金柱boasting

DigitalChina2020:AnactionplanforChineseenterprisesContentsThedigitalgrowthdriver03Takingaction13Keychallenges10TurbochargingChinesegrowth192丨DigitalChina2020AnactionplanforChineseenterprises丨3ThedigitalgrowthdriverChinahasgrownitseconomybytakingadvantageofthecountry'sdemographicdividendandmakingsignificantcapitalinvestments.
AsChina'seconomymatures,thisapproachbecomeslessviable.
Asaresult,Chinahasshifteditsattentiontowardidentifyingnewwaystoimproveitseconomy'sindustrialproductivity-byextractinggreateroutputfromexistinglaborandcapital.
ImprovingproductivityiskeyIn2013,AccenturepublishedadetailedanalysisofChina'spastandfutureeconomicdrivers.
ThereportshowedthatChina'spreviouseconomicgrowthwasdrivenmainlybytwoproductionfactors:largesuppliesofinexpensivelabor,andconsiderablecapitalinvestments.
However,laborshortagesandacapitalcrunchhavedisruptedthispattern.
1China'sdemographicdividendarosemainlyfromitsfast-expandingworking-agepopulationaswellasthelarge-scalemigrationoflaborfromruraltourbancommunities.
AlthoughChina'stotalpopulationwillcontinuetogrow,expansionoftheworking-agepopulationisexpectedtoslow.
Accordingtothe2015WorldPopulationProspects,releasedbytheUnitedNations,China'sworking-agepopulationhititspeakin2015andhasstagnatedsince(seeFigure1).
Whatismore,itstotalpopulationwillalsoreachitspeakof1.
416billionpeoplein2028anddropbackto1.
004billionbytheendofthiscentury.
2DigitaltechnologieshavethepowertobethenewdriverofChina'sfuturegrowth.
Byharnessingthepowerofdigital,Chinastandstogrowitsgrossdomesticproduct(GDP)by3.
75percentby2020-theequivalentofaddingUS$527billiontotheeconomyduringthattimeframe.
WhileChinacanbenefithugelyfrombeingdigital,suchopportunitieshaveyettobetranslatedintoChinesebusinesses'realdigitalinvestments.
Manylackasystematicapproachtocreatingnewbusinessvaluefromdigitaltechnologies.
Bybuildingadigitaltransformationroadmap,Chineseenterprisescanbetterpositionthemselvestocapturedigitalopportunities-andtothriveaspartof"DigitalChina.
"Sources:OxfordEconomics,UnitedNations400300200100Working-agepopulationLaborsupplyForecast500600700800900100011001990199520002005201020152020References1"ThePowerofThree:HowANewApproachtoLabor,CapitalandProductivityCanTransformChina'sEconomyandBusiness",Accenture,20132"WorldPopulationProspects2015",UnitedUnion,2015DigitaltechnologiesarethenewdriverofmacroeconomicandindustrialproductivitygrowthinChina.
Figure1.
China'slabormarket(millions)GrowthofChina'sworking-agepopulationhasbeguntoslow4丨DigitalChina2020Thedwindlinglaborsupply,pairedwithrisingwages,hasputmountingcostpressuresonChinesecompanies.
Ithasalsoweakenedtheglobalcompetitiveadvantagethatthesecompanieshadpreviouslyenjoyed,duetoinexpensivelabor.
CapitalinvestmentgrowthhasalsosloweddowninChina(seeFigure2).
Fixedassetinvestment,China'seconomicengineoverthelastthreedecades,isnowbesetbyovercapacity,highcorporatedebtandexcessiverealestateinvestment.
AccordingtoaStandard&Poor'sstudyamongtheworld's32largesteconomies,Chinafacesthehighestriskofaneconomicdownturnbecauseofitsoverdependenceoninvestmentforgrossdomesticproductgrowth.
WithsuchinvestmentsaccountingforalmosthalfofChina'sGDP(45.
9percentin2014),thegrowthenginecouldstall.
3Inthelightoftheseconditions,howcanChinadrivesustainedeconomicgrowthinthecomingdecadesAccenturebelievesthatitwillneedtoshiftfromgrowthfueledbyfactoraccumulationtogrowthfueledbyindustrialproductivityimprovement.
Simplyput,Chinesebusinesseswillneedtoextractgreateroutputfromtheirexistinglaborandcapitalsupplies.
Overthepast10years,enterprisesinChinaachievedrapidimprovementsinproductivity,buttheystilllagbehindindustryindevelopedeconomiessuchastheUnitedStatesandJapan.
EnhancingproductivityisvitaltoachievingsustainableeconomicgrowththroughoutChina'seconomy.
Figure2.
FixedassetinvestmentinChina,2006to2015(RMBbillion)GrowthofcapitalinvestmentinChinahasbeguntoslowSources:NationalBureauofStatistics;Accentureanalysis200600%100005%2000010%3000015%4000020%5000025%6000030%35%200720082009201020112012201320142015FixedassetinvestmentGrowthrateReference3"ChinaStatisticalYearbook2015",NationalBureauofStatistics,2015AnactionplanforChineseenterprises丨5DigitaltechnologiescandriveproductivityimprovementsInthelongrun,technologicalprogressandinnovationwillbecrucialforproductivity-drivengrowthinChinaandwillplayacentralroleinthesustainabledevelopmentofthenation'seconomy.
JapanandSouthKoreaaresoundEastAsianexamplesofthis.
Bothcountrieshaveinvestedsteadilyinadoptingandinnovatingwithtechnologysincethe1950s.
Chinacanfollowthissamepath.
