A recent research article on “Global Challengers Series” by Boston Consulting Group (BCG) says,
“Emerging-market companies have grown faster than companies in developed markets in most industries over the past decade. One big reason is their embrace of digital technologies. Nowhere is the trend toward digitization more evident than among the 100 companies that we call global challengers, many of which are leveraging digital technologies both to win in emerging markets and to compete globally with multinationals.”.
In this blog, we will see how these companies in emerging market creates their digital capabilities to scale up their competition at global level.
First, let us see some basics of Digital transformation which defines the levels of digital mastery of the corresponding organization.
Three Kinds of Players:
- Traditional operating companies who are strong in their value chain operations
- Follows old management practices which are hard to achieve competitive advantage
- Ford, Toyota & GM are typical companies of this style
- They are born digital, and provide product and service using digital technologies
- Limited focus for traditional management practices
- Tesla, Uber, OLA are some companies who fits in this type
- Pure play digital technologies offerings as their products and service
- Alphabet, Apple are some of the companies which fits in this type
Four Kinds of Digital Mastery:
- Reluctant in digital implementation
- “Wait-and-see” for others to implement and try to follow
- Who has basic digital capabilities
- Creates excuses for digital inaction
- No business strategy or digital leadership strategy to invest in digital technology
- Strategy less all stretch digital investment
- Irrational digital spends and excess wastes and repetition
- Highly useful digital leadership capabilities
- Digital investment is carefully considered and strongly coordinated
- Reluctant to make mistakes and the hence slow progress
- Massive and yet prudent digital investments
- Leadership commitment to scale the business digitally
- Looking for synergy opportunities in-organic digital growth
The three kinds of players discussed above follows any of these four kinds of Digital mastering strategy for their digital transformation initiatives.
Those who play in emerging market with a digital mastering role in all their digital transformation initiatives succeed in the competitions and be a global challenger. They systematically grow market share in digital space.
Digital masters are 26% more profitable than their industry peers and generate 9% higher revenue from their physical assets. Their digital transformation initiative helps to achieve combinational advantage of scale, scope and speed.
A few Strategies (Digital Transformation initiatives) of Emerging Market Players to become a digital master and a global challenger:
Building Strong Internal Value Systems through disruptive innovation and investment in research & development.
- This helps emerging market players to catch-up with developed market’s technology superiority
- Tata Consultancy Services (TCS) developed an in-house innovation centre, and developed Ignio a cloud based cognitive (AI based) automation model which provided digital services to TCS and its clients
By collaborating and co-opting with digital start-ups, technology leaders and digital giants, a huge ecosystem effect is created.
- This provides accelerated scale, scope and speed benefits to increase the revenue scale, product/service scope and immediate availability in the market advantages to the player
Merger & Acquisitions will provide synergy benefit to obtain tech capabilities for the non-tech companies.
- This enables emerging market players to produce value from its both traditional and digital capabilities.
These digital transformation strategies can bring values in terms of, improving business process, improving decision making capability and improving customer engagement. This also enables the emerging market players to create avenues of disruptive business model which challenges the global players in developed markets.
Cover Picture Courtesy: https://techobserver.in