Digital to drive significant disruption in healthcare and retail sectors in next 12 months
TORONTO, Feb. 1, 2016 /CNW/ - The vast majority of companies are unprepared for the move to digital business models, including online products, sales and services that will begin to dominate their revenue potential within the next five years, according to a recent study on the preparedness for the digital disruption expected to impact businesses by 2020.
Global leader in executive search, Odgers Berndtson, and Forrester Research surveyed close to 1,000 executives worldwide on the topic. The resulting State of Digital Business Report revealed that, while executives understand the potential that digital has to transform how businesses create and deliver value to customers, more than four out of five companies (84 per cent) do not have the necessary skills and talent to execute this transformation.
The study highlights that, despite clear optimism surrounding the potential that digital has to drive revenue growth – with 46 per cent of survey respondents estimating that more than half of their sales will depend on digital within five years – executives are concerned about their organization's readiness for this digital transformation. For example, only 21 per cent of respondents feel they are equipped with the right team to define their digital strategy, and only 14 per cent believe they have the necessary processes in place to implement it.
People and culture are real drivers of digital transformation
"With the anticipated dramatic impact on business revenues and growth, it's concerning that a significant number of executives have little confidence in the digital talent within their organizations," said Anthony Batchelor, who leads Odgers Berndtson's Technology Practice in Canada. "While technology deployment is important, digital transformation is fundamentally about people and having the right talent acquisition and retention strategies in place. This presents a significant risk for many organizations, since the search for top talent in this field is highly competitive and the digital talent pool is limited."
Company culture is another fundamental part of ensuring digital strategies can thrive, since the right, progressive internal cultures can help attract new talent and engage the existing team in the challenge of developing innovative digital solutions. Despite this reality, 79 per cent of company leaders do not currently believe they have the right culture in place to succeed.
Strong leadership and vision crucial to enable the success of digital strategies
Noting that digital transformation depends heavily on a company's CEO and executive team to serve as inspirational leaders who can bring a digital vision to reality, only 26 per cent of survey respondents agreed that "Our CEO sets a clear vision for digital in our business."
"The absence of digitally-skilled leadership can stifle company transformation, so it's critical to develop recruitment strategies to identify and attract the right people to fill these senior talent gaps," added Mr. Batchelor. "What we are seeing is that leading companies are using innovative talent practices like reverse mentoring and establishing 'digital boot camp' training programs to develop talent internally. They are also taking a strategic approach to external hiring, seeking senior-level candidates who will be digital evangelists and change agents in their respective functional domains."
Technology and process gaps create barrier to digital success
The survey also highlights that only 19 per cent of leaders believe they have the right technology in place to execute their digital strategy. This presents an urgent need for companies to invest in new platforms including cloud, application program interfaces (APIs) and service-oriented architecture (SOA) to support the growth of digital business.
In addition, just 14 per cent of executives indicated they are confident that their company has the right processes to execute the digital strategy. The report encourages these companies to redesign their business processes to maximize agility and introduce governance processes to measure customer outcomes instead of return on investment for a predefined project.
Healthcare and retail sectors to face massive business disruption within 12 months
Looking at the specific impacts of digital trends on key business sectors, the survey found that no industry will escape the impact of emerging digital business models and disruptive technologies, including business to business (B2B) industries, consumer packaged goods, wholesale sales and professional services, with Forrester estimating that the US B2B eCommerce market will reach US$1.3 trillion by 2020.
The survey also revealed that specific industries expect to be impacted by the rapid shift to digital more than others. Healthcare topped the list, with 94 per cent of respondents anticipating massive disruption over the next twelve months as a result of data management challenges and the entry of traditionally non-healthcare companies like Apple, Google, and Nike into the ecosystem.
The retail industry followed with 91 per cent expecting significant change as a result of online growth within the next twelve months. By 2018, Forrester expects "web-impacted retail" to account for 59 per cent of all retail sales, forecasting cross-channel sales of US$1.8 trillion and online sales of US$414 billion. Digital experiences are also expected to drive 58 per cent of overall sales by 2020 with 12 per cent of retailers expect to be completely digital by then.
Six tactics to accelerate digital strategies
The report concluded by recommending six tactics to help companies accelerate their digital implementation strategies:
- Convince CEOs of the critical need for change across the board using reverse mentoring techniques or visits to digitally mature companies.
- Enlist the support of other digital champions including the Chief Marketing Officer, Chief People Officer, Head of Corporate Communications, or business unit leaders.
- Develop a digital talent strategy, including training existing team members in new skills, as well as a strategy to attract and retain top industry talent.
- Invest in business technology projects that will drive digital experiences to win, serve, and retain customers.
- Update your company's technology to increase the agility of the technology management team and enable them to integrate customer-facing applications into back-end operational platforms for an enhanced user experience.
- Embrace your CMO and executives responsible for customers to establish common goals, metrics and build joint teams to use digital to create enhanced customer value.
About Odgers Berndtson
Odgers Berndtson is a global leader in executive search with more than 200 partners in 27 countries, committed to providing an integrated approach to talent management. With a focus on industry and functional specialization, the firm specializes in recruiting, assessing and developing senior executives and board members in the private, public and not-for-profit sectors across Canada and internationally. Through executive search, executive interim and leadership assessment services, Odgers Berndtson helps its clients build world-class leadership teams.
Forrester Research (Nasdaq: FORR) is one of the most influential research and advisory firms in the world. We work with business and technology leaders to develop customer-obsessed strategies that drive growth. Forrester's unique insights are grounded in annual surveys of more than 500,000 consumers and business leaders worldwide, rigorous and objective methodologies, and the shared wisdom of our most innovative clients. Through proprietary research, data, custom consulting, exclusive executive peer groups, and events, the Forrester experience is about a singular and powerful purpose: to challenge the thinking of our clients to help them lead change in their organizations.
SOURCE Odgers Berndtson Canada
For further information: Jacqueline Foley, Chief Marketing Officer, Odgers Berndtson, 416-366-1990, Jacqueline.firstname.lastname@example.org