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Why business leaders need to go beyond technology in the digital-first era

Author Mahadeva Matt Mani on the seven leadership imperatives the UAE can adopt to shape its future



@MMahadev/Twitter
@MMahadev/Twitter
by

Joydeep Sengupta

Published: Sat 19 Mar 2022, 1:17 PM

Mahadeva Matt Mani is a principal with PwC US. He leads the transformation platform for PwC and for its strategy consulting business, Strategy&, advising executives on business model transformations and operational value creation and productivity programs.

He is a co-author of Beyond Digital: How Great Leaders Transforms their Organizations and Shape the Future along with Paul Leinwand, who is the global managing director for capabilities-driven strategy and growth at Strategy&, PwC’s strategy consulting business. He is a principal with PwC US, and an adjunct professor of strategy at Northwestern University’s Kellogg School of Management.

Mani spoke to Khaleej Times about the inspiration behind writing his latest, which is a labour of love after three years of extensive research, and how the UAE can adopt these leadership imperatives.

Edited excerpts from the interview:

What was the inspiration behind writing Beyond Digital: How Great Leaders Transform Their Organizations and Shape the Future?

We were hearing from so many executives about the sheer number of digital initiatives they were running, the huge multi-million dollar investments they were making on digital programmes, and the constant pressure they were under to have a digital strategy. Yet despite all their programmes and investments they weren’t moving ahead of the competition. They weren’t really creating substantive competitive differentiation. So, we wanted to study what it really takes to succeed in a digital era.

Why is digital transformation critical if it’s no longer a differentiator?

“Digital” transformation is perhaps a misnomer, because what we learned is that it has little to do with digital. Companies that succeeded with their transformations actually went well beyond digital to address more fundamentally how they create value as an organisation — and then used digital as one element to enable that outcome. This is because just digitising what you currently do doesn’t really add anything - other than automating your old business, or getting you to operate faster. The problem is that everyone else is digitising too, so all you end up doing is just speeding yourself up to an undifferentiated future.

Instead, companies have to understand that some key things have changed that require them to rethink their approach and to transform beyond just digital. You have to recognise that the value creation model for all organisations is impacted by three main changes:

  • Revolution of demand: customers have access to more options and more transparency into the quality of those options — there’s no place to hide
  • Revolution of supply: It’s much easier for companies to partner with each other and take advantage of ecosystems to supply. They don’t need to own everything themselves. This also means that scale in your own captive assets have lost in importance — what matters more is scale in your differentiated capabilities as an organisation that can be applied to a customer problem
  • Transformation of context: Organisations have to create value beyond just their own entity’s profit. Their value equation has to include their environmental, social and governance (ESG) impact — and this ultimately does impact their financial value. Also, the level of global interconnectedness raises uncertainty and risk

What all this adds up to is a very different model of value creation. And given that the model of value creation is so different, companies can’t just digitise what they’ve been doing. They need to step back and answer two fundamental questions: 1) what value do we need to create to fulfill the needs of customers and society, and 2) how do we uniquely contribute to creating that value

That’s why transformation in today’s age is critical — and then including digital as an important element in that transformation

What are the seven leadership imperatives for transforming companies in the new digital era?

Your book took three years of extensive research. What are the 12 companies that you looked at for your book and why did you choose them?

We started with a broad global survey to ask leaders of companies across industries which companies they wanted to learn from — which companies did they admire. We then shortlisted a number of companies who had been through digitally enabled transformations and had achieved sustained results. Then, we reached out to the leadership teams of these companies to interview them and learn from them about what they did and how they did it. We learned both about their successes and failures.

These companies range across regions such as:

  • Hitachi and Komatsu in Japan
  • Titan in India
  • STC Pay in the Middle East
  • Philips in Europe
  • Eli Lilly and Adobe in the US

And across industries, including:

  • in the technology sector like Microsoft
  • healthcare like Cleveland Clinic
  • financial services like Citigroup
  • industrials like Honeywell
  • consumer businesses like Inditex Zara

What’s the mantra behind a lasting business?

I’m not sure we’ve any mantra, but I would say that businesses today need to recognize that transformation is continuous. They cannot rest and simply accept that they’ve arrived and try to protect their positions. As we’ve seen viscerally in the last two years and even now, disruption and change is a constant. So as a business you have to continually challenge yourself around the two fundamental questions:

  • What value do my customers and society need me to create? What problems do they need to have solved?
  • How do we uniquely contribute to solving that problem?

