Digital Winners Transcend
Technology
Successful digital
disrupters are good at solving bread-and-butter problems, attracting staff and
staying nimble.
For
all its technological advancement, Southeast Asia has only recently taken to
e-commerce. Thanks to the entrance of RedMart, an online grocer in Singapore
founded by INSEAD
alums, and Lazada (which recently bought RedMart),
an e-commerce giant owned by Alibaba, Southeast Asians are changing the way
they shop. Shipping speeds are starting to catch up with the American norm of same-day
delivery. Consumers are also getting better service by the day. Zalora, a
pan-Asian online clothing giant, lets customers return anything without any
charge or hassle through the postal service. The region is becoming so hot that
Amazon has entered the Singapore market, delivering diapers and beer at two
hours’ notice.
How
the digital organisations of the region are getting there, though, is with
tenacity that transcends clever platforms and flashy new technology. While
those are crucial ingredients, digital disrupters in Southeast Asia have to
take on the same bread-and-butter challenges that plague delivery businesses
throughout the world.
Shouldering
the burden
At
the recent INSEAD
Alumni Forum Europe in Paris, Max Bittner, the
CEO of Lazada, explained how the company thinks about the logistics challenge
in Southeast Asia. “Because of the complexity of delivering large, small, and
odd sized parcels like a couch, a watch or a shower curtain rod to say an HDB
[public housing] in Singapore, a house in a village in Sulawesi or a home in a
jungle in Thailand, we have partnered with more than 80 logistics companies
whose specialties cover all of our needs. However, early on, we realised that
we still needed to invest in building our first- and last-mile infrastructure
to complement these partners. As a result, we now have the biggest logistics
company in Asia, ensuring our supply chain is the best in the region,” Bittner
said.
His
comments reflected a growing need for capabilities in solving ordinary business
challenges among digital players: "We are really building one-stop shop
e-commerce, not just for consumers, but also for suppliers by trying to take
away the complexities they face in the markets. In the past, the fragmentation
of Southeast Asia, resulting not only from country borders but also diverse
cultures, languages and remote locations, has made it less attractive for
brands due to the complexity in understanding consumer behaviour and costs of
doing business. Lazada has provided a simplified end-to-end platform for brands
to access the region's six core markets regardless of their existing offline
footprint in these markets. We are putting everyone on a level playing field.
That is a core pillar of what we're trying to achieve."
An
issue of talent
Disruption
and digital transformation are not solely an issue for unicorns like Lazada.
Established companies must also reassess their digital
readiness. Regardless of company age or size, talent acquisition and
retention are paramount for transformation. Mark Dixon, Christel Heydemann
and Frédéric Mazzella, the other forum panellists, agreed with Bittner that the
best way to effect change is with new eyes.
Dixon,
CEO and founder of Regus, the multinational office space provider, explained
how his company approaches outsourcing: “The answer to a lot of the software
problems we have is Ukraine, Hungary and Romania. There are lots of programmers
there; they can do things in a fraction of the time, fraction of the cost.”
“Outsourcing,
an alliance of partners, good communication with those partners to say here's
our common goal” adds to greater success for Regus, he continued.
Schneider
Electric, the French multinational, has another issue facing established
players: bringing in new skills while securing the competence of an ageing
workforce.
“In
France,” Heydemann, CEO of Schneider Electric France, said, “more than 2,000
people will retire in the next five years.” Replacing the skills, the technical
expertise that has been built up over 30 years is one hurdle they face. But
Schneider Electric, like all companies, also has to attract new workers:
“Our biggest challenge is to attract and retain young talent.” Schneider has a
digital service factory, which is more agile and “more like where these new
generations would want to work. But the challenge is that we also need to bring
those talents in the core of what we do.”
The
newcomers aren’t necessarily outsourcers nor do they have the problem of imminent
retirees. A common thread is the outlook of employees in the face of
disruption.
