One question facing CFOs is how to become part of a disrupted ecosystem in the industries in which they operate.
Michael Buckley managing director, Accenture Interactive Australia and New Zealand and his 200-strong team try to answer for their clients each day.
“Almost every client recognises they are not keeping up with their consumers; they are not giving them a very good experience and they want to improve that. This acknowledges their industry is completely disrupted and they need to rethink their business model from scratch," says Buckley.
“No one is immune in the world of digital transformation. Disrupters are not immune either. Apple is a great example. It was a disrupter and now it's being disrupted, and Microsoft is coming back. Then you have Uber saying, ‘In the next two years our whole fleet of vehicles will be automated,’ but they know they will be disrupted too and they have to keep moving" he adds.
There's no magic bullet in this environment for businesses to embrace disruption. But Buckley says his team use a method called design thinking to devise responses to disruptions for their clients.
Design thinking is a way of developing creative ideas to solve current problems. Its genesis was in fields such as design and architecture, whose processes are now being used to solve business problems. The idea is to start with a goal to produce something better than the current available offering, as opposed to trying to solve a particular problem.
“We talk a lot about living services. We went from the web age to the mobile age to living services, which is the age we live in. Services are being automated, and what we do is use design thinking and service design to recreate processes or services.
“What we're finding is it's also about design culture. We can't do any of this without changing the culture of the client we're working with," Buckley explains.
He says what's necessary is a recognition at the executive level that the business culture needs to change to embrace new ideas and embrace them quickly.
“If you look at Google and Facebook, a lot of their success is the culture they breed and their ability to be so much more agile than a traditional business. Because many of the ideas you need to maintain pace with disruption are quite simple. It all comes down to improving the customer experience and following a straight-forward methodology to do that," says Buckley.
He says it's the businesses that change, test and learn and change on an ongoing basis that are the winners in this environment. “For instance, Google is willing to let go of businesses that aren't successful and move on, and that's great to see."
A good example is the robotics business Boston Dynamics, which Google acquired in 2013 and which it now plans to sell.
Letting go of businesses is an important ability to have in the digital disruption era, where legacy businesses have the potential to cause a drag on earnings. For instance, Amazon's imminent arrival in Australia could put substantial competitive pressures on local supermarkets not built digitally from the ground up, as Amazon is.
However tricky this dynamic may be to manage, Buckley says CEOs can view the arrival of companies such as Amazon, which is geared up for disruption, as both an opportunity and a chance to change.
CFOs can help make their businesses more agile. Says Buckley: “You have to start trying things far more quickly than you've ever done before. You can't take three months to write a business case, another six months to write a strategy and go on a five-year transformation journey."
“Transformation is happening right now, so how can you adapt to change today? The good businesses are realising that, but it's hard. If the business has 50,000 employees it's difficult to get them to change."
He uses Accenture as an example of a business doing this right. “We're incredibly good at changing and adapting to the new. We see something come out and we see a new platform and we adapt to it, and we learn. A short time later we're implementing that for our clients."
Buckley says every industry has lots of low hanging fruit that can be picked to make the company more agile.
“Health insurance forms are a good example. There's no reason why there should be 50 questions on the form when only 25 are necessary. The skill is in getting rid of the 25 questions that are not needed."
Buckley's main message is that the less friction there is between the customer and the business the better the experience for the customer.
“When you buy an Apple phone, you turn it on and it just works. All customer experiences should be like that. We do a lot of work trying to make customers' businesses invisible. Google is another good example. You get in your car and it tells you that you’re 18 minutes from home. How does it know that? That's amazing and you didn't need to do anything."
He says this type of customer experience should be the goal for all businesses grappling with how to respond to digital disruption. It's the centrality of the consumer that should be at the heart of every business' response to digital disruption, and businesses that recognise this are more likely to be the market leaders of the future.
Key Takeaways on Digital Disruption
- New business models are needed that take into consideration changing consumer preferences
- Business leaders should support encourage innovation
- An organisation should support staff to change, test and learn and change again
- This means allowing for failure and knowing when to walk away from a project