Harnessing technology for purpose-led growth

MENA companies should embrace new technologies to reimagine a less risk-prone and more agile future to help keep pace with customer demands.

In brief

• MENA companies that want to pursue digital transformation are helped by a supportive enabling environment: tech-savvy populations, strong connectivity and telecommunications infrastructure, and governments that see the power of digital.
• To succeed, the C-suite needs to rethink common assumptions of the past, including how to measure returns on investment in technology, and should investigate how broader tech trends could be reshaping what business they are really in.
• The “human factor” should be at the heart of technology adoption, including cultural norms, language preferences and digital skills.

MENA CEOs’ top three actions

The pandemic has made digital transformation a necessity across every business sector and function, but technology adoption needs to be strategic, purpose-driven and deployed with people in mind.

Digital transformation is no longer a luxury, but a necessity for all industries. The pandemic has forced every sector and enterprise to accelerate their use of cloud and collaborative platforms, and double down on innovations like artificial intelligence (AI) and automation to boost resilience and agility. Such a broad-based transition impacts the roles and mandates of all functions, from the CEO to the frontline. With a majority of CEOs (68%) surveyed for the global EY CEO Imperative study saying they are planning a major investment in data and technology over the next year, how can this major uptick in spending achieve its desired effects? And what should CEOs in the MENA region pay most attention to?

A digital-first mindset means scrutinizing every aspect of the business — production, back-office, customer experience and a tech-enabled workforce. It means questioning whether some steps in a customer journey are needed at all, and redirecting repetitive workloads done by people to bots, allowing human workers to focus on more creative, complex and interpersonal tasks. It could mean creating new capabilities entirely, such as predictive analytics. The vast majority (88%) of respondents to our survey, for instance, said it is likely that using data science to anticipate and fulfill individual customer needs will be a key differentiator in the next five years. Whether your industry is services or goods, private or public, consumer-facing or business-to-business, a digital-first mindset means looking at how technological capabilities can re-shape the business and allow it to do new things. In some cases, this could mean redefining what the company’s purpose is. Is an airline, for instance, just a ticket-booking service or an “experience economy” brand? As transactions become commoditized and automated, companies need to climb the value chain in ways that redefine what they do.

1. Adopt a digital-first mindset

In the past, technology adoption was driven by IT departments, often after lengthy lobbying of the chief executive and chief financial officer (CFO) for resources. In addition, digitization often meant simply putting the existing business online.

A digital-first mindset, in contrast, is a more fundamental reframing of the future. Do current and emerging technologies change what business you are really in? Consider, for instance, the difference between finance sector incumbents offering online banking compared to the FinTechs who reimagined what personal banking is, such as offering sophisticated budgeting or financial planning tools.

2. Consider the human factor

Technology must be designed and deployed with real users in mind, rather than companies only considering people’s skills and behaviors — whether that be customers or the workforce — downstream. The “human factor” could mean consideration for digital literacy and skills levels, cultural norms, and language preferences, such as greater use of Arabization. It could require revising talent acquisition strategies to accommodate the styles and preferences of tech and data talent. It also requires understanding social attitudes around the ethical, privacy and security risks of technology. Only 34% of CEOs in our survey said customers trust them with their data.

The MENA region has a strong enabling environment for companies pursuing digital transformation. Its citizens are tech-savvy, and the telecommunications, connectivity and digital infrastructure are world-class among higher-income GCC nations in particular. Active government investment in technology for public services and supporting digital entrepreneurship are strengthening the talent pool. A “connected citizenry” helps companies move to a digital-first business.

The region also has local nuances that should be accounted for, such as a strong cultural preference for in-person meetings. That suggests that remote and distributed work will not be a central feature of daily business in the future once the COVID-19 pandemic risks are ameliorated. There are challenges too. Labor markets are distinctive, reflecting the socio-economic dynamics of the region. Saudi Arabia has a comprehensive workforce nationalization program to improve labor market participation, which needs to be balanced against a workforce strategy that can quickly fill key digital skills gaps where they appear, especially in fast-moving competencies like data science. Less populous nations like the UAE, where expatriates constitute the majority of the private sector workforce, need to stay competitive in the global battle for digital talent. This requires them to focus not just on compensation but also on ensuring a working culture and environment that appeals to that talent. This might include more agile working methods, flatter structures and less hierarchy, and more experimentation.

3. Enable a tech-savvy C-suite

Boardroom power dynamics are in flux. Chief technology officers (CTOs) and chief information officers (CIOs) are moving from an era in which they were pushing for resources and budget to one in which the CEO and board are pressuring them to implement digital transformation faster. Our CEO Imperative study found 39% of CEOs now think CIOs should lead business transformation initiatives.

Yet while CTOs and CIOs might be thankful that they no longer need to make a case for technology investment, they have fresh challenges. That includes skillfully synthesizing technologies and capabilities into the business and understanding how both can be leveraged to drive forward the digital road map. They need to weave technologies into the organization, rather than impose them from above, and ensure technology can bolster resiliency and promote corporate purpose, rather than simply improve efficiency.

They also need to work across the C-suite to develop new benchmarks for evaluating return on investment. The past approach relied on financial modeling to often justify multimillion-dollar spending plans. Now, companies can benefit from the huge financial and technical investments that have been made by the global tech giants into the enterprise cloud and capabilities like AI, without having to spend vast sums themselves. CEOs may also need new accountabilities and incentives to capture the many benefits of successfully deployed technology on the company, including customer satisfaction, employee retention and corporate resilience.

By viewing technology as a core strategic question, rather than an operational or efficiency matter, corporate leaders can avoid getting overwhelmed by a constant bombardment of new vendors. Digital transformation should not mean glorified IT projects. Instead, CEOs must ask why the company is going digital and where it wants digital to take them and let that clarity dictate their path.