When undergoing digital transformation, don’t just think digital – think ‘bionic’

“Digital transformation” is one of those catchall terms whose original meaning has gotten muddled over time, but it’s apparent that the need for effective tech use is more important than ever.

A 2020 whitepaper by management consulting firm Boston Consulting Group (BCG) noted that digital leaders are racking up earnings growth that is 1.8x higher than their “digital laggard” counterparts.

For Darren Yuen, a senior knowledge analyst at BCG, the move toward digital isn’t about adopting tech for the sake of it. “Going digital” is a strategy for the future that would see a business get “more agile” where it counts so it can focus on innovation and product development.

“For a company to be digitally transformed, it doesn’t mean all parts of transformation need to be digital,” he says. “It is sufficient to have some digital components as long as they’re meaningful and impactful.”

Darren Yuen, senior knowledge analyst at BCG / Photo credit: BCG

Despite its cultural ubiquity, a successful digital transformation isn’t that easy to come by. Even big name companies such as Ford and Nike have seen their efforts and heavy investments flounder in the face of poor economic circumstances and strategies.

Recent BCG research found that though most companies want to digitally transform, 70% of attempts fall short of their objectives.

Yuen shares that in his experience, a quarter of all projects don’t even register any sustainable change.

“Two to three months later, we’re right back where we started,” he adds.

Forgetting the human part of the equation

There are a number of reasons why only 30% of digital transformations succeed, but one factor crops up again and again: the lack of leadership.
It’s surprising to hear that many projects fail because of the lack of leadership commitment – especially when surveys among top management repeatedly reveal that digital transformation remains high on their list of priorities.

However, Yuen shares that leadership in many companies mistake digital transformation as just a matter of adopting new technologies, whereas the most successful attempts have put as much focus on the “human element” of the process.

This means finding ways in which a company’s leadership sets the so-called “tone from the top” and aligns its digital aspirations with its business’ existing goals and culture, as well as the talent that make up the company’s middle and foundation.

Photo credit: Headway / Unsplash

According to BCG research, early and aligned planning is key to any digital transformation project and could spell the difference between failure and success.

“Organizations often become too focused on having the organization itself be digitally transformed while forgetting to consider that the ‘human’ element is also a crucial part of the company,” he says.

When an entire company’s human talent pool has bought into the business’ need to digitally transform, the roadblocks and the reluctance to make difficult but necessary changes can ease – and that’s where the magic happens. Yuen says that employees will then feel more ownership and claim responsibility for ensuring that their company’s digital transformations succeed.

Thinking like a startup

This is a phenomenon that is more common to see in startups. Generally speaking, startups and smaller enterprises tend to fare better when it comes to building a culture of digital transformation because transformation is embedded in their DNA, driving them to continuously come up with “business-led modular technologies and data platforms,” as Yuen puts it.

“Their talent is more driven, and they belong to a group of people who are embedded in that sense to drive transformation by themselves.”

Of course, as startups grow in size and scale, they will face the same issues bigger corporations do. A bigger talent pool tends to lead to distance between on-the-ground workers and the management – and thus more resistance to transformation.

However, Yuen says that startups have an advantage because they don’t see transformation as just phases to get through. In a sense, for them, that wave of transformation never really ends.

Instead, startups – especially digitally native ones – focus on an alternative strategy of highlighting the power of human talent to bolster the potential of technologies and vice versa.

These “bionic companies,” as coined by BCG, view both components to be integral to achieving superior outcomes. Digital technologies are going to be key to a sustainable future, but humans bring the much-needed creativity, skill, and innovation that computers can’t match. Both, in essence, are needed to make the products and platforms that we enjoy today.

One such business that has successfully integrated a bionic approach is Chinese technology company ByteDance, which Yuen says has become the rare example of an “open-closed bionic company.” In such companies, the value isn’t in a specific product but in the company culture, which can continuously find problems that need solving in order to “create purpose and objective” that can be transformed into a product or revenue stream.

Photo credit: ByteDance

TikTok, for example, was born out of a mission to inspire creators and foster interaction between people. Similarly, ByteDance saw a hunger for a personalized news source, which eventually led to the company’s hit news platform Toutiao. Both these platforms leverage transformative technologies such as artificial intelligence, but are very much still driven by human talent.

Yuen says these successes were the result of a company culture that views the human element as central to its digital transformation and responds in kind by investing heavily in its employees.

“It goes through serious headhunting; it doesn’t delegate. The company makes heavy investments so these employees are able to meet these expectations. Everyone is encouraged to contribute to the company’s purpose, and they are very open in terms of feedback and recognition,” he shares.

The bionic difference

In comparison, traditional companies tend to think of “digital transformation” only as having the most up-to-date systems – and that shouldn’t be the case, says Yuen.

“You need to have talent, and this is why a lot of unicorns integrate their talent and hires [with their systems] to ensure they are constantly improving and transforming what their businesses do,” he explains.

Southeast Asian companies have traditionally underperformed compared to their American and European counterparts due to their tendency to wait before adopting new technologies like 5G connectivity.

“We all know that 4G to 5G is going to be one of the larger drivers of digital penetration,” he says. “We have bigger telcos in Korea and Japan, and even in the US, that have already started because they know that change is necessary. Change is going to add a lot of value in the future.”

Yuen says Southeast Asian companies tend to lean in the other direction by over-relying on their human talent pool to make up for what they lack technologically.

The imbalance between the human and tech elements in Southeast Asia shows that if companies in the region start thinking like bionic companies by evening out the mix, they could reap serious rewards in the near future, like telecommunications firm Singtel did when it began moving into selling digital products.

Over the years, the Singapore-based telecommunications firm has expanded into new revenue streams beyond its original industry. For instance, it established a relationship with insurance provider AIA with whom it launched a wellness app and various micro-insurance plans.

Financial services has been another notable focus area for Singtel, which owns the popular Dash e-wallet and whose consortium with ride-hailing firm Grab recently won one of Singapore’s first digital banking licenses.

Singtel’s and ByteDance’s strategies both signal their respective awareness of how digital transformations need to be done hand-in-hand with human-centric experiences.

And for firms that want to begin their journey to digitally transform into a bionic company, Yuen says it’s integral that they have not only “a clear purpose and strategy” to work toward but also a company-wide understanding that tech can’t come before what makes them human – it has to come with it.

The Boston Consulting Group partners with leaders in business and society to tackle key challenges and capture great opportunities, bringing its skills and experience to help companies blend technological capabilities with human potential.

To find out how bionic companies are meeting the challenges of a digital future, visit their website.

This content was produced by Tech in Asia Studios, which connects brands with Asia’s tech community. Learn more about partnering with Tech in Asia Studios.