Leading Through Digital Disruption: Tesco's Business Transformation

This report analyzes Tesco's digital transformation strategy, focusing on how the retail giant adapted to digital disruption, particularly during the pandemic. The report explores the concept of digital business agility, outlining key steps like hyperawareness, informed decision-making, and fast execution, and suggests implementations such as IoT kiosks and virtual assistants. It also examines the creation of a digital-ready culture, incorporating Hofstede's cultural dimensions and strategies for fostering collaboration and innovation. Furthermore, the report proposes the role of a Chief Collaboration Officer (CCO) to drive this transformation. Finally, it highlights the importance of leadership development and change management models, such as the Lewis Change Management model, to ensure a successful digital transition for Tesco. The report provides valuable insights into the challenges and opportunities of digital transformation within the retail sector.

Leading through Digital Disruption
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Table of Contents
Introduction................................................................................................................................2
The Case for Change..................................................................................................................2
Gaining Digital Business Agility...............................................................................................3
Create a Digital Ready Culture..................................................................................................6
Steer Collaboration.....................................................................................................................7
Develop your Leaders................................................................................................................9
Conclusion................................................................................................................................10
References................................................................................................................................11
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Introduction
To analyze the digital business agility, the chosen organization is one of the largest retail
stores, Tesco that has transformed its business strategy to digital mode during the pandemic.
The report will also focus on creating a digital-ready culture for the organization, steering
collaboration, and developing leaders to support digital transformation within the
organization.
The Case for Change
The chosen organization for changing into digital transformation is Tesco. It is one of the
leading supermarket stores in the United Kingdom having around 4,673 stores worldwide.
Jack Cohen started the multinational supermarket and consumer products company Tesco
PLC in the year1919 and mainly does business in the retail market. Beverages, apparel,
household equipment, and also finance, and insurance are all part of the products offering
(Tesco Plc 2022). Tesco supermarket chains, for instance, are ordinary grocery stores, which
offer largely foodstuffs and a significantly lower selection of non-food items. Tesco's primary
market is the United Kingdom market, which produced the majority of its yearly income.
Tesco's goal is to remain the largest retailer store by providing high-quality offerings at a
cheap price, making them less expensive than rivals.
Initially, Tesco has progressed from being a typical grocery shop to being a retail company
focused on creating its marketing strategy for both its offline and online consumers. An
increase in the fast prevalence of handsets, simple and inexpensive accessibility, and also the
ease of purchasing from any location are the significant factors for the growing expansion of
e-commerce. Tesco's rivals like Asda, Sainsbury, Morrisons have also incorporated online
technologies to stay ahead, and thus, Tesco was left behind. Besides this, the outbreak of the
Covid-19 pandemic has negatively hit businesses globally that led to the rise in e-commerce
businesses (The Guardian 2022). Tesco, Britain's largest retail chain, reported a fifth-year
drop in earnings due to greater expenses associated with the coronavirus epidemic, which
reduced revenues. Customers have also been financially restrained by the covid-19 epidemic,
lowering their purchasing behavior within local offline stores, resulting in a fall in volumes
and decreased profits. The organization also faced additional expenditures associated with
ensuring the safety of its outlets. Tesco has been impacted by the epidemic because of the
lockdown limitations and social alienation, due to alterations within the purchasing style as
well as changes in consumer behavior.
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Therefore, to cope up with the challenge of rising online businesses and to tackle the situation
of the Covid pandemic, Tesco has decided to transform its retail business process to digital
business to retain its existing customers. The epidemic has accelerated the movement towards
the proliferation of online and increased purchases using e-commerce platforms. Tesco aimed
to establish the digital buying process as easily as possible while also personalizing it because
during the epidemic, retaining customers' trust and loyalty remained critical (Zhou et al.
2021).
The main objectives of the digital transformation of Tesco have been described below-
 Gaining customers' trust by providing a safe buying process for customers.
 Through digital transformation, Tesco has also aimed to increase its sales and profit
and at the same time retain its existing customers.
 Another objective is to offer a unique experience to customers through digital
transformation.
Gaining Digital Business Agility
Digital agility enables firms to swiftly build, evaluate, and introduce new technologies,
methods, and activities (Lin et al. 2020). To gain digital business agility, Tesco needs to
focus on initiatives and technologies. In this challenging digital business market, the Global
Center for Digital Business Transformation (DBT Center), has designed a Digital business
model, to help organizations in developing business agility (Baslyman, AlGhamdi and
AlMuhaysh 2020).
Fig 1: Digital Business Agility
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(Source: Baslyman, AlGhamdi and AlMuhaysh 2020)
Hyperawareness informed decision making, and fast execution constitutes the three basic
steps for developing a digitally agile organization. An organization like Tesco must build
these competencies to react fast and efficiently to customers' requirements and also to
capitalize upon emerging market possibilities. Following these steps will help the retail store
to develop an agile digital business process which will further increase its sales and will also
improve customers' experience.
