Companies around the world today face the seemingly Herculean task of adapting their operations to the digital age. In a time of hyper-connectedness, immediate transactions, and disruptions to major industries, it has become a matter of urgency for business owners to understand where their digitalisation needs lie and what the implications are for their supply chains.

Ananthakrishnan (AK) Sankaranarayanan is a Global business strategist with proven expertise spanning “digital age” business strategies, processes, techniques and technology. He has helped several businesses across Europe, the Americas, Asia and Africa keep up with the rapidly changing digital world to propel revenues, growing market share. Based out of the U.K he runs his latest company AKNOW which enables organisations to navigate through what he describes as “digital value chains.” He also supports start-ups in the Digital space.

AK discusses with Tharawat Magazine the process of adapting to the digital world and why it’s never too late to undertake this journey.

SPECIAL FEATURES: The Digital Age – Implications for Business Owners
Image courtesy of AKNOW

What factors have brought us to the point where companies are facing the need to digitalise?

This is perhaps the most important aspect and therefore an ideal starting point in trying to decode digitisation – understanding the ‘Why’.

Broadly, we can define three macro factors that have brought us to the point we are today: The first, interestingly, is the world’s population and its recent exponential growth. Starting from the beginning of human history and until barely a hundred years ago, in the 1920s, the world’s population was two billion. 40 years ago, in the 1970s, it was four billion. Now we are at about eight billion; which means that in the past hundred years, the population of the world has quadrupled. Parking aside all the other implications, let us look at just one – the number of transactions. This means the number of transactions between humans has exploded exponentially.

This is where the second factor comes into play which is what I call ‘the power of the individual’. For the first time possibly in human history, the ‘unnamed individual’ has the power to initiate, impact, and influence transactions – real-time, as they happen. And this, from their very fingertips. For example, social media started off as friends wanting to hang out together virtually. It then became social economics and then it became a geo-political influence. All of these developments are initiated, impacted, and influenced by individuals. It is unprecedented at this scale.

The third macro factor is ‘hyper-connectedness’. Everybody today is connected to almost everybody else. Moreover, everybody is connected to everything and, very soon with the Internet of Things (IOT), everything is going to be connected to everything. This shift is unstoppable and comes closer every day.

These three macro factors combined are pretty much responsible for moving us into what we call “the digital age”.

How do these macro factors shape the strategies of companies?

More often than not, the immediate reaction of many companies is ‘Let’s get ourselves out there and have some sort of digital marketing presence. Let’s be on Facebook, let’s be on Instagram’. That’s important but that’s just one part of it. To put it perhaps in basic terms there are five areas of any business, irrespective of which vertical sector it operates in, that are impacted by digitisation:

The first is the Customer: How businesses interact with their customers has changed, or should change, or is, as we speak, changing. More and more, the interaction with customers is 24/7. And this is not necessarily true only for those businesses that are in the B to C space, where it is obvious. It is also true for businesses that are active in the B to B space. It is also worth noting that the Customer as an entity is also fast becoming ubiquitous, and the answer to ‘who is my customer’ isn’t as clear-cut as in the past.

The second area are the Partners; every business is part of a much larger value chain and therefore, operates in an ecosystem of partners. These partners are also changing and ‘digitising’ – which in turn impacts how a business operates.

The third area are the ‘Products and Services’: The necessity to digitise products and services depends strongly on the industry the business operates in. For instance, car manufacturers realise they need to continue developing their products to turn cars pretty much into computers on wheels. Today you have ‘smart’ everything – from phones to home appliances to cities. But all businesses will have to look at their products and services and how they need to be changed and/or adapted to the digital age.

The fourth area is the Supply Chain: The way transactions flow in a business before the revenue is received – across the ‘buy-side, the inside and the sell side, has to be looked at in the digital age. What processes need to be re-engineered or automated differently for effectiveness and efficiency?

And lastly, but by no means least important, the ‘Workforce’: The people who are going to be employed today and tomorrow have been brought up in the digital age. They are used to instant information, they are used to instant data and consumption of volumes of data. They are used to the latest gadgets. To have a workforce with that ability within businesses becomes very important, so their retention needs to be a priority.

SPECIAL FEATURES: The Digital Age – Implications for Business Owners
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Digitisation obviously goes hand-in-hand with reducing manual labour, reducing analog processes, and reducing the number of people that are potentially necessary to operate the same process. What do you say to the concern companies regarding the impact on the workforce?

By and large, the perception is ‘The minute I go digital, I will have a large number of workforces that will be made redundant’. That’s not entirely true. Even before digitalisation, when process optimisation and automation began to penetrate, whatever human beings used to do has pretty much been done by machines and computers. The abacus was replaced by the calculator and so on and so forth.

What’s happening now however, is slightly different. Today, you need a retraining of the existing workforce to operate in the digital age. It’s not so much a workforce downsizing, but rather a question of enabling the workforce to use a different set of skills, or a different set of tools and follow different processes. Previously, for instance, a customer representative had to travel to a customer’s place, had to speak to them face-to-face to help solve their problems. While there will continue to be an element of that, today however, they will have to react instantly and constantly which means they need the tools to do so. Therefore, there is actually an opportunity here to motivate the workforce whereby they are broadening their skill set and making themselves more employable in the industry.

