- It’s about having a BUSINESS strategy that fits into the digital world
- The concept of ‘strategy’ itself has been disrupted
OVER the last few years, analysts, consultants and vendors have been telling businesses that they need to craft a digital strategy.
If that’s what you’re doing now, you’re already behind the times, according to RHB Banking group chief operating officer Rohan Krishnalingam, who argued that the idea is not to have a ‘digital strategy,’ but a business strategy in the digital world.
“Frankly speaking, we are now living in the digital era – your strategy has to follow that, and has to fall into the context of a digital world; there is no choice,” he told Digital News Asia’s What’s Next conference in Kuala Lumpur this morning (July 28).
Large companies that do not recognise the importance of ‘innovation’ and ‘digital’ will get disrupted, Rohan said, citing Kodak and Nokia as examples.
But transformation is not easy, he admitted in the session titled Is Strategy & Innovation Still Relevant in an Era of Digital Disruption?, moderated by business station BFM Radio’s Khoo Hsu Chuang.
“It is tough for us traditional companies to change our mindset. We have a large legacy of infrastructures, we have people who do not think that the world is changing,” he said.
In order for a business to succeed in its digital transformation journey, this cannot be at a business-unit level, but needs full support from the board and management, according to Rohan (pic).
He also suggested having a different business unit to focus on innovation as a catalyst for the whole organisation.
Finally, there is a need for more collaboration across the company – departments can no longer operate or strategise in silos, they need to communicate and collaborate with the other departments as well, he added.
Malaysia not conducive to innovation
Dr Danaraj Nadarajah (pic), corporate advisor and executive director at glove manufacturing giant Hartalega, questioned the relevance of conferences talking about business being disrupted, arguing that Malaysia’s ecosystem does not really support disruptors and innovators.
Innovation needs to be supported at both the macroeconomic and the microeconomic levels, he said.
“We always contextualise the Western experience, but when we look at our country, we see a dismal performance – we have an ecosystem that does not support many things,” he declared.
According to Danaraj, many people forget that innovation comes from small firms, and this means that whatever strategy big companies put forward will fail.
“There is no such thing as structured strategies – some are organic, some are opportunistic, and more often than not, they lay in the minds and in the realm of the young and talented,” he said.
“So there is a still big question mark out there on whether such strategies … have been able to create a disruptive model within large companies,” he added.
Strategy itself is disrupted
Taking on a different perspective, Anshuman Singh (pic), managing director of Accenture’s technology strategy practice in South-East Asia, said the concept of strategy itself is being disrupted.
“The highly detailed and long-term vision strategy has long gone – strategy has now become experimental and experiential,” he said.
He said that this has changed how Accenture consults for large companies.
“We used to prepare 200- to 300-slide decks of the potential returns of a certain action or activity the companies does, but that is no longer the case,” said Anshuman.
“We now talk about what we can launch or test really early – in the organisation and in the market – and learn from it,” he added.
Anshuman said another fundamental change is that technology is now at the front-and-centre when companies talk about strategy.
In fact, he said sees that the board is getting more educated about what technology means to the business.
Innovation limits and barriers
While they may have had different views on strategy, the three panellists agreed that innovation is important to keep the business going.
However, Hartalega’s Danaraj argued that innovation has its limit when it comes to the manufacturing industry.
“You can probably have disruptive innovations once in a lifetime – that is why companies in the old manufacturing industry had to focus on the traditional areas of innovation: How to get efficiencies out of their capital equipment, supply chain, and the ecosystem,” he said.
Danaraj also said that companies should not limit themselves to providing a single business model or product, because innovation can be limited by market forces.
“Companies need to broaden their horizon – try to cross-sell, try to look at wider supply chain activity; look into innovation in those areas as well, the opportunity there is bigger and better,” he added.
It is also important to have people inside the company who believe, RHB’s Rohan said.
“The more people who believe in change, the more innovation you will get out of the company,” he added.
He said that innovation in the banking industry is not going to be the same in every country or geographical area, mainly because innovation follows customer demographics.
“Some areas might still need a physical bank, some areas would need mobile and Internet banking – it all depends, and you need to listen to your customers,” he added.
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