Indeed,analysisshowsthatby2030,Chinaexpectstosurpasstheworld'smostadvancedcountriesinadoptingtechnologyandextendingthetechnologyfrontierthroughindigenousinnovation.
4Justassteamenginesandelectricityrevolutionizedentireeconomies,digitaltechnologiesaretransformingindustriesandeconomiestoday.
Suchtechnologies-includingmobileInternet,cloudcomputing,bigdata,theInternetofThingsandartificialintelligence-havedeliveredunprecedentedefficienciestogovernmentsandbusinesseseverywhere.
Thesetechnologieshavealsopresentedenterpriseswithnewwellspringsofproductivityandgrowth.
Accentureresearchacross11countriesin2016showsthatbusinessescanspurnewgrowthandbenefitfromdigitalization.
Thesecountriesneedtostrengthenworkers'digitalskillsandknowledge,increaseinvestmentsindigitalassetssuchassoftware,hardwareandcommunicationsequipment,andnurtureanorganizationalculturethatencouragesdigitalentrepreneurship.
IfChinesebusinessescanmeettheseimperatives,thenation'sGDPcouldgrowby3.
75percentby2020,animprovementthatwouldaddtheequivalentofUS$527billion-andthelargestincreaseamongthe11countriesinthestudy(seeFigure3).
5References4"China2030",WorldBank,20135"DigitalDisruption:TheGrowthMultiplier",Accenture,2016Sources:AccentureandOxfordEconomics,2015Figure3.
GDPgrowthfrominvestmentindigitalizationChinahasthemosttogainfrommeetingdigitalizationimperativesChinaUnitedStatesJapanBrazilGermanyUnitedKingdomItalyFranceSpainAustraliaNetherland7006005004003002000.
0%1.
0%2.
0%3.
0%4.
0%5.
0%6.
0%7.
0%1000Changein2020grossdomesticproduct(%)Changein2020grossdomesticproduct(US$billion)3.
7%527421146120908481804334132.
1%3.
3%4.
2%3.
1%3.
2%2.
4%1.
6%6.
6%2.
5%2.
5%TheAccentureTechnologyVisioncomprisesalongstandinganalysisofkeytechnologytrends.
Thisyear'sAccentureTechnologyVisionhighlightsfiveemergingtechnologytrendswitha"PeopleFirst"theme.
Thepowerofadigitalbusinessisnolongersimplyaboutincorporatingthesetechnologiesintotheorganization,butaboutreinventingtheorganization-andtheculturewithinit-todriveinnovation,tocreatechange,andtotakethebusinessforwardintothenextgeneration.
FivekeythemesoftheAccentureTechnologyVision2016are:Thesethemesarethelatestexpressionofourassertionthat"EveryBusinessisaDigitalBusiness.
"Withtheimpactofdigitaltechnologiesonthestrategiesandoperationalprioritiesfororganizationsworldwide,companiesmustbegintoembraceanewdigitalculturetomoveforwardandtransform.
Sidebar:TechnologyVision2016Trend1:IntelligentAutomationIntelligentautomationisthelaunchpadfornewgrowthandinnovation.
Poweredbyartificialintelligence,thenextwaveofITsolutionswillgatherunprecedentedamountsofdatafromdisparatesystemsand-byweavingsystems,dataandpeopletogether-createsolutionsthatfundamentallychangetheorganization-whatitdoesandhowitdoesit.
Trend2:LiquidWorkforceCompaniesareinvestinginthetoolsandtechnologiestheyneedtokeeppacewithconstantchangeinthedigitalera.
Butthereistypicallyacriticalfactorthatisfallingbehind:theworkforce.
Companiesneedmorethantherighttechnologies;theyneedtoharnessthosetechnologiestoenabletherightpeopletodotherightthingsinanadaptable,change-readyandresponsiveliquidworkforce.
Trend3:PlatformEconomyThenextwaveofdisruptiveinnovationwillarisefromthetechnology-enabled,platform-drivenecosystemsnowtakingshapeacrossindustries.
Havingstrategicallyharnessedtechnologytoproducedigitalbusinesses,leadersarenowcreatingtheadaptable,scalableandinterconnectedplatformeconomythatunderpinssuccessinadigitalworld.
Trend4:PredictableDisruptionEverybusinessnowunderstandsthetransformationalpowerofdigital.
Butfewhavegraspedhowdramaticandongoingthechangesarisingfromnewplatform-basedecosystemswillbe.
Itisnotjustbusinessmodelsthatwillbeturnedontheirheads.
Astheseecosystemsproducepowerful,predictabledisruption,wholeindustriesandeconomicsegmentswillberedefinedandreinvented.
Trend5:DigitalTrustPervasivenewtechnologiesraisepotentnewdigitalriskissues.
Withouttrust,businessescannotshareandusethedatathatunderpinstheiroperations.
Thatiswhythemostadvancedsecuritysystemstodaygowellbeyondestablishingperimetersecurityandincorporateapowerfulcommitmenttothehighestethicalstandardsfordata.
6丨DigitalChina2020AnactionplanforChineseenterprises丨7TheInternetofThings(IoT)isaprimeexampleofdigitalsuccess.
Inthemanufacturingsector,companiescanusedatageneratedbymachinery,equipmentandproductstodevelopbetter-informedproductionplans,monitormanufacturingactivities,andreducemachinefailureanddowntime.
Intheenergysector,theIoTcanhelpcompaniesconnectdemandandsupplyinrealtimesotheycanallocateenergyresourcesinwaysthatsupportenergyefficiency.
