accenture being digital fast forward report 2015 (1)

8/9/2019 Accenture Being Digital Fast Forward Report 2015 (1)

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Being digital Fast-forward to theright digital strategy


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Strategies for speed 3Strategies for success 4

The strategy paradox 8

What makes digital leaders dierent? 9

Where next? 10

About the research 11

Contents


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3Being digital: Fast-forward to the right digital strategy

1 Source: Accenture Strategy Executive Research 20152 Ibid

Today, business leaders recognize that digital technologies

create new threats and opportunities. In the latest Accenture

Strategy research among 700 business leaders in the EuropeanUnion, United States, China and Japan, a majority identified

large digital players or start-ups as the greatest competitive

threat to profitable growth.

Finding the right competitive response is complex. Digital

technologies change everything—from customer expectations

to distribution channels and production methods. The scale of

change creates a sense of urgency. Investors readily recognize

the potential, assigning multi-billion-dollar valuations to digital

pure plays that are little more than a strategy and a few initial

customers and capabilities.

Business leaders have aspirations for their organization to

be a “digital leader” in their particular industry. And while just

19 percent believe they are already a digital business, 59 percent

plan to become one over the next three years.1

Aspirations are not necessarily translating into actions. The majority

of business leaders (55 percent) said they do not yet have an

enterprise-level digital strategy to support their corporate strategy— and a high proportion of those that do have a strategy are uncertain

that they have the right one. Clearly, historical approaches to

digitize strategies are missing the mark.2

This report is one of a series offering pragmatic advice on how to

embrace digital to not only compete, but also drive new value to

help businesses grow. As business leaders seek to rapidly respond

to digital disruption, having the right digital strategy to compete

and win is the new imperative.

Strategies for speedBusiness leaders are uncertain that they have the right digital

strategy. It is time to stop assuming that digital is an adjunctto current strategies and plans. Competing in a world shaped bydigital technologies requires a fundamentally dierent approachto how strategies are developed and executed.

Executives want their organizations tobe digital leaders in their industries.

http://www.accenture.com/us-en/Pages/insight-being-digitalhttp://www.accenture.com/us-en/Pages/insight-being-digitalhttp://www.accenture.com/us-en/Pages/insight-being-digitalhttp://www.accenture.com/us-en/Pages/insight-being-digitalhttp://www.accenture.com/us-en/Pages/insight-being-digitalhttp://www.accenture.com/us-en/Pages/insight-being-digital


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4 Being digital: Fast-forward to the right digital strategy

Strategies for successStrategy is the discipline of setting a direction, lining up resources

and executing commitments. Digital disrupts business strategy.Possibilities opened up by new technologies reduce the reliabilityof proven practices and approaches. Business leaders must considera new strategic approach.


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3 Source: “First Wal-Mart, now IKEA Insurance?” Insurance Business , October 2014, http://www.insurancebusiness.ca/news/first-walmart-now-ikea-insurance-182541.aspx 4 Source: Celent report, “A Scenario: The End of Auto Insurance, What Happens When There Are (Almost) No Accidents,” May 20125 Source: Accenture Strategy Executive Research 20156 Source: UconnectTM website, https://www.driveuconnect.eu/en/home7 Source: “Defects, a vanishing species?” Pictures of the Future, October 2014, http://www.siemens.com/innovation/en/home/pictures-of-the-future/

industry-and-automation/digital-factories-defects-a-vanishing-species.html

Multi-speed—Moving quickly in thesame directionIn the past, orchestrating transformation was the norm, requiring

everyone to act together. This approach works when organizations

drive change from the inside-out. Digital drives change from the

outside-in—and customers do not wait for organizations to be ready.A multi-speed strategy recognizes that each part of the organization

needs to move at a different pace, but in the same direction.

Take the situation facing a multinational insurer. New distribution

models offered by organizations such as Walmart and IKEA challenge

the current business.3 New “customers” in the form of autonomous

cars may threaten future premiums by up to 80 percent,4 while

other technologies could create new opportunities for growth—

insurance on household robots assisting the elderly, or commercial

risk management for distributed manufacturing using 3D printing.

Multiple challenges occurring at different rates require strategies

that work across different time horizons:

• Optimizing the current business (the current core) to

fuel future growth investments: For example, one insurer

redesigned operations and customer experiences across digital

and physical channels resulting in improved market share.

• Evolving new capabilities (the new): Another insurer built a new

analytics-enabled offering focused on preventing customer health

issues, instead of paying claims after an incident has occurred.

• Inventing the future (“the new, new”) business: A range ofinsurers are proactively engaging with technology companies

that drive innovation in robotics and the Internet of Things.

They seek future revenues from ensuring future technology

innovations are safe for business and society.

Multi-layered—Changing from experienceto infrastructureWorking at multiple speeds requires executing across multiple

layers. Traditionally, organizations are vertically oriented, aligning

resources against specific market-geographies or product lines.

