Industry articleResponding to digital disruption in a large organisation: the Woolworths Story

Digital disruption is here and is already transforming the way companies and organisations interact and en-gage with their customers. While disruption presents significant opportunities for Australian businesses, the biggest risk facing leaders and executives is not to take any action at all. It’s now a fact: ignoring the wave of digital disruption will result in the loss of customers, and ultimately result in business failure of extinction.

Business leaders only have to look at the demise of big brands like Nokia, Video Ezy and Kodak who are on the brink of extinc-tion due to a lack of innovation, to see the threats of disruption are very real. Accord-ing to Ryan Fahy, Chief Technology Officer at Woolworths there are a number of impli-cations for large organisations if they don’t formulate a strategy about how to respond to digital disruption. “The risk is there’s a competitor out there who we don’t know about, who has a good idea that will hurt our business. If we don’t respond to it, or we respond to it too slowly, they would have already made huge inroads into the sector and potentially have started taking customers away from us,” he says. So what steps is the retail giant Woolworths taking to tackle the threats associated with digital disruption, as well as to take advantage of the opportunities it can provide?

“Moving quickly means that different parts of our organisation need to interact nd talk to each other, when traditionally in the past they would not“

Ahead of Digital Disruption, Ryan Fahy ex-plores the fundamental elements of Wool-worths’ digital strategy, and the methods used to overcome the challenges the business has faced on the road to digital transformation.

The challenge: innovating in a large organisationWoolworths is a large and complex organisation, whose customers’ rely on being provided with high quality products. And as to be expected in a large organisation, there are a huge number of processes and people involved in delivering high quality service and products to custom-ers Australia-wide. Fahy says it has been these processes, and the fact that Woolworths is such a big organisation, which has been their biggest limitation in terms of innovating. “Innovation requires a business to move and respond quick-ly. This is something that has been a big chal-lenge for us. It’s forced change across the board, because moving quickly means that different parts of our organisation need to interact and talk to each other, when traditionally in the past they would not,” he says. The concept of ‘moving quickly’ is echoed by the business’ approach to innovation. Fahy explains responding to digital

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disruption is about taking risks and accepting that failure may be involved. This can be some-what daunting for a large business like Wool-worths, with numerous internal systems and processes. This can be somewhat daunting for a large business like Woolworths,

with numerous internal systems and processes. If you look at the skill sets in large organisations such as ours, huge risk-taking mentalities is gen-erally not part of our company’s DNA. If you look at the skill sets in large organisations such as ours, huge risk-taking mentalities is gen-erally not part of our company’s DNA. Despite this, Fahy says he has been pleasantly surprised with the reaction of Woolworths staff to digital transformation, and the idea of ‘risk taking’ in the wake of digital disruption. “Even within large organisations like ours, there are enough people who have that risk taking mentality and can do it with a sense of stewardship over the stakeholders funds. We’re finding we do have people within our company that have the right spirit and mentality to facilitate innovation,” he says.

Creating a culture of innovationAccording to Fahy, the idea of creating a holistic, detailed digital strategy is not always the right step for oragnisations to take when it comes to innovation. According to Fahy, the idea of creating a holistic, detailed digital strategy is not always the right step for oragnisations to take when it comes to innovation. “For me,

digital strategy is creating the right culture, the right relationships, the right dialogue and the right capabilities. This enables staff to have the right degrees of freedom to respond to external challenges, but also allows them to be agile and nimble enough to respond to the opportunities bought about by disruption,” he says. One way Woolworths is facilitating a digital culture, is through the creation of a ‘chief customer and data officer’ in September 2014, who is at the heart of the organisation and drives innovationbased on changing customerbehaviour. Fahy says data is being used in two ways in order to meet changing customer demands brought about by digital.

“On one hand we’re using data to see how we can better meet the needs of our customers. But we’re also using data and innovation in terms of how can we actually improve the movement of physical goods for our customers. We are work-ing on new and better ways of delivering those foods at the right place at the right time, to meet our customers’ needs,” he says. One example of how Woolworths is responding to their chang-ing customer needs, is through the creation of it’s first dedicated online store, which opened at Mascot in August 2014.

And with Woolworths’ total online sales, in-cluding general merchandise, exceeding $1

“For me, digital strategy is creating the right culture and the right capabilities. “

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