Rapid changes in competition, demand, technology and regulations have made it more important than ever for organizations to be able to respond and adapt quickly. However when we look at our businesses in Zimbabwe, the ability to quickly reconfigure strategy, structure, processes people and technology toward value creating and value protecting opportunities is very elusive for most. Most CEOs are yet to waken up to the realities of the digital world coupled with its disruptive behaviour.

Being a CEO of an organization facing digital disruption is a very challenging task. You can’t afford to gamble with your business model or strategy. Digital transformations aren’t games of chance. They require big and bold commitments in the midst of uncertainty to reinvent the business rather than just improve it. There is no room for cosmetic changes.

When one looks at the Zimbabwean business environment, some of the organizations are having a half hearted approach to digitization. Others are just concentrating on piecemeal apps or creating pseudo innovation labs. Meanwhile, the legacy business remains in place, largely unperturbed. This is a recipe for disaster in a digital environment.

Without a transformation of the core, the value proposition, people, processes and technologies that are the lifeblood of the business, any digital initiative is likely to be a short term fix. The legacy organization will inevitably exert a gravitational pull that drives a reversion to established practices.

Reinvention of a business is, by its nature, bold.  But it’s one thing to be bold, it is another to be thoughtfully bold. A digital reinvention requires the CEO to make tough decisions, which involve tradeoffs that it is tempting to ignore, defer or rush into. Yet knowing which decisions to prioritize and how to implement them can make the difference between a successful transformation effort and one that struggles.

Digitization often lowers entry barriers, causing long established boundaries between sectors to tumble. At the same time, “plug and play” nature of digital assets cause value chains to disaggregate, create openings for focused, fast moving competitors. New market entrants often scale up rapidly at lower cost than legacy players can, and returns may grow rapidly as more customers join the network. This is why it has become very easy to dislodge established businesses.

Digital capabilities increasingly will determine which companies create or lose value. Those shifts take place in the context of industry evolution, which isn’t monolithic but can follow a well worn path: new trends emerge and disruptive entrants appear their products and services embraced by early adopters.

Advanced incumbents then begin to adjust to these changes, accelerating the rate of customer adoption until industry’s level of digitization among companies but, perhaps more critically, among consumers as well reaches a tipping point. Eventually, what was once radical is normal, and unprepared incumbents run the risk of becoming the next Blockbuster while others which have successfully built new capabilities become powerful digital players. This can happen within a very short period of time. It is therefore unfortunate to see how casual some of our businesses are at the moment. They don’t seem to appreciate the threat being accelerated by digitization.

The upshot is that digitization will change industry landscapes as it gives life to new sets of competitors. Some players may consider your capabilities a threat even before you have identified them as competitors. Indeed the forces at work today will bring immediate challenges, opportunities or both to literally all digitally connected businesses. This is why Chief Executives now need to seriously put the digital agenda on the forefront of their strategies. A CEO who is reluctant to embrace technology will not last in a digital environment. Some of our CEOs are not even on social media such as twitter, whatsapp or Facebook and yet this is the reality we have to face daily.

It is very sad to note that most businesses in Zimbabwe still look at IT, as a department and some of the Heads of IT departments are not as alert as they should to the rapid changes that are taking place in the global economy.

It is time that CEOs waded into the technological discussions and shape that debate rather than leave everything to their chief information officers or chief digital officers as some of Heads of ITs, are now called.

CEOs should choose to lead the digital transformation themselves especially in industries that are being heavily disrupted. This is because digital impacts many of the different functions in an organization. It is very hard to delegate it to one person because, in fact, it impacts most of the organization. The challenge for the CEO is creating enough time for that aspect, given the number of issues he has to manage in the organization.

However one solution is for the CEO to delegate the digital agenda to a chief digital officer. That can be very effective. However it has its own challenges. Specifically it can be very difficult for a chief digital officer to have enough influence to make the changes they need across the whole organization. This is one of the main challenges that is being faced by chief digital officers especially in organizations where the issue of technology is foreign and most of the top leaders are “technologically innocent.”

To illustrate this point, a bank wanting to create a seamless customer experience needs to change marketing, needs to make changes to the products, needs to make changes to distribution, and needs to make changes to operations and technology. It can be hard for a chief digital officer to have the mandate and the impact across all of those functions.

However in some sectors such as retail it may be easier for the CEO to delegate the digital agenda. In such a sector, often the main impact is in the marketing function. Therefore it can make sense for the chief marketing officer to take control of the digital agenda.

Operating in a digital economy.

Digital technologies create near perfect transparency, making it easy to compare prices, service levels and product performance: consumers can switch among digital retailers, brands and services with just a few clicks or finger swipes. This dynamic can commoditize products and services as consumers demand comparable features and simple interactions. Some banks for instance now find that simplifying products for easy purchase on mobile phones inadvertently contributes to a convergence between their offerings and those of competitors that are also pursuing mobile-friendly simplicity.

Another challenge which is also an opportunity in the digital economy is that digital dynamics often undermine barriers to entry and long standing sources of product differentiation. New competitors can often be smaller companies that will never reach scale but still do a lot of damage to incumbents. New entrants can cherry pick subcategories of products and severely undercut pricing on small volumes thereby forcing bigger companies to do the same.

Companies must be open to radical reinvention to find new, significant, sustainable sources of revenue. Incremental adjustments or building something new outside of the core business can provide real benefits and in many cases is a crucial first step for a digital transformation. However if these initiatives don’t lead to more profound changes to the core business and avoid the real work of redesigning how the business makes money, the benefits can be fleeting and too insignificant to avert a steady march to oblivion. This is the risk that some of the businesses in Zimbabwe are currently facing.

Simply taking an existing product line and putting it on an e-commerce site or digitizing a customer experience is not a digital reinvention. Reinvention is a rethinking of the business itself. Companies need to ask fundamental questions such as “Are we manufacturer or are we a company that enables customers to perform tasks with our equipment wherever and whenever they need to?” If it is the latter, then logistics and service operations may suddenly become more important than the factory line.

Digital success requires not only that investment be aligned closely with strategy but also that it be at sufficient scale. Digital leaders have a high threshold for risk and are willing to make bold decisions. If you decide to eat a dog, go for a bull dog. The returns usually come within a very short space of time.

Digital winners think broadly about whom to collaborate with. In some cases, that may include collaborating with firms, that would have been considered competitors historically, or at the very least, collaborating with firms, that can share data with your organization. It is very important for the CEO to lead in this debate on the appropriate strategies to be pursued in a disruptive digital economy.

Concluding Remarks

While it is true that different companies have been using technology for many decades, a few things have changed drastically. First, customer expectations are very different now from what they used to be. Most people now research their purchases online.

The second thing is that the cost of delivering high end IT solutions is reducing all the time. Historically, it would have been very expensive and a lengthy process, to deliver a highly functional technology solution that customers want to use. This is no longer the case. It can sometimes be done now in just weeks or months. This means that an established business can be dislodged within a very short period of time.

Digitization, is fundamentally shifting the competitive landscape in many sectors. It allows new entrants to come from unexpected places. We are seeing mobile network operators get into financial services. Travel agents are getting into insurance business in other countries. So your competitor set is not what it used to be.

This now calls for a new way of thinking and CEOs have to embrace technology on their agenda. Gone are the days when this task would be relegated to an un empowered head of IT department. Digitization now has to be part of the business strategy not an appendage to strategy.