Sailing ahead with digital transformation in rough seas
THE outlook for 2023 looks stormy with looming layoffs, scarce talent, soaring inflation and fears of a recession. Amid the volatile, uncertain, complex and ambiguous environment, companies are quickly becoming digitally dependent. Within the next year, Gartner forecasts that worldwide IT spending will grow 5.1 per cent to US$4.6 trillion.
There are some inescapable truths about digital. First, everything that is default offline will become default online. The future is digital, with connective technologies like 5G and Wi-Fi 6 speeding up networks significantly. Second, every industry will be reimagined and redefined by technology. Digital transformation, led by retail, banking and governments, will continue to revolutionise sectors such as the arts, agriculture and construction. Third, the speed of change influenced, impacted and enabled by technology will continue to accelerate.
Technology continues to be a double-edged sword. While it disrupts and creates new opportunities, it may also produce redundancy through non-competitiveness. Netflix, Grab and Amazon are easy case studies to illustrate how industry and competitive battle lines have been redrawn with the clever adoption of new technologies. As such, innovation and creativity are at the front line and who dares wins.
However, there are complexities to consider. Firstly, it is not easy to determine which technologies will have the biggest impact given how rapidly tech evolves. The ability to identify, understand and adopt new technologies requires a nuanced understanding of digital, business and consumer behaviours. This is also layered with the awareness and sensitivity to geopolitical and regulatory shifts, as well as keeping abreast of the many expert opinions from analysts, academia and industry watchers.
Secondly, complexity is the non-linear nature of some trends, as there are frequent false dawns. For instance, the start of artificial intelligence (AI), attributed to a conference at Dartmouth College in 1956, generated strong interest and funding at a rapid pace. However, disappointing progress led to AI “winters” of funding and support in the 1970s and 1980s, with the interest in AI and machine learning receiving renewed focus and investments only in the 2010s. Today, applied AI and machine learning have become mainstream and well-adopted across multiple industries like digital marketing, e-commerce and online banking.
Thirdly, layering different technologies together adds a new tier of complexity. For example, while cybersecurity has become a mainstay in board discussions of enterprise risk management, the potential fusion of cybertrends with AI, quantum advanced connectivity or other technologies could create new opportunities and challenges to cyberresilience strategies.
Businesses will need to find ways to leverage new technologies successfully and marry considerations of the business, the industry, clients, key stakeholders, and many others to piece together a cohesive view.
Key digital transformation strategies
Hope is not a strategy. A comprehensive digitalisation roadmap could determine whether organisations thrive or wilt. Here are some transformation strategies to consider:
* Keeping digital as an always-on board agenda
Keeping digital as an always-on board agenda creates an always-on radar for potential opportunities and impact, especially with choppy seas ahead. The agendas could vary from industry sharing and business updates on technology to scenario planning. Having it top-of-mind also signals the importance of digital to management and teams.
* Increasing digital quotient (DQ)
More mature companies typically include a digitally-aware board collaborating with digitally-capable management and a digitally-savvy workforce. Increasing the board’s and leadership’s DQ allows for comprehensive opportunities and risk mapping. There are many ways to skin this cat: onboarding independent directors with strong DQs; creating a separate technology advisory panel to complement the main board and/or hosting trainings for the board.
* Building new muscles for speed and agility
The need for speed and nimbleness to operate and thrive is quintessential. The quick growth and acceptance of the sharing economy drove many incumbents to reshape their operations and offerings. While Kodak prototyped the first digital camera in 1974, they did not innovate quick enough to be the first in commercialising the idea. Anticipating the next seismic shift post-Covid, companies have created digital twins for experimentation and adoption as well as constructed separate business units or special purpose vehicles to respond with speed and agility.
* Seeing innovation as an investment, not an expense
Viewing innovation as an investment alters how companies assess its success, as compared to an expense item. Ringfencing resources for innovation with longer-term ROI (return on investment) targets would be increasingly necessary. While committing to this investment would represent a classic Catch-22 in the current stormy economic outlook, those who commit might be better placed for future success.
Favourable winds amid rough seas
Technology will define and shape the winners and losers of the Fourth Industrial Revolution.
Singapore is increasingly recognised as a global technology hub, with the presence of many global tech companies and a vibrant tech startup ecosystem. Together with a strong pool of digital talents, Singapore provides a fertile environment for companies seeking to leverage digital well.
Borrowing from an old nautical blessing, may fair seas and following winds chart the voyages of digital transformation. While the seas ahead may be rough, fair wind conditions in Singapore could make all the difference as businesses hoist their digital sails towards brave new frontiers.
The writer is managing partner, corporate development and partnerships, at NCS.
This article will appear in the Q1 2023 issue of the SID Directors Bulletin published by the Singapore Institute of Directors.