Inthehealthcaresector,digitaltechnologycanturnthevisionoftelemedicineintoareality,enablingdoctorsandnursestotrackpatients'conditionsremotelyandpromptlyrespondtoemergenciesviaconnecteddevices.
AccentureforecaststhatindustriescoretoChina'smacroeconomicgrowthstandtomakesignificantgainsbyembracingdigitalization(seeFigure4).
TheadditionalGDPgeneratedasaresultofdigitalization,thedigitaloutputinthoseindustries,willgrowbyafactorof1.
6by2020.
Theautomotive,industrialequipment,infrastructureandtransportationindustrywilllead,boastingadigitaloutputofUS$395.
4billion.
Thefinancialservicesindustrywillmakeasmallercontributiontothisgrowth.
However,itsdigitaloutputwillrepresentapproximatelyone-thirdofthesector'stotaloutputin2020,makingthissectorthemostdigitalizedofallthesectorsintermsoftheproportionofdigitaloutput.
Figure4.
DigitaloutputinChina'ssixcoreindustries(US$billion,2015versus2020)China'sautomotive,industrialequipment,infrastructureandtransportationindustrywillleadthewayinthegrowthofdigitaloutputSources:AccentureandOxfordEconomics,201520202015252Auto,IndustrailEquipment,InfrastructureandTransportNaturalResourcesConsumerGoodsandServicesElectronicsandHigh-techChemicals&RefinedPetroleumFinancialServices1016789129195395311142188169240ChinahasasoliddigitalfoundationChinaisalreadyundergoingadigitaltransformationasaresultofChineseconsumers'enthusiasmforthesetechnologiesaswellasthenation'sfast-growingdigitalinfrastructure.
LetuslookatwhatishappeningwithChineseconsumersinmoredetail.
Theyareparticularlyenthusiasticaboutsearch,entertainment,networkingandonlineshoppingtechnologies.
Indeed,theactivitiesthatthesetechnologiesmakepossiblehavebecomealmostadailynecessityforChineseconsumers.
Peoplepayforproductsusingtheirmobiledevices,attendonlinecourses,makedoctors'appointmentsonlineandhailtaxisusingappsontheirsmartphones.
Bytheendof2015,Chinahad688millionInternetusersand620millionmobileInternetusers.
Amongthem,413millionhadshoppedonline,collectivelygeneratingUS$623billioninonlineretailtransactions,whichaccountedfor12.
9percentofChina'stotalretailtransactions.
Moreover,152millionInternetusersenjoyedtheconvenienceofdigitalhealthservicesbymakingdoctors'appointments,seekingmedicaladviceorevenworkingoutusingtheInternetormobileapps.
Nearly100millionpeopleusedappsfortransportation.
6Chineseconsumers'growinguseofanddemandfornewdigitaltechnologies,newproductsandnewuserexperiencesismotivatingChinesecompaniestocontinuouslyinnovateintheirproducts,servicesandbusinessmodels.
Theseenterpriseshaveanopportunitytousedigitaltechnologiestobetterservetheircustomersandcreatebusinessvaluethatwasunimaginableinthepast.
WhereasFortune500companiesusedtotake20yearsonaveragetoreachamarketcapitalizationofUS$1billion,savvycompaniesintoday'sdigitalworldcangetthereinjustfouryears.
7Chinesecompaniesthatcanridethisdigitalwavewillbenefit.
Butconsumerenthusiasmfordigitalisonlypartofthepicture.
GrowthinChina'sdigitalinfrastructuremattersequally.
Thankstothedevelopmentof"smart"and"wireless"cities,alongwithincreasedprevalenceofmobileInternet,ChinahasseenInternetpenetrationratessoarovertheyears.
Furthermore,aspartofits13thFive-YearProgram,Chinaplanstoincreaseitsfixedbroadbandpenetrationrateby30percentanditsmobilebroadbandpenetrationrateby28percentby2020.
Thenationalsoplanstoadvanceresearchonkeytechnologiessuchas5Gandultra-wideband,andtoinitiatethecommercializationof5G.
References6"37thStatisticalReportonInternetDevelopmentinChina,ChinaInternetNetworkInformationCenter",20157"DigitalTransformationofIndustries:DigitalEnterprise,WorldEconomicForum,Accenture",20168丨DigitalChina2020Sidebar:"DigitalChina"Recognizingthetransformationalimpactofdigitaltechnologiesonconsumers,industriesandsociety,theChinesegovernmenthasdefineda"DigitalChina"vision.
Thevisioncomprisesanumberofnationalinitiativesaimedatsupportingdigitaltransformationinarangeofindustries.
The13thFive-YearProgram,releasedinMarch2016,outlinesaseriesofplans-frombuildinganewgenerationofinformationinfrastructureandupgradingtraditionalindustriesthroughtousingadvanceddigitaltechnologiestopromotemassentrepreneurshipandinnovation.
Below,weoverviewkeyprojectsdefinedinthe"DigitalChina"Program.
MadeinChina2025Announcedin2015,MadeinChina2025aimstoenhancemanufacturingefficiencyandraisemanufacturingvaluethroughuseofdigitaltechnologiesandplatforms.
TheplanwasdevelopedatatimewhenChina'smanufacturingsectorwasstruggling.
ChinahadseenitsGDPgrowthslow.
Ithadenteredanewphaseofeconomicdevelopment,inwhichthefocuswasshiftingfromquantitytoqualityandefficiency.
Inthefaceofsuchchanges,China'smanufacturingsectorhaslostitslow-costadvantage.
Meanwhile,consumers'needshavegrownincreasinglydiverse,andpollutionandinefficientenergyusehavebecomepervasiveproblems.
