Keeping step with the pace of digital disruption

By TEC Speaker Simon Waller

You don’t have to look far to see the impact that digital disruption has had on our lives. Technology that was once central to our lives now belongs in a museum, replaced by new devices that are faster, smarter and more useful to us.

While technological development has always been happening, what we have seen in the last few years is the true impact of digital disruption. Now, business processes that used to be lodged firmly in the analogue world are finding their feet in a digital existence that looks very different to anything we have seen before.

For many CEOs, the challenge is now two-fold. Not only do they need to start embracing technology within every level of the business, they also need to become the leading proponents of technology and win over sceptical workers to these new opportunities.

The end of business as usual

One of my favourite quotes comes from Kevin Kelly, a founder of Wired Magazine, who said:

If we were sent back with a time machine, even 20 years, and reported to people what we have right now and describe what we were going to get in this device in our pocket – we’d have this free encyclopaedia, and we’d have street maps to most of the cities of the world, and we’d have box scores in real time and stock quotes and weather reports, PDFs for every manual in the world – we’d make this very, very, very long list of things that we would say we would have and we get on this device in our pocket, and then we would tell them that most of this content was free. You would simply be declared insane. They would say there is no economic model to make this.

The point here is the influence of technology appears in many ways, making it hard to predict the future. Digitisation has inevitably and irreversibly changed business organisations so that there are entire industry sectors offering free services, with diverse and creative ways to be profitable.

In just about every sector there are start-ups and innovators looking to challenge the way businesses are traditionally run. These upstarts are often able to thrive thanks to their reliance on technology and their willingness to push the envelope in ways that risk-averse organisations aren’t prepared to pursue.

Kevin Kelly was also quick to point out that over the next 20 years we are going to see even greater change – the kind that will make the last 20 years look like a snail’s pace by comparison.

This change has become so widespread that even attempting to predict the future is pointless – with the words likely to feel outdated as soon as they leave our mouths. So while we cannot stop this disruption from occurring, we still don’t know what form it will take or how it will occur.

Preparing for a world where technology underpins every business

Just as the future business world cannot be predicted, it is becoming clear that every job in the future will require some level of technical or IT knowledge.

The findings in the UK Digital Skills Taskforce, published in 2014. The study found that 90 per cent of jobs will require at least a basic understanding of digital technology, while 56 per cent require an intermediate to advanced skill set.

Many workforces simply don’t have this depth of expertise that they need in order to thrive in a digital future. Building these skills require comprehensive training efforts and upskilling programs to ensure existing staff can handle an increasingly digital workload.

This is also true at the C-Suite. Many senior executives will have come of age at a time when digital technology was still in its infancy and therefore may not be familiar with the latest developments that are changing work on the shop floor. CEOs that want to make the most of digital technology need to acknowledge the limitations of their own skills as well as those of their staff members.

Technology that is truly personal

If you look at the history of technology, among the biggest changes has been taking technology and making it personal and relevant to an individual.

Take computers as an example. The very first computers were solely the preserve of governments and very large businesses. Over time, mainframe computers became standard in businesses, before being replaced by the personal computing revolution.

Of course, the PC was never really personal – it still had to sit on a desk be plugged into a wall and even with the advent of the internet, the connection still came through the wall. It has only been with the growth of mobile computing that this technology can truly be called personal.

While the march towards truly personal technology is a great boon for individuals, these same changes need to be addressed at an organisational level. CEOs need to recognise that old patterns of procuring and using technology are still done through the lens of the organisation, rather than the individual user.

Scaling technology to a personal level also demands scaling business decisions and direction to that same level as well.

Business that is led by innovation

Every company sits on a scale – from those who are leading digital disruption to those who are actively trying to preserve an old technology in the face of change.

Historically, companies at the latter end of the scale were those that were seen as successful – they had a proven track record, a specific niche and were dependable. Innovative disrupters were the opposite; treated as highly risky undertakings working on the periphery of established processes.

Now, that relationship has been inverted. Protecting old industries is now seen as a dead-end, while the top end of the disruption scale is seen as the area where real growth is occurring. A shift in business thinking needs to occur so that companies focus on moving up that scale. That’s a change that cannot come soon enough – and it has to start with the C-Suite.

Expecting the unexpected

Being told there is no way to predict the future may come as anathema to CEOs that are used to market research and sales forecasts, but it’s a realisation that needs to happen. Every industry and sector is already playing catch-up with technology and trying to keep pace with the latest innovation, and this challenge is only going to grow from here.

