Nitin Seth

Businesses now operate in a volatile, uncertain, complex, and ambiguous (VUCA) environment, which has widespread implications across dimensions – people, process, and technology. Digital transformation is an unavoidable organizational imperative in such an environment, so much so that Technology strategy has become “The Strategy” for enterprises. Seventy-eight percent of respondents to a recent study revealed that a company’s survival depended on its digital transformation capabilities.

However, change on the ground is not happening fast enough. Enterprises are plagued by concerns on the effectiveness of their Digital efforts. Despite investing significantly in new technologies, high performance and breakthroughs in business impact are typically not as per expectations. It is vital that companies find ways to bridge this gap between the massive potential of digital and the current reality of sub-par impact.

We delved into this topic of “Digital Strategy for building scalable models in VUCA.” in a panel discussion at the recent NASSCOM Annual Technology Conference. I was joined by four eminent industry leaders – Ruchika Panesar, VP & Technology Head India American Express, Mark Brincat, Global CTO SHL, Pravin Goel, MD BlackRock, and Babu Thiagarajan, Country GM & Head Technology Fidelity. The panel collectively tried to bring more clarity on the dimensions of:

What does VUCA mean?

Disruption is happening across industries because of multiple factors – both internal and external. Enterprises are in a constant state of flux owing to the pace of change in the technology landscape, ever-increasing customer expectations, new competitors causing industry disruption, and rapidly changing talent requirements. The revenue models, and often times entire business models are rapidly evolving. In addition, companies need to grapple with frequent regulatory changes introduced by governments, globally. This has led to the emergence of the VUCA era, where organizations are forced to adapt to an unprecedented velocity and variety of change.

These rapid adaptions are at multiple levels. Companies have to revamp products to cater to more digitally savvy customers and create their branding in the digital space. This typically requires new type of talent. Dynamic strategies and dynamic resource allocation have become the norm and are the cornerstone for sustained success for any enterprise.

In as much, “big is no more beautiful” which necessitates micro approaches that evolve fast with disruptions – an all-too-common VUCA feature.

Customer Experience: Digital transformation gives an opportunity to move away from various siloed customer experiences to a unified, customer-centric approach. With an ever-increasing number of options available and the accompanying digital clutter, enterprises need to provide a frictionless and intuitive customer experience or risk churn. Key factors that enterprises need to focus on are delivering digitally-empowered simple solutions, ensuring immediate and real-time resolution, consistent omni-channel experience, and continuous reinvention. To address these, a cross-functional approach is needed, which can ensure speed, efficiency, and agility in action.

Ensuring a seamless well-integrated Omni-channel communication strategy is an important dimension of enhancing the customer experience. Often, customer experiences are determined by how your brand communicates with a customer. When customers call or email or use social media to communicate with enterprises, company’s response system could make or break this relationship. For instance, if a customer first emails a query to a company and subsequently follows it up on a call, she expects the company representative to be aware of the conversation history across all the digital platforms and respond accordingly. This calls for unifying communication across different product lines and businesses.

Acceleration:  One of the biggest opportunities with Digital Technology and accompanying business models is scalability. It can allow you to both build and scale up a new business rapidly. However, for that you need to find the right product-market fit, develop the right business model, make intelligent technology choices, and leverage the ecosystem smartly. This is where a dynamic strategy broken down to a micro-level is crucial for companies to adapt and succeed. One has to bear in mind that there is no end-state. It’s a continual change process.

Insights: The velocity, volume and variety of data is a tremendous opportunity. It provides opportunities for 1-1 personalization for your customers at one level, and helping enterprises improve the quality of their decision making at another level. On top of this are the massive opportunities with Artificial Intelligence and Machine Learning. The opportunities data is providing are unprecedented. Perhaps, it is fair even to suggest that Digital Strategy is really Data Strategy!!

Digital is not only about “what”; it is increasingly about “how.” Digital strategy demands a mind-set shift while the organization is moving from legacy to digital. It is an overall strategy, not just pertaining to certain operations or departments, but a complete shake-up of the status quo. It is cross-functional. It is interdisciplinary.

