What’s the biggest impediment to business these days? Lack of capital? Skill shortages? Over-capacity? Regulation? I’d argue that it’s actually complexity. Billions of dollars of potential corporate profit is buried under a mountain of inefficiency and waste, resulting in missed business opportunity.
This was the core of a panel discussion I chaired at the JP Morgan Global China Summit with Kai-Fu Lee, Chairman and CEO of China’s Innovation Works and Ken Hu, Deputy Chairman and Rotating CEO of Huawei. It seemed to us that both the problems and the remedies are becoming increasingly clear.
If you were to design a business organization from scratch, based on best possible practice, it would look considerably different than what exists in almost all companies today. That simply reflects the fact that they have legacy systems which make businesses difficult to run. Scattered information and data duplication create different versions of the truth. Archaic batch processing techniques lie at the heart of existing business processes. The data explosion shows the limits of current technology not only to run the day-to-day operations but also serve as a base for innovation.
To get most out of this new digital era, organizations need to attack complexity at all levels and embrace digital transformation – i.e. use digital technologies to create enhanced, customer-centric business models. With the growing roster of breakthrough technologies available – such as hyper-connectivity, supercomputing, cloud, big data analytics, in-memory databases, the Internet of Things (IoT), machine learning and blockchain (the technology behind Bitcoin) – companies can re-imagine their business models, the way their business processes are designed, and the way their employees work.
Clearly, to Run Simple and digitize the business, companies need to have the right technology platform in place. Driving massive simplification and innovation in critical areas such as finance, supply chain, R&D and manufacturing requires a platform aligned to desired outcomes. One that enables businesses to commutate and integrate with key elements of the business world – customers, suppliers, workforce and now devices.
Big Data to Big Insights
All these interactions with human constituencies and devices will create ever more data. In fact, we’ll be drowning in data, which creates new data management and analytics challenges. Winners in the digital economy will meet these challenges and provide “insights for all” – giving employees, partners, and customers immediate access to the most relevant information they need to answer every question, understand their businesses and seize new opportunities.
Big data analytics, increasingly supported by the intelligence of machine learning, greatly expands the possibilities of transformation and growth by enabling businesses to understand past and present in real time, and to predict future. Companies can become a proactive and data-driven Live Business – running at market speed and differentiating by being able to anticipate risks and opportunities in the moment.
Heralding the Digital Business Framework
The right digital technologies ensure speed, agility and a rich environment for re-imagining business models. Companies need to develop an end-to-end digital business framework that can help digitize the entire value chain, including the core (ERP).
The framework enables companies to build their digital strategy across various areas:
- Drive a truly omnichannel customer engagement and commerce platform
- Migrate from a simple sourcing and procurement model to a fully integrated business network model
- Create workforce engagement strategy to address diversity and multi-generational workforce needs and focus on attracting and retaining young talents
- Harness big data, the Internet of Things and artificial intelligence to drive business insights through tight integration with core business processes and systems
With a structured digital framework in place, companies can drive competitive advantage by expanding beyond traditional industry boundaries, transforming themselves from being asset-based to being service/outcome-based organizations.