Kathy Gibson is at the Deloitte Risk Conference in Sandton – Arguably one of the biggest risks facing business today is the speed of digital transformation and innovation.

These create a lot of friction that we need to address, says Thiru Pillay, MD: consulting at Deloitte Africa.

“Even in our own organisation, one of the challenges of the speed of innovation is compliance, processes and policies.”

Digital transformation and the fourth industrial revolution are changing the way the world thinks, Pillay points out.

Digitalisation will result in the dematerialisation of business, he believes. It will also result in the adoption of cognitive technologies, within the context of cloud.

“The convergence of these technologies is what is creating impact,” Pillay adds.

Legacy businesses have to change in order to keep up with new entrants.

As the representative of a legacy business, Tawanda Chatikobo, head of digital channels and product at Nedbank, says a large part of his day is meeting challenges that may not exist today.

“How do you understand what digital is? It is about breaking things, which equals disruption, which equals risk. The question to ask is how do I safely manage risk to give us a competitive advantage.”

Companies have to embrace risk, Chatikobo says, and figure out how to manage it to create competitive advantage.

As a challenge, Sandile Shabalala, CEO of TymeBank, points out that digital is inevitably going to drive major disruption.

“We need to figure out what customers are looking for, and what they are used to. Business needs to shape itself to mirror that.

The business I am involved in tries to break the barriers, think differently about how to provide services in a more cost effective way.

“People are looking for simplicity; there is a cry out there for us to simplify things. And you use digital to simplify things.”

For traditional business, compliance and regulation has been a huge factor preventing businesses from innovating, he adds. This means they have a standard way of operating in a way he regulator expects.

“It is interesting when you shift the dynamic to what customers are looking for, rather than try to get the customer to fit into what we are offering.

“This is a big ask for businesses, and being able to embrace digital going forward presents a lot of opportunities and challenges the status quo. It lets us think of new business models.”

Shabalala points out that traditional businesses will have to unlearn a lot of things to catch up.

A company like Coca-Cola is a long-established brand, but still needs to adapt to the new digital world.

Priya Thakoor, chief digital officer: southern and eastern Africa at The Coca-Cola Company, explains that companies have to first define what digital is – and companies often battle with this.

“So we have to start with that what is digital in the business in the era we are in, and what it will be in the future?”

Many definitions are not inclusive enough, she adds.

“It is five languages: it has to talk business and understand commercials. As digital champions we need to understand all elements of the business.”

Another language of digital is technology and how it can help to improve business operations.

Consumers are the third language, closely aligned to the experience – which is not something that traditional business tend to have taken notice of before.

The last language is that of innovation, or edge. “How do you take all the assets of the traditional business, and take them to another level using digital and the convergence of technologies.?”

One of the biggest challenges about digital is that competition won’t come from traditional competitors, Chatikobo points out.

This means that companies shouldn’t be benchmarking themselves against the competitors in their own markets, but against the best organisations in the world – from any industry sector.

“We need to understand how to move at the speed of the customer – and ensure that my mother can understand it. Digital needs to be simple; you need to be able to understand it instantly.”

A big issue holding South African companies back is that fact that many big companies don’t really believe these trends will affect them, Thakoor says.

“We need to understand that the threats are coming, and from different parts of the world.”

Shabalala adds that the ecosystem will be key to making digital successful. “Although this brings in a different risk when there are partners that you transact with.”