortunately, an investment into Digital very seldom fits these criteria. We need to be able to take a leap of faith in the absence of a solid business case. Are you ready to make it?


Author

Kari Kaario
Managing Director-Accenture Digital

Nordic Digital Sales lead, actively advancing digital business capabilities of Accenture’s clients across all industries. These capabilities build on technologies such as digital, social networks, mobility, interactive, analytics, and cloud.

 

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