This is content for Accenture Strategy
Digital disruption presents business leaders with a challenge that is as pressing as it is unprecedented: to systematically transform their organisation in an age which has never known such rapid, immediate and profound change. The business leaders who rise to the great digital challenge, and who possess the necessary strategy, commitment and vision, will position their organisations for a new era of growth and productivity.
A study by Accenture Strategy contends that to retain their global competitiveness in an increasingly digital economy Australian organisations must reassess where their profit centres, competitive strengths and growth opportunities lie and optimise their investments in digital skills, technologies and operations accordingly.
As companies successfully transition their digital profile, so too will the Australian economy. The potential rewards for doing so are significant.
If the Australian economy were to improve its “digital density” – the effectiveness with which digital investments are made – the boost to gross domestic product (GDP) would be transformative in terms of global competitiveness, strengthening the nation’s skill base and enriching the lives of Australians through improved standards of living.
The study estimates that 29% of Australia’s GDP can be attributed to some form of digital skills, capital and intermediate goods and services used in production.
Despite the growing digitalisation of the economy, digital’s ability to unlock value is far from being fully exploited. The incentive to do so is clear.
If the Australian economy were to improve its digital density, the study estimates Australia could enjoy a boost to GDP of 2.4% beyond current forecasts – pumping an additional $46 billion into the national economy by 2020.
Digital disruption: The growth multiplier, emphasises it is the “optimal combination” of investments in digital skills, technologies and enabling accelerators that will ensure that businesses are more competitive and productive.
Digital disruption is transforming business models, consumer behaviour and market dynamics, but the importance of leadership remains critical. The digital challenge places leadership at the crux of business and economic transformation.
Business leaders require a strategic – and holistic – understanding of the transformation process. It requires nuanced judgment about how best to calibrate digital investments to realise the greatest improvement to performance.
The leadership imperative is ensuring that digital transformation is an integrated process. Whereas previous technology-led business drivers have essentially been about enhancing existing businesses, digital disruption entails the transformation of business models, developing new distribution channels and innovating new products and services.
Investing in digital technologies is critical to deepening an organisation’s digital density, but this must go hand in hand with investing to build, acquire and retain digital talent throughout an organisation, from entry level to the C-suite.
There is also a balancing act that goes with the transformation process: transitioning legacy customers to new digital channels, products and services – but not at pace that will alienate them – while offering those customers that demand it, the full digital experience.
How to prioritise digital investments to exploit future opportunities in a rapidly changing marketplace, while satisfying the needs of longstanding customers who will be transitioning to new digital channels at a pace that suits them, will test leaders’ acumen and organisations’ culture, values and resilience.
When all the pieces come together, “digital investments can act as a growth multiplier”. When they do not, there will be a “digital disparity gap”, where an organisation’s digital investments are not being reflected in its performance and ultimately profitability.
For business leaders, there is no time to lose.
“Within the next 3-5 years the competitive landscape could be turned on its head. [Digital] platform players are not only seizing growth, they are redefining it – new leaders, multi-dimensional industries and market capitalisation valuations, all driven by digital,” according to Accenture Strategy.
“Our research shows how adjusting three levers – digital skills, digital technologies and digital accelerators (such as access to finance, ease of doing business and technology infrastructure) – can enhance overall digital intensity and act as a growth multiplier.”
Accenture Strategy notes that “managing digital disruption is a complex and ongoing process” and in addition to the three levers identifies three key actions business leaders must take to exploit the growing digital economy, improve economic opportunities and drive new productivity and growth:
Prioritise digital investments based on value opportunities: Balance digital investments so that an optimal combination of improvements in areas such as skills or technology helps you to deliver the best returns.
Compete using an industry-specific digital strategy: Be clear on which platform, what roles and which data are fundamental to compete successfully in your industry.
Create the right environment for digital transformation: Improve your own “digital IQ”, invest in ongoing skills training and development, have systems in place to encourage and utilise innovation across your organisation.
“Uncoupled from the constraints of traditional business models,” Accenture Strategy concludes, “incumbent industry players can find new routes to value creation – embracing disruption to become the new leaders of the digital economy.”