Digital technology cuts those layers horizontally along customer,enterprise and infrastructure lines.

Our research shows that nearly two-thirds of businesses have a

digital strategy to address the customer experience, while less than

one-half have a digital strategy to address the digital enterprise.

Meanwhile, 40 percent of business leaders said they have a

strategy to address the Internet of Things, which is becoming the

future infrastructure for commerce.5 Examples of organizations

successfully addressing opportunities within these layers include:

• Digital customer strategies: Fiat Chrysler is creating new

connected services that change the ownership experience.

Its UconnectTM Live Internet-based infotainment and diagnostic

services help drivers remain focused on the road.6

• Digital enterprise strategies: IT lies at the heart of banking,

and one multinational retail bank is using technology platforms

to create efficiencies now to enable future growth through

new business models. The bank adopted a mind-set that sought

to emulate the success of Alibaba—which created the world’s

largest eCommerce platform and identified a set of platforms

that enable it to be part of the future of banking.

• Digital operations strategies: Technology advances blur

the boundaries between the digital and physical worlds,

transforming production processes and creating an Industrial

Internet of Things. Siemens is an early adopter with its

electronic control systems factory in Amberg in Germany, where

products give instructions to the machines producing them.7

Maximizing the potential of digital business will require strategies

that, over time, address all layers of the organization.

One direction, multiple speeds and layers

In a fast-changing world, the value of clarity has never been higher.Business leaders must meet the dual challenges of operating today

while transforming for the future by executing strategies at multiplespeeds and across multiple layers. It is not a matter of whetherorganizations will be digital, but a case of when and how.

1

http://www.insurancebusiness.ca/news/first-walmart-now-ikea-insurance-182541.aspxhttp://www.insurancebusiness.ca/news/first-walmart-now-ikea-insurance-182541.aspxhttp://www.insurancebusiness.ca/news/first-walmart-now-ikea-insurance-182541.aspxhttp://www.insurancebusiness.ca/news/first-walmart-now-ikea-insurance-182541.aspxhttp://www.celent.com/reports/scenario-end-auto-insurancehttp://www.celent.com/reports/scenario-end-auto-insurancehttp://www.accenture.com/us-en/Pages/insight-being-digitalhttp://www.accenture.com/us-en/Pages/insight-being-digitalhttps://www.driveuconnect.eu/en/homehttps://www.driveuconnect.eu/en/homehttps://www.driveuconnect.eu/en/homehttps://www.driveuconnect.eu/en/homehttp://www.siemens.com/innovation/en/home/pictures-of-the-future/industry-and-automation/digital-factories-defects-a-vanishing-species.htmlhttp://www.siemens.com/innovation/en/home/pictures-of-the-future/industry-and-automation/digital-factories-defects-a-vanishing-species.htmlhttp://www.siemens.com/innovation/en/home/pictures-of-the-future/industry-and-automation/digital-factories-defects-a-vanishing-species.htmlhttp://www.siemens.com/innovation/en/home/pictures-of-the-future/industry-and-automation/digital-factories-defects-a-vanishing-species.htmlhttp://www.siemens.com/innovation/en/home/pictures-of-the-future/industry-and-automation/digital-factories-defects-a-vanishing-species.htmlhttp://www.siemens.com/innovation/en/home/pictures-of-the-future/industry-and-automation/digital-factories-defects-a-vanishing-species.htmlhttps://www.driveuconnect.eu/en/homehttp://www.accenture.com/us-en/Pages/insight-being-digitalhttp://www.celent.com/reports/scenario-end-auto-insurancehttp://www.insurancebusiness.ca/news/first-walmart-now-ikea-insurance-182541.aspx


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8 Source: BMW website, http://www.bmw.com/com/en/insights/corporation/bmwi_ventures/index.html

When a telecommunications company faced diminishing

returns from its core activities for business customers, it sought

new opportunities for revenue growth by focusing on digital.

The company took a portfolio approach to these growth “bets”

by evolving its core digital product and service portfolio, and by

seeking out new market opportunities for new types of digital

products and services. In total, the company identified several

hundreds of millions of dollars in business growth potential.

Digital leaders establish new governance mechanisms to manage

multiple growth bets and their associated risks alongside today’s

demands. One way that a large bank is managing growth alongside

the traditional business is through the close alignment and

cooperation of three key executives with specific roles. The CEO

assumes the role of the “banking entrepreneur” and balances

risk and business viability with sustainable profitability. A newly

appointed CDO is the “digital entrepreneur,” with the emphasis on

anticipating customer needs and setting the overall digital agenda.Finally, the CTO or CIO is the “technology entrepreneur” who is

responsible, among other things, for creating the open, scalable

and flexible platforms that support the digital strategy.

