How digital transformation—and a challenging environment—are building agility and resilience

CEOs are now reassessing mindsets and current business operations after a year of constant disruption that pushed organisations to undergo rapid transformations. As they look to the future, they are aiming to achieve two main things – agility and resilience.

The pandemic has proven that moments of acute disruption can force organisations to formulate plans and reconsider the ways through which they respond to chronic disruptions. For many of our clients at Deloitte, their digital strategies going forward are being guided by lessons learned in 2020:

• Transform: The pandemic has caused an urgent need to accelerate digital customer solutions and workforce productivity/collaboration tools. Moreover, global supply chain transformation has not only re-defined what is possible, but also reset expectations of requirements and revealed bottle-necks in environments where businesses need to adapt and change.
• Focus: This global crisis made companies realise which areas of business are the most important to focus on. It has also highlighted the value of innovation, strategic direction, and digital transformation.
• Execute: The crisis has also emphasised the need for future-proofing businesses, enhancing security, and enabling financial performance by creating more resilient operations and infrastructure which will help pave a path to a high performance culture. Deloitte’s 2020 digital transformation survey shows a link between digital maturity and higher financial performance.

Digital tools help to virtualise and better manage processes and infrastructure, as well as empower sales teams to better understand their customers, integrate remote and in-person networks, and boost competitive advantage. However, the main challenge for business leaders is deciding how best to plan and accelerate a digital transformation.

A common mistake is floating ‘safe’ proofs of concept and continuing to keep outdated legacy systems as this could cause innovation to stagnate and brand reputation to decay. At Deloitte, we have found that our forward-looking clients are taking the following two approaches to their business transformations:

1. Brownfield transformation – focuses on enhancing the present architecture through digital capabilities.
2. Greenfield transformation – focuses on building the future of the business with innovative or disruptive ideas, products and operating models enabled by the digital capabilities that also underlie brownfield optimisation.

The digital transformation processes raises questions about a number of factors; scope, procurements, costs, training, integration, ROI, and more. It is imperative for leaders to understand where to focus and how to execute effectively when undertaking a digital transformation. From working with our clients, we have established five points to help them target their transformation efforts:

1. Take a ‘virtual first’ perspective – Re-thinking assumptions can open up a world of new opportunities on both sides of business transactions. Establishing virtual business architecture by determining where ‘physical can become optional’ is the first step towards creating a virtual-first culture.
2. Find agility and extensibility with the cloud - In rapidly changing, disruptive environments, cloud capabilities can be a boon in enabling business to keep up to speed with that of their markets. Migrating data to the cloud enables better standardisation, automation, and scalability while enabling operations to be more agile.
3. Automate decision-making where you can and where it counts - Businesses often have operations that involve high volumes of tasks with large costs that do not require much human oversight. With the help of AI/ML technologies, businesses are able to establish thresholds for when input is required by a human being, allowing the rest of the tasks to become automated, which frees up employees’ time to work on more value-adding activities such as dealing with clients.
4. Amplify product/service innovation - Organisations can utilise digital transformation to magnify their product and service innovation strategy, whether they adopt a leader or fast-follower model. Cloud computing can provide power and flexibility which can be quickly scaled up to support R&D. Teams can use data analytics and AI to enhance discovery, modelling, and prediction, allowing for speedier prototyping and testing while also lowering risk.
5. Become an accelerator - Businesses that have progressed in their digital transformation have the opportunity to act as ecosystem accelerators: they can shift to standardised architectures and leverage cloud solutions that have common services; APIs, reusability, and extensibility that enable better performance and innovation.

Effectively executing a digital transformation requires strong leadership, talent, and partnerships as well as the cultivation of an agile and adaptive mindset. It is unlikely that we will ever return to the ‘old normal,’ but we now have pathways and clear guidelines to define more flexible and adaptive environments for business, partners and customers. CEOs should use this as an opportunity to shed the burdens of the past and to pave a better future.