In a VUCA world that is 'volatile, uncertain, changing and ambiguous', businesses evolve as they continuously respond to their ever-changing ecosystem.
This conviction comes from Charles Darwin's seminal thesis that species survive when they constantly adapt to their changing environment.
Warren Bennis, a renowned management guru, made a prophetic pronouncement about the factory of the future:
"The factory of the future will have only two employees, a man and a dog. The man will be there to feed the dog. The dog will be there to keep the man from touching the equipment."
We would not want to go as far as Bennis does. But, we can surmise that in an era of digitisation, organisations will have to adapt along the following five dimensions if they want to retain their competitiveness.
FIRST, digitisation of their operations is a necessity. This will require technology platforms — digital algorithms — to conduct their operations — from supply-chain management through manufacturing to marketing and sales.
Algorithms, powered by artificial intelligence (AI), will digest mountains of data to give insights into consumer behaviour and on how to run an outfit with the least cost.
Indeed, these technology platforms allowed Netflix to deliver a superior customer experience. Its subscribers can find their preferred content amid a sea of options.
In his 2021 book Rethinking Competitive Advantage, Ram Charan, an influential management consultant, argues that digitisation has given companies such as Netflix, Amazon, Meta and Apple the wherewithal to grow exponentially.
Ram put paid to the traditional notion that internal competencies or the company's market positioning determine the ability of firms to enjoy extraordinary returns.
Digital technology enables these firms to think differently, scale up speedily and make quick and better decisions.
SECOND, companies will prosper if they direct their focus on their consumer. With the help of data analytics, companies should increasingly customise their products and enhance the consumer experience.
THIRD, the death of a competitor should never be a company's survival strategy. Traditional management philosophers, such as Sun Tzu, draw inspiration from war strategies.
However, in the digital era, companies would need to also collaborate even as they compete with one another. Take Microsoft. It competes with Google in online searches.
Yet, it collaborates with it in installing its Microsoft package on Google's android platforms.
As chief executive officer Satya Nadella says in his 2017 book, Hit Refresh: "Sometimes we have to bury our hatchet with old rivals, pursue surprising new partnerships and revive long-standing relationships."
FOURTH, a company will need digital-savvy leaders. Digital leaders will harness digital technology to create a future for their company that has never been imagined before.
If Jeff Bezos did not envision such a future for Amazon, he would still be an online book seller.
With technology platforms, digital leaders get a helicopter view of where the market is headed, and what consumers will want in the future.
They then use their powerful algorithms to generate innovative ideas and convert them into customer-pleasing products.
As they tenaciously reach out to consumers, digital leaders constantly measure whether their products add to consumer utility.
A culture of continuous innovation must replace incrementalism and short-termism.
FIFTH, given that digital algorithms speed up innovation and its execution, organisations cannot cling on to their top-down hierarchy. They cannot run their show in a command-control mode.
Small teams empowered to innovate and execute will be the emerging paradigm. Such empowerment will require digital-savvy employees to have the same laser focus as their digital leader on the consumer.
These employees will chase after the consumer experience. While AI is self-learning, businesses will need digital experts to refine their algorithms.
The experience of companies enjoying high profits with technology platforms holds promise for our small and medium enterprises (SMEs).
If our SMEs want to thrive in the marketplace, they too must harness digitisation. That way, they will be able to drive down costs while creating value for their customers.
The writer is the Vice-Chancellor, AIMST University
The views expressed in this article are the author's own and do not necessarily reflect those of the New Straits Times