It may sound simple, but when a small group of leaders comes together to share in a frictionless environment across industries, innovation is accelerated. Recently I was in Shanghai and Hong Kong to launch a community of innovation leaders – senior executives who are driving digital transformation within their respective companies in China. I was amazed to see the participants’ enthusiasm while sharing their experience and lessons learned from digital transformation projects. One executive in Shanghai summed up the meeting’s appeal with a simple phrase: “learn together, grow together.”
As proven by these meetings, continuous conversations among digital leaders benefit organizations greatly. The ongoing exchange of knowledge demystifies digital transformation and helps companies define their strategies with clear objectives for value creation.
While introducing our innovation community in 20 cities worldwide, I always asked the questions, “where are traditional, non-digital-native organizations today,” and “what are the challenges they are facing in their ability to execute?”
Untapped potential of Greater China
In China, the stage of digital awareness has passed, and most companies are in the early phases of digital transformation. Nearly every industry has identified digital technologies as an integral part of their future, and most companies have begun to innovate, with pilots underway. Several of the participants have completed successful proof of concept implementations, and these early wins have helped drive confidence in their ability to achieve digital maturity.
One limiting factor that executives in both Shanghai and Hong Kong agreed upon is the need to raise the digital IQ of management within their respective companies to drive sponsorship and top-down support of enterprise-wide digital transformation.
We agreed to focus future community efforts on helping participants’ management teams understand digital capabilities and potential applications in business. We also discussed how design thinking can be used as a catalyst to drive executive engagement and greater mastery of what digital can do for each business.
Indeed, there is still a long way to go.
A new SAP study revealed that only one percent of large companies (and zero percent of small and midsize businesses) in China report having completed digital transformation across the enterprise.
Organizations that transform will win in the digital age. In fact, 85% of the top 100 companies that have digitally transformed globally have increased their market share. What’s more, 80% say it has increased their profitability. And it’s not exclusive to revenue: 70% of leaders are seeing increased customer satisfaction, and 64% say their employees are more engaged.
Accelerate digital transformation value creation
As I look at companies that have done a good job implementing and moving their digital strategy in the right direction, I see elements of best practices being developed and deployed. These are applicable not only to those companies I met with in China, but leaders everywhere.
I always say digitize your core competency first. And, drive new business models that don’t diverge too far away from it. I often see companies struggling to identify what their core competency is, but by doing so you can define your digital destiny.
Below are three additional boardroom considerations for successful digital transformation:
- Focus on total experience. The total experience includes both customers and your workforce. Every company needs to change the experience above and below the surface, end-to-end. Sometimes this change will eliminate the manual effort and work completely, becoming fully automated.
- Start measuring value differently. Time is money; reduce cycle time. Upgrade your technology infrastructure with new digital capabilities to reduce cycle time. This will significantly improve your total experience and your cost structure.
- Upgrade talent and skills. Invest in required new capabilities and skills at all levels within your company. Appoint chief digital officers; grow and attract new talent such as data scientists; and build a network of strategic partners for new products, services, and capabilities.
This is the first blog in a series that will share learnings from the SAP Executive Digital Exchange taking place in cities worldwide. Future blogs will look at key insights and learnings from Mexico City, Toronto, Canada, South Korea, and East Asia.
For more insight on digital leaders, check out the SAP Center for Business Insight report, conducted in collaboration with Oxford Economics, “SAP Digital Transformation Executive Study: 4 Ways Leaders Set Themselves Apart.”