‘People are more afraid of digitalisation than they should be’

Source: EY Inzicht; De Tijd Connect (12/05/2018)

More data is available than ever before, digital trends are popping up one after the other and disruptive business models are cannibalising the turnover of many large companies. Is this revolution a threat or an opportunity?

Patrick Rottiers, CEO of EY Belgium and Marion Debruyne, Dean of Vlerick Business School, put their heads together to brainstorm data, disruption and digitalisation.

Patrick Rottiers (EY) - Marion Debruyne (Vlerick Business School)
Patrick Rottiers (EY) and Marion Debruyne (Vlerick Business School) © Frank Toussaint

The term disruptive innovation comes from the groundbreaking book ‘The Innovator’s Dilemma,’ published in 1995. In this book, Clayton M. Christensen describes how smaller companies can successfully cannibalise established names. Successful companies traditionally focus on products and services for their most demanding clients. However, they often ignore the needs and wishes of their less profitable clients as a result. If new players with new business models can satisfy these needs more efficiently, they can quickly steal market share from the established names. This is known as disruption. The best example is probably the low-cost airlines in the aviation sector. They completely overturned the whole sector in a very short time.

‘If data is used in a digital way which is linked to disruptive business models, the whole environment changes.’ Marion Debruyne, Dean of Vlerick Business School

‘Disruption has become rather overused,’ says Marion Debruyne. ‘These days it is even taken to mean innovation in general, or digitalisation. The result? People are more afraid of digitalisation than they should be.’

Added value

RPA or Robotic Process Automation is a good example of digital innovation which does not need to be disruptive. ‘If we use RPA to automate several processes in a company, this is a technological evolution. However, this will not necessarily cannibalise the business model. This is an important distinction,’ says Patrick Rottiers.

‘First and foremost, employees have their hands full just monitoring and adjusting the robots,’ continues Rottiers. ‘The results then need to be interpreted, packaged and communicated. Employees gain time to tackle more interesting tasks, with greater added value.’

The content of the job needs to be redefined as a result, which requires additional training. But if you tackle this properly, it is not a threat but actually a good opportunity. Debruyne mentions the digitalisation of several lectures at Vlerick as an example: ‘Professors now need to teach online in front of a video camera. We are also using interesting digital tools which allow us to collaborate online. Training is needed for this, but it is actually very rewarding.’

‘At EY, audits will take place entirely on computers five years from now,’ says Rottiers. ‘We would usually bring in new staff to carry out the regular, repetitive tasks. Now that these are automated, new staff will need to perform more complex tasks which offer greater added value from day one. This is one of our biggest challenges today.’

The 3D world

‘If data is used in a digital way, transactions are as good as free and take place in real time. If you link this with disruptive business models, the whole environment changes.’ The consequences can be seen at industry level with the emergence of players such as Netflix, Uber or Airbnb which threaten the established names in an entire sector. Megatrends also have a major impact at company level. Staff need to be trained how to handle information differently, have the courage to experiment and change course more quickly.

Revolution

‘We are still right at the start of the digital revolution,’ says Rottiers. ‘Things are moving fast and the acceleration of innovation and disruption is still underestimated to this day. That's why agility is the key word.’ Things are buzzing in Silicon Valley, in China and also in some places in Europe. ‘Things are certainly moving fast in the sectors in which Vlerick has special expertise,’ says Debruyne. ‘In particular, healthcare, energy and finance are now being confronted with HealthTech, CleanTech and FinTech.’

‘Digital automation gives employees time to tackle tasks which offer greater added value.’ Patrick Rottiers, CEO of EY Belgium

‘We are also hard at work here in Belgium,’ continues Debruyne. ‘Our well-educated people are a great asset. Several successful scale-ups, such as Showpad, demonstrate that you can also grow in Belgium. All the same, innovation is still driven by technology here rather too often. Successful innovation is best when it starts from the business model.’

Rottiers agrees: ‘We are good at technology and innovation in our country. One reservation is that we still lack the courage to keep going. Faced with initial success, all too often people tend to go for the easy money. We certainly have the capacity to keep growing. We are very strong at the management level. Globally speaking, many Belgians hold the reins of large companies.’

Experimentation

Companies which wish to survive need to constantly scan their environment to spot new trends. They must have the courage to experiment and to redesign their own successful business model before someone else does. However, the ability to operate fast and flexibly within a network of external partners is also a crucial skill in the digital revolution.

In The Factory, EY has an interesting initiative which allows the firm to support creative collaboration beyond company boundaries. Start-ups are asked to come and work on specific challenges within the organisation. ‘The automation of VAT listings is a good example,’ says Rottiers. ‘This was a labour-intensive manual process, but we didn't have the skills in house to automate the process. We therefore invited five starters to tackle the problem. By working together, we quickly developed an optimal solution.’

The EY Wavespaces are another initiative. In these technological “labs”, start-ups and EY colleagues can try out and co-develop the latest technology. ‘Our established clients also drop in and this often leads to some exciting cross-pollination,’ says Rottiers. ‘I am looking forward to the summer, when the EY Wavespace in our new office in Antwerp should be operational.’

The regular hackathon competitions also mean that experimentation will form part of the culture at EY. ‘We challenge our people to spend 24 hours concentrating on several clearly defined problems from our day-to-day practice. This always leads to creative solutions.’

Directors

To get innovation into a company's DNA, you need the courage to free up time and resources. You can't delegate a change in culture. The top management must set a good example.

‘The directors must also get on board, so to speak,’ says Rottiers. ‘Directorships used to be more ceremonial than functional. These days, directors are expected to help the company guarantee a broader view of the world. You need diversity for that. It's a good idea to integrate one or more successful starters into the board.’

‘We've just done this at Vlerick,’ says Debruyne. ‘Louis Jonckheere, co-founder of Showpad and alumnus of the school, recently joined our board of directors.’

Marion Debruyne
  • Civil Engineering at UGent in 1995.
  • Special degree in Marketing at Vlerick Business School in 1996.
  • PhD in Applied Economics at UGent in 2002.
  • Between 1999 and 2005, she was affiliated with Wharton School (University of Pennsylvania) and was also a visiting scholar at Kellogg Graduate School of Management and Goizueta Business School.
  • Associate Professor and Partner of Vlerick Business School since 2005.
  • Dean of Vlerick Business School since 2015.
Patrick Rottiers
  • Master in Economics and Far Eastern Business.
  • Employed by EY since 1988.
  • Partner since 2000.
  • Real Estate Leader EY Belgium in 2003.
  • Managing Partner of the Antwerp and Limburg region since 2008.
  • Audit engagement partner at EY Bedrijfsrevisoren since 2011.
  • Member of the Regional Leadership Team of Belgium, the Netherlands, Luxembourg and France.
  • CEO of EY Belgium from 1 July 2017.