Dr. Rick Huijbregts' Blog Posts

Digital Transformation for the Small and Medium Enterprise

Earlier this month I had the pleasure to deliver a keynote at the Wisdom Exchange, an event hosted by the Ontario Ministry of Economic Development and Growth. This forum is a peer-to-peer exchange with leaders of small and medium businesses on matters of business strategy and innovation. At the same time, 2,500 miles away in Vancouver at the YPO, Cisco Chairman John Chambers was having a similar conversation with Canada's Prime Minister Justin Trudeau.

Prime Minister Trudeau, as well as the 300 attendees at the Wisdom Exchange, are very aware of the rapidly changing world that we live in. Canadians, businesses, and government are seeking to increase productivity, drive economic growth, and become more innovative in a world that is being redefined through digital disruption (most recently labeled as the fourth industrial revolution or industrie 4.0). To prepare oneself for the rapid pace of change and respond quickly to competitive forces that are brought on by digital capabilities and digital companies, government and industry will need to adopt agile strategies that are infused with digital technologies.

The Federal Government has a Ministry of Innovation, Science, and Economic Development. Last years budgets included significant investments in growing the broadband economy (connecting the unconnected and create a levelled playing field for all Canada in the global rankings of digital transformation and innovation). Municipalities are taking charge by forming or joining Smart City organizations that apply technological advances to municipal challenges and to explore economic opportunities. The City of Toronto just announced its Civic Innovation Council, a cross-departmental approach to stimulate innovation across the city. Enterprises are hiring Chief Digitization or Chief Innovation officers to build digital approaches in support of modernized, updated, and agile business strategies.

IDC showed in 2016 that 97% of our Canadians business appreciate the disruptive force (and corresponding opportunities) of digital transformation. They also found that less than 18% of the business leaders have a strategy in place that will deal with the shifts, threats, and opportunities in front of them.

It's great that the larger companies and governments alike are taking a stand in the age of digital disruption and embracing technology and innovation to change our nations economic and innovation trajectory and rankings.

But what about the small and medium enterprise. More than 95% of Canadian businesses are considered in this category. Over 60% of them have less than 4 employees. They typically are working around the clock to keep the lights on and revenue flowing. The small and medium enterprise is the engine of our economy. But where will digital disruption and business transformation leave them?

At the Wisdom Exchange, I spoke with small business owners that employ 6 people in a services and call-center environment. Will automation and big data analytics take their jobs? Probably. I spoke with small business owners that manufacture parts that are part of larger systems that are essential to some of our most important industries. Will they have the funds to upgrade, automate, and digitize their operations to compete in the new world? Possibly not. I spoke with partners of small law firms that deliver specialized legal services to citizens or other business owners in rural communities. Will Artificial Intelligence make their jobs obsolete? Most likely. I spoke with the owner of a small trucking company that wonders if he'll need to lay-off his staff when autonomous trucks become mainstream. I would think so.

It can be a scary time for the small and medium enterprise. But none of this will happen overnight. And none of this will cause massive unemployment. Over 150 years ago we had more than 70% of the population work in the agriculture sector. Today, this is 5% or less. And this shift didn't mean that we have everyone else without a job. In turn, consider new employment that come with startups and digital companies such as Uber. Uber, for instance, grew in a very few years to an enterprise with more than 14,000 employees. Jobs that didn't exist before.

Digitization may challenge established processes, jobs, and companies. But for every job that may fall victim of innovation and digitization, new jobs will be created instead. Supply systems evolve. New systems need to be designed. New infrastructure needs to be build. New technologies will need to be created. New companies will be formed. This shows that while our business leaders are preparing themselves for the transformation of their business, skills need to be upgraded and continuous learning becomes essential.

For the owners of a small or medium business, here are some thoughts on how to get started and embrace the opportunities in front of us:

1. Digital literacy…educate yourself on the possibilities and opportunities. Public libraries as well as economic development agencies are taking an active role in supporting citizens and business leaders with this basic understanding of digital transformation.

2. Vision…try to articulate how you can take advantage of the technology changes in front of us. Reach out to your nearest College who are all looking for applied research opportunities that can help you cost-effectively to formulate and start your journey. There are government grants available that will heavily subsidize this.

3. Platform…start building a technology infrastructure and platform that will allow you to upgrade and modernize your operations. Consider wireless networks, mobile technologies, enterprise-grade collaboration, and cyber security to build the foundation needed for your journey. Start connecting people, processes, data, and things.

4. Digitization…add digital capabilities to your next capital or operational expense. Shift conventional operational spending towards digital alternatives (software, automation, internet of things). You are going to spend the money anyways, let's avoid you keep funding the "business as usual" but direct your investments towards more innovative solutions. Many of these digital alternatives can deliver short-term or immediate ROI. Challenge your vendors and suppliers: don't take "no" for an answer.

5. Partner…no one can go at this alone. Team with peers; call on your associations; bring in a partner that may be more familiar with digital technologies.

Cisco has more than 1,900 value-added resellers and integrators. I am certain that you can find a partner that will work with you on make your journey a smashing success.

6. Dream…make time to dream. Imagine the possibilities. Find energy and inspiration in the transformation that is happening around us. Focus on the bright side and engage your employees to help you re-define your business for the future.

These are exciting times…for governments, big business, and the small and medium enterprise. Dream It. Believe It, Do It. #BetterTogether.

#SME #SMB #digitaltransformation #Cisco #RickHuijbregts

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