DIGITAL DISRUPTION. It’s arguably one of the most used terms in business today. However, what implications does it really have for big businesses across sectors, our shareholders and employees?
Put simply, connectivity and digital innovation are transforming operating models, irrespective of industry. Whatever term you use for it, it is real and relevant – regardless of your business or seat at the boardroom table. Here’s why.
More than 90% of adults in the UK own at least one mobile phone, more than two thirds of these are smartphones. Consumer demand for connectivity is huge and it is only set to continue. It is estimated that by 2020, 30 billion devices will be wirelessly connected, supporting a global digital services market worth as much as the entire UK economy.
For consumers, it means their expectations of what they access – whether for work or play – is constantly changing. They want to have personalised experiences and instant access to services at the touch of their smartphones.
For businesses, it means there’s ever more urgent need to keep pace with those demands. Uber and AirBnB are the posterchildren of such agility. They spotted an opportunity and used tech to find a solution that was not previously feasible or viable in a given market. Now they are reaping the rewards.
When you look at the speed and scale of this connectivity revolution, combined with its potential to drive commercial gain, it’s not hard to see why digital disruption is making its way to the top of CEOs’ agendas the world over. So how can more organisations create it, rather than have it done to them?
Digital transformation is not about introducing new technology or digital processes. It must come hand-in-hand with a changed mind-set – one that is more inquisitive about your customers, more collaborative with colleagues and more challenging of the status quo.
Firstly, as finance professionals, we need to be as close to our customers as we are to the numbers. That means we need to be anticipating their changing needs and responding to them quickly. It shouldn’t only be the responsibility of the customer insight teams. The modern day Finance function should be equipped to understand the increasing demands levied at service providers by their customers.
We must drive better collaboration with colleagues from across the business. Just as we expect our marketing colleagues to understand financial limitations and implications for a business, so too should financiers stretch their creative capacity to find new and adaptive ways of doing business. Forward-thinking CFOs should seek out creative solutions and embrace bold decision-making to overcome business challenges.
Finally, we must relentlessly challenge the status quo. Kevin Plank, founder of Under Armour, an innovative sporting-performance apparel company, started out by asking “Why has no one made a t-shirt that keeps you dry under your sports kit?”. By focusing on what should be done differently to give customers what they want, his company has earnt permission from consumers and investors to expand into other fitness services such as wearable technology and health apps.
An example from within our own business is O2 Refresh, our move to separate the cost of the mobile handset from the airtime. The mobile industry has traditionally locked customers into 24-month contracts but, in reality, people want the latest phones whenever they choose – a request I can’t argue with. We ripped up the rulebook and, in doing so, my team considered the opportunity with a view to it strengthening our business model. The two separate finance agreements allow us to generate more cash up front, which we now invest in new revenue streams, setting us further apart from the competition.
With any form of change, challenge is inevitable: the cost of making the transition; uncertainty of outcomes; a risk averse culture internally; heightened customer expectations externally – the list could go on.
Digital disruption shouldn’t be the reserve of the CTO or the CIO. To truly deliver business transformation, these three principles must be embraced by the entire business – including the finance function. That’s not easily said from someone in a traditionally analogue, prescribed and risk adverse discipline. CFOs have a central role to play – I don’t just mean by appreciating its ability to drive cost efficiencies or streamline operations. I mean in truly understanding and championing how connectivity can add significant value within your business model.
Mark Evans, Chief Financial Officer of O2 UK, will discuss how to instil effective change management programmes on 28 June at the CFO Agenda.
Digital technologies such as blockchain and analytics are being prioritised by public sector finance chiefs
Accountagility's research of 200 CFOs highlights the weaknesses in existing IT solutions and an unprecedented dominance of spreadsheets
Chancellor's R&D investment viewed as pragmatic - and one that will pay off in the long term
Finance chiefs attending the Anaplan Hub16 event share their key business plans - and concerns - as they look to cloud-based tech to provide solutions