While Strategy in a VUCA world needs to be holistic, there is also a need to fundamentally re-think approach to strategy. The traditional flow from Strategy to Execution does not work and can even be counter-productive given the dynamic environment in the VUCA world. It requires a more dynamic approach to strategy, which is more real-time and adaptive, where you make many changes as you are executing. Good analogy is how ailerons on airplane wings adjust the flight path thousands of time every minute!!

Strategy in a VUCA world is messy and you can even say that VUCA is the end of strategy!! What we can certainly say is that VUCA requires a more dynamic approach to strategy, with dynamic resource allocation and where the traditional Strategy-to-Execution cycle is reversed. A clear picture on strategy comes together by looking back and connecting the dots.

This leads us to the final discussion.

Challenges in implementing Digital Strategy

Organizations often struggle to meet the challenges of digital disruption in VUCA. There are typically 5 challenges that enterprises face in executing their Digital Strategies and that result in the big gap that we see between Strategy and Execution. How each of these challenges are met will determine an enterprise’s future.

Architecture: VUCA requires companies to move from large monolithic structures to a more micro-services based agile architecture. Increasingly the approach has moved from defining an “End state architecture” to working on an “Emergent architecture”, an architecture that is integrable and extensible. Architecture is no more something you solve, but you make progress on it. Cloud, Virtualization, and API’s based architecture are the key components of companies’ dynamic architecture. The customer life cycle view should form the basis of any IT transformation initiative. Making the IT environment agile, which enables seamless integration with the partners is another critical dimension.

Organization Structure: Traditional organizations typically operate in silos in the form of business units, functions, geographies, and the likes. This is a major hindrance to digital transformation which is inherently cross-functional. Digital typically needs different units to work in unison to solve customer problems. A borderless organization that is customer-centric, brings the best out of the organization, and has velocity and agility to deliver in the VUCA world is the need of the hour.

Talent: Finding talent which can adapt to this dynamic world, is challenging. Do you try re-skilling existing talent and just hire fresh talent?  Creating a small but distinctly upgraded talent pool can have a huge positive multiplier, creating pull for rest of the talent. However, getting talent in a hot talent market is just the beginning, you still need to plan for their development, adaption into the organization, and their retention. At the same time, Digital is also a great opportunity to focus on the “skills of the future” – to unlearn, learn, up-skill, re-skill. If harnessed well, it can bring new meaning and purpose to talent and to the organization at large.

Culture: While Digital is seen to be about Technology, the most fundamental roadblock in realizing the potential of Digital is not Technology (or even Strategy) but Organizational structure, processes and mindsets, which are rooted in an enterprise culture. Culture “is the way we do things here”, which is deeply embedded and difficult to change. An illustration of this is moving to daily release cycles, which can be a huge challenge in legacy enterprises. It is not just about implementing Agile but building Organizational Agility. This is a massive change management process and requires taking the entire organization along.

Leadership: So, how do you change a complex thing like Culture?  Our panel strongly felt that Leadership was the starting point for this change. Digital transformation has completely changed the nature and dynamics of leadership. Companies need a new-generation of leaders who are technology natives, who have the foresight and vision to proactively develop strategies to benefit from the tectonic technological shifts. But most importantly, they need to be change agents, customer obsessed, organization builders, and have the resilience to absorb and learn from the many shocks that will invariably come in the VUCA world .

To sum it up, VUCA is real, and we are already in the middle of massive digital transformation and disruption. Enterprises have the opportunity to scale up and leapfrog competition by adopting ambitious digital strategies. However, there are many challenges that are causing a big gap between the potential and current impact. Technology is only one part of it, issues are more fundamental are rooted in the organization design, culture and leadership of the organizations. Enterprises and Leaders need to drive organization transformation at multiple levels to bridge this Strategy to Execution gap in Digital. It is not easy, but those who succeed will win big!!

Carpe Diem!!