Some of the most successful enterprises have embraced global diversity and operate nimbly in multiple countries by digitising key aspects of their businesses. Below, Siew Kien Sia, Peter Weill and Christina Soh describe insights from a study of enterprises that have successfully managed global complexity using five digital capabilities, and show how top performers actively explore new digital possibilities to create business value.
Despite – and perhaps because of – recent economic uncertainties, businesses are continuing to globalise. The World Investment Report 20121 highlights the internationalisation of businesses, with sales, employment, and assets of foreign affiliates all increasing. For example, from 1998 to 2011, the UN’s top 100 trans-national companies grew their percent of sales from outside their home countries from 58% to 71%: a 22.4% increase.
Increasing globalisation means more business complexity that results, in part, from political, regulatory, and socio-economic risks. Add the demands of sophisticated global customers and the differences in cultures, tastes, and business practices, and the challenge grows. Yet, we found some of the most successful enterprises have embraced global diversity and operate nimbly in multiple countries by digitising key aspects of their businesses, e.g., channels, products, collaboration and processes. For example, Ravi Kant, the Vice Chairman of Tata Motors, a fast globalising Indian-based enterprise says ‘there are three things we do well: challenge people, deploy world-class business processes, and heavy use of IT – we are 70% digitised’. As part of their globalisation strategy, Tata Motors acquired Jaguar LandRover, and the turnaround has been impressive. In 2009, Jaguar LandRover lost $632M; three years later, in 2012, this figure grew to a net income of $2,328M.
Digitisation facilitates globalisation by enabling a number of critical capabilities: