As business leaders try to make sense of what’s in front of them – while mapping out a plan for the short-, mid-, and long-term for their organisations – one of the critical things to consider is the potential for digital transformation, says Senior Deputy Dean of UNSW Business School Professor Leisa Sargent

There are four types of digital transformation: business process, business model, domain, and cultural and organisational. While some businesses have already pivoted their organisations, the question is whether they are genuinely investing in the technologies they need for the future, says Prof. Sargent. 

They also need to be thinking about where the risks are in their business, says Prof. Sargent, who points to recent cases of legacy issues, particularly with infrastructure and technologies, as well as threats to cybersecurity.  

“We see that pretty much every day affecting businesses, and also agencies and government agencies. So, I think there’s a really important piece around how we think about our business,” she says.

Digital transformation within businesses across Australia has accelerated since the outbreak of COVID-19. Amid the chaos of the first wave, a Capterra Australia survey found 57 per cent of employees said their business had already begun operating fully remotely by mid-April, with 6 per cent saying they had plans to be by the end of the month. 

Fast-tracking technology adoption significantly helps innovate business processes and operations, but even with the pressures of a global lockdown, digital transformation doesn’t happen overnight. A successful digital transformation will largely depend on how leaders and employees respond to technological change. And this migration will likely continue well into recovery.  

Also underscoring the importance of Prof. Sargent’s comments, a recent McKinsey report found the most common reasons for failed digital transformation is due to “outdated models and change techniques” that “are fundamentally misaligned with today’s dynamic business environment”.  

Innovate to regain customers’ confidence  

Just as the transition into working from home came with certain challenges, businesses cannot expect the transition between home and face to face operation again to be seamless. One way around this is for businesses to decide for themselves just how digital they are going to be in the future.  

“People have pivoted on their businesses, they’ve gone online, and so the question is: to what extent do they want to remain online? Or do they truly become omnichannel?” Prof. Sargent says. 

She says this will be particularly important for retail. Many businesses in Victoria, for example, remain closed, and will likely remain so until at least the end of October. Without being able to communicate with customers in the same ways as pre-pandemic, they must find new ways of reaching consumers.

With this in mind, businesses should be touching base with their clients, asking them about their preferences on how to rebuild their confidence and return to shopping in stores. 

“I think that’s the big challenge: people feeling confident enough to go back outside again,” says Prof. Sargent. 

Indeed, consumer confidence in August plunged almost to the depths seen in April when the nation entered lockdown. The Westpac-Melbourne Institute Index of Consumer Sentiment fell to 79.5 in August from 87.9 in July, not far from the extreme low of 75.6 seen in April. However, things do seem to be improving, and the index has since risen 18 per cent to 93.8 in September.

Continued innovation, to promote consumer confidence and trust in your business, as well as productivity, will be critical in the recovery.

How to approach innovation 

With a dispersed and virtual workforce, organisations may be finding it difficult to measure performance and productivity, so how should they approach innovation? 

“We’ve known a lot about what telework looks like for a long time… it’s just that we need to ramp up how technology mediates that much more productively and effectively, and how to help people be successful,” says Prof. Sargent. 

Good leadership is essential. “There’s a big piece here around business leadership, and how we make sure that our leaders and managers know how to manage a workforce like that,” she says. 

“Historically, in some organisations, it’s been quite typical, or it’s been normative to work virtually. But for many businesses, this has been absolutely a brand-new day,” she says. 

So organisational productivity primarily comes down to first making sure you have necessary policies for remote working in place, as well as occupational safety and health support and the required technologies. 

“Productivity is about making sure you’ve got those elements in place, those resources and supports, but also the mindset that says it’s no longer a command [and] control kind of workplace,” she says. 

She also suggests leaders and employers need to be more flexible in how they think about their workforce and empower people to be successful. 

“It will require some imagining. When you think about innovation, you’ve got to be thinking about how you innovate business processes, how you innovate in employment processes, and how you also foster and encourage people to take responsibility for where they work and when they work,” says Prof. Sargent. 

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