While there’s no sure-fire way to succeed, there are some steps CEOs can start to take. Focusing on technology skills, both their own and those of their staff, is essential for building digital-first organisations. Likewise, understanding how personal technology and innovation are now shaping the business landscape are essential for informing future business planning.

In an unpredictable future, mastering these strategies will give businesses a chance to make the most of digital disruption, rather than becoming another disrupted organisation.

Is your business ready for the collaborative economy?

Business conditions are changing at a rapid pace and one of the biggest trends in the last few years has been the emergence of the collaborative economy.

Over the last decade, organisations like Uber, Air BnB, eBay and GoGet have become household names for the shared services they are able to coordinate. This new model of operating is poised to make big waves in the Australian economy over the coming years, presenting a challenge for even the most established corporate models.

For any SME, planning ahead is going to be essential. Finding a course in this new business environment and then adjusting course as necessary is going to be a major factor in setting your business apart from the competition.

What is the collaborative economy?

The collaborative economy currently goes by a number of different names – the sharing economy, collaborative consumption or peer-to-peer sharing. The idea is that people are now using new technologies to unlock alternatives to established business models in an effort to reduce costs and increase efficiency.

The idea is also an economic one – many people have things they own but don’t use most of the time. By sharing these items, the cost of use is spread across a number of different people, while the object is also used much more efficiently as a result.

Perhaps the best example is Uber – the app which lets anyone become a taxi driver without using a traditional company. The service has become incredibly popular overseas and already seems to have broken the monopoly previously held by taxi operators.

Just a few years ago, this sort of innovation in shared services wouldn’t have been possible and the taxi industry certainly wouldn’t have been one people would associate with digital disruption.

Of course, Uber isn’t the only firm riding this new development in the collaborative consumption space. Other companies like Air BnB have had a similar effect on the hotel industry, providing an alternative for individuals to offer accommodation at a cheaper rate than established providers.

These are just some of the ideas that have already impacted the market. Companies are also innovating in new spaces that could upend more industries. One example that a number of startups are investing in is car sharing services that will allow individuals to rent a car short-term without having to go through a car rental provider.

Given that a car will spend most of it’s life unused, this sort of innovation has the potential to significantly change they way we think about buying and running a car.

Many other industries are also going to see significant growth. Research from PricewaterhouseCoopers in the UK predicted that nine key sectors – peer-to-peer (P2P) finance, online staffing, P2P accommodation, car sharing and music/video streaming will be the sectors which see the largest growth over coming years.

With these areas range from futuristic to an imminent strategic opportunity, every company now needs to be thinking carefully about how to adapt to this sort of digital disruption.

What does the collaborative economy mean for an SME?

Clearly these new models of sharing are going to change the way individuals perform. As new sectors of the economy encounter the same disruption that is affecting transport and hospitality, SME owners will need to be sure they are taking steps to prevent this same kind of disruption occurring in their business.

While there are clearly significant obstacles that the collaborative economy is putting on small businesses, it also represents an opportunity for companies to improve their operations and realise new growth.

So what are these benefits? Here are two of the advantages of a shared economy for a small business:

1) New opportunities to provide services

Every company will now need to think about how their services might be better provided over a shared service. Planning ahead for how a business’s services might be provided over a shared platform will be essential if your SME is going to make the most of the shared economy.

This was highlighted in recent research, discussed in the Harvard Business Review, which found that the main reason for individuals to engage with shared services is based on price. The research suggested that companies that want to be competitive in the shared economy will be those that can offer convenience and lower cost.

However, companies working in this space will also need to be sure they are investing in their reputation. The sharing economy requires both companies and individuals to build “reputation capital” if they want to be successful under this business model.

2) Lower operating costs

Just as the number of businesses working in the shared economy space has increased, established firms are turning to these same services as a way to cut costs in their business. This new model of managing services means that even if a firm’s own business cannot be translated to a shared platform, they can still profit from this new model of using resources.

Peer-to-peer finance is just one example of how shared services might come to benefit an organisation in the future. Instead of relying on funding sources from a bank or financial institution, SMEs might be able to attract capital from alternative funding sources. By cutting out the middleman, these services have the opportunity to lower ongoing costs for accessing essential business services.

These are just two of the ways Australian SMEs might be able to achieve a more effective operation by using the shared economy. For companies that can take the time to understand this service and adjust their corporate strategy to account for this shift, the advantages in the future are going to be considerable.