To borrow a phrase from Jeff Bezos, you have to operate like “every day is day one”.

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How can companies use technology to solve the massive challenges and opportunities facing society today?

First recognise that technology itself is not a solution. So many of the companies we spoke to talked about how the mistakes they made during their journeys often came from chasing after a technology, or assuming that technology alone would give them an advantage.

For example, Titan which is the largest consumer company within the Tata Group initially tried to disrupt the jewellery industry in India by investing in modern machinery, manufacturing techniques and digital technologies in a modern large scale retail experience they felt would give them a huge advantage. However, it turned out this approach didn’t work so well and they had to go back to understanding what customers really wanted, which was artisanal quality jewellery that they were used to getting from their trusted local family jewellers.

So they changed their approach, and instead of just using technology, they focused on improving the lives of the jewellery artisans in India. They shifted to engaging the ecosystem of local artisans and improving the value proposition for them to partner with Titan to create greater value for customers. Instead of just offering to pay them money, they also worked on actually improving their working and living conditions. They also worked to make the profession sustainable because the younger generations didn’t want to take on the old artisanal arts. With this commitment they made dramatic changes — for example, they built dormitories for the karigars, they gave them better & safer working conditions, they helped create a living wage & income stream for them among other things.

With these changes coupled with a modern retail experience and digital engagement capabilities, they totally transformed the jewellery industry and raced to the top of the industry with their Tanishq brand — with significantly greater revenue and profitability.

It’s a great example of how a company coupled technology with going beyond digital to solve a big societal issue while also creating value for its shareholders.

Another example is Philips which is integrating Artificial Intelligence (AI) and other technologies into its medical devices, but also combining this with engaging clinicians to develop solutions that improve healthcare outcomes for people who need healthcare. They aren’t just making a more technologically advanced medical device to sell more devices, they’re focusing on solving the ultimate problem of healthcare, which is how to get people well faster & better, and keep them healthy, while also making life better for the clinicians.

So, you have to think more expansively and focus on solving the real need/problem your customers and society have and then you can use technology to its fullest potential to create massive value and solve that problem.

What’s a future view of the world that business leaders must cope with?

Business leaders need to recognise that they have to deal with a fundamental paradox:

On the one hand they have to choose that change will be constant, conditions will continue to evolve and they will have to adapt. At the same time, they need to stop worrying about trying to figure out all the ways the world will change in the future and focus more on what won’t change. Focus on the big problems, needs and challenges that society and customers need solutions for and build their strategies around that. As they shape their organisation’s future based on this understanding, and then apply the seven leadership imperatives we describe in in a structured way, we’re confident they shape their organisation’s future vs. being shaped by the future. We’re confident they can take ownership of their futures vs. their future being dictated to them.

How can the UAE adopt these leadership imperatives to emerge as one of the leading nations behind digital transformation?

The UAE as a country is already a great source of innovation and inspiration for others — innovation in thinking, in how to use capital and in inspiration in how to challenge the norm. By applying the 7 leadership imperatives we believe organisations in the UAE can continue to shape their own futures, and create examples for others to follow.

They can use these leadership imperatives to leapfrog some of the challenges that legacy organisations have had to contend with. They can use these leadership imperatives to deal with some of the massive challenges that society is faced with.

These leadership imperatives apply equally to public sector organisations (not just to for profit businesses). In fact many public sector organisations we’ve been speaking to recognize that they need to:

  • Re-imagine their place in the world given the rapidly evolving needs of citizens for services and solutions to challenges like sustainability
  • Embrace and create value through ecosystems given the huge challenges they have to solve
  • Build a system of privileged insights that collects & uses data from citizens responsibly, with trust, in a way that is about making the future better for citizens
  • Transform their organisation models to more integrated cross-functional teams focused on delivering outcomes for citizens vs. be bureaucratically focused in their organisational silos
  • Invert the focus of leadership so that they can meet the immediate needs of citizens while constantly keeping an eye to shape the future
  • Reinvent the social contract with their people, so that they inspire people to get engaged in government service and work in innovative and value creating ways
  • Disrupt their own leadership approach to keep developing the leadership capabilities of government leaders so that they can step up to the challenges of our world

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