Let’s get real, digital technology is now applied to almost every part of industry. Conventional businesses are suffering because they failed to meet customers demand. Technologies are changing quickly and businesses that choose to stay ‘conventional’ will be either disrupted or outcompeted by those who applied digital transformation.
Unsatisfied customer leads digital disruption, not technology
Digital disruptions are customer-driven phenomenon. Technology by itself is not the real disruptor. Not being customer-centric is the biggest threat to any business. Based on MIT research, 87% executives believe digital technologies will disrupt their industry. Amazon didn't kill retailers. Poor customer experience did. Uber didn't kill the taxi business. Limited access and fare control did. Apple didn't kill the music industry. Being forced to buy full-length albums did. Even the fast-growing startups such as Uber, Airbnb and Pinterest don’t have access to more or better innovative technology. What they do is an ability to accurately build and deliver faster what customer wants.
Challenges & Opportunities: How to implement digital transformation in Indonesia
The era of digital transformation has arrived in Indonesia and many businesses have joined into this transformation. Why? Because digital transformation is able to bring more ROI, higher efficiency, and productivity, and the most important, more satisfying customer experience.
If we talked about the opportunities that can be achieved by implementing digital transformation in Indonesia, we can start from improving customer experience. Digital transformation is mainly about improving customer experiences. Giving the best customer experience is everyone’s job in the company that cannot be siloed under marketing or sales department only. One of the best strategies to improve Customer Experience is through implementing feedback from customers.
Next, by implementing digital transformation, we get the opportunity to improve process efficiency. Digital transformation cannot be achieved without efficient internal process. Through efficient process, the company will get competitive advantages. Process digitization, worker enablement, and performance management are the examples of internal processes that can be improved.
Improving business revenue becomes the third opportunity that we can gain by implementing digital transformation. Digital transformation also transforms and creates new business models, for examples: think company as a platform, instead of just product/service provider. Companies also are expected to innovate unless they want to be disrupted.
Meanwhile, there are at least three big challenges of implementing digital transformation in Indonesia. The first one is Strategy. Most companies, especially in early and developing stages of digital maturity, don't really understand how to perform digital transformation. Leadership must have sufficient digital skills to encourage transformation. Strategy should focus on customer experience, efficiency growth, and business model innovation.
Second is Talents. Most conventional companies run short of talents to compete in digital economy. Companies should invest in improving digital skills of their employees. Meanwhile people who aren't getting digital opportunities are leaving.
And the last challenge in implementing digital transformation in Indonesia is Cultures. Company culture defines how company will react to change (transformation). Conventional companies tend to have cautious risk appetite, siloed work style, hierarchical leader structure, and instinctive decision making. These cultures cause slow agility that resists digital transformation. Digitally mature companies tend to have exploratory risk appetite, nimble and integrated work style, distributed leader structure, and data-informed decision making. These cultures will encourage digital transformation.
Stay on top and keep up-to-date in digital transformation era
As mentioned before that digital disruption start from unsatisfied customers, therefore what companies should to do to face digital transformation era?
Digital transformation is not about technology, it is more about people. So, to face and survive in the digital transformation era, company should make Customer Experience Improvement. Companies should design customer experience from outside in. Gather feedbacks from customers. Communicate with all stakeholders, especially customers, to really understand what the jobs to be done, pains, and gains. Customer Experience should be everyone's job in the company and be applied mainly in these three departments: marketing, sales, service.
If we talk about digital transformation, let’s talk about Digitization and Digitalization too. Digitization is the process converting information from a physical format to digital one to be used by computer systems. For instance, we scan a paper document save it as a digital document. Digitalization is the process of leveraging digitization to improve business process. It enables companies to use digital technologies and data to create revenue, improve business, and create a digital culture where digital information is at the core. It makes more efficient and productive processes. For instance, digital documents could be shared in the cloud, so that many people can analyze the data. Digital transformation requires both on the way to building a digital business.
Companies also should make Organization Transformation by starting with strong purpose. Leaders should have sufficient digital skills and encourage digital transformation top-down to all employees. Empowering employees and partners about digitization and digitalization will encourage them to support new digital culture. Optimize internal process and measure every result, which should involve integrated work approach, agile product development, and data-informed decision making.
In conclusion, by implementing digital transformation in every part of business, Indonesian companies will stay competitive in digital revolution era and grow to the next level.
Author: Anggriawan Sugianto (Director, CTO/COO)