By Ravi Vasantraj, Senior Vice President, and Global Head – Business Process Services at Mphasis
In 2000, when the Internet was in its infancy, Netflix approached Blockbuster executives for a US$50 million merger, but was not taken seriously. Blockbuster, then valued at US$4.8 billion, could not predict the technological disruption that Netflix would drive. By 2010, Netflix had grabbed a 20% share of North American viewership while Blockbuster was delisted from the New York Stock Exchange and filed for bankruptcy.
It was ironic. The Blockbuster leadership, which ran over 9,000 stores across North America, failed to foresee the impact of the Internet. Similarly, while technological adoption by enterprises is a continual process, the pandemic has accelerated this process. Consumers are shifting to online channels and businesses are getting ready to meet them there.
A global McKinsey survey suggested a seven-year increase, on average, in the rate at which companies were developing digital solutions. About 62% of those surveyed believe the changes spurred by the pandemic are here to stay.
Adapting to change
The pandemic changed the way banks interact with customers. Risk management practices such as in-person meetings for underwriting, determining creditworthiness, and signing loan documents shifted to online channels. Underwriting processes in banking have been digitized and automated, as have credit-monitoring tools, financial fraud detection, and reporting mechanisms. A McKinsey report suggests digitization will boost banks’ margins by 5 to 10%.
Digital disruption is changing the way services are rendered and consumed. Business leaders must be aware of this disruption and how it might impact business models and customers. Experiments to shorten business cycles and discover new models are essential for business. The hallmark of a transformational leader is an antenna for perceiving change before it happens.
Delivering integrated services
Before the pandemic, large wealth management companies would take two to three weeks to onboard a customer. Today, it happens within a single day. The same with applying for insurance and mortgage. A Salesforce survey found 88% of digital customers expect companies to accelerate digital initiatives and 68% say that the pandemic elevated their expectations of brands’ digital capabilities. This consumption of technology services is forcing traditional players to layer in responsiveness at the core of their operations.
As digital technology becomes the norm, transformation is visible across industries.
The lines between different services are fast blurring—providing an integrated service is key to an organization’s success. Transformational leaders must view their businesses from beyond the “services” prism. They need to have the ability to contextualize this integration in a financial context where digital transformation syncs with a client’s revenue models.
Technologies will be bimodal
This ongoing digital transformation does not mean legacy technologies will disappear. For close to 15 years, we have talked about retiring mainframes and moving all existing code, programs, and applications to the cloud. But mainframes are still in use. Therefore, I believe technologies will be bimodal.
Both must coexist because businesses have invested in traditional technologies, which cannot sit idle. These are not agile enough to adapt to changes like newer technologies. Thus, we must shrink the core, which runs on traditional technologies, while new business services built around this are powered by the latest technologies. The traditional technologies will exist as a book of records and intelligence, with the customer interaction layers built around it.
If incumbents do not perceive this change and move fast enough, they will face disruption, just like Blockbuster, Kodak, and many others. Leadership is key to making a smooth transition. The challenge is rarely the scarcity of resources or the availability of technology. It is in leading those rapid decisions and pivoting for digital change.
Fostering leadership through organizational culture
Organizational culture is vital in fostering leadership and enabling enterprises to adapt. Successful teams are built on trust and the ability to put aside self-interest and work together. Teams must think of organizations as a single entity and keep a growth mindset.
Culturally, organizations should be able to make decisions quickly and not succumb to analysis paralysis. When deciding, it is not necessary for a leader to have all the available information—they should be comfortable making decisions in ambiguity. Doing away with internal bureaucracy for agile decision making becomes essential.
The organizational structure should foster a safe space where employees may voice their opinions, even if there are disagreements. It’s important to have those discussions, but to come together to commit to the final decision. Strong leaders are nurtured when an organization upholds a culture of working together with the collective belief that a team can experiment and fail, but most importantly…learn.
To learn more, visit us here.