How are the rules of business changing in the digital age? How can a company best leverage the potential of digital technologies like AI and Cloud? What new skills do leaders and young professionals need to build?
A new book, Winning in the Digital Age, seeks to answer these questions, and presents a set of principles that could unleash India’s entrepreneurial energy and help it emerge as a decisive winner in an uncertain world.
“Digital Transformation is a mega trend of our times. It is a large and complex change that is not easy to manage”
Digital transformation is one of the most significant megatrends of our generation, one which is continuing to grow in scope and scale. Digital started as a new channel for engaging customers, for digitizing back-end processes and was largely the domain of the technology function. Today digital has become all pervasive, and it is not an exaggeration to say that we are living in a digital age. Digital is touching every aspect of our lives as consumers, is impacting every industry and is totally transforming not just products and processes but entire business models. This change is not just a technology change, but something that is impacting every part of the business and the organization. It is redefining what business companies are in, forcing a shift in long-held organizational principles and practices, and it is changing expectations from leaders and young professionals alike.
For the enterprise and its leaders, the digital age is a rollercoaster ride with more than its fair share of thrills and spills. It presents them with great opportunities to leapfrog and grow. However, success is not easy in the digital age. I characterize the digital age as the VUCA world – Volatile, Uncertain, Complex and Ambiguous. Competing in the digital age requires you to make changes at multiple levels – in business strategy, products/service offerings, technology, processes, organization, talent, culture – which is not easy at the best of times. The complexity in the VUCA world makes it very difficult to establish both what should be done and how it should be done. Resulting in a lot of confusion at the enterprise leadership level, and that is why despite significant investments in digital transformation initiatives, its impact has been underwhelming.
“Unlearn the old rules and learn the new or lose unrecoverable ground”
To win any game, it is important first to understand and master the rules of the game. It is the same in business. My submission is that the VUCA world or the Digital Age is very different from the world we have seen so far, and thus we need new rules of business to succeed….
Most enterprises have embarked on some variation of Digital Transformation programs. However, the impact of these programs often falls short of expectations. There are many reasons for this, which we explore across this section, but the core issue is that enterprises have not recognized how much business fundamentals have changed in the Digital Age. They continue to take their existing business models, infrastructure, and approaches and apply it to digital age problems and opportunities. It is clear if you apply old world formulas to new world situations, your outcomes can only be sub-optimal.
“Various technologies like AI, Cloud, and Automation are parts of an orchestra – Beautiful music happens when all of these come together end-to-end!”
The most important aspect of these technology building blocks is that they are not independent but are interconnected. Enterprises realize transformative value from them when they are connected end to end. These building blocks represent different layers of the technology stack; connecting them tightly creates a virtuous cycle.
Digital must start with design thinking to define strategy and customer experience. The whole experience must be thought up from scratch and redesigned to deliver ‘what it should be’ rather than starting from ‘what it is’. One of the distinctive aspects of the digital customer experience is that it can be highly personalized and targeted at the individual. This is enabled by analytics. Analytics also enables customer insights, analysis of sales performance and operational efficiencies, and informs other key business decisions that help drive the business.
The superior customer experience that digital enables has to be fulfilled by internal operations. Typically, digital requires significantly improved response time, and this requires a redesign of processes, which is enabled by automation. Artificial intelligence (AI) can power enterprises to reach the next frontier of digital transformation. The self-learning ability that AI provides can sharply enhance both customer experience and operations efficiency over time.
The bedrock of everything we have talked about – Design/ Customer Experience, Analytics/Data Science, Automation/ Operations Transformation, AI – is Data. All these technology building blocks require high-quality and deep data. Data is also where the recursive relationship or the virtuous cycle between the technology building blocks happens.
Digital is leading to a data explosion – in volume, variety, and velocity. However, to realize the full potential of this ‘digital data deluge’, enterprises have to upgrade and build scalable data infrastructure. This is easier said than done. Most enterprises struggle with getting high-quality, harmonized data together.
Cloud, which began as an infrastructure capability helping provide scalability and making costs variable, is now becoming a key enabler for transformation across the entire technology stack that we have mentioned. Cloud’s scope and capabilities are increasing tremendously, and many enterprises are transitioning to a cloudnative architecture. It provides them a great opportunity to upgrade the various elements of the technology stack and, in particular, to address the data infrastructure and quality issues that we have talked about.
As you can see, the various technologies that are the building blocks of digital are like the parts of an orchestra. Each of the parts needs to be very good, but only when they sync together that beautiful music happens. That beautiful music, in our case, is realizing the full potential of digital transformation!!
“The opportunity for global delivery is more than cost, it is clearly about innovation and velocity. But to realize it, you have to operate as an integrated global network”
Global Delivery Centres are absolutely pivotal for enterprises to succeed in the digital age. Technology is the core foundation of digital, and GDCs are the centre of gravity for this technology execution. They provide not just the cost but also the innovation and velocity advantage necessary in this VUCA world. While GDCs have existed for many years, to meet the new expectations from technology in the digital age, the GDC’s proposition and operating model have to change significantly. Historically, GDCs have been seen as cost and execution centres; this needs to change, and they have to become revenue and innovation centres. This is a fascinating opportunity. Enterprises that are able to make this transformation and leverage global delivery effectively will stand to gain a real advantage in the digital age.
I have been a participant and a leader in this industry, helping shape the evolution of the GDC over the past twenty years almost. I led McKinsey’s Knowledge Centre in India from 2002 to 2010, and that was not just an opportunity to build a cutting-edge centre that was continuously defining what could be done from a GDC, but it also became a showpiece for us at McKinsey to demonstrate GDC best practices to our clients looking to set up GDCs themselves. Subsequently, I led the global delivery network for Fidelity’s international business for six years. Along the way, I led the Global Inhouse Centres forum for NASSCOM (the industry body in India for IT and BPO companies) for a number of years, where I helped define the value addition framework and maturity roadmap for GDCs. It has been a fascinating journey for me to see – and shape – how GDCs have grown from being support centres to becoming a source of competitive advantage for global enterprises. This opportunity to leverage the global advantage – the why, what and how of it – is the focus of this section.
In my observation, six principles drive end-customer and revenue-centric value addition. Also, I am sharing examples of GDCs that have driven value addition, resulting in tangible benefits for their parent organizations beyond what is typically expected.