And here the UK has strengths. However, new evidence suggests that although business leaders see the digital opportunity, they can’t work out how to respond effectively. And many are turning ‘wait and see’ into an official strategy.
Waiting for what? Think what has happened since the financial crash of 2008. Back then 10 million iPhones had been sold. Today that number has reached 700 million. There were no Android apps. Today there are over 1.3 million. Xiaomi, the next being name in smartphones was two years from being founded. Airbnb was one month old. Spotify and Uber did not exist.
The difference between the decade just past and the one to come is that digital technology will not be the preserve of technology start-ups or Internet giants. The UK has technology successes such as ARM, but we would be missing a trick if we were to champion our technology leaders at the expense of large and small innovative enterprises of all kinds in all sectors. As new technologies mature, all businesses can embrace digital for their own benefit, disrupting their own sectors before technology start-ups threaten or invade.
In new research by Accenture Strategy, 53 percent of 60 UK business executives believe that their largest threat now comes from traditional competitors using digital technologies. They recognize the size of the prize were they to invest. That’s good news.
The bad news is that they are having difficulties developing strategies to seize that prize. That’s why only two-fifths have a corporate wide digital strategy today. More dangerous is that seven in every ten executives do not want to be a digital leader in their sector. Their approach is either to wait and see or to aim to be merely a fast follower.
Three broad challenges face UK businesses that are on the brink of committing to entirely new digital business models. The first is the need to shift the balance of technology investments from the historical domain of making efficiencies to the new agenda of driving growth. Yet, nearly two-thirds tell us that they mainly focus their attention on automating processes rather than completely reinventing them. Efficiencies are important but will not defend them against the next major digital disruptive innovation that can capture their clients and new revenues by delivering entirely new services.
Another challenge is the patchy supporting environment for digital investors in Europe as a whole. While our recently published Digital Density Index shows the UK as a world leader in the way digital penetrates its economy, it deserves a superfast broadband network that can match those of our major competitors.
Finally, skills are perhaps the biggest barrier to progress. They are cited by 70 percent of UK business executives as their biggest challenge in becoming a digital business. But here the cloud has a silver lining. We spoke to 500 workers around the UK. Six times as many think digital will improve their working lives than those who think it will have a negative impact. 47 percent say digital technologies such as robots, artificial intelligence and analytics will improve their working experience. Seven percent disagree.
The evidence suggests that UK businesses are hesitant to take the first digital steps within their industry despite the momentum that an enthusiastic workforce can give them.
Devising long term talent strategies will take time. But much can be done in the short run. Businesses must test out new technologies and ways of working rather than wait for long term clarity. To do this, they must let go from the centre and allow a new entrepreneurial culture to radiate throughout their organizations, encouraging more autonomous decision making, experimentation and creativity.
For instance, 3D printing and collaboration tools can transform the way and speed teams can work across company walls to respond to consumers, design new products and prototype them, breaking free from traditional hierarchies that would otherwise stand in the way of such spontaneous innovation.
After a decade in which aggressive competitors have come from the technology sector, the next disruptions will as likely come from traditional competitors who have learned how to exploit the possibilities of maturing digital technologies.
But business leaders will be deceiving themselves if they think that digital competition from their historic competitors will somehow take the pressure off. Waiting and seeing is not an option. Employees across the UK are ready to embrace digital. Their bosses have less reason than ever to hold back from taking essential risks in becoming digital businesses.
Posted by Narry Singh is managing director, Digital Strategy, Accenture Strategy