January 7, 2016 | Written by: Gaby Glasener-Cipollone
I recently had the opportunity to convene and moderate a panel of experts for a finance leadership group discussion around ‘Leadership in the Digital Economy’. We talked about a range of hot topics – from the impact of the digital economy on specific industries to the shape of our future personal life – and there were some key takeaways I want to share.
CFOs and their C-Suite colleagues would be well served to think deeply about these in the New Year. I know these will certainly be key components in my discussions with CFOs around the world as I work with them on their biggest challenges here in 2016.
1. The digital economy will affect all industries, but in a time-delayed way. The technology, media, and telecommunications sectors are already approaching the base camp of Everest, while financial services, health care, and consumer goods enterprises are largely still on the early slopes. The energy, industrial goods, construction, and public services industries are just about to start their journey and will necessarily catch up quickly.
2. The digital economy will change organisations’ nature and dynamics, from their basic underlying business model and how they are run and operate to the way they interact with customers and suppliers. In some industries such as Financial Services, we can see this clearly happening, specifically in the payments and remittance domain.
3. The panel agreed that digital reengineering, which is mainly focusing on efficiency and effectiveness, can vary in complexity and impact, ranging from a single value-chain step to processes that cross multiple corporate functions and even organization’s boundaries. Data analytics play an important part in this.
4. Another obvious opportunity of the digital economy is the development of entirely automated order-to-delivery processes. In the back office, HR and finance processes may offer opportunities for immediate optimization.
5. In addition to reengineering, the digital economy also creates lots of opportunities for novel products and services. These innovations usually exploit new data and powerful analytics.
6. There are new entrants and new offerings that are re-shaping whole industries. Uber is an oft-used example in the taxi/transportation industry, but virtually all industries have these disruptors (i.e., Transferwise in the remittance area and Kabbage in the credit market) and how the entrenched enterprises react will be critical. (By the way, I strongly recommend that your read IBM’s recently released C-Suite Study that significantly focuses on this: ibm.com/csuitestudy.)
7. There was an agreement that organisations’ digital strategies need to continually adapt to and seize new opportunities. Executives have to play a “double game”: making the most out of today’s contests while positioning themselves to win tomorrow’s.
8. We will see a fundamental change in customer behavior being shaped by technology and driven by facilitated access to information and reduced transaction costs. There was agreement that the “millennials” demographic group is at the forefront of this development since it is this populace that is the first to have had internet access during their formative years.
9. The world around us will be much more transparent. There was a heated discussion on the pros and cons, with particular concerns expressed around data security, private data protection, and the potential of digital fraud.
10. The digital economy will fundamentally change the way we live and work…with everyone and everything being fully integrated. The panel estimated this is going to happen within the next 10 years.
But will it even take that long? I regularly partner with clients whose executives certainly aren’t waiting — they are acting now. Which of these resonate with you? How are your 2016 plans and initiatives being impacted by the digital economy? I look forward to continuing the dialogue with you – either publicly here or privately at Gaby.Glasener-Cipollone@uk.ibm.com.
Image courtesy of KROMKRATHOG at FreeDigitalPhotos.net