China has proven to be an ideal place to experiment with cutting-edge digital apps. Many Chinese companies are digital-first enterprises that tactically test and tweak digital applications. A China CEO remarked during an IMA Asia forum meeting,
‘Most Chinese companies never talk about digitalisation; it is native to what they do. I have never met a Chief Digital Officer at a Chinese company. The title doesn’t exist. They spend little time strategizing digital and all their time experimenting. Chinese firms approach digitalisation from the bottom up; foreign firms are the opposite. They approach digital from the top down and seek to digitalise their legacy ways of doing business, which turns out to be ineffective.’
Chinese firms offer many customer-centric, fast-moving examples of digital transformation.
‘Chinese firms have everything related to the customer kept in one place and are data-driven 24 hours a day. What I see in MNCs is greater fragmentation and discord. Sales, commercial, marketing, these teams do not get along. I would encourage you to not look at your MNC competitor for digital ideas. They are not doing very well, either. Look at Chinese companies, and how they do it. There’s a lot to be learned, especially how to operate in a digital ecosystem and be close to customers.’
Learn from those that have gone before you
MNCs embarking on the digital transformation journey in China can learn from their Chinese counterparts. However, that is not enough for successful digital transformation in China. The experience of digital start-ups in China often is difficult to replicate. Digital transformation experts and executives who have initiated digitalisation shared a series of recommendations with their peers at a recent IMA China CEO Forum meeting. Outlined below are a few of the pointers that were discussed during the meeting
Digital transformation should start from the top
For many firms, having a leader responsible for a digital transformation program is a crucial first step. But merely putting someone with tech skills in charge is seldom the solution. It takes someone with a strong business acumen who is comfortable with technical complexity, but not overly enamoured with it either.
The ideal solution is to have business and technical experts offer a cohesive solution. That includes having digitally savvy people at the top and business-minded technical people throughout the team.
‘When I advise a new company, my first question is: who drives the transformation outside of the C-suite? Usually, it is a CIO or tech person who believes that technology is the solution. That checks the first box. The second question I ask is: who in the C-suite can explain the difference between edge and cloud computing? If no one at the top knows the terminology, who will guide the way?’
One consumer firm with a sophisticated digital presence decided to do away with a digital leader altogether. By embedding digital into everything a firm does, responsibility for digital then belongs to everyone.
Experiment with bite-size changes
Digital transformation does not require dreaming up novel, blue-sky solutions. Often, bite-sized digital changes can reveal what works or fails, without the risk of getting it massively wrong.
‘Give me market intelligence on the 10 best ideas that have worked in the market in similar or adjacent industries. Show me ideas derived from where the problem already has been solved. Then, I will challenge my technical genius to find the right solution for my company.’
Learn from others but don’t mindlessly follow
When B2B firms look to improve their core value proposition through digitalisation, they should not just copy their consumer counterparts. Industrial firms are using digitalisation to transform their businesses in their own ways.
‘In B2B, the core digital strategy is not about data mining for millions of customers because there may be only a handful of key accounts. B2B firms need to focus their digital efforts on four core initiatives:
1. Getting new products faster to market.
2. Developing pricing architecture and connected supply chains.
3. Optimising SKUs that match capacity with requirements.
4. Using IoT to manage predictive maintenance.’
Showcase digital advances to gain HQ approval
For many firms, convincing HQ that China offers unique digital solutions can be accomplished, but only with the right approach. The first step is to showcase existing digital advances in the market.
‘The biggest challenge we face is a lack of understanding of what China has to offer. Instead of playing the victim card, we spend time and effort with our local team to collect information and case studies about how China is leading the world. There are numerous instances where ‘digitally native’ companies are leading, and when we showcase these to our Chief Digital Officer, he listens.’
Click on ‘Deep Read’ at the top of the page to read more about how MNCs in China are leveraging digital tools to enhance their go-to-market strategies.