Assignment Sample on Leading through Digital Disruption
Introduction
Digital transformation not only affects competitive advantage, but also has an impact on the entrepreneurial orientation of a company (Shehadeh et. al. 2023). This digital transformation report proposal aims to evaluate and propose changes which Adidas a multinational corporation designs and manufacturers of clothing, shoes and accessories. The report will provide with clear digital transformation objectives for the next five years as well as evaluate and propose techniques and technologies for Adidas to operate in the market. Moreover, the report will also recommend some innovative approaches for Adidas to maintain a digital culture leveraging two relevant digital leadership.
Task 1: Change analysis proposal
1.1 Overview of Adidas
Adidas is a German athletic apparel and footwear corporation located in Bavaria, Germany. Adolf Dassler found the company in 1924. Adidas operates in the textile and footwear industry. As of 2023, Textile, and other footwear sector globally is expected to reach around US $140 billion and is projected to grow annually by 3.19% between 2023-2028 (Statista, 2023).
The purpose of the company is “Through Sport We have the power to change lives” and their attitude towards the work is impossible is nothing. The company appoints 59,258 employees with the average age around 32 years (Adidas Group, 2023). The products of Adidas mainly comprise of footwear, pieces of apparel and hardware related to sports like Bats, balls, footballs and basketballs. The below figure shows the Net sales of Adidas amounting with 61% of £22,511 million consists comes from Wholesale, 20% from Ecommerce and 19% from retail sales (Supply Chain Movement, 2022).
The company has around 2,000 retail stores and their own e-commerce channel and is available in 65 countries. Out of which 1,057 are factory outlets, 834 are concept stores and 99 are concession stores (Adidas Group, 2023).
1.2 Key areas of Adidas impacted through digital disruption
The key areas where Adidas’s digital disruption has impacted the most is the sales and marketing section of the company. Adidas shifted towards a digital approach soon with some exceptional marketing strategies to promote their products this includes having their own online store. The Figure number 1 shows the efficiency of the e-commerce store of Adidas with around 20% of its revenue generated from store. Similarly, Adidas has a strong social media presence (Adidas Group, 2023). Since, most of the target audience of Adidas is Gen-Z with the most active on social media Adidas recognised this soon and has been able to reach around 7.6 million users through their Instagram Reels for #OpenForum (Social Samosa, 2021).
Moreover, digital disruption has also affected Adidas’s value chain. According to Intelligent automation network, (2022) the digital transformation of Adidas is driven by more than € 1 billion as investments until 2025. The centre of which is the entire value chain from sourcing products to setting to consumers and creation process with 3D design abilities. The company uses digital technologies in Risk mapping in supply chain, its speed factory and has recently adopted a Software as a Service solution by TrusTrace to cover the wide range of material compliance requirements (Supply chain Movement, 2022).
1.3 Digital transformation objectives
The Three digital transformational objectives for Adidas to be achieved in the next five years is improved customer experience, improve collaboration and achieve higher process efficiency.
According to Press et. al. (2021), customer experience is positively connected to the competitive advantage of a company. This means that better customer experience results in competitive advantage for a firm. For Adidas digital transformation needs to be aimed at improving customer experiences since it has the potential to put the brand and product at the forefront.
While improving collaboration is equally significant for Adidas. Li et. al. (2021) found that in addition to digital transformation being effective in establishing a digital technology infrastructure; it also enables internal and external relationships, which as a result improves the capability to address the turbulences in the market environment properly. Thus, making it necessary for Adidas to improve their collaboration in the next five years.
Lastly, improving the company’s efficiency is extremely important because of the fast-paced environment, in which the company operates. According to a report by Fashion United, (2021) the most fast-paced and lucrative item in the fashion industry are sneakers. While to deal with this fast pacing market, Adidas needs to implement digital technologies and improve their efficiency.
Task 2: Data and Decision Process
2.1 Proposing techniques and technologies for Adidas
With the changing conditions be it political, social, economic or technological the only constant in the world is Change, making it necessary for companies to develop techniques and use technologies to adopt to these changes. Some techniques and technologies for Adidas to integrate in their operation to detect market changes in which they operate in are:
Artificial Intelligence: Using Ai in business presents a wide range of use cases for a business. When used in conjunction with traditional methods it can influence marketing strategy, uncover consumer behaviour and deliver service solutions (Intelligent Automation Network, 2022). It can assist in market research by increasing efficiencies, automating tasks, gaining deeper insights and allowing them to use a Natural language processing (NLP) to better comprehend. However, the fact that AI is programmed, bias in algorithmic patterns can be seen because of the bias in the data input.
