A featured contribution from Leadership Perspectives: a curated forum reserved for leaders nominated by our subscribers and vetted by the Construction Tech Review Advisory Board.
CHIEF OPERATING AND MARKETING OFFICER OF MANDIRI AXA GENERAL INSURANCE [EPA: CS]
Beyond Digital Transformation
EDWIN SUGIANTO
Nowadays, digital transformation has been widely used across all industries. Many companies across the globe, including in Indonesia, are racing to introduce mobile apps, super apps, web-based portals, and even racing to put their first step in metaverse, as well as, to be the early adopters of cryptocurrency. But is this enough to be called digital transformation? Is digital transformation only about launching one or more digital channels, or actually the definition is much wider than that? How many apps, launched by so many companies, are considered successful? How many of the apps lasted for more than one year?
Having been leading digital transformation of several multinational companies, mostly in financial industries, I realized that digital transformation is not a matter of launching a new app, digital customer on-boarding solution, and anything alike. Digital transformation is talking about a fundamental change in the way a company is doing business, starting from its people and culture, internal process, customer focus, data analytics and monetization, and in some companies, involve a high degree of organization re-design. Therefore, the two words that sound simple, translates to a massively more complex program for a company to go through across the span of multiple years. Let us now look deeper into each component.
People and Culture
The most important factor of any successful transformation is human. Companies planning to run the journey of digital transformation first need to change the mindset of their people. Innovative, collaborative, one goal, adaptive, agile, customer-first and simplicity are among the must-have behaviors that all people in the organization must internalize.
Change in people mindset and organization culture must be a top down approach coming from CEO. Having a champion below the CEO, no matter how strong her leadership is, in many cases, is proven to be insufficient. In my observations in most, if not all, of successfully transformed companies, the program is initiated, led, and driven by a visionary CEO.
All of the above behaviors must be formulated into organization culture, values that everyone in the organization, has no choice rather than internalize as their own values. Doing this is not a responsibility of human capital department, but it is the challenge to be taken by all leaders in the company. In many cases, middle-level managers are playing the most important role in translating the direction from the senior executive to the execution level employees.
Internal Process
In most cases, the success of a transformation is determined by how serious an organization is reviewing its internal processes. Process automation, supported by the available technology, such as API integration, robotic process automation, machine learning, and many others, is an essential part of a transformation journey.
On the other hand, companies, which claim undergoing a digital transformation but retain their existing processes, will face a serious challenge with fulfilling its service level commitment.
Similar to the people and culture, the internal process review must be done as a holistic program, sponsored by the highest level of management in the organization, normally its CEO or chairperson, and fully supported by the senior and middle management team. The review should start with the process closest to customers, which naturally begins with the customer acquisition, to customer servicing, until the back-end process, including finance and operations. This exercise usually takes place over a time span of one to two years, and continues evolving as the business grows. It is also very important to make sure that the new processes are being properly documented, although, they are not written in stone.
Customer Focus
A common expression is saying that no one should do change for the sake of change only. For any organization, change is to be conducted for an improved performance of the organization. In digital transformation, customer must always stay at the center of the transformation objective. Many transformations fail as they are carried away from the main focus, namely customer. Hence, at the end of the journey, the management does not see the actual and quantifiable benefit of the program and decide to change the course of the journey and restart the process.
Many Transformations Fail As They Are Carried Away From The Main Focus. At The End Of The Journey, The Management Does Not See The Actual And Quantifiable Benefit Of The Program And Decide To Change The Course Of The Journey And Restart The Process
Design thinking framework helps us to stay focus on customers, as each process under the framework put customer at the center. The most interesting part is that the framework starts with empathize, which ensures that everyone doing the project completely understands what matters the most for their target customers. Validation by customers is also carried out at every step, and without customers’ endorsement, the solution, which could be a product, a new process, a system, needs to be re-assessed from the very first step, or from the step when customers’ confirmations were obtained.
Agility is also key to make sure a customer centric delivery process. Under agile delivery framework, any additional requirement or any deviation from the initial objective, can be addressed very quickly, without waiting for the project to complete.
Data Analytics and Monetization
Some research is saying that in 2022, it is expected that more than 77.5 exabytes of mobile data will be going around globally per month. Today, data is the new currency. However, without the right interpretation, the massive amount of data will go wasted. On the other hand, when data is rightly analyzed, a company can massively improve its ability to target the right customers, to give the right incentive to its customers and partners, and to reach a high degree of service personalization. In the insurance industry, it is very important to have propensity to buy, the propensity to pay, the right price, and the type of protection demanded by the customers.
Monetizing the data is as important to make sure that the organization gains the right level of revenue and profit from the business it is running. Many digital banks, for example, are very successful in acquiring new customers by providing incentives, such as cash back, for every account opening. Nevertheless, the real challenge is to ignite new deposits, new loans, and new transactions from the newly acquired customers.
Conclusion
When digital transformation sounds like a very common process that everyone in the industry is doing, the process involves a holistic transformation program, which is sponsored and driven by the top leader of the company and everyone in the company is actively participating in. As a result of a digital transformation, in many organizations, the corporate culture, the internal process, the mindset of the people, and the way data is being monetized, has never been the same compared to before the journey started.