Givenallthesechallenges,Chinesemanufacturingcompaniesmustmoveupthevaluechain.
DigitaltechnologiessuchastheIoT,cloudcomputing,bigdataandtheIndustrialInternetcanhelpthemdoso,byenhancingtheiroperationalefficiency,optimizingassetallocationandadopting"green"manufacturingpractices.
Evenmoreimportant,suchtechnologieswillhelpcompaniesswiftlyandflexiblyrespondtoever-changingconsumerdemands.
Forinstance,theycanmasteron-demandproductionandmasscustomization,whichwillenablethemtoprovidepersonalizedanddifferentiatedofferingstoconsumers.
DigitaltechnologiescouldevenhelpChinesemanufacturersgainastrongerpositionintheglobalmarketplace.
InternetPlusWhileMadeinChina2025focusesondigitalizationofChina'smanufacturingsector,InternetPlusseekstotransformabroadspectrumofindustriesthroughuseofdigitaltechnologies.
TheplanemphasizesmorethanjustintegratingmobileInternet,cloudcomputing,bigdataandtheIoTintobusinessesinvarioustraditionalindustriestoenhanceoperationalefficiency.
Italsocallsforcompaniestousedigitaltechnologiestodevelopnewsourcesofrevenue,tochangethewaytheyproducetheirofferingsandtoidentifyandseizethemostpromisingopportunitiesthatmayariseinthefuture.
AnactionplanforChineseenterprises丨910丨DigitalChina2020KeychallengesSource:AccenturesurveyUnitedKingdomNetherland90%86%82%82%76%70%64%54%52%45%AustraliaFranceGermanyJapanItalySpainChinaUnitedStatesNote:WhydoUnitedStatesexecutivesdisplayevenlessmotivationtoinvestinITthanChineseexecutivesUS-basedbusinessesandthenationalgovernmenthavebeeninvestingheavilyindigitalinfrastructureandtechnologiessince2010-evidencedfromtheirtoprankintheGlobalConnectivityIndexpublishedbyHuawei.
9ThelackofinterestfromChinesebusinessesinmakingimmediateinvestmentsisstartling,giventhatChinaranks23rdoutof50countriesonHuawei'sGlobalConnectivityIndex.
References8"2015CEOBriefing:DigitalStrategyNeedsExecution",Accenture,20159"2016GlobalConnectivityIndex",Huawei,2016Comparedtoitsglobalcounterparts,Chinastandstogainthemaximumadvantagefromembracingdigitalization.
Tosupportthismove,Chineseenterpriseswillneedtoinvestindigitalizationnow.
Yetourresearchshowsthattheyfaceobstacles.
ChineseenterprisesfailtoinvestindigitalIn2015,AccenturesurveyedCEOsacross32countries.
Only52percentoftherespondentsfromChineseenterprisessaidtheywouldincreasetheircompany'sITinvestmentsinthenext12months-apercentagemuchlowerthanthatofcompaniesbasedinothermajoreconomies(seeFigure5).
8DigitaltechnologyholdsgreatpromiseasthenewenginedrivingChina'seconomicgrowthinthefuture-yetChineseenterprisesfaceanumberofchallengesontheirdigitaljourney.
Figure5.
CEOs'intentiontoincreaseITinvestmentinthenext12monthsArelativelysmallpercentageofChineseCEOsplantostepupITinvestmentinthecomingyearAnactionplanforChineseenterprises丨11WhyareChineseenterpriseshesitanttoinvestindigitaltechnologiesOursecondaryresearchanddiscussionswithindustryexpertsrevealedthreeculprits:Chinesecompanieslackawell-defineddigitalstrategy:Digitalinitiativesshouldsupportanorganization'sdigitalstrategy.
Astrategyfor"beingdigital"involvesmorethanjustaddingdigitalchannelstotheexistingbusinessorcreatinganewdigitalbusinessindependentoftheexistingone.
Adigitalstrategyisallaboutbusinesstransformation.
Itshouldstartbyrethinkingandredefiningwhatvalueneedstobedeliveredandthenworkingbackwardstotheinitialsteps.
Yet,manyChinesecompanieshavenotyetdefinedsuchastrategy.
Chinesecompaniesarestrugglingtodesignadigitalbusinessmodel:Oncetheyhavedefinedadigitalstrategy,companiesmustbuildadigitalbusinessmodeltosupporttheexecutionofthestrategy.
Adigitalbusinessmodeldefinesacustomervalueproposition,profitformula,digitalresourcesavailableandmetricsforassessingtheimpactofdigitalization.
High-techcompanieshaverisenrapidlybyestablishingsuchbusinessmodels,whichdiffermarkedlyfromtheconventionalbusinessmodelsusedbymanyChineseenterprises.
ForChineseenterprisesthathaveformulatedadigitalstrategy,buildingasupportingbusinessmodelwillrequirecarefulconsideration.
Theyneedtoassesshowdigitaltechnologiescanbringnewformsofvaluetotheircustomersandhowtheycandeliverthatvalueprofitably.
Theymayevenneedtointegratetheirdigitalbusinessmodelsintotheircurrentorganizations.
Chinesecompanieshaveyettodecodehowtooperatedigitally:Companiesseekingtodigitallytransformmustalsosetuptherightdigitaloperatingmodel-whichincludesdecisionsregardingmatterssuchasworkforcecapabilities,infrastructureandoperations,andorganizationalculture.
Acompany'sdigitaloperatingmodelismostvaluablewhenitisalignedwithitsdigitalbusinessmodel.
