A small minority of Chinese companies are leading their industries and achieving higher profits by digitising their operations to transform their businesses and unlock new growth, according to new research by Accenture.
The report, The China Digital Transformation Index, revealed that 7% of Chinese brands have become what Accenture refers to as 'rotation champions' by generating more than half of their revenues from new businesses started in the last three years. This comes at a time when traditional growth efforts are too partial and fragmented to make a real impact.
'Rotation Champions' are achieving, on average, a 14.3% three-year compound annual revenue growth rate, 5.5 times greater than the rest. They also secure a sales margin of 12.7%, compared to 5.2% for the others.
Across the eight industries surveyed, the automotive and consumer electronics sectors are seeing the most champions, while the metallurgical industry is the most inferior.
In general, B2C brands are closer to the end consumer, and find it relatively easier than B2B peers in the use of digital technology to dynamically acquire customer data, or digital applications in their supply chains for more efficient and leaner production.
For example, the report cited home-appliance company Midea for digitising its consumer purchase information. Applying multiple attributes to each purchase record helps form a full 360-degree user portrait. Based on this, Midea can meet consumer needs more accurately.
There are B2B brands that stand out from the crowd as well, such as Baosteel Group, that has been committed to improving its own digital fate with the Internet of Things, cloud computing, and big data, pointed out Accenture. Baosteel's manufacturing process of its steel plates has improved to match the client's production plan, for instance.
- Establish top-down ownership: Drive the digital transformation agenda with senior executives who have organization-wide influence. A dedicated digital transformation taskforce will also ensure effective implementation. 58% of the Rotation Champions said that their C-level executives are responsible for driving digital transformation initiatives, higher than the 42% cited by other companies.
- Build hyper relevance: Become customer-centric by continually sensing and addressing the changing needs of your customers (e.g. affordability, social connections and quality of experiences). Inform digital transformation with customer insights in order to become a hyper relevant brand. Leading companies trump competitors through constant service improvements based on sophisticated customer analytics.
- Embrace ecosystems: Bring the best innovation to customers by harnessing the power of a carefully managed ecosystem of external partnerships. Create an open-source Research & Development innovation communities.
- Improve data fluency: Build a solid supply chain of data by mastering leading-edge technologies, such as cloud solutions, enhanced data infrastructure, improved data connectivity, and advanced AI algorithms. These data-driven improvements can enable business innovation at an unprecedented level and scale.
- Create an agile organism: Evolving workforces (specialized, flexible, augmented and adaptive) can help transform a static organization into the agile one. This change can help companies gain a competitive advantage in the digital age. Companies also need to assess employees’ performance and evaluate their competence through data visibility.