Keeping up with the times: Is your leadership modern enough?

Anyone who works in a business leadership capacity knows that the corporate landscape is forever in a state of flux, with change the only constant in an unpredictable environment. The implication of this, of course, is that leadership skills and attributes are evolving in tandem.

Never has the impact of continuous business change been as pronounced as it is today. With the relentless rise of technology, new markets and shifting consumer preferences, the only companies that survive are those that can keep up with the times.

Some of the leadership traits that were relevant only a few years ago are now considered outdated by many – and there is always a new batch of skills for the modern leader to learn. What are the key qualities that today’s managers need to master in order to stay ahead?

Be a tech guru

Technology has long been one of the biggest priorities for business leaders, and the latest indications are that this trend is only set to grow in the future.

Whether it’s to streamline internal processes or to enhance consumer-facing interactions, there is rarely a space within your organisation that can’t be improved through technology. In 2014, we looked at some of the top business technology trends, which highlighted, for instance, the increasingly mobile nature of commerce and what this means for businesses and consumers.

Already a vital area to invest in for companies, mobile will only grow in dominance. In this article, CNET analysed data from US Census Bureau and GSMA Intelligence to demonstrate that there are now more active mobile devices than human beings on Earth – and their growth rate also exceeds that of our population.

There are no two ways about it – technology is touching more and more aspects of our personal and business lives and your success as a leader is likely to hinge on how well you can leverage this change.

Think data, think big

In addition to mobile, one of the technology trends that is revolutionising business processes the most is big data.

Companies are now dealing with quantities of data that were once thought unimaginable. Correctly and efficiently tapping into this information to extract meaningful insights is, and will continue to be, of utmost importance for any business.

One of the areas in which companies are deriving the most value out of big data analysis is customer relationship management (CRM). The savviest businesses are using the latest software and tools to crunch customer data and enhance individual relationships with them. It’s no surprise, then, that research firm MarketsandMarkets predicts the global CRM market to grow at 36.5 per cent between 2013 and 2018, reaching a value of US$24.22 billion (AUD$27.8 billion).

In addition, technology research group Gartner announced that advanced analytics, fuelled by big data, will be “a top business priority”.

“Rather than being the domain of a few select groups (for example, marketing, risk), many more business functions now have a legitimate interest in this capability to help foster better decision making and improved business outcomes,” explained Alexander Linden, research director at Gartner.

Harness the power of people

Despite the growing attention being placed on technology, it is still crucial for the modern leader to appreciate the human aspect of their business.

Engaging your employees and showing you value them by offering advancement and development opportunities is an area of increasing focus. This is true regardless of the industry in which you operate, no matter how “techy” or not it is.

For example, a survey by recruitment firm Robert Half polled technology professionals and asked them what frustrates them most at work. The most common response, with nearly half (45 per cent) of votes, was the lack of opportunities for advancement.

An additional study by the same company surveyed a range of CFOs and employees on the factors that cause the best employees to leave an organisation. Both pools of respondents were remarkably similar in their answers, with the second most cited reason being “limited opportunities for advancement” (22 per cent for CFOs and 20 per cent for employees). The first-placed factor was salary and benefits.

In the context of a digital business environment, it is essential you do not neglect the potential of your people, and give them the opportunities to grow and flourish within your organisation.

Be a student

Don’t limit professional development to just your employees, however. The best leaders are those who seek opportunities to personally learn and develop for the benefit of their business, and in an increasingly networked world, executive coaching is a great option.

Business leaders can benefit immensely from an executive development program, working with someone in a coaching or mentoring capacity. Often, the best way to learn in business is working closely with someone who has ‘been there and done that’, and using them as a sounding board.

According to Grant Thornton’s International Business Report, 40 per cent of business leaders in the Asia-Pacific (excluding Japan) region said they have used a business coach – this was one of the highest proportions around the world. In order to keep up with the times, it may be worthwhile investing in a relationship with an erudite business mentor.

Look global

In an earlier blog post we looked at the importance of globalisation, especially with a focus on Asia – and the need to take a worldwide view to business is not likely to change.

Additionally, the October 2014 Technology Leaders Forecast Survey from DLA Piper found that two-thirds (67 per cent) of technology business leaders believe China will be “a source of major technology innovation in the next five to 10 years”. Given its proximity to the region, Australian businesses are well placed to tap into Asian markets, and the onus will be on business leaders to instigate this investment.

