Competing globally? Go digital

09 August 2016

Joss Honour / Business Development Manager / Australia Pacific

Which is a greater contributor to GDP growth – digital or bricks and mortar trade in goods? According to a recent McKinsey Global Institute (MGI) report, Digital globalisation: The new era of global flows1, the answer, as you may have guessed, is digital.

The MGI report provides some mind boggling numbers:

  • Tens of millions of SMEs worldwide have become exporters through marketplaces such as Alibaba, Amazon, eBay, Flipkart, and Rakuten
  • Approximately 12 percent of the global goods trade is conducted via international e-commerce
  • 86 percent of tech-based start-ups surveyed by MGI report some type of cross-border activity
  • 900 million people have international connections on social media 
  • 360 million people take part in cross-border e-commerce

Unfortunately, by comparison to the leaders in connectedness, MGI finds that Australia and New Zealand lag well behind the overall leaders – Singapore, Netherlands, USA and Germany. If the rest of the world had participated in digitization at the same rate as the leading countries over the last 10 years, MGI forecasts that global GDP would be $10 trillion (13% higher than actual GDP today).

What do digitisation and connectivity mean?

Connectivity relies on assets – hardware, software, networks. These are relatively easy to acquire. More difficult to find is leadership capable of carrying a business through the digitisation process, which involves large projects such as digitising customer and supplier engagement as well as enabling staff and clients through digital tools.

Playing ‘catch up’

At a recent Melbourne event, Richard Umbers, CEO and MD of Myer, spoke about the department store’s five-year transformation strategy in Australia. The program, “Bringing the Love of Shopping to Life” has been implemented against a backdrop of disintermediation, volatility, uncertainty, complexity and ambiguity largely as a result of disruptive technology.

Not withstanding Umbers’ aspirations, Myer is playing “catch-up” having been a laggard in the area of digital engagement. Myer now has a partnership with eBay and its online sales are growing. By contrast, Ground Effect (a New Zealand biking clothing company based in Christchurch) created its first website in 1998 after starting out in 1994 as a ‘mail order company’. It now has an international following and continues to innovate year after year.

The need for transformation

IMD (International Management Development) wrote in June3 that the first step of the digitisation journey is to “grasp the need for transformation”. The authors suggest asking:

  • How will digital disruptors impact my company?
  • What steps should I take?
  • What capabilities do I need – to protect as well as go on the offensive?

No single strategy is the solution. Nor will your strategy today be the same as is needed in 12 months. Some ideas to start with might be asking whether your company may be able to relocate to a smart office or connect your fleet vehicles. Could you digitize payments systems, marketing and processes that enable closer interaction with customers? Is there software that may help you streamline operations? Most importantly, how can you use technology to help employees be more efficient and provide stand out customer experiences?

Technology will continue to evolve as must your business. Younger companies are not necessarily more competitive than older companies. The advantage belongs to those who can most effectively and efficiently reset their business models to survive3. As a young business, leveraging digital technologies may permit you to by-pass traditional (and expensive) infrastructure in the same way as mobile phone networks have all-but made irrelevant landline telephone networks.

New Zealand companies are generally innovative but now also need to be agile. Digital transformation will help you reach distant markets, connect virtual supply-chains and then grow by exceeding customer expectations.

For instance, it is now possible for successful retail brands to make digital stores their flagships with demonstration of the companies’ personalities and great ecommerce experience to set them apart from faceless corporates.

Retail is not the only sector which has opportunities to become more digital. Harvard Business Review in April2 highlighted that digital spend, usage and provision of digital tools to employees is increasing in mining, hospitality, construction and agriculture – to name a few.

NZTE has the resources to assist you with understanding the efficiencies and benefits of developing your businesses digitally to grow bigger, better and faster.

Joss Honour is a BDM in the NZTE AusPac team and joined in 2015 after more than 25 years in business creating growth strategies for small, medium and large businesses. She is a member of NORA (National Online Retail Association) Australia.


  1. “Digital globalisation: The new era of global flows”, McKinsey Global Institute (MGI) report, February 2016
  2. “Which Industries are the Most Digital (and Why)?”, HBR, April 2016
  3. “The digital business agility imperative”, IMD Webletter, June 2016