Hyperawareness- The capacity of a corporation to recognize and analyze shifts within a
corporate context is referred to as hyperawareness. Organizations that have been hyperaware
are incredibly informed about their surroundings, especially developments that indicate
possibilities or risks. Organizations must have the capacity to perceive transformation within
their surroundings by gathering pertinent insights to adapt to the digital revolution. That
information could be gathered both from the internal factors (employees, stakeholders, and
customers) and external factors (market, trends).
In the case of Tesco, one initiative to remain hyperawareness is to implement an interactive
Kiosk for improving customer experience and also to increase business sales amidst the
pandemic. According to Chauhan and Sarabhai (2018), an interactive kiosk includes sensory
equipment that is combined with technology to assist in meeting customers' and employees'
needs. Consumers would be able to interact using digital signs using contact or speech,
allowing them to access precise data regarding products and services. Furthermore, this
would enable consumers to acquire data, goods, and experiences while interacting
through Kiosk. Nevertheless, an interactive kiosk provides a digital option. The
system enables buyers to create transactions in-store digitally at Tesco. Furthermore, the
system will also assist in improving staff’s satisfaction level by reducing their pressures and
boosting their capability in managing their work pressure.
The Kiosk system could be implemented in the retail organization with the help of the
Internet of Things (IoT). The Internet of Things (IoT) comprises a system of linked real items
that are integrated with sensors. The Internet of Things enables such gadgets to connect,
analyze, and exchange information. IoT devices may substantially improve a customer's
online experience; therefore, installing IoT kiosks will help the organization to understand
customers' needs (Meinert et al. 2018).
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Informed decision making- The process of informed decision making refers to a
corporation's potentiality of creating the best solution feasible under any specific scenario.
Decisions should be related to facts instead of previous events and should be communicated
across the business. Organizations should have robust data analytics tools that assist in
creating informed decisions (Baslyman, AlGhamdi and AlMuhaysh 2020).
However, to emphasize the informed decision-making process of Tesco and to build a
customer-focused business, it is advisable to implement a virtual assistant on their website.
During the pandemic, as customers preferred to buy groceries and other products through
online mode, therefore, a virtual assistant would be a great initiative to assist customers in
buying products. After browsing the company s webpage, customers could access the virtual
assistant by speaking directly through their device. Like a real salesman who may aid clients
in picking the best alternative, the virtual assistant would lead consumers in selecting the
right products depending on their choice and preferences.
This could be done with the help of Machine learning (ML) technology that will allow the
management of Tesco in collecting consumers' data and insights and using those during the
customer's buying process. The most valuable aspect of machine learning has been its
predicting ability, which enables Tesco to utilize previous and current consumer and
operational insights to forecast upcoming behavior and patterns.
Fast Execution- The capacity of a corporation to respond to the changing environment
rapidly and successfully is called fast execution. This seems a critical skill in the digital
world, wherein alterations are continual as well as rapid. Furthermore, possessing adaptable
techniques and expertise which could swiftly change and modify between project activity is
critical for developing a continuous utilization of capital and assets and responding fast to
changes.
To initiate change within the organization, Tesco needs to focus on the Lewis Change
Management model. To make change happen smoothly, Lewis focused on three processes-
unfreeze, change and freeze (AlManei, Salonitis and Tsinopoulos 2018). In the unfreeze
process, Tesco needs to unfreeze its current phase to implement the digital process. In the
change process, the organization should focus on incorporating the change. To adapt to
digitalization, Tesco could develop an in-person shopping experience for its customers
through Virtual Reality (VR) technology. Through VR, the retail business could offer a 360-
degree view of its stores along with products, to make their online buying like in-store
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buying. This would lower store operational expenses while providing customers with a
holistic, compelling, and comfortable experience. Lastly, in the refreeze stage, assuming this
change to be permanent, Tesco will lock this new initiative and focus on this to improve
customer experience.
Create a Digital Ready Culture
As stated by Westerman, Soule and Eswaran (2019), a digital organization does not only
focus on offering digital goods and services but also uses technologies to support basic
processes. According to Think with Google (2017), each business seems to be at a distinct
stage of digitalization. There would never exist a one-size-fits-all approach because every
company possesses its unique distinct culture. Culture measurement provides a clear
direction for organizations to follow along their path: a means to understand and analyze the
real objectives. Moreover, to instill the digital culture at Tesco, it is important to focus on the
6 Hofstede dimensions of culture.
Power Distance- To approach cultures at both sides of the spectrum, communication styles
within digital-ready culture must include both direct and suggestions-oriented aspects.
Therefore, Tesco could apply the Agile system for virtual communication (Li 2020).
Individualism vs Collectivism- Fast execution and staff empowerment are critical within
digital-ready workplaces. Tesco could provide freedom to its staff in providing strategies for
the company's growth and should also focus on prioritizing group work.
Masculinity vs Femininity- Within a digital organizational culture, Tesco needs to motivate
both male and female staff to improve collaboration.
Uncertainty Avoidance- To adapt to digital culture, Tesco needs to concentrate on improving
communication to reduce uncertainty.
Long vs Short term Orientation- Before the exercises have a "check-in" event so that
everyone is on the same page.
Indulgence vs Restraint- Workgroup chat services and networking platforms are essential for
cooperation and synchronization.