The business world is always changing – but by knowing which skills and qualities you need to master today, you can ensure you and your business are ahead of the curve.

Is company culture holding back your organisation?

Company culture can be a difficult thing to quantify and measure, especially for an SME that is looking to become more innovative.

While CEOs and company leaders will play a major part in establishing and maintaining a strong internal culture, there are still issues which derail these initiatives.

This is especially challenging if it means that companies cannot remain competitive and stay ahead of the opposition. Innovation is just one area where company culture can play a major role in long-term success or failure.

This issue was recently explored in the Culturing Success report from Microsoft into how widespread innovation is within a small business and what is setting apart high-performers in this space. The research reported that nearly 70 per cent of SMEs in Australia are finding it difficult to become more innovative because of company culture.

According to the report, there are four cultural issues which are undermining the performance of Australian firms. These four are; working in silos, employee distrust, poor collaboration and a fear of failure.

The importance of innovation was underscored by Microsoft Australia’s Managing Director, Pip Marlow, who stated that “innovation is vital to the success of any business, no matter how big or small.”

“However, our research reveals that many businesses find it difficult to develop a culture of innovation.”

While there is clearly a lot of room for Australian companies to improve their processes, the report did highlight features that set highly innovative companies apart from the competition. The 33 per cent of firms that fell into this highly innovative category possessed five key features, including:

A strong customer focus
Awareness of and appetite for innovation
Visible and involved leaders, which in turn create engaged employees
Authentic internal dialogues
A supportive working environment

The result of implementing these processes is a considerable improvement in the performance of an organisation. According to the research, 39 per cent of high-performing firms reported above average growth, compared to less than a quarter of those who are poor innovators.

So how can companies achieve this new focus? The report suggested four strategies that companies can embrace to move closer to the example set by highly innovative organisations:

Attract new staff

The study emphasised that attracting the right staff is an important part of building an innovative business. By bringing in new perspectives, organisations will be able to create great ideas and subsequently see them through to completion.

The advantages of attracting the right staff go beyond boosting innovation, they can also play an important role in realising customer engagement.

Many Australian companies are already aware of the challenges that come alone with attracting and retaining valuable staff members. For fast-growing SMEs like Enablis, finding the right staff members has been the core challenge when trying to scale the business to handle further expansion.

Collaborate with external partners

Creative ideas and innovative solutions don’t just come from within a business – in many situations, creative ideas will actually come from tapping into the skill sets of other firms and working collaboratively.

Business collaboration is also becoming increasingly important across new technology, with collaboration over cloud technologies predicted to double over coming years, according to a study from Research and Markets.

Evaluate performance

Companies that are looking to become more innovative will need to have established and concrete processes to measure performance. Microsoft suggested organisations can audit themselves to understand exactly how well they are realising an innovation strategy at each stage.

One option that companies can use is the assessment tool provided by Microsoft. This quick test was designed to accompany the research and allows businesses to measure how innovative they really are. This sort of information can then be used to identify the areas an SME will need to work on if they want to move up the scale.

The benefits of this system were also highlighted by Pip Marlow, who emphasised the advantages of taking this assessment for small-business owners.

“Microsoft’s new self-assessment tool is the first of its kind to help small and medium-sized businesses identify their culture-related obstacles and then implement tangible solutions to become true innovation leaders,” stated Ms Marlow.

Build a flexible workplace

Staff will often perform better if they have the opportunity to get out from behind their desk and work in a way that best suits them. Not only can making this change ensure that staff are thinking creatively, it can also reduce the amount of stress they feel outside of work.

Solutions like working from home and employees choosing their own hours are easy ways for small businesses to introduce more flexibility, and thinking along these lines is a key ingredient in building an innovative company.

A flexible workplace can also involve introducing new processes to reduce the amount of time spent working on menial or repetitive tasks. For TEC member Alister Haigh, introducing ‘Baxter’ – a robot  designed to take over menial processes – has introduced a new level of flexibility into his family’s chocolate business.

Of course, none of these approaches alone is going to transform a business into an innovative organisation. But, by combining these different factors into a single coherent strategy, businesses will be well-placed to become a highly innovative firm that is also a leader in their industries.

For small businesses, building this sort of culture is going to require constant attention and maintenance. While this might sound daunting, the benefits for SMEs that can embrace this way of thinking are certainly going to be considerable.