Digital Transformation – Build or Die

By Dr Nkululeko Sibanda

Most companies in the developed world have competitive advantage over their counterparts in the developing world due to the type of digital applications they use to support their value propositions. Gartner, in their Insuretech report of 2021 on the disruption of the traditional insurance business, notes that most developing world insurance companies are stuck with inflexible models that are largely irrelevant and force them to continue offering archaic products.

If we take this view, the next question is “Why it is so?”. Is it information disparity between these two worlds? Is it the leaders of these businesses that are propping up and perpetuating this narrative because of their backgrounds and training in large traditionally risk averse fields such as banking and accounting? One might argue that the developed world is endowed with vast skill sets and advanced technologies. (Identify the relevant skills sets here I.e broad area to specific certifications)

 In Zimbabwe, there is a serious shortage of talent in the tech space because these developed companies are mopping up all the talent and allowing these skills to work remotely for hefty packages. (What is the average salary in the DigiTech field in Zim compared to the countries that have mopped up the talent?)

At the height of the Covid 19 era, most big companies in Zimbabwe lost a lot of techies to these progressive institutions.

 This leads me to posit that talent is like capital, it flies to where it is most valued. On a deeper level, it just shows that the developed world companies are more open minded and allow their businesses to morph at the same frequency with consumer tastes; regulation and demographics whereas the opposite is largely true of businesses in the developing world.

I therefore posit that what has made global businesses remain relevant and profitable for so long is that they abandoned the 1950s model of fighting competition head on using conventional means, which are:

1. Acquiring cheap, untalented skills
2. Buying off the shelf applications
3. Having static ( tried and tested ) business models (traditional)

They do the following things very well:

1. Hire skilled people and   do not tell them what to do or how to do their jobs.
2. Do not buy off the shelf applications or outsource development
3. Allow business models to follow and at times be ahead of the market (experiment)

Talented people do not come cheap. When they are not compensated well, they tend to do just enough to earn their keep, which leads to business stagnation. In the ICT space, this can manifest in personnel just following instructions and not innovating new products. Top talent also demands the best tools on the market and these are very pricey. The upside though is that the solutions they come up with are cutting edge and light years ahead of competition, which creates a blue ocean for the company. If properly monetized, some of the solutions can be distributed to competitors for hefty fees and bring back insights through embedded analytics features. Competitors will always be playing catch up.

Off the shelf applications are a product of legacy and decades of development. By the time they are widely distributed, they would have already reached their sell by date and are inflexible. Take, for example, the major office accounting packages such as……. on the market. They are similar and do not offer any real competitive advantage as all players use them the same way. In most cases, these applications  lock out third parties and are therefore not extendable or customizable in-house. This becomes a huge impediment for any digital transformation initiative. Not to take away credit, they are very good tools for the initial steps of digitization and digitalisation but do not facilitate digital transformation. They do not accommodate new use cases easily and in so doing, lock the business down to one way of doing things or delivering value to the customer, yet we all know that customer preferences and tastes are constantly changing.

The only way out of this rut and for businesses to keep ahead is by building their own applications that are adapted to their specific needs, at a particular point in time. This is only possible by adopting the “Build or die” mentality. Kodak and Blackberry were at one point corporate giants but note that they have been relegated to the dust bins of history. Some would say their philosophies did not develop them for permanence due to inflexibility.

In the Industry 4.0 age, the age of digital transformations and the Internet of Things (IOT) a company’s ability to integrate to other  platforms is now a need, not a want. Companies should realise and fast that change is the only constant and if they are to stay alive, they need to develop internal capacity to build their own applications (“Build or Die”).They now more than ever need to have that proverbial element of surprise of bringing to the battleground weapons and tools not available to competition, which were internally developed and sharpened.

(How should they build skill sets, how should they retain it?)

New business models should also be developed for each new product or value proposition. This is only possible if the company has its own mechanisms for supporting that process. This can take many forms but the most plausible two among many are:

1. Changing the team to deliver each new product. This removes the cultural inhibitions, the generational nuances and organisational politics that characterise defenders of the traditional models. In Zimbabwe this is aptly summed up by the famous cliché that runs …”At XYZ Pvt Ltd  this is how we used to do it…” or “It will not work”. Of course we will never know if it will work if we do not try it. The most dangerous people are those that will hasten to say “if it will not bring the desired results this side of the year, then let’s not do it”. I am proposing a team that was not brought up or trained to prop up traditional models as they need a lot of convincing and tend to drag everybody back.
2. The business models should be crafted based on where the market is going (predictive analytics) not where it is or was, which is what informed the current model. Companies should always be seeking to disrupt themselves so that they are not caught flat footed. For example, the traditional insurance model is based on “fear of loss” i.e. clients insure themselves to ensure protection against loss, but the market has since moved on and focused on wealth creation; preservation and convenience. To that end, the value propositions, the distribution channels and stakeholders must of necessity change to reflect this. It is imperative that insurance companies must redefine their models. The extension of that is that legacy applications that support insurance businesses are now irrelevant and should be replaced by open structure, custom built ones that resonate with current business needs and future growth.

Lemonade is a multibillion dollar, Insurtech Company that took an outward-inward approach and built custom applications with multiple touch points to deliver products globally to customers in the comfort of their houses, during their daily activities (embedded insurance) and running a remote claims pay-out process. (What is the global claims payout turnaround average compared to Lemonade?) An experience which is a dream for consumers of similar services in the developing world.

After everything is said and done, every business in the developing world and even laggards in the developed world must adopt the build or die philosophy if they are to survive and stay profitable into the future.  

Dr Sibanda resides in Harare and can be reached via linked in (https://www.linkedin.com/in/dr-nkululeko-sibanda-dba-cisa-cism-cgeit-crisc-pmp-mcom-74813215/) or more directly via email on nsibanda75@gmail.com

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