Making tech work for companies: What Leaders do that Laggards do not?

Accenture’s Integrated Global Services Lead,  Ramnath Venkataraman, talks about why companies need increase their Technology Quotient

Ramnath Venkataraman is an Accenture veteran. He joined the company in 1995 and became a managing director in 2005. Ramnath now heads Accenture’s Integrated Global Services, and is responsible for Technology sales, and the company’s Advanced Technology Centers around the world. He is also a member of Accenture’s Global Management Committee–one of the few Indians to do so. Speaking with Publishing Director of Trivone, Leslie D’Monte, from his office in the Greater New York area, Ramnath explained why companies need the so-called ‘Systems Resilience’; how technology has helped Leaders grow exponentially during the pandemic as opposed to Laggards, even as a category of Leapfroggers break away from the lower ranks on the back of swift technology adoption; and why companies need to focus more on business outcomes rather than the next shiny technology. Here are edited excerpts:

In April 2020, Accenture released a report that spoke about ‘Systems Resilience’ (a system’s ability to operate during a major disruption or crisis, with minimal impact on critical business and operational processes). While speaking about this concept, you referred to a 2019 research which revealed how only the top 10% of 8,300 companies surveyed had cracked this code. This April, Accenture released its ‘Make the Leap, Take the Lead’ report which revealed that leaders have extended the revenue gap over Laggards by 5x. Are these Leaders the same companies that had cracked the systems resilience code? And how are companies scaling technology innovation during this pandemic?

We did our initial round of research in 2019, which spoke about the priorities of our clients. The respondents were a mix of C-suite business executives and C-suite technology executives, and the intent of that research was to find out what is really driving the adoption and embracing of technology; and how quickly organizations are adopting the latest and greatest as far as technology is concerned — Is it just as a proof of concept? Are people just experimenting with AI and IoT? What’s the depth of adoption of technology? Or is that (technology adoption) a part of the organizational DNA and culture? And is it pervasive?

The research provided us with some interesting findings on what C-suite business executives thought was important for them. We, then, correlated their responses to business performance. There’s an interesting correlation. People who gave the responses that put them in the top 10% had a strong business performance associated with adopting technology. We call the top 10% as Leaders and the bottom 25% of the respondents as Laggards–the terms that you referred to.

Leaders who are really embracing technology at the heart of their business were growing at 2x during the pre-pandemic period. We, then, asked the same set of questions (in 2020) to gauge the impact of technology during the pandemic. The results surprised me in two distinct ways. The first is that new technology not only continued to be a significant driver for business performance but that the gap between the same leaders and laggards in the (same) categories also increased from 2x to 5x — people who were leaders were outperforming laggards by 5x. This implies that if technology is at the heart of your business, it’s going to lead to quantum improvement in performance.

The second surprising finding that came from the second research (in 20202) is that the winner does not take it all. Those who made the right investments, and a significant shift in mindset (during the pandemic) by asking how they could leverage the power of technology to drive business growth, were managing to break away from the Laggards and create a breakaway group (the Leapfroggers).

In this context, are Leaders emerging in all sectors?

Yes. There are leaders emerging across all the industry segments that we did the research on, and there are laggards across all the industries. So, it’s not just the so called Digital Natives that are reaping the benefits of technology. It’s also traditional organizations — Best Buy and Home Depot are some examples of traditional businesses in retail that are doing really well. They are the leaders in the category. Every industry has a leader who is in the top 10%, and there is a laggard too. And it’s (Leaders and Laggards) spread geographically, too.

In this year’s survey, Accenture has also re-established how indispensable technology is to business growth. You have simultaneously pointed out that there’s a minority that has taken a different approach and adopted compressed digital transformation. What do you mean by this term?

The term came from our CEO, Julie Sweet, when we were discussing this report. What does she mean when she uses this term? Traditionally, you had to make exceptionally large capital investment when adopting digital transformation — you had to have a structured effort to run it. If you were a large organization, it used to run into hundreds of millions of dollars in addition to capital expenditure. We now live in a quite different world — companies could experiment, adopt and scale very quickly (which explains the term ‘compressed digital transformation’). The Leapfroggers, which is emerging category, were not leaders before the pandemic. But they did embrace the company’s digital transformation, which means they started experimenting very quickly. Cloud is as an example. It doesn’t require you to make a major capital investment. You can embrace it very quickly, which is why you see the (rapid) adoption of cloud. Leaders accelerated their investments in cloud and AI by 70%, which helped them retain their advantage.

What exactly are the Laggards not doing that the Leaders are? Is it reluctance? Is it that the CFOs are not opening up their purse strings because they do not understand or do not see immediate ROI in those technologies? Or is it just a mindset issue?