ButmanyChineseenterprisesarehavinggreatdifficultydefiningandimplementingadigitaloperatingmodel.
Forinstance,theyareunsurewhichfunctionalandtechnologycapabilitiestheywillneedtosupporttheuseofdigitaltechnologiesthroughouttheirorganization.
Andtheyhavedifficultyattractingandretainingdigitaltalent.
Accenturedefinesdigitalizationastheprocessoftransformingdigitizedresources(suchasconnectedfacilitiesandprocesses)intosourcesofnewvalueforcustomers,aswellasnewvalueforabusiness,suchasfreshsourcesofrevenue.
ThedigitalizationeraisanextensionoftheITandindustrialITeras.
Inthedigitalizationera,acompanycanusedigitaltechnologiessuchasbigdata,cloudcomputing,mobiletechnologyandplatformstobuildcustomer-anddata-drivenbusinesses,spurinnovation,bringbetterproducts,servicesanduserexperiencestocustomers,andachieveauniquecompetitiveadvantage.
However,thedigitalizationeradiffersfromtheITandindustrialITerasinmanyways11(seetablebelow).
Acompanycanbeusingdigitaltechnologies,butnotbeadigitalbusiness.
Forinstance,perhapsabusinesshasestablishedanonlinesaleschannel,hasequippeditssalesforcewithtabletcomputersandhasinstalledcloud-basedsoftware.
Alloftheseactivitiesmayhelptheenterpriserunmoreefficiently,buttheywillnotdeliverthelarge-scaleimpactneededtodriveimprovementsinthetopline.
Trulydigitalenterprisesviewsuchtechnologiesastoolsfordrivingrevenuegrowthandprocessexcellenceatthesametime,acombinationthatsharpensabusiness'scompetitiveedge.
Sidebar:BeingdigitalITERAINDUSTRIALITERADIGITALIZATIONERAProductivityAutomationSpecificorganizationalfunctionsStandardizationEfficiencyatscaleProcessexcellenceValuechainSegmentedcustomizationWaterfallmodel(linearapproachtosoftwaredevelopment)Customer-anddata-drivenprofitablerevenuegenerationNewproductsandservicesBusinessmodelPersonalization(B2C)andmicro-segmentation(B2B)Agilemodel(iterativeandinteractiveapproachtomovefromapplicationstoapps)BUSINESSGOALSOUTCOMESIMPACTAREASVALUEFORCUSTOMERSSOFTWAREDEVELOPMENTMODELSReferences10"DefiningDigital,Technology'sCurrentTowerofBabel",Accenture,201311"India'sPathtoDigitalization:TheCorporateAgenda",Accenture,201512丨DigitalChina2020AnactionplanforChineseenterprises丨13TakingactionChinesecompaniesneedaroadmapcomprisingthreemajorstepsinthedigitaltransformationjourney:ambition,actionandachievement(seeFigure6).
Chineseenterprisesmustdefineadigitalstrategy,businessmodelandoperatingmodelandexecuteeffectivelytomasterdigitaltransformation.
AmbitionDefinedigitalvaluetobecreatedFosterownership,capabilitiesandmindsettodeliverdigitalbusinessvalueBuilddigitalbusinessandoperatingmodelsDigitalstrategyDigitalbusinessmodelDigitaloperatingmodelOwnershipMindsetshiftCapabilitiesCustomer-drivengrowthUsedigitaltoprofitablyengageconnectedcustomersProcessefficiencyUsedigitaltooptimizeprocesscostsMakecreationofdigitalvalueaC-suitepriorityDriveorganization-wideawarenessofdigitaltransformationProjectfuturerevenuesgainedfromdeliveryofdigitalvalueOpennessMachineinclusivenessCustomervaluepropositionusingdigitalDigitalresourcesinthebusinessecosystemtodeliveroptimalvalueMetricstoreflectcommitmentandimpactofdigitizationWorkforceAgile,efficientandengagedemployeesInfrastructure&operationsRapid,scalable,intelligentandconnectedITinfrastructureandtechnologystackCultureAdaptable,collaborativeandrisk-takingcorporatecultureDigitalenterprisesDigitalcustomersCollaborativeexperimentationTrust&securityActionAchievementProfitformulabasedondigitalenhancementofcustomergainsFigure6.
DigitaltransformationroadmapChineseenterprisesneedathree-steproadmaptotransformthemselvesinthedigitalageStep1.
Ambition:DefinedigitalvaluetobecreatedChinesecompaniesmuststartbydefininghowtheywillusedigitaltechnologiestocreatenewbusinessvalue.
Theycandosobyanalyzingavarietyoffactors,suchasfuturetechnologydevelopments,aswellasindustryandconsumertrends.
Businessleadersmustidentifyhowtheywillusedigitaltechnologiestoimproverevenuegrowthbyprofitablyengagingconnectedcustomers.
Executivesshouldthinkabouthowtoapplydigitaltechnologiestoenhanceexistingcustomers'experienceswhenevertheydobusiness.
Theyalsoneedtoidentifywaystodeploysuchtechnologiestoattractnewconsumers,optimizesalesanddistributionchannels,driveongoingproductandserviceinnovationanddevelopanewprofitandpricingmodel.
Businessleaderscanalsobrainstormwaystoapplydigitaltooptimizeprocessefficiency;forinstance,byusingdigitaltoolstoimproveassetallocation.
14丨DigitalChina2020AnactionplanforChineseenterprises丨15Step2.
