Welcome to smallmatters – The way we live and work is changing fundamentally, driven to a large extent by emerging (digital) technologies and advances in AI, robotics and 3D imaging. What that digital future will look like is unclear, but we do know that it will be fundamentally different from today (be “disruptive”), and that all businesses and people will have to adjust to a more rapidly changing world (i.e. be more “agile” or “adaptive”).
Smallmatters is about one jigsaw in this big puzzle, a matter that I am passionate about: What does that digital future mean for Finance as a function, and how can it transform into a more adaptive (or agile) Finance to capture the potential from digital technologies and business models and mitigating their risks? What does this mean for us Finance professionals?
More and more businesses are trying to address real or perceived “disruption” or be “disruptors” in their markets by using combinations of (digital) technologies in new business models. However, digital transformation is about much more than technology. It is about accepting that customers, businesses and economies are fundamentally changing through the combined forces of advances in computing, communications and imaging technologies. Ultimately, all businesses will have to move into the digital economy to stay relevant to their customers.
The availability of key technologies for business and consumers (to inform, to communicate and to transact) has exploded over the last 20 years, with almost half of the world’s population now online, and about 5bn people with access to a mobile phone.
- Just under 1,000,000,000 websites are live & accessible from anywhere;
- Between 2 and 2.2 million apps are available at Google Play and Apple’s app store;
- More than 8bn connections are live on mobile networks (including M2M) worldwide.
Hard drives, computing and communications cost are an almost negligible fraction of 1995, making it possible for consumers and businesses to communicate, exchange information and transact worldwide at marginal cost. It is the combination of these trends that is so disruptive (though not over night). The rate of technological change will certainly not slow down at least in the near-term, with advances in AI, robotics, imaging and blockchain visibly disruptive today.
The same technology trends are driving how business will be organized in the digital economy (in loser eco systems rather than hierarchies, and almost constantly changing shape). The boundaries between employees, suppliers and customers will blur at the same time.
These new, digital technologies are just enablers of new business models and innovation. Digital transformation really is about changes in processes and people (culture). Businesses will need a digital strategy, addressing all trends combined and integrating it with its core operations effectively, to stay relevant in the digital economy.
Businesses that proactively embrace this digital future will address both its opportunities and risks better, even if many aspects of what this future may look like are highly uncertain. There is no clear or straightforward path to adapting to this digital future (“digital transformation”), but it is inevitable and the rewards of a successful transition could be huge. Embracing digital transformation will require more than appointing a Chief Digital Officer or Chief Officer for Customer Centricity. It will require that the business revisits what its core value proposition is and establishes a supportive eco system that will ensure that the business remains adaptive (“agile”) and relevant to their customers, people and business partners. It will also require changes at every level of the organisation, starting with a culture that embraces technological change, trying out new things, accepting failure, adapting and moving on.
Finance as a function does not have to change what it does, but how it does things, thinks and works with the business. Technology is an enabler in this context, not more but also not less. Finance in the digital economy will remain relevant if it is an integrated part of an operationally excellent, adaptive (agile) and customer centric business. That is what I would call an “Adaptive Finance”.
Contact me if you are interested in discussing any of this. Your feedback, insights or contributions are just as welcome.