Over the past thirty years, as an employee and consultant, I've observed many companies in turbulent times. I've seen that leaders who embrace turbulent times succeed more than those who don't.
In a recent study by Crowe LLP, 25% percent of leaders of $500M+ companies viewed volatility as an opportunity to outperform their less aggressive peers in top-line success. They capitalize on volatility in ways that provide business advantages for their organizations during uncertain times.
"History has shown us that the companies that embrace the concept of perpetual evolution are the ones that are fastest to adapt to market dynamics and are thereby ultimately best positioned to thrive in changing market conditions with dynamic client expectations."— Max Baer, CEO, Crowe LLP
Globally, 90% of companies are SMEs and mid-size enterprises that power "up to 70% of global GDP."According to the World Economic Forum, small to medium enterprises don't fare as well, with 67% "fighting for survival."
SMEs find it challenging to keep up with technological and innovation demands, with 25% citing it as their top challenge. If that's where you are today, let's look at some of the potential restraints businesses face:
Resource Constraints: Expensive new technologies are beyond the reach of many, and dedicating people and financial resources to innovation will hamper business operations.
Lack of data policies and clarity on specific roles and responsibilities: In a WEF survey for Davos 2023, 64% of the surveyed respondents claimed to have a data privacy policy, and only 50% had a cybersecurity policy.
Short-Term Pressures: Meeting immediate customer demands, managing cash flow, and ensuring survival can divert your attention away from technological advancements.
Expertise: New technologies often require specialized expertise to integrate into workflows.
Data Challenges: About 64% of SMEs struggle to harness insights from their systems, and 74% have difficulty getting value from their data.
Risk Aversion: Small size and lack of resources drive fear of failure.
Lack of Awareness: Rapidly evolving technologies require continuous learning and awareness. SMEs may not have the time or resources to stay informed about the latest trends and advancements.
Incompatible legacy systems: Old technologies often require updating or replacement to work with today's streamlined apps.
Competing Priorities: Technology adoption often takes a back seat when other urgent tasks demand attention.
Mindset Shift: Develop a mindset encouraging experimentation, adaptability, and openness to change. That requires HR and C-suite leadership, with substantial preparation and support.
With the right mindset, strategy, and workforce, you can overcome all these challenges, even in turbulent times.
Most companies have embraced, or at least accepted, the idea that becoming a digitalized organization is imperative in today's business environment.
Before we discuss the how, let's agree on the definitions of the terms we use.
Digitization is the representation of physical objects or attributes that allow us to define what we know and to organize, store, and manipulate them. We've been doing it since the 1960s.
Digitalization uses digital technologies to change a business model and provide new revenue and value-producing opportunities.
Digital Transformation is the business transformation enabled by digitization.
This diagram from ARC Advisory Group shows how digitization is the foundation for digitalization, which is the foundation for digital transformation.
Post-pandemic, employees suffer from change fatigue. Most of us adapt well to a short period of disruption, relying on what author Tara Haelle describes as our "surge capacity." That capacity broke down when the response to the pandemic created a long-term holding pattern. The remedy is inclusion, giving your people a stake in your organization's success.
In our experience, the smoothest way to success is to include your people as co-designers of the future. It requires a new leadership mindset.
We've noted the challenges mid-sized enterprises and smaller companies face as they navigate the future. Let's break down the concepts of digitization, digitalization, and digital transformation to understand how to approach and overcome them strategically.
Without a plan, you won't know where you're going or how to get there. Assess your current business needs and gaps. As you work through what you need to know, you can build your timeline with milestones and checkpoints to minimize the risk of failure. You may want to take advantage of this.
Start by getting control of your data. Without well-governed, high-quality data and integrations, you can't succeed in a digital world. So, as part of your assessment, you'll need to determine what data you have, who has access to it, and where it's stored.
You'll need a Chief Data Officer or a similar role to lead your firm by establishing policies and procedures for managing and securing data. If your business is too large for your CTO to fill this role part-time, you can engage a consulting firm to fill the gap until you can hire or develop the talent you need.
You'll also need to develop a governance framework. The Data Governance Institute has a wealth of resources and training programs.
Digitize your processes, records, and data: scan paper documents and create digital archives. Declare war on paper shuffling.
Digitalization is more than conversion. It's about leveraging digital technologies to modernize existing processes and improve efficiency. Explore how digital tools can streamline operations, automate repetitive tasks, and sweeten the customer experience, including internal customers of each process.
For example, it may be the right time to implement customer relationship management (CRM) software to manage client interactions better.
Digital transformation isn't just new technology. It's about reimagining the way your business operates. It's building a new customer experience that feels personal and effortless. More than an add-on, it requires rethinking business models, processes, and customer engagement.
Embrace agility, data-driven decision-making, and innovation.
Digital transformation is even more complex if your company isn't a global behemoth with plenty of resources.
Limited capital, people, and time don't mean you can't change how you make decisions and design your processes. However, you won't have a dedicated department or team, nor can you count on a gaggle of top-shelf consultants. "Trendy" platforms won't typically be in the budget, and they most likely won't quickly adapt to your current needs. Moreover, you won't have the staff to support them.
You will find more straightforward, more affordable solutions that will meet your current needs without putting you in a situation where you have expensive technology waiting for you to catch up.
Focus on your digitization effort, especially your data and analytics. You will need a business analytics expert to guide you in organizing your data and teaching your people to make data-driven decisions. You will naturally move toward digitalization as you forgo traditional methods and embrace data-driven insights.
Give your people the freedom to innovate and experiment. This thought recalls W. Edward Deming's teachings and the impact his methods had on our organizations during the 1980s.
"In God we trust; all others bring data.""Without data, you are just another person with an opinion."— W. Edwards Deming.
Transformation happens as you apply your new digitalization skills to your processes and methods.
Notice the emphasis on processes and methods rather than technology. Invest in the technology you need, but not until you need it.
If you haven't done so already, we recommend converting from a hierarchical job and role structure to a skills-first talent strategy. Your first technology investment may be in a skills hub and talent marketplace.
Ultimately, embracing digitization, digitalization, and digital transformation is necessary for long-term success. By taking actionable steps toward these efforts now, you are setting your business up for growth and sustainability in the future.
Don't let resource constraints prevent you from realizing your potential; instead, harness them as motivation to innovate and propel your business forward.
Seize small opportunities to improve your business. Success breeds success.
Phenom eCloud is a comprehensive technology solutions provider committed to empowering businesses to overcome challenges, enhance their workforce capabilities, and achieve superior outcomes.