Action:Fostertheownership,mind-setandcapabilitiesneededtodeliverthenewdigitalvalueOnceacompanyhasdefineditsdigitalstrategybyarticulatingthenewformsofdigitalvalueitwantstocreate,itneedstofosterownershipoftheeffort,encourageashiftinmind-setrequiredtodelivertheenvisionednewvalue,andinvestintherightdigitalcapabilities.
Together,theseactivitieshelptheorganizationsetthestageforexecutingthedigitalstrategy.
FosteringownershipofthedigitaltransformationeffortCreationofnewdigitalvaluemustbeaC-suitepriority,andseniorexecutivesneedtodriveorganization-wideawarenessofthecompany'sanddigitalstrategy,allthewaytofront-lineemployees.
Tofurtherfosterawidespreadsenseofownershipofthetransformationjourney,executivescanprojectfuturerevenuestobegainedfromdeliveryofnewdigitalvalue,andcommunicatethoseprojectionstoeveryoneinvolvedinthedigitalizationinitiatives.
Adoptingadigitalmind-setDigitaltechnologiesarecatalyzingtheconvergenceofindustriesandintensifyingcross-industrycompetition,asevidencedbytherapidemergenceofnewcompetitors,marketsandcustomers.
Atthesametime,companiesarealsostrugglingwithever-greaterbusinesscomplexity,uncertaintyandrisk.
Toadapttothesechanges,Chinesecompanieswillneedtoadoptadigitalmind-set,shiftingtheirthinkingonseveralfronts.
Forexample,theywillhavetomoveawayfromself-reliancetoopennesstoworkingwithpartners,suchascustomers,start-upsandevencompetitors,toinnovatemorequicklyandefficiently.
Theywillneedtoshiftfromlineardevelopmentofnewofferingstocollaborativeexperimentationwithpartnersonproductandservicedesign.
Inaddition,theywillneedtomoveawayfromthenotionthatmachinessubstitutehumanstowardrecognizingthepossibilitiesofmachinesandhumansworkingtogether.
Andtheymustchangefrompassivereactiontoinformationsecurityissues,suchasdatabreach,toestablishaprotectionmechanismupfront.
InvestingindigitalcapabilitiesWithnewdigitaltechnologiesconstantlyemerging,Chinesecompaniesneedtomakecalculatedchoicesabouttheirdigitalinvestments.
Buildingadigitalcompanyandwinningdigitalconsumersshouldbetheirtoppriorities.
Tobuildadigitalenterprise,companiesneedtoinvestindigitalcapabilitiessuchastheIndustrialInternet,artificialintelligenceandagileinnovation-allofwhichcanhelpthemenhanceoperationalefficiency.
Forexample:TheIndustrialInternetcanhelpcompaniesimprovemanufacturingprocesses,minimizemanufacturingdowntime,enhanceproductdesignandafter-salesservice,andstrengthentechnicalcollaborationinthebusinessecosystemsinwhichtheyparticipate.
Artificialintelligencecanhelpcompaniescollect,identify,analyzeandprocesslargevolumesofdiversedataefficientlyandtopredicttrends,enablingmoreinformeddecisionmaking.
Agileinnovationcanhelpcompaniesinnovateswiftlyandflexibly.
Keycapabilitiesandresourcessupportingagileinnovationincludedesignthinking,scrum,digitalcollaborationplatformsandcollaborativeprototypingtools.
Towindigitalconsumers,companiesshouldbreakawayfromtheirtraditionalproduct-drivendevelopmentmodel,deepentheirunderstandingofconsumers'implicitandexplicitneedsanddelivercustomizedsolutionsanduserexperiences.
Thefollowingdigitalcapabilitieswillproveessentialtotheseefforts:Datainsight:Byusingbusinessintelligencetechnologiessuchaspredictivestatisticalmodelingandself-learningprocesses,companiescanintegratehugeamountsofdatafrommultiplesources.
Theycanthenconductholistic,multi-dimensionalanalysesofthedatatogaininsightsintohowconsumerpreferencesarechangingandwhattheymustdotoattractandretaincustomers.
Omni-channelmanagement:Companiescaninvestinnewtechnologiestointegratekeydataacrossmultiplechannels,includingdatarelatedtoinventorymanagement,pricing,efficiency,customerbehaviorsandinformationsharing.
Companiescanalsoupgradetheirexistingtechnologyinfrastructure;forexample,byinvestingincloudcomputing,enhancingmobilesupport,improvinginter-systemcompatibilityanddevelopingsystemsthatproactivelyprotectdatasecurity.
16丨DigitalChina2020Step3.
Achievement:DelivernewvaluebybuildingtherightdigitalbusinessandoperatingmodelsTodeliverthenewformsofvaluedefinedintheirdigitalstrategy,Chinesecompaniesmustbuildacommerciallyviabledigitalbusinessmodelandadigitaloperatingmodel.
Adigitalbusinessmodelinvolvesunderstandingthefollowing:HowdigitaltechnologieswillenhancevalueforcustomersInthebusiness-to-consumer(B2C)realm,successfulcompanieshaveanalyzedlargevolumesofdiversedatageneratedthroughsocialmediaplatforms,suchasTwitterandFacebook,tocreatenewformsofvalueforcustomers,suchasusage-basedinsuranceforcars,timesavingsfromshoppingonline,alternativelast-miledeliveryoptionssuchasdrones,andsoon.
Inthebusiness-to-business(B2B)arena,successfulmanufacturingcompanieshaveusedconnecteddevicesequippedwithsensorsandmobilenetworkstodelivergreatervaluetotheircustomersinsuchformsasadvancedprocesscontroltoimproveproductquality,orcrowdforecastingbasedonadvancedanalyticstoincreasetheaccuracyofdemandforecasting,andsoon.