Based on the features of Digital Ready Culture, by Think with Google, Tesco could create a
digital-ready culture by-
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Putting customers first- Tesco should deploy digital information and services to showcase
usability and value to consumers. and thus, must place a premium on authenticity and
sustainability. Technological decisions will be focused on offering benefits to customers
(Merks-Benjaminsen 2018).
Creating a collaborative culture- Collaborative culture could be developed at Tesco by
embracing employees' differences and bringing them together to achieve the above-
mentioned digital transformation objectives.
Instilling a culture of innovation- To establish a positive innovative culture, Tesco should
offer its staff members the necessary information, tools, and skills to enable them to innovate.
It is advised that to grant knowledge and make people conscious about innovation, staff
should actively participate in the innovation phase through creative programs.
Becoming a digital champion- To promote digital culture, it is required to create an agile
organizational structure. Tesco should put more emphasis upon cross-functional
collaborations to boost ROI and also consumer engagement by concentrating on the end-to-
end customer feedback rather than focusing on timelines, estimates, or expenditures.
Steer Collaboration
To change perceptions among employees and to encourage cooperation, it is required for
Tesco to hire a Chief Collaboration Officer (CCO). A responsible CCO will focus on creating
a collaboration for digital transformation.
Job description for the position of CCO at Tesco
Position- Chief Collaboration Officer (CCO)
Salary- $85,000 to $ 1, 25,000
Job Status- Full Time
Reporting to- CEO
Job Description
The (CCO) is in charge of assembling and leading a diversified workforce. A CCO would
place a strong emphasis upon inventing different values by using technological resources,
networks, and operations. The CCO is responsible for coordinating and executing the
team's planning process, hiring, funding and sales and marketing, and program assessment.
Roles and Responsibilities
 Manage the creation of a personnel strategy, which includes hiring, onboarding,
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remuneration, and assessment.
 Create an operating spending plan to assist in the effective implementation of the
yearly company plan (Ecodistricts.org 2022).
 Ensures that all regional, state-wide, and national employment legislation are being
followed.
 Implementing industrial standard practices and guidelines in the hr department, and
administration.
Suggestions for the CCO to improve communication among the team members and
departments within the corporation-
 To improve communication amongst team members, the CEO needs to ensure that
everyone remains on the same track by stating every member's role clearly to avoid
conflicts.
 It is also recommended to foster a collaborative culture. This entails communicating
the schedules and job objectives linked with several departments of the company. It
entails developing a clear knowledge of each team's position within the company
(Kremer, Villamor and Aguinis 2019).
Develop your Leaders
Leadership formation promotes employee retention, improves the firm's capacity to cope with
skilled personnel, and decreases the problems and expenses related to attrition. To support
digital transformation within Tesco, it is important to develop an effective leadership style
based on Goleman's leadership styles. The Goleman leadership styles focus on six types of
leadership which include- affiliate, commanding, democratic, pacesetting, coaching, and
visionary.
Affiliate- This type of leadership style focus on creating harmony within a team in a tough
situation. This type of leader solves group conflicts through collaborative measures. They
also focus on showing empathy to customers and employees (Boyle et al. 2018).
Commanding- This leadership style wants others to work as per the leader’s command. This
leader also requires a quick response from the team. This style is only good during a crisis.
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Democratic- This leadership seems particularly successful at inspiring teammates for
improving performance and focus on transparent communication. Ask members to share
feedback for designing business strategies.
Pacesetting- This leadership style focuses on getting a high-quality result from employees
and keeping them under pressure by setting high standards.
Coaching- This leader help in developing future leader by analyzing members' skills and
limitations (Boyle et al. 2018).
Visionary- This particular leadership style motivates others to work towards the same goal
and also shows empathy to the employees.
Based on the above-six Goleman’s leadership styles, it could be stated that the democratic
leadership style could be implemented in Tesco to establish collaborative work culture for
supporting digital transformation. This style of leaders will involve employees in the
decision-making process which would lead to framing unique and innovative ideas and plans.
To develop the coaching leadership style, it is recommended to Tesco implement the
leadership GROW Model. The GROW Model offers a coaching paradigm to unleash the
ability and strengths of individuals to develop their leadership styles (Yount et al. 2018).
GROW means- goal, reality, options, and will. This particular model will help the
management at Tesco to develop a democratic leadership style among the leaders. The
GROW model for developing a democratic leadership style is as follows-
Goal
 To develop a democratic leadership
style at Tesco for supporting digital
transformation.
Reality
 Leaders face problems in showing
empathy to others.
 Self-controlled leaders
Options
 Analyzing alternative possibilities to
change existing styles of leaders.
 Reverse mentorship, in which young
workers counsel the leadership, for
leaders learning about digitalization
and cultural trends.
Will
 Providing them leadership training.
 Establishing collaborative culture by
applying a 360-degree feedback
process.
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Conclusion
The following report has thoroughly analyzed the digital transformation of Tesco and also
focused on establishing digital-ready culture by establishing a collaborative culture. To
support digital transformation, the report also analyzed the prime duties of CCO and also
explained that a democratic leadership style will be appropriate for supporting digitization
within the organizational culture.
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