Microdata: Micro data is significantly increasing in today’s time, as it is the data about the activities of individual consumer. It is the data on the physiognomies of units of a group like households, individuals or establishments collected by a census or survey. For example, Colombi and D’Itria, (2023) used micro data to reveal the differences between the dynamic behaviour across the product varieties and congruently the different levels of predictability. Thus, Micro data can be used to analyse the smallest of the details of the customers, which can be used for better decision making. However, businesses using microdata would need to satisfy the agency-particular edit rules such as linear inequalities and balance equations. This would require highly skilled individuals, which can be costly.
Social targeting: Social targeting is a process of posting or advertising for a specific set of audiences. Brands often target a specific set of segments based on their interests, age and gender to drive sales. Often market changes are specific to certain groups of people, with social targeting Adidas can ensure targeting their advertisements towards a specific set of individuals. However, some users may not be willing to share their preferences giving advertisers and incomplete picture to work with creating issues.
2.2 Digital systems to be chosen to take quick decisions
According to Shepherd et. al. (2023), decision quality and speed are both equally important for the organisation’s prosperity and survival. Since the Textile and the Footwear industry is the fastest paced, it becomes essential for Adidas to develop fast decision-making. Below are some digital systems Adidas can opt for to enhance their speed in decision-making.
Cloud Computing and Edge: By applying cloud technologies, Adidas can handle big data efficiently; it can be stored and accessed from different locations giving the management an edge to take decisions much faster through the insights gained from the data stored in the cloud. While Cloud computing helps in handling data, Edge computing has the ability to process data closer to the source rather than moving it to a different place. This improves the scalability, enhances system reliability and reduces communication latency (Edge Computing vs Cloud Computing, 2022). For example, Nike the biggest competitor of Adidas uses the Amazon Web Services, which is a cloud computing platform service provider, as a result are able to built many capabilities in house for strategic edge and speed.
Open Source Data control analysis: The open source data control analysis is the balance system and checks of sorts. It is defined as the data available and accessible to the public with minimal restrictions and open licenses. Having this information available to Adidas can be used for sharing information pattern tracking and additional analysis, which can influence decision-making (Adidas Group, 2023). However, the data is open for all one who access it thus making the risks of cyberattacks ransomwares increases.
Task 3: Implementing Digital Culture
3.1 Recommendations on some innovative approaches to support digital transformation
According to Erol et. al. (2020), the organisational culture in particular is represented in digital maturity models which signifies that the growing significance of digital culture as an enabler of digital transformation efforts. It not only supports digital transformation but also is beneficial to attract sustainable actions within the firm and also to create value for the stakeholders. A Digital culture is the connection between individuals and the use of technology. It can be described as how the digital technologies have shaped the interactions between the organisation as well as the customers.
There are three innovative ways in which Adidas can develop a digital culture to support digital transformation this includes:
Building a set of practices, which makes the form, stand apart digitally: Promoting habits of self-organisation and rapid experimentation within a framework for decision-making which is data driven. These practises can be presumed to run counter to firms whose values, governance rules and structures were designed for thoughtful stability (Adidas Group, 2023). However, X has shown that these practices can have a significant impact on innovation and self-reported growth positively. Moreover, organisations cannot experiment without the data to measure a particular change effectively. These practices may include constant innovation and self-organisation activities.
Reserving practises which promote stability and integrity. Adidas’s shareholders, regulators, employees and customers deeply feel appreciated when these qualities and practises support them. According to Dreher and Ströbel, (2023) companies who manage their stability and integrity report innovative before men’s that is neither good nor worse than the organisations which do not. However, it is critical to find ways, which can achieve these without hampering the self-organising experimentation approach, which makes innovation, happened. This is where the values of openness, accountability, organisational location, digital culture and giving freedoms within guidelines can help (Stangl, 2020). Leaders should strive to avoid rules where people may use rules to prevent the changes, which they want. These can be done through the leadership of the company by learning non-negotiable skills and technologies to build agility and resilience.