What do you feel is the biggest impediment towards companies implementing digital strategies?

Companies face several big questions that may hold them back from implementing their digital strategies:

The first key question is the Timing of Digital Transformation or Adoption. No change is easy; companies usually change when the pain is great or the gain is great. Most of them start planning for the change when it’s thrust upon them. This puts companies ultimately behind the curve. But these companies can also learn valuable lessons from the journey travelled by the early adopters, so there’s always a silver lining and its never too late.

The second question relates to the Reasons for Digitalisation, the ‘Why’. It is key to retain clarity on the motivation behind Digital adoption. Often when you get into the implementation part of it and get caught in the middle of the complexities the purpose might otherwise get lost.

The third key question is Where to Begin Digitalisation and How. In which of the five areas we mentioned before should the process start? Should companies go for ‘quick wins’ or what are called point solutions’ or is there a need for a more concerted strategy and road map? What should the road map look like? Followed closely by the fourth question; an assessment of How Much these changes are going to cost, the business case, as it were.

The fifth question relates to the required Talent for Digitalisation; the ‘Who’. The existing workforce or suppliers might have to be adjusted or retrained. In some cases, they may even need to be replaced, because they may not be the people to take the business on the journey forward. So some honest conversations about who do I do it with are important.

Lastly, the question of the required Structure for Digitalisation arises. Sometimes organisations get caught in a simple question of ‘Is this a business problem or an IT solution?’ It’s extremely important to realise that digital is where business and IT converge seamlessly. The structure and governance of a company is important and defines to a great extent how successful digital strategies can be.

SPECIAL FEATURES: The Digital Age – Implications for Business Owners
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Are there companies or sectors that handle digitalisation better?

There are a few sectors which, either by necessity or by nature of the vertical that the operate in, handle digitisation better than others. For instance, banking and financial services, by necessity, had to be fast to adapt. Telecom is another area where digital practises and digitisation is quite high. Those that don’t are institutions that fall by the wayside and there are quite a few examples of that. Any industry providing products or services closer to the consumer or the ‘empowered individual’ by necessity tends to adopt digitisation quicker. For example, airlines want to be connected to their travellers at all points in time through the lifecycle of their trips. Airlines want to be able to own their timeline from the decision to take a trip until they physically reach their destination. To do that, there are multiple steps from commercial to operations to technology, that need to be charted and implemented.

No matter what industry a company operates in, before it starts looking at its digital needs, it is important to acknowledge that digitisation impacts from both within and without.

By without, or external, I mean beyond just the enterprise. Companies that successfully adapt to digitisation include all entities, players, and transactions in the value chain that they operate in. Extending right up to the individual or the consumer. Companies that can pre-empt what the value chain will look like in the digital age, and therefore ask themselves questions like where they fit in, will be the ones that do well and even have the head start.

Then there is the look within. Many successful organisations already have a lot of projects and programs that work towards making them digital enterprises. Whether they’re looking at their own products or whether they’re looking at their own digital go-to-market channels, all of them are important.

And finally, there are companies that identify and create new and disruptive business models for the Digital Age and revolutionise the very industry sector.

How is the decision-making process impacted by after digital strategies are implemented?

A key element of effective decision-making is the availability of comprehensive, accurate data and therefore insightful and meaningful information at the time of making the decision – to improve the chances of making the best decision.

Effective digital adoption provides a huge amount of very valuable and insightful data and information beyond just that business or the enterprise. It provides eyes and ears for the business out into the external world, into the entire ecosystem and the value chain.

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SPECIAL FEATURES: The Digital Age – Implications for Business Owners
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Even in large mega-corps, sometimes this data and information that digitisation provides is not what the leadership expected or in many cases even palatable. The top management becomes aware that the way they make the decision tomorrow may be different from what they were used to.

Having said that, it is important to appreciate that all of the organisational values and heretofore revered methods of decision making that you used to have, do not have to disappear because of digitisation. If anything, it should help you make more informed, better, quicker, more meaningful decisions.

What do you do today if you come to the realisation that your business has been made redundant by digital progress?

Even if a business is disrupted because of digitisation, please don’t look at it as a threat. Switch it around. Make it an opportunity. There may be temporary reverses in either sales, revenue, top line, or market share. But once you recognise that yes, my business model has been disrupted, that is the time becomes an opportunity to transform.

If a company has been there for say a 100 years in a particular business area or segment, there is a wealth of institutional knowledge and an asset base and experience, which cannot be gained overnight. It doesn’t matter what new digital techniques are being brought in and are disrupting the space; businesses should look at moving into the digital age by leveraging on all the experience and strengths that have gotten them to where they are over the past decades. It means taking that knowledge, merging it with the new opportunities the digital age presents, and creating a new competitive advantage to succeed and grow in the digital age.