I would rather ask: what did the Leaders and Leapfroggers do that others (the Laggards) should embrace? First, clearly technology is now not just the CIO’s agenda — it’s at the broader C-Suite table and spread across CEOs, CHRO, and CEOs. You need top-down strategic intent and acknowledgement of the fact that technology is at the heart of every business, and not just to keep the lights on. Technology is a growth engine. If I don’t adopt technology, I’m going to get heavily disrupted and you’re seeing this in every industry. The traditional pharma industry is a good example. Was technology at the heart of this industry? Maybe not but look at what happened with our vaccine model. We were able to come up with vaccine very quickly by leveraging the power of technology. They did simulations and came up with different permutation combinations and ran algorithms that helped drive the pace of growth.

The next part is how do you think about technology and executing it because it’s taking a very strong hard look at where you are, and where you want to be. We speak of a three-step strategy approach which we found what Leaders and Leapfroggers embrace –the three R(s). First is Replatform, which means you’re consciously creating the right degree of connection between business and technology. The second is Reframe — more money (technology spend) is spent on keeping the lights on versus really driving business growth. This means that if you’re spending $100 on technology, and $70 of that goes towards really maintaining, only $30 is going towards generating newer capabilities that can drive business growth. This is the wrong formula, and you need to flip it. So, Reframe is changing the mindset to say: How do I consciously flip the spend towards driving business growth and introducing that agility? The third is Reach: really making it pervasive. This implies that you need everybody in your organization to be a digital worker — from the sales and marketing process to manufacturing to support services.

When adopting technology, CXOs face a dilemma since the technology treadmill is moving at a faster clip than it was, say a decade back. There is a multitude of technologies like AI, IoT blockchain, 3D printing, 5G, that are clamouring for attention. What is your advice to CXOs when exploring these emerging technologies?

I would say: Start with the business outcome. Technology is an enabler for driving business growth — you don’t just pick up the next shiny thing that comes your way. You can do that as a as a lab experiment, but you can’t do that in your running business. You need to be conscious about what am I trying to achieve? Where do I want to go? So, you need the point A to point B strategy. You need to say: What are the things that I need to put in place to be able to help me drive growth. There are some non-negotiables like moving to the cloud and creating agility and flexibility (that is derived) from adopting such technology. It doesn’t mean that you just pick up every new shiny thing that’s coming in, and start embracing it, because that might not lead you to the right outcome that you want.

First, create a structured approach and make sure you execute it. If you’re not thinking about all these things, you’re not going to be able to survive or thrive in the next two or three years. There are non-negotiables — you need to really think about how to embrace the power of cloud. This means not just embracing cloud for the sake of cloud, but really creating the power of leveraging cloud to drive business and go forward.

In this context, you have cited the example of India’s Reliance Jio in your report…

Jio leverage leveraged the power of technology in a significant way. They’ve created a platform and an engine that is really transforming the industry, not just in India, but it’s becoming a model that’s being embraced across the globe. And then they used technology in a significant way and when we looked out for Leader examples across the globe when doing the research, one of those that jumped out was what Jio has done — got a plethora of ecosystem partners that they are leveraging and bringing the muscle of knowing the local market and saying I’m going to execute that piece. They did everything that we said should be done by Leaders. They identified what the business potential and looked at the enablers and drivers to getting that business. Then, they moved at speed and executed at scale. There are several other examples of leaders who did something similar across multiple different industries.

Before we conclude, please sum up the findings of the report. What are the five things that a CXO should look out for when adopting digital transformation?

Let’s not go by a number. First, be technology needs to be at the heart of the C-Suite agenda — it needs to be a top-down strategic drive, which says that if I don’t do this, I’m not going to be relevant in the next three months, or (will be) less relevant in the next three months. Or it could be that in two years, somebody else is going to come and disrupt it (my business) so what do I do to make sure that I’m not disrupted.

In typical Accenture style, we have a diagnostic asset that does a current state assessment. We say, here’s really where you’re sitting, usually where Leaders are sitting. Now, this is the gap, so you decide the pace at which you want to bridge it. But bridge it you must, otherwise you’re not going to be relevant. So, the way to bridge is the three steps that I spoke about — Replatform, Reframe, and Reach. All of these are extremely critical.

If you don’t Replatform, you’re not laying the foundation, and changing the wiring of your business. If you don’t Reframe, you’re really spending a lot of investments without changing the mindset of how things should shift from keep the lights on. Reach ensures that technology adoption is pervasive. We call this the Technology Quotient. We are working with businesses to explore how to increase the technology quotient.

Thank you again, Ramnath, for taking time out to explain to our viewers what digital transformation entails. Wish you and your employees the best.

The full ‘Make the Leap: Take the Lead’ report is available here.

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