Constant reinvention pivotal for achieving business success
Organisations must do more than undergo digital transformation – they need constant reinvention underpinned by an integrated digital core to survive and thrive, says Nitesh Singh, Managing Director for Communication, Media and Technology for Accenture in Africa.
Singh says where digital transformation was once a focus, businesses now need ongoing reinvention.
“Back in 2013, Accenture coined the phrase ‘every business is a digital business’. We saw how technology was evolving and how central it was going to be to every organisation. We were proven right,” he says.
He says when the COVID-19 pandemic happened, businesses that were set up well from a digital perspective led the market. “Other organisations did what we call ‘compressed transformation’, in which they very quickly tried to enter the game and get their digital ecosystems working.”
This year, Accenture conducted a study of 1 500 transformation leaders at major companies worldwide. “This is where we spotted the business reinvention trend. What we found is only 8% can be classified as business re-inventors. These are businesses that have a digital core around artificial intelligence, cloud, security and platforms – all of which interoperate together. They use that core to reinvent and constantly change their lines of business,” he explains.
The study found that 86% of companies are ‘transformers’, which focus on transforming parts of the business in finite programmes, and 6% are ‘optimisers’ that focus on limited and functional transformations.
“What’s special about re-inventors is that these businesses are now able to get almost 30% growth in the market compared to 10% from companies we classify as ‘transformers’, which just do technical transformation. What’s happening now, which is phenomenal – prior to the pandemic we were seeing disruption only having an impact of around 5%. Since the pandemic, it’s gone up threefold, and it's all around a digital core,” Singh says.
He explains that we are seeing revenue upticks and share price appreciation in the high double digits from the re-inventors. The survey also picked up a lower customer churn rate than in normal ‘transformer’ organisations.
Organisations that just do a typical transformation are seeing rates around 8% to 10% versus the 30% and above that we see in re-inventors. Siam Commercial Bank in Thailand, for example, is a re-inventor, with a digital core and a focus on constant transformation. This organisation has seen growth rates of 500%.
Singh says while local organisations may have the digital core components in place, they still operate these in silos. “You must get AI, cloud, security and platforms working together in the right way, and you have to constantly change your business. Organisations in South Africa aren’t where the re-inventors are yet. A large number of them understand the benefits of technology but they haven’t yet grasped the concept of a digital core.
Singh cautions that digital transformation and reinvention efforts can go wrong.
“We have seen a lot of large failures locally, for example, retailers which experienced failures in how they should service customers and lost revenue. Unfortunately, a lot of organisations wait until it’s too late to transform. You have to be constantly reinventing yourself,” he says.
He notes culture and strategy are as important as technology in reinventing business: “You have to understand why you exist as a business and whether you have a right to play in your market space. You would think corporates have a strong purpose and strategy, but not all of them do. You need the C-suite leading from the front, with good buy-in and support from the middle managers all the way through to everyone in the company. One of the reasons reinvention could fail is due to what we call the ‘frozen middle’, where middle management kills transformative ideas.”
He adds that some telcos have been doing multiple transformations since the industry started, and in recent years it has become harder for them to be successful. “We believe those that understand the fundamentals of the digital core, the need for interoperability of the components of the core, and the importance of constant change will own the market. Companies that understand this reinvention concept have a very distinct advantage over those that don’t.”
Transformation needs to be part of the organisation’s DNA, and the business must be constantly changing. “Staff should be engaged and not see it as ‘yet another transformation’, they need to know that without that change the business won’t succeed.
"Organisations should not wait until their customers have already left the building and revenues are down to focus on reinvention.”
Singh advises: “Any transformation must start from the top. The CEO, board and executive team must drive this transformation and be aligned on the purpose. Everyone who works in the organisation needs to be part of it. When these big transformations run for multiple years, the business value gets lost. You need the ability to show quick wins – with a compressed transformation mindset that delivers quick wins in months rather than years. You must be churning change out with bite-sized transformation strategies.”
