Is digital innovation the future for businesses?
- All Industries - | 26 Jan 2023
If the past two years taught us anything, it would be that black swan events such as COVID-19 have the power to push businesses to rethink, recover and rebuild. As the economy improves, businesses are pivoting their strategies, some rebounding from almost zero revenue and taking risky gambles in investments to be future-ready.
Singapore is welcoming a post-pandemic recovery, with most sectors including those that were hard-hit due to border closures and travel restrictions steadily recovering. While this seems like good news for businesses, there may be other disruptions in the future.
Companies need to be prepared for illness-related absences and shortened workdays. With fewer team members present, productivity may suffer, and staff burnout is also more likely. If unaddressed, businesses could be adversely affected. Transforming the business as if the pandemic is here to stay is one way to respond and adapt.
Slow shifts into digitalisation – what is to blame?
Contrary to the belief that COVID-19 accelerated digitalisation across all sectors, Singapore reported a slow take-up rate during the height of the pandemic in 2020. Digitalisation has repeatedly been shown to be crucial for businesses. However, for some, investments in digital transformation seemed to have been deprioritised during the pandemic.
A study done by the Association of Small and Medium Enterprises (ASME) and Microsoft showed that although 54 percent of respondents blamed COVID-19 for slowing their digital transformation plans, about an equal proportion (56 percent) mentioned that it was too costly to digitalise. Through industry chats, surveys and focus groups, IndSights Research also gathered similar sentiments that some companies were deterred by the high implementation and operational costs of information and communication technologies. Business survival and overcoming financial difficulties were businesses’ prime concerns in 2020.
To ease companies’ financial burden in adopting digitalisation, there have been constant rollouts of government initiatives, subsidies and projects.
According to a survey conducted by IndSights Research between April and June 2022, one in two Singapore companies believed that innovative or digital transformation was moderately to extremely important for growth in the next five years.
However, from our chats with business leaders, some shared that many digital systems and platforms were not industry-tailored, rendering them less optimal for business operations. Promising systems may be too costly or not covered by government aid. Furthermore, there is a need to upgrade employees who lack the skills, knowledge, and time to integrate these systems into their work. Although it appears that businesses understand the need for digital platform services, their implementation has not yet kept pace with Singapore’s plans for digitalising businesses.
To drive tech adoption amongst companies, a mindset shift is necessary. First, firms must see digital innovation and implementation as a cost-saving investment. While adopting technologies can be financially taxing on resource-constrained companies, doing so propels them to stay ahead in the game. Companies that explore innovative ways to incorporate tech into their products or services will also be able to provide new and interesting offerings for their employees.
Second, firms must also cultivate a workplace culture that embraces digital transformation. Consulting firm McKinsey found that the main bottleneck in digital transformations is the lack of a strong and common culture. Unsupportive leaders are more likely to impose a top-down approach to their management styles, leading to employees holding back their thoughts. The lack of interaction and communication can slow down the progression of the business.
Rising operational costs is another common concern for all industries in Singapore. The budget needed for a company to digitalise can be substantial; it would inevitably be expensive to replace existing infrastructure and overhaul security practices to integrate technology into existing systems. Yet, despite rising operation costs, and combined with the cost of digitalisation, most security companies are still profitable. Two-thirds of the security firms polled from July 2020 to June 2022 cited that they were profitable in the Financial Year 20/21, higher than the overall average of only 57 percent for all sectors. Perhaps this may quell the worries of employers that investing in digitalisation will compromise profitability.
Jumping employees, jumpy employers
Manpower is the lifeline of any organisation. However, with employees and job seekers now prioritising work-life balance, good compensation and learning opportunities, it is causing tremors in the employment market. The “Great Reshuffle” and recent tech layoffs are some of the many disruptions that are creating demand for a cultural and digital transformation. A company that struggles to adapt to these changes risks falling behind competitors. Through its regular discussions with businesses, IndSights Research found that business leaders in Singapore are under pressure from job searchers’ shifting attitudes toward employment.
Digital transformation may provide companies with opportunities to meet the challenges of the fast-changing expectations of its workforce, including:
- Streamline and automate certain processes, granting employees the prospects of a better work-life balance
- Refurbish job scopes and provide advancement options, affording employees compensation discussions
- Create development plans for employees to upgrade and upskill, preparing them for new tasks and responsibilities
It is crucial for employees to hone digital skills and advance their careers, amid strong demand for digitalisation and a digitally informed workforce. Education Minister Mr Chan Chun Sing has advocated for businesses to recognise how business transformation can affect workforce transformation and vice versa.
While it is important for companies that are looking to boost headcount to employ digitally-savvy workers, instilling an environment that supports and encourages this, specifically in digital innovation, should be prioritised as well. Companies that wish to act upon new digital opportunities can consider the Rapid & Immersive Skill Enhancement (RISE 2.0) programme, which was created to help businesses improve productivity and optimise operations with lower costs.
Two-pronged approach for setting digital transformation in motion
While the talent market ebbs and flows, consumers are also adopting different behaviours and habits. Strategies to connect businesses to their consumers should not be taken lightly. According to Forbes, consumers appreciate businesses that provide omnichannel platforms to do their purchases, a multitude of payment methods and different outlets to communicate with the brand more directly.
Nurture learning in employees
As employees are placing bigger importance on development, companies need to follow suit or risk losing their talents. According to Salesforce, 64 percent of Singaporeans feel unprepared for the digital skills their workplaces ask from them and 71 percent feel unequipped to learn and develop themselves.
To support and empower Singaporeans and close the digital skills gap, the Government has worked alongside companies like Google and Meta to launch various upskilling initiatives. Companies can also tap on government grants and support for digital development plans and needs, such as the Enhanced Training Support for SMEs which covers up to 90 percent of training course fees for employees and the SkillsFuture Enterprise Credit (SFEC) that funds the digital transformation of your business. Such investments to offset manpower constraints are imperative for a collective economic recovery.
READ MORE: Business grants and initiatives resources
Understand customer needs
Customer data has increased in value over the years, with firms capitalising on business intelligence to better understand consumer behaviour to create exceptional customer experiences. Knowing exactly what consumers are looking for provides improvement opportunities. Therefore, companies must maximise their usage of digital platforms for their customers, thus improving customer engagement, driving business productivity, and allow businesses to collect insightful customer data.
At the same time, encouraging customers to use the technologies the business operates on is pivotal in providing a phenomenal user experience because the business can now better understand customer behaviour and needs. Take for instance Grab, which used to be just a taxi-hailing app.
Over the years, it has grown into a Super App, an ecosystem of apps within itself, powering everything from ride-sharing to e-commerce. Grab’s approach? It tries to address its consumers’ pain points and needs through the additional services and invests in user-to-app awareness and education.
A significant advantage of digital platforms lies in their ability to gather data. IndSights Research reported in its Apr-Jun 2022 Business Sentiment Survey that 67 percent of companies used digital platforms for logistic services, 44 percent used them for F&B delivery services and 29 percent used them for point-to-point passenger transport services. With adoption of such digital platforms, businesses can now easily collect useful customer insights. Making full use of the technologies allows businesses to mine more such data over time, creating access to information that can be used for specific actions. With proper planning and a head start in data collection, organisations can gain a competitive advantage.
When companies are laser-focused on upgrading themselves and their services as technology advances, there are endless possibilities for innovation, transformation and growth. True digital innovation is not about investing in the latest technology or system for the sake of it. Rather, it requires the right mindsets, beliefs and attitudes that can ensure the organisation as a whole truly benefits from the value that digital transformation can bring.