WhichdigitalresourcesareavailableinthebusinessecosystemtodelivertheenhancedvalueIntoday'sdigitalworld,consumersexpectcutting-edgefeaturesandpersonalized,uniqueexperienceswithcompaniesandtheirofferings-buttheydonotwanttopayextrafortheseformsofvalue.
Tosatisfythem,companiesmustidentifywhichdigitalresourcesareavailableacrosstheirindustry'svaluechainthatcanbesthelpthemmeetconsumers'risingexpectations.
Onlythencantheyintegratesuchresourceswiththeirownassetstoprovide"affordableexcellence"tocustomers.
WhichmetricsthecompanywillusetoassesstheimpactofitsdigitalizationeffortsPurelyfinancialindicatorssuchasrevenueandprofitdonotfullyreflecttheimpactofabusiness'sdigitalizationefforts.
Thebestdigitalcompaniesdefineadditionalmetrics-suchaspercentageofdigitalsales/totalsales,digitalcustomerprofitabilityandmargin,digitalcustomer-engagementscore,andsoon-thathelpthemassesstheimpact.
Suchmetricsenableexecutivestogaugethedigitalperformanceoftheorganizationoverallandofitsemployees,intermsofanabilitytodelivernewvaluetocustomersaccordingtothefirm'sdigitalstrategy.
HowthecompanywillmaximizeitsprofitabilitywhiledeliveringenhancedvalueForsuccessfuldigitalcompanies,profitmaximizationisagameof"I"(thecompany)with"You"(thecustomer),notagameof"I"versus"You.
"Customersarenolongermerelytakersofacompany'sofferingsbutactiveco-creatorsofacompany'sitsproductsorservices.
Inthisenvironment,anenterprise'sprofitsarestronglyinfluencedbytwofactors:first,thelevelofefficienciesthecompanycanachievewhilecreatingnewvalueforcustomers(fromofferingconceptualizationtolaunch),andsecond,theshareofwalletthebusinesscanearnbyprovidingdifferentiatedexperiencesthatareco-createdwithcustomers.
AnactionplanforChineseenterprises丨17Adigitaloperatingmodelcomplementsacompany'sdigitalbusinessmodel,byreflectingdecisionsmadeabouttheenterprise'sworkforce,itsinfrastructureandoperations,anditsorganizationalculture.
WorkforceCompaniescanusedigitaltechnologies,suchascrowdsourcedworkforcevirtualization,toorchestrateinternalandexternaltalentpoolstodelivervaluetocustomersinnewandbetterways.
Forexample,theycangainaccesstoalargeuniverseoftalentondemand,andscaletalentupordownquicklytoadapttochangesincustomerrequirements.
Inaddition,theycanstrengthenworkforceengagement,bymatchingemployeestotasksandactivitiesthatinterestthemmostandthatplaytotheirbeststrengths.
CultureInanorganizationthathasadigitalculture,peopleareadaptable,collaborativeandcomfortabletakingrisks.
Suchacultureencouragespeopletocooperatewiththeirinternalandexternalcounterpartstoaccelerateproblemsolvingandworktogetherinnewandbetterways.
Peopleareabletoestablishnewbehaviorsthatsupportthecompany'sdigitaltransformation,suchasperformingdigitaldiagnostictoassessdigitallevelsacrosscompany,establishingdigitaldiplomawithelectivesforbothcoredigitaltalentandothers.
InfrastructureandoperationsCompaniescanusedigitaltechnologiestomaximizeautomationinkeyoperations,suchassalesforecastingandorganizationallearning.
Andtheycandosoacrossdifferentfunctions,suchasdatacenter,networkcenter,manufacturingandsecurity.
Foundedin1995andbasedinShandong,China,RedCollarspecializesinmanufacturingcustom-tailoredsuitsandshirts.
Since2003,thecompanyhasinvestedinbuildingitsownnetworkingsystemtostreamlineitsproductionlineusingdigitaltechnologies.
Adheringtoabusinessmodelfocusedoncustomer-to-manufacturingandonline-to-offlineinnovation,RedCollarappliesInternetofThings(IoT)-relatedtechnologiestomass-produce"made-to-measure"suitsandshirts.
Inthisway,RedCollarhasbeenabletoremovethebottleneckscommonintraditionalcustom-tailoredgarmentproduction,whichincludelowproductivity,highintermediatecosts,andinconsistentandunmanageablequality.
12Thecompany'sproductionprocessstartswithanalysisofdataonacustomer'sbodymeasurementsandpersonalpreferences.
Beforeassigningjobstorelevantworkers,thesystemautomaticallycalculatesandtransformsthecustomer'sdataintolanguagethatfrontlineworkersrecognize,suchasthestyleofthesuite,cuttingprocedures,andsewingprocedures.
Informationflowssmoothlyacrossdifferentproductionlines,andauniqueradiofrequencyidentification(RFID)tagcarriesanddeliversallthedataonthecustomer'srequirements.
BecauseeachgarmenthasitsownRFID,RedCollarcanmonitoreveryproductionprocessinrealtimetoensurequality.
Moreover,thesmartproductionsystemcanallocatejobssuitedtoeachworker'sskills,improvingproductivityandreducingoperatingcosts.
13AsaresultofRedCollar'sinnovativebusinessmodelandsavvyuseofdigitaltechnologies,thecompanycancompleteasuitinjustsevenworkingdaysafterreceivingtheorder.
Thisperformancehassignificantlyimprovedtheorganization'scompetitivestrength,helpingittoattractoverseascustomers.