Reorient significant practices, which were only optimised for the traditional world. In order to implement new digital technologies, it is important to reorient or optimise the traditional practises. The interconnectedness and speed of the digital world requires new approaches to design focus and customer obsession. Rather than just asking customers about their needs from a go actively experimenting to value the customer and emphasising on anticipating customer desires can ever build a digital culture which is much more customer centre (Press et. al. 2021). Demanding the most current data on product performance and managing it will help organisations to create a digital culture to manage the changes efficiently.
While to create a digital culture in Adidas the following steps can also be taken.
- Living the values: It is important to keep traditional values of the company while inspiring innovation practices through different tools can increase a customer focus in the company culture.
- Setting the right goals: Management needs to consistently and continuously communicate their strategy, vision and progress on digitalization projects. Smart goals and metrics required to be set in order to create an awareness of the performance.
- Establishing leadership: While building a digital culture it is important to have a chief digital officer as a leader who provides vision while proactively indulging in problem solving processes (Shepherd al. 2023).
- Involving your employees: For leaders one of the challenges during digital transformation is innovation fatigue, which is caused due to the resistance to change from employees. This can be resolved through engaging the employees in the entire process making them feel valued at more agile.
- Monitoring progress: It is significant to monitor the work, which has been done keeping constant updates of the work and listening, and trusting the team is essential for the leaders (Szalavetz, 2020).
- Providing relevant digital tools: To build a digital culture employee need to work with digital tools. Training and providing workshops for the employees to upskill, themselves with these digital tools can help them deal with the situation.
Task 4: Collaborative team leadership
4.1 Proposing two digital leadership styles for Adidas
Digital Leadership for Adidas is required for evolving the digital landscape in order to adapt new challenges and opportunities. Servant leadership can be used at Adidas as it emphasizes on collaboration, empathy and supporting the growth and well-being of the organization. Through this approach, Adidas will be able to foster culture of innovation and sustainability. This leadership approach is focused on the growth of the team (Stonehouse and Konina, 2020). Thus, digital leaders can prioritize the development and empowerment of their teams in order to achieve strong foundation and innovation. Servant leadership encourage decentralized decision making which allows the team member to contribute towards their unique expertise and perspectives. In the digital realm the quick decision-making is consider very important. ‘
Effective leadership needs to actively listen to their team members concerns and ides for their feedback (Stangl, 2020). Through empathy and understanding their challenges, leaders can better align their efforts to their individual strengths that can foster through collaboration and motivation. In this leadership, the team would work towards the elimination of obstacles that can hinder the productivity and creativity of Adidas. Therefore, in the digital aspect streamlining the process with the access and cutting-edge tools and promote their culture of the continuous improvement.
It is very important for Adidas to adapt and innovate in order to maintain its competitive advantage. To do so embracing a transformational leadership style can empower the organization for navigating these changes successfully (Huateng et. al. 2021). The transformational leadership, is said to inspire the organization to navigate through changes successfully. There are key principle of transformational leadership for the digital leadership at Adidas. The articulation and compelling vision of a transformational leader resonates with the values of employee and their aspiration. Technology allows the company to enhance the products and services and customer experiences.
Transformational leaders utilize their passion and enthusiasm in order to inspire their teams and exceed their expectations. Involvement of fostering a sense of excitement about exploring new technologies and experimenting with such ideas can also push boundaries with the possible requirements. These leaders are considered responsible for seeking diversity and continuously refining strategies (Dashkov et. al. 2021). Through transformational leadership unique strengths and potential of each team members can be enhanced and Adidas. In this, the digital leadership context can also involve providing tailored opportunities for the skill development of the career growth and contribution that work together with individual development.
Conclusion
From the above report, it can be concluded that digital transformation outlines the critical need for Adidas to adapt and thrive in the dynamic digital landscape. This report allows various aspects of the company’s operations and provides the insights into how digital disruption has influenced their key areas. In this report, the strategic objective for digital transformation has been clearly defined through the emphasis of the enhanced customer experience, improved collaboration and higher process efficiency. This report addresses the digital culture and its significance on Adidas. This report serves as a comprehensive roadmap for Adidas to navigate the complexities of the digital era.
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