Asia Pacific faces a digital dichotomy: Digital investments are higher here than the global average, according to our recent research — but so are fears about potential digital dark sides. Righting this balance through the adoption of new mindsets, organizational structures and management cultures, we believe, is the most pressing concern for senior executives in the region when it comes to leading in the digital future.
In conjunction with Roubini ThoughtLab, we surveyed 300 senior executives across Asia Pacific as part of our global study to understand the changing nature of work in the dynamic digital economy. We found digital to be alive and well among Asia Pacific businesses, which are far ahead of the game when it comes to digital investment and returns. These organizations are on the way to establishing the region as a digital leader, as long as they can fully embrace all that’s entailed in taking a digital-first approach.
Highlights of our findings include:
Asia Pacific businesses are top digital investors. Businesses here are applying an average 15% of their total revenue toward digital each year, compared with the global average of 11%. They had spent almost US$120 billion on digitization in 2016 alone; in 2020, this figure will increase by about 93%.
And they are unlocking far greater rewards. Asia Pacific respondents expect huge returns — an average of 116% by 2018 — on their digital investments. Approximately 12% of respondents’ net revenue was driven by digital during the last year, compared with the global average of 4.6%, and that’s expected to nearly double by the end of 2018.
AI and IoT are prime technology areas of focus. Like their global counterparts, Asia Pacific businesses point to artificial intelligence as the most impactful technology in the next few years; even more so, however, Asia Pacific is bullish about the impact of IoT — double the global average of 35%.
Cybersecurity could derail Asia’s digital growth story. Asia Pacific respondents are significantly behind their global counterparts in prioritizing cybersecurity. Only 56% agree that cybersecurity has a moderate to large impact on their businesses compared with 72.5% globally. IT departments and CIOs/CISOs must keep up with security standards or risk falling behind.
The biggest hindrance to continued digital success in the region is the concerns expressed about its downsides, such as widespread job loss due to intelligent automation (identified as a concern by 98% of respondents vs. just 60% globally) and exposure to fraud and theft.
Such fears are an inevitable consequence associated with anything new and unfamiliar, and we believe they will dissipate once these new technologies are assimilated. It is incumbent on business leaders to change these perceptions and help their organizations reach this assimilation stage.
To make the digital shift, leaders need to step forward and prime their organizations for the work ahead. Here are some good places to start:
Embrace the digital future. Business leaders have the power to choose whether digital transformation works for or against them and their organization. Leaders that fail to invest in digitization due to fear will inflate counterproductive perceptions and encourage detrimental decisions. Ultimate success will require an open mind, perseverance and courage.
Spell out digital priorities. By making wise decisions about how to embrace technology, organizations can expand the business and increase ROI — but only if it’s clear why it’s going digital in the first place. To master the digital world, businesses will need to be focused on the user experience and be flexible when overcoming inevitable missteps.
Identify and fill skill gaps. Robots and machine learning are likely to replace specific human tasks rapidly over the next five to 10 years, challenging workers to focus on new skills. Careers will be determined not by a worker’s last job title, but on the new skills developed for the work ahead.
Overhaul command-and-control management cultures. To succeed in today’s world, companies need a tribe of people fiercely devoted to the company’s digital mission. To bridge the gap with next-generation leaders, businesses should emphasize empathy and humanity, which will require big changes for traditionally hierarchical and authoritarian cultures in many Asia Pacific organizations.
Don’t go it alone. Digital is inherently collaborative. It is about equalizing power structures through the democratization of information, engaging people in a shared journey and breaking down internal silos. Leaders who recognize that collaboration is the key to business success will be more in demand in the digital workplace.
View digital as an enhancement, not a replacement. Machines may help improve productivity, but they won’t produce the ideas that move businesses forward. Leaders need to look beyond their fears of machines as job destroyers and enable people to work in tandem with machines to help their organizations succeed.
This report — as one of several installments in The Work Ahead series — focuses exclusively on the responses from Asia Pacific respondents. For the full report, see The Future of Business and Jobs in Asia Pacific’s Digital Economy. Also see our overview report, Mastering the Digital Economy, and our close-up view of Europe, Europe’s Digital Imperative. We also detail our in-depth findings about the impact of digital on business processes, as well as on individual industries, including healthcare, technology, insurance, financial services and manufacturing.