14Itnowmakes3,000tailoredgarmentsdailyforitsclientsinNewYorkandplanstodoubleitshighlycustomizedproductioninthefuture.
CheBaoisChina'sfirstthird-partyonlinecarinsuranceplatformprovidingusage-basedinsurance(UBI)services.
Itusesdataonindividualcustomers'drivingperformancetoofferpackagesthatrewardsafedriving.
15InChina,about70percentofcaraccidentsresultfrominappropriatedrivingbehaviorssuchasspeeding.
Theusage-basedbusinessmodelpromotessafedrivingbyofferinglowerinsurancepremiumstocustomerswhodemonstratesafedrivingbehaviors.
CheBaocollectsdataonawiderangeofindicatorsofsafedrivingperformance,suchasfuelconsumption,speed,mileage,drivingtimeandlocationandthenumberofhardbrakeapplications.
Byinstallingasmartwirelessdeviceinthevehiclethatiscompatiblewithhundredsofdifferentcarmodels,CheBaohasautomatedthecollectionofsuchdata.
Thesystemtranslatestheinformationintodriving-safetyscoreswithoutrequiringhumanintervention.
Safedriversearndailypremiumsthattheycanapplytooffsetthefollowingyear'sinsurancecosts.
AsofSeptember2015,thisstrategyhasattractedthreemilliondriverstoUBIservicesacrossChina.
16RedCollarCheBaoReferences12"红领集团李金柱:数据可以是金子也可以是垃圾",SinaFinance,October16,2014,http://finance.
sina.
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cn/leadership/msypl/20141016/140920557774.
shtml13"红领西装,一场个性化定制的革命",EBusinessReview,December3,2014,http://www.
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html14"红领:3D打印工厂化逻辑实现互联网工业升级",XinhuaNet,February13,2015,http://news.
xinhuanet.
com/local/2015-02/13/c_1114336735.
htm15OfficialwebsiteofCheBao,http://www.
chebao.
com.
cn/index.
php/Index/index16"帅勇:车险后定价模式可能很快到来",TheEconomicObserver,September21,2015,http://www.
eeo.
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cn/2015/0921/279923.
shtml18丨DigitalChina2020DigitaltechnologiespromisetoturbochargeChina'seconomicgrowthbyenablingdramaticimprovementsinindustrialproductivitywithinkeyindustries.
Acknowledgingdigital'spotential,theChinesegovernmenthasoutlinedanewvision-"DigitalChina"-initslatesteconomicplan.
Tomakethevisionareality,Chineseenterpriseswillneedtoembracedigitalization,includinginvestingindigitaltechnologiesthatgeneratefreshrevenuestreamsbydeliveringnewformsofvaluetocustomers.
Bymovingupthevaluechainintheirindustry,companieswillnotonlysupportChina'sdigitalvision,theymayalsostrengthentheircompetitivepositionintheglobalmarketplace.
Buttogaintheseadvantages,Chinesebusinesseswillneedtoundergoadigitaltransformation-onethatstartswithdefiningtheirdigitalstrategy.
Theymustthenfosterasenseofownershipofthestrategythroughouttheirorganization,aswellasinvestinthedigitaltechnologiesandcapabilitiesrequiredtoimplementthestrategy-andmakethecorrespondingmind-setshifts.
Finally,theyneedtobuildadigitalbusinessmodelandadigitaloperatingmodeltoensurethattheirdigitalstrategydeliversonitspromise.
Thistransformationcannothappenovernight.
Rather,itwillrequirelong-termplanningandrigorousimplementation.
Usingathree-steproadmapcanhelptoguidecompaniesontheirdigitaljourney-andnavigatetheshiftinglandscapeasdigitaltechnologiescontinuetoadvance.
TurbochargingChinesegrowthAnactionplanforChineseenterprises丨1920丨DigitalChina2020QiWuDeputyGeographicUnitandCountryManagingDirectorAccentureGreaterChinawu.
qi@accenture.
comRaghavNarsalayManagingDirectorforInnovationandRiskManagementResearchAccentureInstituteforHighPerformanceraghav.
narsalay@accenture.
comSerenaJingQiuResearchManagerAccentureInstituteforHighPerformanceserena.
jing.
qiu@accenture.
comJingYuResearchAssociateManagerAccentureInstituteforHighPerformancejing.
yu@accenture.
comSuningAnResearchAnalystAccentureInstituteforHighPerformancesuning.
an@accenture.
comContactsTheAccentureInstituteforHighPerformancedevelopsandcommunicatesbreakthroughideasandpracticalinsightsonmanagementissues,economictrendsandtheimpactofnewandimprovingtechnologies.
ItsworldwideteamofresearcherscollaborateswithAccenture'sstrategy,digital,technologyandoperationsleadershiptodemonstrate,throughoriginal,rigorousresearchandanalysis,howorganizationsbecomeandremainhighperformers.
Formoreinformation,follow@AccentureINSTorvisitwww.
accenture.
com/Institute.
AbouttheAccentureInstituteforHighPerformanceTheauthorswouldliketothankthefollowingindividualsfortheirsupportandguidance:XuyuChen,GwenHarrigan,JolieHuang,VegardKolbjrnsrud,WilliamLesieur,GuanghaiLi,DavidLight,DongLiu,LuvNijhawan,PaulNunes,WeiQian,RowenaRobertson,AarohiSen,RobertThomas,KuangyiWei,TeresaYe,SherylYapingYuAcknowledgementsAccentureisaleadingglobalprofessionalservicescompany,providingabroadrangeofservicesandsolutionsinstrategy,consulting,digital,technologyandoperations.
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