SMEs must beat cultural barriers to digitalize

By Beatriz Marie D. Cruz, Reporter

SMALL and medium enterprises (SME) can better digitalize their operations if they can overcome organizational and cultural barriers, according to the chief executive officer (CEO) of a top Philippine bank.

“Mid-sized companies have a much better chance at succeeding in transformation,” Rizal Commercial Banking Corp. President and CEO Eugene S. Acevedo told a technology summit in Manila on Tuesday.

“Do you have to pay for transformation and innovation?” he asked. “No. Do you have to pay for culture? No. You only pay for technology.”

“But the most important things [in digital transformation] are actually freely available,” he added.

Mr. Acevedo said digital transformation should focus more on organizational changes than on investing in the best technology. “You can buy digital tools, but you cannot buy transformation.”

He likened the difficulty in adopting digitalization to teaching children to eat their vegetables.

“You can buy the best vegetables, but if you don’t create an environment where they feel encouraged and motivated to eat them, you’ll struggle,” he said.

“Similarly, you can invest in the best or latest technologies, but without fostering a culture that embraces change, your digital transformation efforts will fall short,” he added.

Some challenges in leveraging digital transformation include employees’ resistance to change, wrong leadership practices and the absence of support from various levels of the company, Mr. Acevedo said.

He cited the Filipino psychological concept of hiya or shame, which often guides behavior and reinforces accountability, but could stifle innovation.

He also noted the concept of pakikisama or camaraderie, which “builds strong teams as it encourages cross-functional collaboration, but sometimes, it can suppress dissent or new ideas.”

Finally, the bahala na habit or fatalism reflects Filipinos’ “willingness to act in uncertainty and adapt.”

“When these three traits are acknowledged and integrated into the organizational culture, they become weapons and assets rather than obstacles.”

The Philippines fell to 61^st out of 67 economies in the 2024 World Digital Competitiveness Ranking compiled by the International Institute for Management Development.

“When you talk about transformation, it changes the way you do business and how you do your work, so you have to also enhance your skills,” Management Association of the Philippines President Alfredo S. Panlilio told reporters on the sidelines of the summit.

“You have to be able to look at yourself and say: ‘How do I remain relevant in this new business model?’ So, it starts with really the [company] culture embracing this change, and the leadership embracing change,” he added.