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Fundamentally, the goal of a business is to maximize value. Share price-to-earnings ratio is only part of the equation now. Shareholders are putting a lot more emphasis on whether the business will still be relevant in a future given the changing landscape of societal values, new business models, and disruption brought by digital. So, digital will bring either opportunity or threat to the business.

3 key points
1. No longer can we separate digital strategy and business strategy. These two aligned strategies must be the #1 agenda for the CEO.
2. Supplier-customer relationships have to change. We have to start thinking differently about how we can collaborate and co-create the solution of the future. But there’s another level to collaboration, and that is the collaboration between humans and machines. Data and analyticsprovide timely insights that are key to delivering performance. But, more importantly, the feedback from operators is key to ensure continuous improvement.
3. It’s not just about technology. It’s about culture and mindset. If the company culture does not give people the agility to respond, you won’t make it. As with any technology, the competitive edge that digital brings to the company will be normalized over time across the industry. The winners will be the companies that are agile, and able to take action on the insights. This will require a change in the way of working. And what are you doing to get the organization to be more empowered? That means pushing the decisions right down to the front line, and how agile is the organization to responding and delivering on its goals.

We’ve seen over the years many large successful companies that are just not able to re-orientate and transform the organization. In my experience, this is the most difficult to achieve— creating the urgency and need for change, and implementing the change seamlessly within the organization.

Petronas is trying to do a lot more communication inside the company. We have an app now called Switch that educates the whole company on what digital and cyber security are all about. Because it’s very difficult to transform the whole organization at the same time while meeting a customer needs, we’ve built ventures at the fringe of the organization. Hopefully, over time, the organization will absorb the culture of these ventures.

The other thing that will be big is figuring out how to de-silo the organization across the value chain. Digital will provide a great platform for doing this, where data becomes transparent across the whole organization and allows it to run as a single entity.

There’s an over-arching thing that has to be the obsession of the company: the customer. Everything has to be done from the customer lens.

By Datuk Md Arif Mahmood, EVP & CEO Downstream