“The impact is transformative over a period of time- if done correctly” Saad Khalid (CIO, M.M)
Organisations seek to grow. The formula for growth is interesting and one that any entrepreneur will want to decipher. Spend less time and get more out of it. Why would you want to do it any other way?
There is a path to business growth that is described as ‘linear’. This is the traditional model of growth that companies we all grew up with and are well established have followed. The growth pace is in increments as shown below:
Companies with linear growth offer goods or services to clients and consumers. These are then sold, this is the typical supply chain that we know of. In the 20th Century, companies with linear growth patterns dominated the market and became multinationals. They were the giants that dominated the market and kept competition to a limit. Coca-cola, Nestle, Phillips, Toyota and others are leaders in their industry and dominated with a steady growth pace. They are still relevant and make huge amounts of revenue.
Fast forward to today, and there are many new companies that have used technology and platforms to grow rapidly, however in a fraction of the time. We can book hotel rooms without ever contacting the hotel. The platform of Airbnb has fast made a mark in the tourist industry, a preferred choice for many who want to book last-minute or ahead of time. You no longer need to hail a cab from the roadside, you can have a driver at your doorstep in minutes. Uber has transformed the way we call a cab. Waiting for a new movie and queuing up for a copy of the DVD is long gone when we can stream or download it online. Life with technology is easier for the consumer. For businesses, the potential to grow rapidly using technology is also for the taking.
With the traditional linear model, growth is generally achieved by adding human capital or physical assets, or both. Value is created by controlling production. In order to sell more, investment is needed to expand capacity. This requires both physical assets as well as more employees. This costs.
The benefit of technology is that there is more space for companies that do not have huge revenues to invest with. More space means more competition. This is good for the customer. And for an entrepreneur, the need for large investments will be minimised and they can see a greater return. If the product is good and you can build a good network, you can make a lot of profits a lot quicker.
The benefits of digitalisation are that a company can experience exponential growth. Many of the companies that have grown exponentially rely on a network for their growth. For the network, you need a platform, for this, you need to harness technology.
Exponential growth is a process that increases quantity over time. The prediction being, growth to the power of 2. Double, quadruple, and so on. Year on year growth and profits will be greater.
How Does Digitalisation Lead to Growth?
Digitalisation can lead to exponential growth. The reasons for this are many and in the future, there may be more reasons.
- Processes improved, rate of error decreased
As processes are digitalised the quality of services and activities improves and the rate of error is decreased. An example is that an AI bot can be trained to respond to an array of queries from a caller and thereby saving time for both customer services and the caller themselves.
Every variable is taught to a bot and it can then be further trained to assist customers even better as new variants of a query may arise.
Feedback can also be attained at the press of a button immediately after an interaction. This can assist in improving processes in the future.
As processes are a day to day function when they are well organised and managed there is a benefit for a company to enable it to grow.
- Updated framework due to digitalisation
Digital transformation requires a formalised plan for when an organisation will make upgrades to its core systems and processes.
This plan will serve in enabling an organisation to be proactive and not be as susceptible to sudden problems or changes in the business landscape.
Any such change will also most likely be across the board and as such lead to transformation in all departments. This revamp will serve to allow the company to experience growth as the old way of doing things is looked at and realigned with technology. Problems will be solved and the opportunity to seek new areas of expansion are a result.
A case to explain this is well known to most readers, Netflix which was founded in 1997. The initial business model included DVD sales and rentals by mail. After about a year the focus was on DVD rental only. By 2007, Netflix introduced streaming media. It then expanded internationally, offering video on demand in Canada, Latin American and the Caribbean. Then in 2013, it started its own content production. By 2016 Netflix had expanded so much that it is currently operating in 190 countries. (https://en.wikipedia.org/wiki/Netflix). . Netflix is a prime example of a company that successfully shifted its business model multiple times and grew exponentially because of the shift.
At the same time, there are other companies that did not shift their model and depended on their name, for example, Blockbusters. Technology and times of economic strains globally have taken many to their demise.
- More work in less time
Automation of repetitive tasks or automation of tasks that need greater time to be completed saves time and increases the volume of tasks that can be completed. An example is Robotic Process Automation (RPA).
Imagine updating an invoice, in normal circumstances, this would be done manually or with the help of a formula that needs to be manually input. RPA is a tool whereby multiple tasks can be simultaneously undertaken due to technology. The speed of activity in some such tools can be that one device works to the speed of four. This is a greater volume of multitasking compared to an equivalent with human input. Automation of tasks means that work is being done without as much input, aside from the initial click of a button.
The speed of work being performed is a path to increase growth. In the old days of factories, multiple production lines would be added to the floor as a sign of growth. Now you can achieve multiple activities on a screen in a number of windows.
- Employees better utilised
No matter how much we advance it is clear that not all tasks can be automated and need the human touch. If technology is used in tasks that are mundane, repetitive and taxing on a human, employees can be retrained or relocated to tasks that can only be done by a person. Fully utilising employees reduces the costs of rehiring and filling up positions unless there is a need.
An organisation that uses technology and human potential in the optimal areas will grow at a quicker pace than where work is not being done in the most productive ways.
Conclusion
The transformation is dependent on adopting the correct strategy, starting with a clear road map for change. Self-evaluation or using a consultancy would be the first step. Implementation, the next. Revaluation and fine-tuning the activities would follow. And this is where an organisation will see its growth will follow the exponential patterns which will become more common as time passes.
Whilst organisations need to pave their path to transformation as a necessity of the times we live in, it is good to know that there is a great return on investment waiting.