Another way to manage growth bets is separating them

organizationally and financially from the core business. German

automotive manufacturer, BMW, has set up BMW i Ventures to

identify and grow start-ups in the area of mobility services. In

particular, the company is aiming to “improve personal mobility

in urban areas.” Investments from BMW i Ventures range from

electric vehicle charging solutions to car park sharing apps.8

Several horizons, sequencing multiple bets

There is no one path to becoming a digital leader. Success ebbsand ows with changing customer expectations and technology

capabilities. These variables reduce the eectiveness of multi-yearinvestment horizons leading to strategies based on sequencingmultiple bets on the future.

2

http://www.bmw.com/com/en/insights/corporation/bmwi_ventures/index.htmlhttp://www.bmw.com/com/en/insights/corporation/bmwi_ventures/index.htmlhttp://www.bmw.com/com/en/insights/corporation/bmwi_ventures/index.html


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Rapid cycles of test and learn strategies have been used for

some time now in optimizing product offers in eCommerce.

One leading eCommerce store, for example, can automatically

create and test more than 4,000 page variations and can optimize

the customer response dynamically through rapid, hypotheses-

driven experimentation.

Executing through intelligent experimentation is more than trial

and error. It requires developing hypotheses, building prototypes

to rapidly test the hypotheses, advancing what works and

learning from what does not.

Direct actions, experimenting intelligently

Executing an eective digital strategy is characterized byshort cycles between direction setting and direct actions—

the equivalent of a marathon in sprints. Experimentationis central to quickly verifying and rening ideas in theface of changing demands.

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The strategy paradoxLeading in turbulent times requires an apparent paradox—having clear

goals and ambitions without knowing the totality of action requiredto achieve them. Here is the essential challenge for digital strategiesthat set one direction, work at multiple speeds and layers, and executethrough intelligent experimentation. Such a combination is challenging,which may explain why few business leaders believe they have theright strategy for digital business today.


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9 Source: Accenture Strategy Executive Research 2015

Growth focus Digital leaders set digital strategies

for revenue growth and new businessmodels—while followers focus on xingthe short-term cost and eciency issues.

AgilityDigital leaders organize for speed andadaptability. They appoint senior leaders,they create new digital governancestructures and leverage external partners—while followers treat digital investments asfunctional issues and prefer to “go it alone.”

External empathy

Digital leaders are proactively andprovocatively engaging customers and

start-ups—while followers tend to reactto incumbents’ digital eorts.


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What makes digital leaders dierent?Accenture Strategy asked business leaders about their approach to

digital strategy and found dierences between those with the ambitionto be digital leaders and those with a fast follower or “wait and see”attitude. The digital leaders demonstrated three core dierences: 9

http://www.accenture.com/us-en/Pages/insight-being-digitalhttp://www.accenture.com/us-en/Pages/insight-being-digitalhttp://www.accenture.com/us-en/Pages/insight-being-digital


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Where next?Build digital strategy condence and competency

by keeping the following factors in mind:

Think in actions, not just ambitions

An implementation mind-set that prioritizes value is at the heart of digital

strategy. Be thoughtful and be considered, but do not think you can wait

by being a follower.

Win through a series of sprints

Match the external rate of change with your internal ability to changeby being too focused to fail. Executing multiple initiatives enables success

to become viral via frequent bursts, which is the essence of agility.

Embrace change at the edge

Customer experience occurs at the edge, the front line, not in the back oce.

Enable the front-line workforce to adapt new ways of working in real time,

blending human and digital resources and frequently experimenting.

Place a premium on results and experience

Turbulent times churn through good ideas. Be prepared to identify failure—

understand what to pursue and when to move on. Reckon on disregarding

80 percent of ideas to be free to nurture the ones that deserve to grow.



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Contributors

Ryan McManus, Piercarlo Gera, Narry Singh,

Jouni Hakanen, Mark Halvorsen, Clemens Oertel,

John Cassidy, Emmanuel Jusserand, Gionata Tedeschi,

Miguel Vergara

Authors

Bruno Berthon

[email protected]

Mark Pearson

[email protected]

Mark McDonald

[email protected]

About the research

Early in 2015, Accenture Strategy interviewed 700 business leadersin the United States, China, Japan and the European Union. We wantedto understand how business leaders and policy makers can take advantageof digital technologies to accelerate growth and competitiveness. Inaddition, we sought the views of more than 2,500 European employeesin ve countries—France, Germany, Italy, Spain and the United Kingdom —on the impact of digital technologies on the future of work.

Join the conversation

@AccentureStrat

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Copyright © 2015 Accenture

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not be viewed as professional advice with respect to your business.

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The use of such trademarks herein is not an assertion of ownership of such trademarks

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between Accenture and the lawful owners of such trademarks.

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and governments. The company generated net revenues of US$30.0 billion for the fiscalyear ended Aug. 31, 2014. Its home page is www.accenture.com

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accenture being digital fast forward report 2015 (1)

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