The countries that adopt the technology first are also the first to reap its rewards.
1. Focus on growth opportunities
I believe that focusing on the opportunity for growth, and approaching digital as an enabler of new-world efficiency rather than as a threat to the existing business, is the challenge that most of our clients and boardrooms now have to overcome.
Organizations that are pragmatic, proactively invest in innovation and new business models, and embrace digital change, can reinvent themselves and expand beyond geographical and industry borders by delivering new, innovative and enhanced products, services and experiences.
However, CEOs and board members need to understand that simply having a digital strategy is not enough. In fact it is no longer even a choice. Organizations have to stop “doing digital” and start “being digital.”
Being a digital leader means embracing a portfolio of investment and development opportunities in new tools and platforms to improve the customer experience. It also means challenging the traditional approach to ROI for technology investments through more focused portfolio management and innovation to positively disrupt the existing business model.
Indeed, companies that have taken innovation outside the confines of the research and development (R&D) department and embedded it within every level of the organization are those that are making the greatest strides ahead of their competition. These companies recognize that innovation should not only drive product and process development, but also brand, customer experience, supply chain and new business models. Innovation is not housed strictly and solely within R&D; it becomes everyone’s responsibility, championed by the leadership team, including the CFO.
As a global organization, our call to action is for all enterprises to make digital disruption their friend. But this can only be achieved by taking the right strategic and practical steps to ride the digital waves breaking on their corporate shores.
2. Develop a network of collaborators
Part of the role of a digital leader is to fund new approaches to offset technical debt and build new capabilities through partnerships and collaboration. Those that are able to build the flexibility to venture into new capabilities more effectively than their competitors will be the winners in the new digital economy.
Just as with a circle of close friends, companies need to build a strong network of external partners that can take them to the next level by helping to deliver a true digital enterprise strategy. Companies with capital to invest can do this via acquisitions. But no single firm is an island in a sea of digital disruption.
For instance, while companies typically have some level of in-house digital expertise and assets, most will need to collaborate with others to make the most of the latest mobile technologies, AI capabilities, advanced analytics, cloud computing and other emerging technologies.
3. Leverage the power of data analytics
Another practical way to positively embrace digital disruption is to use sophisticated analytics software to leverage what is often masses of under-utilized or latent corporate and customer data.
According to research (pdf) by EMC and IDC, from 2005 to 2020, the amount of digital data created, replicated and consumed in a single year is forecast to have grown by a factor of 300 – from 130 exabytes to 40,000 exabytes, or 40 trillion gigabytes (more than 5,200 gigabytes for every man, woman, and child in 2020). Yet only a tiny fraction of this data has been explored for analytic value.
We know from our work with global enterprises that organizations consistently using data analytics typically outperform those that do not, by using deep analysis to support innovation and objective, strategic-decision making.
Making the transition to this new, collaborative model of partnering and co-creation is not always easy. We are helping clients to understand how to adapt in this new multi-disciplinary world, through the recent launch of EY wavespace™ – a network of global growth and innovation centers, where clients can catch the next wave in radical breakthroughs in transformation and tap into innovative thinking across our disciplines, experience and industry sectors.
4. Develop a future-proofed digital investment strategy
EY wavespace reflects our conviction that change, digitization and disruption present huge opportunities for businesses, with the right support from technologists, strategists and designers. We believe that those who can develop strategies and form collaborations to assemble the right blend of capabilities and access new ones will gain a competitive edge.
In all scenarios, however, firms need to be clear about the digital capabilities they need to aspire to – for example, what they need to buy, versus what they need to build. A thoughtful, structured investment strategy here will help to ensure that innovative ideas are not abandoned or overlooked, and that scale is achieved through the best assets and distribution channels available (whether they are owned and operated internally or not).
Companies also need to be pragmatic about investing in change that will generate returns to the current business, but also manage a portfolio of future investment that will deliver in the years to come.
When strong investment is made in the right digital technology and talent – as part of an integrated portfolio across all business functions – the rewards from digital disruption can be limitless for enterprises.
The impact of these technologies and disruptive business models is now reaching beyond consumer experience alone. As automation, AI, machine learning and big data begin to be applied across the middle and back office, the real impact to enterprise is yet to be fully realized. At EY we believe that the benefits can be huge if embraced as an opportunity, rather than something to be feared.
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To drive inclusive growth, digital leaders need to collaborate, leverage data analytics, and invest in the digital future.