Digital disruption is challenging many companies in traditional industries and service organisations. Surviving significant change requires new ways of thinking and a strategic mindset.
Leaders must reimagine and reinvent the business itself.
You will need to rethink the way you do business, to become more efficient, smarter, and, most importantly, to be customer-centric.
This is about leadership of the organisational and cultural changes needed to re-align around the cross-functional value-chain, so that revenue is secured by iteratively delivering augmented products and services, so that the company stays relevant as the world moves on.
Please read on for an insight into why change is hard, and what you can do about it.
Do you recognise these challenges?
- Your customers are no longer to be marketed to and persuaded to buy. Instead they seem to network with each other, seeking social proof rather than listening to your marketing department, and are wary of any sales manipulations you offer.
- Your business used to compete with rival companies that looked very much like yours. Today companies from outside your industry, who look nothing like you, offer competing value to your customers. You've pulled the levers that used to work, but you're not agile enough to stop this asymmetric challenge.
- You've noticed that data is generated in unprecedented quantities from every conversation, interaction and process, inside and outside of your business. But it's no longer structured, and there is so much that it's becoming overwhelming. The challenge is understanding what it all means, and then using that insight to make vital decisions
- You know that you need to innovate to stay relevant, but it is difficult. So many ideas float up, but you can't do them all and don't know which ones to back. There is still a singular focus on the finished product, because market testing is difficult and costly, and you rely on the intuition of your time-served managers, with the hope that there is meaningful data, somewhere, to give you insight. Your competitors are rapidly iterating their products and it appears that their continuous learning makes them quick to gain market feedback, and to act on it.
- Your successful company had a clear value proposition, had found a point of market differentiation (price, features, service or quality) and focused on execution year on year. Now, you realise that relying on an unchanging value proposition will be inviting challenge and disruption by new competition.
- Your traditional hierarchical organisation structure has created silos and internal protectionism. It's difficult to focus your resources on the cross-functional business processes necessary to create ongoing customer value. Your competitors seem to have a flat, value-creating organisation, with staff empowered to make decisions.
Digital disruption has meant that traditional businesses have been forced to rethink their products and services, and to reconsider the structure of the organisation that delivers them. You will need to think through your response to the challenge - and opportunity - this represents.
There are good reasons to embrace your digital future sooner rather than later:
Increased profits. Businesses can expect to grow revenues significantly as a result of adopting digital strategies. Digital mastery is an outcome when digital capability and leadership capability are combined; the MIT Center for Digital Business established that a high-performing cohort of organisations who were digital masters outperformed their peers in every industry, by as much as 26%.
Greater resilience. Disruptive challengers, world events such as Covid-19 and new technologies will continue to shake up customer expectations and processes. A digital business builds resilience by replacing rigid structures and inflexible processes with a workplace culture and infrastructure that can respond and adapt to new demands.
Engaged employees. Disengaged employees cost the economy ££ billions each year. Digital businesses empower employees through transparency, learning opportunities, and open communication. By providing employees with data on how the business is performing – and their part in it – performance improves.
Avoiding the competency trap. Many companies assume that their current success (and the methods that enable it) will continue indefinitely. Then they end up scrambling to adapt when it stops working, making decisions for short-term survival rather than long-term growth.
Digital transformation is mainly about the leadership needed to implement corporate agility and the cultural changes needed to make the company entirely customer-centric. Digital technology is an enabler, but not the main focus.
You will need to instigate the changes your company must implement, by focusing on:
Leadership. Transformation is an all-company activity, but having respected leaders committed to achieving transformation outcomes is seen as a signal of intent, and significantly increases success.
Capability Building. Transformation success is more than three times likelier when respondents say their organisations have invested the right amount in digital talent. Developing skills and talent is one of the most important factors for success in a digital change effort, as is redefining individuals’ roles and responsibilities so they align with a transformation’s goals. Success is at least twice as likely when innovative recruitment takes place, using techniques that appeal a candidate’s innate digital conscience.
Empowering Workers. Digital transformations require cultural and behavioural changes such as calculated risk taking, increased collaboration, and customer centricity. Establishing at least one new way of working, is more likely to result in success, as it is when leaders encourage employees to experiment with new ideas and allow employees to learn from their failures. You will need to create the space for people to make decisions without fear, and give them the authority to make the decisions, teachng them how to make decisions likely to be in the customers' best interests.
Upgrading Tooling. When businesses empower employees to work in new ways digitising tools and processes can support success. You will need to work on implementing new tooling, together with the readiness activities and mindset adjustments needed to make the most of the investment.
Communication. As with traditional change initiatives, clear communication is critical during a digital transformation. Communicating the change story is vital – it helps employees understand where the company is headed, why it is changing, and why the changes are important. You will need to create engagement messages which explain the vision and help foster a sense of urgency for making the changes within their business units.