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What’s next in digital transformation?

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Digital leadership practices encompass five pillars.

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Free Malaysia Today

From Mudiarasan Kuppusamy and Murugappan Subramaniam

As widely known, technological evolutions have shaped and pushed the boundary of socio-economic transformation, with the fourth industrial revolution catalysing further disruptions and changes.

Digital transformation presents new opportunities for enterprises to digitally infuse their operations through new operating models and value propositions. Digital transformation is a push-and-pull phenomenon; it is imperative for both traditional and digital-native enterprises.

Policymakers worldwide are exploring ways to make the most of the new and unexpected digital transformation potential.

The Global Connectivity Index (2019) outlined the US$23 trillion (RM94.4 trillion) economic opportunity presented by the digital connectivity phenomenon by 2025.

A similar perspective applies to Malaysia, with Jendela’s (Malaysian Connectivity Action Plan) 100 Mbps mobile broadband and 5G connectivity access to nine million premises, and the recent announcement by the prime minister on MyDigital (the Malaysia Digital Economy Blueprint), underpinning the catalysing effect of digital transformation in the country.

With the higher-order transformation plan and initiatives, notable concerns are expected to be addressed to accelerate Malaysia’s digital transformation agenda.

First, while Malaysia’s overall digital adoption rate is high, the business sector’s adoption is relatively low. The World Bank’s Digital Adoption Index (2018) suggests Malaysians are among the most digitally connected in the world.

However, Malaysia’s business sector underperforms relative to peer countries. The country’s business sub-index stands at 0.55 in comparison with Singapore, South Korea and Japan.

Second, the Digital Entrepreneurship Ecosystem Map outlines various institutions in pushing digital entrepreneurship in the country. Various digital inclusivity entrepreneurship programmes such as eUsahawan, eRezeki, Global Online Workforce (GLOW), and Go-eCommerce facilitate lower to mid-income groups as well as small and medium enterprises to take advantage of the digital economy.

Nevertheless, there’s an empirical need to increase globalised Malaysian technopreneurs as well as Unicorns like Gojek, Tokopedia, Bukalapak, Grab, Sea, Lazada, Revolution Precrafted and VNG, to name a few, as seen within our neighbouring shores.

In addition, it seems rational to target a one-stop identity for digitalisation in Malaysia with the digital environment’s governance isolated and scattered, with multiple agencies spearheading different digital transformation components.

Although entry into the digital business domain is exciting, the multifaceted governance mechanisms raise concerns for sustainability.

Although the tangible facilitators are crucial, evidence suggests that digital transformation will be sustainable by focusing on the leadership aspect, primarily digital leadership.

Business leaders believe in the importance of digital business, but overwhelmingly they rely on investing in technology and tangible assets as the salve, while drastically underestimating the value of their people (Crandell et al 2016).

At the same time, efforts to introduce innovative thinking tend to happen on the fringes, rather than being woven into the organisation and scaled.

Harvard Business Review research supports the fact by showing that the greatest challenges facing companies aren’t access to superior technology alone but other aspects like top-down structures, an inability to experiment, limited change management capabilities, legacy systems, a risk-averse culture, and an inability to work across silos (HBR, 2016).

The notion of digital leadership implies the ability to make strategic changes in the structural embodiment, cultural rudiments, capabilities configurations, and maintaining proximity with customers. Lack of agile digital leadership, forward-looking skills, technology infrastructure, digital ecosystem and data management could lead to a failed digital transformation.

A similar connotation applies to the digital leadership landscape in Malaysia. There has been a lot of discussion about how the pandemic has pushed digital transformation in Malaysia. However, it is rather unfortunate that most digital transformation is happening at the operational level, such as adopting tools and applications for operational purposes, rather than in a wholesome strategic formulation perspective.

Organisational level digital transformation entails three strategic aspects of digital leadership.

Using data from 645 Malaysian corporations – profiled as 314 private limited and 331 enterprises of micro- (21%), small- (30%), medium- (24%) and large-sized corporations (25%) – we examined the leadership capabilities required across digital transformation phases.

We found that the role of varying leadership capabilities seems to be pivotal across the different phases of digital transformation journey.

First, leaders need to focus on cross-industry benchmarks in embarking on digital transformation. Having a high level of business objectivity and infrastructure is essential for change to take place. Nevertheless, organisations can understand their own organisation’s transformation capability (including resourcing requirements) through peer-level benchmarking.

This leadership practice broadens the horizon by drawing inspiration from other industries and envisioning whether disruptions are opportunities or threats. Scanning industry competitors alone may not present the best options, thus the need to do it vertically.

Second, digital transformation cannot shy away from data ecosystems. Leadership must work towards attaining an enterprise-wide data capitalisation by breaking down all inherent data silos that give a fragmented understanding of the business, its customers, and associated processes.

A sustainable digital transformation will see a company transitioning by optimising and integrating its databases to create digital ecosystems within and beyond its entities.

Data is the lifeblood for all digital endeavours as it extracts all the value needed to optimise operations, reimagine customer (both internal and external) offerings across the entire organisation’s transformation as well as for the future.

Third, a leader would need to empower and carry the role of the architect of digital transformation. A leader with a helicopter view of the organisation should enable others to run quick experimentation independently.

This leadership practice would lead to the deployment of the right technologies that will allow and facilitate transformation. Thus, with an emergent strategy, the free flow of information emanating from the empowered employees keeps them engaged, knowing that their roles’ output is critical to the overall strategic direction.

The fourth aspect of digital leadership is the trait of being a “humble” seeker. Such a digital leader keeps ears on the ground and has the humility to enquire with peers for any emerging technologies to overcome the potential challenges. This trait allows the digital leader to learn from peers while learning from others down the organisational hierarchy.

This humility provides a platform for allowing the strategic direction to have input from the lower-level executives closer to the operational issues. A digital leader practice here is akin to a “technology proactor” – a leader keen to establish trends and explore changes ahead of time.

The last aspect of concern is the practice of ethical data leadership. A digital leader must practise optimal data ethics in building the business’s digital resilience. Data ethics is about data used for the right processes without abuse.

Therefore, the ethical leader safeguards the company’s value by ensuring all aspirations are within legally acceptable confines. To this end, data governance needs to ensure that everyone understands how costly data privacy can destroy a business’s value.

 

 

Prof Mudiarasan Kuppusamy is a digital business advocate and specialist and is a staff member of the University of Cyberjaya.

Murugappan Subramaniam is a PhD candidate (final year) with Asia Pacific University (APU) specialising in Digital Leadership.

The views expressed are those of the writers and do not necessarily reflect those of FMT.

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