Being in the IT industry for the last 28 years, I had the chance to observe the many advancements and upheavals in the field – advancements in technology, changes in standards and protocols, mergers and acquisitions, layoffs and re-organisations. But I have never seen Southeast Asia (SEA) transforming at a breakneck speed until this pandemic.
This transition boils down to one segment – digital. In fact, the region has reached more than the forecasted 310 million online consumers for 2025 in 2020, five years in advance. Thanks to the 40 million first-time internet users last year from Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Vietnam.
As a result, there is now an urgent need for businesses to reconsider their infrastructure, their business model, and their ways of doing transactions. The stakes are higher for firms to wade through this digital wave, with this global crisis in the background.
This transition boils down to one segment – digital. In fact, the region has reached more than the forecasted 310 million online consumers for 2025 in 2020, five years in advance. Thanks to the 40 million first-time internet users last year from Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Vietnam.
As a result, there is now an urgent need for businesses to reconsider their infrastructure, their business model, and their ways of doing transactions. The stakes are higher for firms to wade through this digital wave, with this global crisis in the background.
So today, I want to share five key areas decision makers should consider while planning for a digital transformation. Inspired by Sun Tzu’s Art of War, the concepts and examples are based on my views and lengthy experiences in the IT industry. These 5 areas are - 五事：道、天、地、将、法。
- Alignment - Alignment from the board level or CEO to the last men in the front-line like the customer support and sales is important. If aligned, the men will fight the toughest war. The “Shared Values” and “Strategy” in the McKinsey 7-S Model are probably the closest elements to this concept. Unfortunately, the modern management theory sees the shareholders as the ultimate people to please, with employees as mere digits akin to the factory workers of the Industrial Age. Coupled with disproportional use of debt-based leveraged buyouts, owners are no longer owners and alas, the employees who staked their well-being on the company, their voices are hijacked. Fortunately, this is probably true only for the larger corporations where the gains are meaty. Nonetheless, for all corporations of various sizes, the spirit of the company is the thread that weaves all together. Without a clear sense of direction and purpose that is well communicated, the individual parts can be difficult to summon and align. Applying this logic to digital transformation, the whole company from the C-suite to the groundwork staff should be structured correctly, aligned, fully aware and on board. A good example is how companies pivot into digital retail. It is important that the company is well aligned to execute this. The company needs to understand that that digital retail is another channel to reach the same customer. So for companies who does not have a consistent strategy for omni-channel, they end up setting up a new department to target this without rallying the other conventional channel to join the race, causing fault lines to divide the company.
- Natural elements – Natural elements refer to climate and timing. In this era of digital transformation, timing is the more appropriate element. Interestingly, the concept of timing is also reflected in many ancient Chinese classical philosophical studies, like Lao Tzu’s Tao De Jing, who advocated in flowing with “Tao”. 人法地，地法天，天法道，道法自然. For those who observed the masters in executing the TaiChi movement, counteracting the enemy’s strokes involves the timing of absorbing their strikes by moving along the force, not against. Not going so far, we are well aware that the current pandemic has been causing major disruptions across all industries and entities in Southeast Asia. Based on “Tao”, businesses, no matter what shape or size, should move along with the on-and-off lockdowns and restrictions. How? There is no other way but to harness the power of technology. With transactions online predicted to hit $1.2 trillion in SEA by 2025, it is timely to start shifting your physical records and dealings online, from forms to be filled, payment, and other in-between affairs. If you have not started or considered it yet, you should do so now.
- Physical elements – You may ask how is physical elements related to a non-physical environment such as the internet. During the ancient time, this will be about the soldiers’ marching distance and the war’s type of terrain. Currently, and in digital transformation, it is about your market that you operate in (terrain). Identifying the right market is critical. This is not just a geographical market identification, it is also identifying the approach to the market, and targeting the correct audience type that fits into the company strategy. For example, a clothing line manufacturer may choose to directly market to the consumers. The manufacturer may choose to go for un-addressed country to avoid conflicting with existing ecosystem of business partners, or may choose a new target audience (youngsters), reaching them through social media influencers, and selling it purely online.
- Managers – One cannot execute a plan without the management’s approval. This pandemic showed that innovation is needed to thrive and our recent survey revealed that managers play a crucial role to enable it. A great majority (96%) of surveyed companies confirmed that their board plays a direct role in business innovation. This means that if innovation has more weight behind it, there will be more drive and this not only changes the way businesses operate, but their deep-rooted culture and corporate DNA. These are welcome findings and a reminder to loop in your C-suite about your digital transformation plan. Aligning this across the structure is also important. Execution needs to be aligned all the way to the last person in the hierarchy. That means, the many layers of managers are key to its success, and not just lip service from the top. At times, we see the drive from the top, but the effort is thwarted by managers, especially line managers who are used to address old markets, using old tools, or are simply not convinced. Qualities we need to look for in good managers are : wise, trustworthy, benevolent, courageous, strict ( 将者，智、信、仁、勇、严也。)
- Structure and Protocols/Process – Technological advancements freed us of the need to maintain roads for military supplies, to marshal armies in proper subdivisions, and to control military expenditure. However, this was changed to the need to plan our steps, consider our assets, redefine our protocols, and train our employees regularly. For instance, the same survey revealed that 95% of innovations in a company fail before the launch and the culprit is lack of planning. Reverting back to digital transformation, it is important to have defined protocols, comprehensive security measures and tools at hand, and a clear road map and division of tasks to make it possible. It is important to equip your company before diving into an irreversible transformation. Be sure that you have the updated and secured tools, revisited and adapted your process flows to a digital-first approach, and trained all your employees about securing and managing your evolving IT environment.
What part then, does cybersecurity play in this transformation? One thing that companies mistakenly think is that cybersecurity stifles innovation. In our recent survey, 54% of our respondents shared this thought. But news about data breaches and ransomware attacks should be considered a clear warning about this thinking. Any such breaches will set the company back in terms of digital transformation as it shakes the transformation at the foundation layer. This is akin to old times when you move the front troops too fast, stretching the supplies line and risking the hijacking of your food supplies, and starving the front troops before they reach the destination.
So yes, it is essential that your digital transformation plan include a comprehensive look into cybersecurity at the earliest.
Article contributed by
Yeo Siang Tiong, General Manager for Southeast Asia at Kaspersky