Bittner
said there are two central factors about tech talent: Accept a lack of
perfection and create a sense of paranoia in them. On tech talent “there is no
way you can say ‘I want a data scientist who specialises in exactly the process
I want to optimise’. It's more about creating a culture of hiring very young
people and then giving them the freedom to express themselves and shine,” he
said.
Regarding
“paranoia”, Bittner described how disruption in the technology industry is not
a one-time event. Over the six years Lazada has been in business, it’s been
disrupted itself any number of times. Keeping all employees paranoid about the
competition, on their toes and ready to face any challenges is key for Lazada.
At
BlaBlaCar, founder Mazzella reported that “what's really important is that you
have a mindset, a culture that is agile and that can adapt, innovate.” At the
Paris-based start-up, they take agile into the physical world: “No one in the
company has had a desk for more than a year in the same place.” People may
retain their job but move to a different desk, or they could change job and
desk. Ensuring the company is an attractive place to work, with a focus on culture,
also helps to attract and retain talent.
Disruptive
agility
Solutions
to the problem of disruption vary from company to company. Mindset, supply
chains and business models have helped the panellists’ companies affect change.
I referred to a report from Deloitte called “Navigating the New Digital Divide”
which explained that there is no more gap, there is no more divide between real
and digital life.
Bittner
agreed, “The concept of offline vs. online is archaic. If you're online at a
store or at home, it doesn't make a difference. We're not living in a world
where you need to sit at home on a computer to be online. If I'm in a store and
I'm looking at my phone, what am I? Offline, online? It's very hard to define.”
“The
disruption here is less about my industry being disrupted. It's more about the
digital players, which are the Alibabas and the Amazons of this world, bringing
their expertise of using data and technology and tools to optimise the supply
chains within a department store. Or understanding through their data who the
consumers walking into the store are. Frankly, they should know who the
customers are and what they want before the customers even enter the store,”
based on information from WeChat and other apps.
Consumers
share their opinions on WeChat or Facebook or they write app reviews to
show what they need and how they prefer to get it. Digital transformation is
the convergence of technology and data to optimise processes.
Dixon
said, “We have to run our business like it's a start-up, like we were starting
it tomorrow. So everything we do, make it digital. How we interact with
customers, how we interact with our own people.”
“In
order to adapt,” Mazzella added, “you have to go back to the strengths of your
roots.” For BlaBlaCar, these roots are the ability to go anywhere at a low cost
with the help of a large community. This is a reflection of the core of the
company.
The
importance of supply chains – perhaps not the first thing that springs to mind
when discussing digital transformation – shone through during the panel.
At
Schneider, “our biggest strength is obviously our supply chain, that’s number
one,” according to Heydemann. “We are one of the top 20 companies for
supply chains. Number two is our network of partners. We have a strong
industrial software business with 4,000 integrators around the world.”
In
the digital age, “the biggest change is obviously that we can connect and know
better our customers and our partners. And we should serve them better using
digital technology, connecting them through the web, providing all the
technology available in the digital space,” she said.
For
Heydemann, a unique opportunity is the role of energy storage and renewable
energy. “The world of energy is becoming digital decarbonised and
decentralised. Everyone today is an energy consumer, everyone tomorrow can be
an energy producer, with solutions combining solar and storage. The biggest
revolution that's coming to Schneider Electric is energy storage and
decentralisation of how energy is consumed and produced.”
“Digital is, of
course, a fantastic driver for change,” Bittner said in his closing remarks,
but “don't be too scared of us. We have the same problems with teams and
motivation and incentivisation that everyone has.
Jean-Marc Liduena, Senior Partner and Leader of Consumer & Industrial Products at Deloitte (INSEAD MBA ‘99J) | February 5, 2018
Read more at
https://knowledge.insead.edu/blog/insead-blog/digital-winners-transcend-technology-8331?utm_source=INSEAD+Knowledge&utm_campaign=8079813a21-EMAIL_CAMPAIGN_2018_02_08&utm_medium=email&utm_term=0_e079141ebb-8079813a21-249840429#wIrHWhoy3VCDhurM.99
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