The COVID-19 pandemic, which has fundamentally shaken the world over the past two years, has shined a spotlight on digital transformation and pushed lawmakers and industry players to work together to remove barriers to spur long-term digital maturity and create healthier business environments.
There is no single definition that can crystalize what digital transformation means. After all, digital transformation encompasses cultural, organizational, operational, and relational changes. It impacts not only companies but also regulatory environments and the greater society. And in the new normal, leadership has become an even more critical element in the digital transformation equation—to initiate, orchestrate, and drive sustainable digital change.
Recently, SwissCham Singapore, in collaboration with Deloitte, held the DX Leaders Series 2021—monthly digital transformation webinars featuring business leaders across industries, that discussed issues and case studies around digital transformation. Here are some of the key takeaways from the series:
Focusing on the human element
The success of digital transformation initiatives hinges on sound leadership. Leaders need to show determination and strength while focusing on building trust and empathy across their teams. Especially in critical situations, they play a huge role in bolstering internal engagement, morale, and an innovative spirit; all of which translates to greater team motivation and resilience.
By putting humans at the center, companies can better progress through different transformation phases with ease. In 2020 with the onset of COVID-19, companies were understandably preoccupied with addressing logistics challenges and adjusting to new safety protocols. Yet, in the midst of radical changes, organizations that had the capability to support people throughout the transformation were the ones that stayed the most resilient and reaped the benefits of digitalization.
“Digital transformation has little to do with technology, but a lot to do with people,” says Sergio Salvador, APAC Digital Lead from Egon Zehnder. “We need a lot more diversity from the board to the leadership level. A study from HBS in 2018 states that if at least one client sees the necessity of diversity, the team is twice more likely to understand what they need.” Considered as key indicators in human-centric organization development, inclusion and diversity are seen to reinforce innovation and creativity within teams. “Equality and diversity in an organization mean more than merely striving for an equal number of men and women in the management level,” says Lauren Bradbury, the executive director of Consulting (Human Capital) at Deloitte Southeast Asia. “We can only say that we have achieved this endeavor once women have the same opportunities and are able to get their voices heard as much as the men in the same group. We recommend that companies focus on deepening comfort, connection, and contribution, as they work on building a diverse and inclusive community.”
Employing a human-centered approach to change management across the business value chain is critical for long-term success, especially in traditional industries such as building and infrastructure, which has complex ecosystem players, long life cycles, and diverse digital maturity levels. Sylvia Koh-Gratton, managing director from KONE Singapore, highlighted the need to persuade facility managers to adopt digital changes by showing how smart building solutions can generate a more comfortable environment for tenants.
In summary, leaders should focus on being more human and cultivating a sense of empathy to develop a culture of belongingness in teams. At the same time, they should put diversity and inclusion into practice, as these are vital in enabling an organization to grow and fully transition from digitalization to business transformation.
Regulating the pace of change
Southeast Asia is a region that enjoys fast economic growth and is often treated as a regional economy. However, a key challenge for any company that wants to enter the region is its heavy fragmentation, with each country having its own set of rules and regulations.
The healthcare sector has been increasingly shaped by the rise of artificial intelligence. AI solutions can turn data into insights for drug development, pre-treatment care, chronic patient self-monitoring, and more. As sensors become more widely available and affordable, various technology solutions have emerged to help patients monitor and understand their bodies, even in the pre-condition stage. Vital signs-led care may well dominate the future of healthcare, but they are still subject to regulators’ risk assessments before they can be widely adopted.
COVID-19 has provided a window of opportunity to relook at the implementation of technology in health, bringing transformation forward to a point we never would have imagined in the past three to four years. The pandemic has put the focus on digital health, and forced lawmakers and industry global leaders to adjust faster.
The logistics and supply chain sector is another example, where prior to the pandemic, digital solutions were considered mostly a “nice to have”, but not critical. With the onslaught of COVID-19 and rapidly changing safety measures, the logistics and supply chain sector had to start implementing digital solutions such as digital documentation to drive business continuity and resilience in the post-COVID-19 world.
“The biggest difference in the logistics and supply chain industry between Southeast Asia and Europe, is the digitalization level of the governments,” says Gino Marzola, managing director of DSV Air & Sea. “It doesn’t matter how advanced digitalization is and our capability to optimize the logistics flow; there is little we can do if the government uses pen and paper, for example, at ports and customs.”
Governments will have to continue to balance risks with the potential efficiency gain from technology-enabled solutions. With COVID-19 serving as an inflection point for sectors such as healthcare and logistics and supply chain, there is increasing pressure for governments to accelerate the pace of change, both in terms of regulation and their own digitalization efforts.
Laying the path for digital transformation
The key to a successful digital transformation is the designing of a user-centric digital experience, translated into a clear roadmap with strong inclusive leadership. Across the DX Leaders series, a common refrain among digital transformation leaders—whether they are technology enablers, executive coaches, or multinational corporation senior management—was the importance of identifying what digital tools to invest in and laying the groundwork for digital transformation before implementation.
A clear pitfall for some organizations has been their decision to purchase complex digital solutions at once, without a clear integration roadmap. As a result, these investments are not only costly, but leave employees, partners, and customers dissatisfied and frustrated. Managers realized in hindsight that such large investments could have been avoided with more strategic planning beforehand.
Major considerations in designing the digitalization roadmap include smooth system integration, practical and user-friendly API, scalability in cloud-based environments, and most importantly, knowledge building through improving the user experience.
While some sectors and industries are frontrunners for digitalization, like insurance and financial services, others are still struggling to break out of their silos. A prominent example of slow adoption of digitalization is the building and infrastructure industry, a labor-intensive industry that generates 39% of carbon emissions globally, according to the World Green Building Council. This industry faces impetus to find better solutions to improve measurement on energy consumption and carbon footprint, where digital tools can move the needle. Promisingly, action is being taken—Siemens, for instance, developed the MindSphere, a cloud-based, open Internet of Things operating system for its building and infrastructure clients to quickly build and integrate personalized IoT applications. Through a combination of advanced analytics and IoT devices, data from connected products and systems is used to improve energy efficiency, deploy new business models, and monitor and optimize operations in general.
A digital future awaits
Looking ahead, how can leaders step up to ensure that organizations are on track to achieving digital transformation success? Digital transformation is not merely about implementing technology solutions, it has to be grounded in a good business sense with an eye on enhancing connectivity across the business ecosystem and customer value chain.
In order to do so, organizations should first assemble and empower the teams needed to adopt and implement a digital transformation, and then focus on the rationale behind technology investments with a scalability mindset and carefully assess which digital tools are necessary. Business leaders would do well to work with the larger ecosystem, including working out regulations with governments to foster trust across the business value chain and maximize benefits for their customers.
About the authors: This piece is co-authored by Richard Mackender, Tan Shuo Yan, and Andrea Cheng.
Richard Mackender leads the Deloitte Southeast Asia Innovation team, a cross-function, cross-country unit dedicated to driving innovation as a long-term value creator across Deloitte’s Southeast Asia operations. Tan Shuo Yan and Andrea Cheng are members of the team.