Establishing a strong digital core
Singh shared these seven proven lessons for business success with Africa telecoms leaders at the recent Connected Africa Summit in Johannesburg.
1. All businesses need a strong digital core
Singh advises that business reinvention and reinvigoration are necessitated by changing market conditions, ageing technology, climate change and regulation, high energy prices, inflationary pressures, geopolitical tensions, supply chain disruptions, talent shortages, economic downturn and more. A solid digital core in place provides a stable, future-forward base from which they can operate and thrive.
A strong digital core, made up of elements such as platforms, cloud infrastructure, data, artificial intelligence (AI) and security is the essential foundation for any business in the digital era.
2. Make reinvention part of your company DNA and purpose
“Knee-jerk, overhasty and poorly planned reinventions in response to all the crises in the business environment today can have dire consequences, including reputational damage, customer and staff churn, as well as cyber security breakdowns,” says Singh. This in turn can affect competitiveness, share price, leadership continuity, shareholder activism and more.
“Reinvention is a holistic process that involves people, culture and purpose. The truth is that the world is in a state of ‘permacrisis’ and we must get into the habit and mindset of constant reinvention and evolution as a part of a strong company culture and DNA. It must be something you do actively every day, driven by an ultimate company purpose everyone on the team can buy into and pursue together.”
3. Start with the customers' needs
Our research has found that companies that do well in the digital era always put their customers’ needs and experiences first. This means shaping the business strategies, products and services on what customers need and want, and working backwards from there to determine processes, resources and skills needed in the business to deliver on the customers’ evolving needs.
“You need to work on how to give customers what they need, through smooth, helpful and convenient digital and physical customer experiences. It’s about solving the customer piece from end to end.”
4. Remain authentic, but don’t get stuck on business-as-usual
The most successful business reinventions in recent history came down to the companies getting clear on their top strengths and opportunities and adapting their strategies and processes to achieve a refined focus. “Companies should not cling to business-as-usual when it no longer serves them, their customers or their stakeholders. Instead, they need to focus attention on where they can stand out.”
One pharmaceutical giant turned its business around by redefining its leadership, financial controls and creating end-to-end jobs all along its value chain. Technology giant Apple in turn invested in ahead-of-the-curve innovation and a strong brand identity.
5. Constantly invest in talent and better workflows
“Companies with a strong digital core should constantly evolve and improve the ways their people work. Digital efficiencies can free your teams up to focus on what really matters now, which is critical and creative thinking and problem-solving,” says Singh.
In order to be a company of creative problem-solvers, businesses need to invest in the best talent they can afford. “Continually investing in talent is part of constantly reinventing and strengthening your business.”
Creating 360-degree value in a business is about taking a holistic approach, rather than focusing on a few key activities. Reinvention should happen constantly across a number of business categories, including finance, sustainability, talent, diversity and inclusion, customer and staff experiences and more. Companies must consider their people, the environment, the industry they operate in, operational efficiencies and innovation, and market fit, profitability and sustainability.
Companies that have become re-inventors are more likely to score highly in their industries on non-financial measures such as diversity and inclusion, talent and innovation, according to Accenture/PMI’s 2022 survey of 1 500 chief transformation officers at major companies worldwide, including several global telcos.
7. Open yourself up to the right partnerships
When one multinational technology corporation refocused its business a few years ago, it decided to focus on “rediscovering their soul and reason for being”. To achieve real success again, they adopted a start-up and partnership-focused mindset. “In the new digital economy of tomorrow, the companies that remain relevant and strong will embrace ‘coopetition’ by embracing partnerships with specialist competitors to create maximum value within their digital ecosystem.”
“In a time when so many large and small businesses are struggling or failing, embracing the principles of holistic, constant reinvention is of huge business importance in the digital era.”
Manageable, systematic and holistic reinvention approaches require proactivity, a common purpose, customer experience prioritisation, significant investment in talent and diligent upkeep of core technologies. “You can’t keep doing the same thing and expecting a different result. If change becomes part of your company DNA, however, you can expect to achieve new success.”