Digital - the new business tsunami
In the age of digital development, the world is becoming more open and connected and this presents opportunities for businesses. Similarly, digital disruption in the banking sector is forcing a change in business models. Digital trends have a massive socioeconomic impact on the lives of consumers and the trajectories of companies.
Africa is no longer regarded as an emerging continent by leading digital companies like Facebook, but rather a hub for digital development. Kenya is building a Silicon Savannah, a city designed to become an ICT hub in Africa. According to research by McKinsey and Company, Nigeria has the most number of mobile users in Africa, with 73% of internet traffic being mobile-based. More than half of the African population will have smartphones by 2020, making information more accessible to consumers.
Vikas Sagar, senior partner at McKinsey South Africa, shares four key areas businesses should focus on to take advantage of digital trends to boost revenue and cut costs.
Beyond developing a digital strategy, businesses should consider digital transformation of their models to influence the customer journey. Only 44% of companies surveyed by McKinsey indicated that they have a digital strategy, but only 10% of these companies state that their strategy is aligned to the customer journey. Businesses should use technology to redefine the customer’s experience. Consumers want convenience and, over time, digital will offer a benchmark for convenience. Digital offers a global platform to do business and can build loyalty through convenience, which contributes to brand value.
Businesses should think big, take risks and move fast. However, not all managers and employees are comfortable taking risks. About 84% of surveyed executives indicate that there is not enough support for risk taking, although they would like their business models to be agile. Less than half of surveyed companies which are willing to take risks, do not have the right skills to implement tests for alternative business models.
Businesses should invest to build new capabilities in the long term. Most businesses recognise that they have capability gaps in technology. About 80% of surveyed companies struggle to capitalise on modern technology and are still dependent on legacy systems. Only a quarter of these companies are using digital insights to improve business models. Sagar says barriers to digital adoption, like load-shedding and limited data, are expected to drop over time.
Digital departments in businesses are mostly staffed by existing talent, few of them have a digital budget to meet key performance area requirements. Sagar says the main challenge for businesses is to create an environment that attracts the right talent. The workforce of the digital age is temporary and companies can source skills from freelancers as they require it. Companies should adapt to the shift in the workplace. Further, entrepreneurs cannot disregard digital completely. Most entrepreneurs and small businesses use digital platforms to promote their brands or products or communicate a message.
Businesses need to manage and take advantage of disruption, but it’s not that easy, says Sagar. The fundamental values of traditional business, such as brand loyalty, ethics and customer experience, will always be important in a digital world.