If the change in the FTSE 100 has shown anything, it is that no company or sector is immune to disruption. Four in ten companies listed on the index ten years ago are no longer there.
Conventional wisdom has it that large companies always have the resources and know-how to compete. Yet, in an age of disruption, many larger businesses are struggling to digitally transform at the required pace. That’s a key finding of Bigger, Faster, Stronger, a new joint report from the Confederation of British Industry (CBI) and Oracle.
Greater adoption of technology could unlock productivity and wage growth. Research shows that more adoption, coupled with better management practices, could add £100 billion to the UK economy and cut income inequality by 5%. However, only 54% of UK companies believe that disruptive technologies play an important role in their organisation. That figure is much lower than in countries such as France, Germany, India and Russia.
Since the 2008 Financial Crisis, UK productivity growth has slowed considerably compared with that of many G7 competitors, with key sectors such as financial services and construction experiencing negative growth. At the same time, a productivity and prosperity gap is opening up between companies willing to invest in the latest technologies and those that are not.
The research highlights the fact that larger companies – which account for 48% of UK turnover and employ 40% of its workforce – are especially struggling to digitally transform. They face a range of issues, including skills scarcity, complex legacy systems and a 25% greater threat from cyberattacks compared with other companies. By contrast, smaller start-up companies are more likely to adopt new technologies, while firms aged over 15 years are the least likely.
Successful innovation can feel like hitting a moving target
Felicity Burch, CBI Director of Digital and Innovation, commented: “No business can rest on its laurels when it comes to technology. Big firms must be doing all they can to stay ahead of international competitors and adopt new technologies that will boost productivity and efficiency.
“Many will assume that, with the resources at their disposal, it’s easy for large firms to adopt new technology. But a host of challenges, from ageing legacy systems, cybersecurity threats and agile new challenger firms can make successful innovation feel like hitting a moving target.
“For the UK’s big hitters to secure their position as world leaders over the next ten years, senior business leaders must be prepared to challenge their established ways of operating and cultivate an environment that encourages employees to seek innovative solutions to company-wide issues, or these companies risk extinction.
“If larger businesses don’t want to become dinosaurs, they need a long-term plan for adoption of new technologies. But they cannot do this alone.”
“Digital innovation is everyone’s job”
Neil Sholay, Vice President of Digital Innovation at Oracle, said: “In any digital transformation project, culture is crucial and knowledge is power. Both the latest technologies and connected thinking are needed to ensure the benefits of innovation are felt at all levels of the organisation. Digital innovation is everyone’s job, and everyone should be willing to learn from exemplars in other companies and sectors.
“One of our customers, West Midlands Police, wasn’t unique in the challenges it faced, but it’s a great example of utilising technology to its fullest. By adopting a shared services model in its back-office based on a standardised Oracle software-as-a-service module, West Midlands was able to create £36 million in savings and streamline processes for officers. This not only cut resolution time to 24 hours for 80% of operations, it doubled reported satisfaction.
“At the same time, innovation isn’t an endgame, it’s a constant process of transformation. The only constant today is disruption, so businesses need to evolve ruthlessly fast to keep up with it. That means providing employees with the tools they need to be creative, collaborative and agile at all times.”
The four fuels of innovation
The joint report also sets out new guidelines from the CBI and Oracle to help large businesses ease their digital transformation journeys and become more competitive. Recommendations to improve productivity and employee engagement include:
- Bring digital transformation to the boardroom – senior business leaders must commit to addressing risks, sharing learnings across departments, and being strong advocates for change.
- Digitally empower your workforce – make growing digital skills a company-wide initiative and focus on building trust and fostering communication to drive further innovation.
- Maximise and connect your silos – silos are a reality within any large business, but when connected to an overarching strategy they can act as useful testing grounds for innovation.
- Automatically upgrade – invest in systems and software that constantly update and self-optimise to help the business keep pace with disruption.
On 3 July 2019 the CBI and Oracle will be running a webinar on the opportunities and challenges faced by businesses undergoing a digital transformation. Takeaways will include:
- key findings that highlight the need for digitisation – including data from the recent Bigger, Faster, Stronger report
- fuels and frameworks that businesses can deploy to help form robust digital transformation strategies
- case studies of how other businesses have managed to find digital transformation success.
Attendees will receive a link to a digital copy of the report.
For further advice on achieving a successful digital transformation in your organisation, email me or call me on 020 7099 2621.