Adding a digital business to an existing one: not just about tech.

If you company is like most, it is not built like Google or Apple, or even Facebook — and certainly not like they were, ten years ago. By that, I mean your R&D, sales, marketing, operations, HR, and IT departments are not tuned for bleeding-edge innovation at scale - irrespective of how much new digital tech you can fund.

What's more, when you do try to build a new, digital business, you often get operationally handicapped by your existing one. In many cases, the result is a strategy that is either impossible to achieve or so uninspiring that even your most motivated people won't get on board with it. The former leads to a pie-in-the-sky mentality and a far from executable reality, while the latter leads to a lot of exhausting, internal campaigning.

Having been a part of big, technology-driven transformation efforts in many companies, I've found that applying five relatively straightforward principles can make a significant difference and help organizations successfully build their digital businesses.

1. Strategic vision vs. wishful thinking

Let's be realistic and assume that your company doesn't have the most money or the greatest people in your marketplace. So, your business strategy needs to be hard-nosed, and not biased by internal marketing. You need to ask yourself, what distinctive parts of your existing business can be leveraged in the digital business? For instance, you have unique data about your clients, your suppliers, and operations. You have domain expertise about what makes an impact on your client organization and what systems and processes cannot be changed but will need to work with the new, digital capabilities.

If you're honest about what you have and don't, you can develop a strategy that is achievable.

2. People matter

Your digital business is only as good as the people behind it. So, you need to properly grow, retain, and integrate your team.

• Hiring right. There is a fine line between painting a pretty picture and misguiding people about the road ahead. Disillusionment after hiring creates a toxic environment where people who struggle in the new digital business will rationalize their obstacles to something like “I didn't come to do this." Make sure your hiring teams aren't crossing the line.
• Retaining right. The digital space is hot and many people — especially the more tech-savvy — will be tempted to act like prima donnas. Retaining the best people is crucial, but efforts must be targeted at people who are not just technically good, but who also inspire an atmosphere that lifts up other team members.
• Integrating people right. When new employees come in, you run the risk of creating a first- vs. second-class-citizen situation, where it's new employees vs. the old. Existing employees may walk over the new ones because they have more access to clients, finances, or other formal and informal resources. This dynamic can work against your digital business. To counter this, you need to create a narrative that makes both sides possible heroes. Then, you need to build an environment where both can cooperate (design thinking is a good idea for that reason). Finally, you need incentives to foster the right behavior, which also means no tolerance for toxic ones.

And obviously, you need sponsorship and political clout to make the integration between people happen. That's where new chief digital officers often struggle, unless they can connect quickly with the rest of the organization, or surround themselves with people who have that connection. Conversely, an existing, credible executive can surround themselves with empowered digitally savvy newcomers - and achieve the same results.

3. Processes matter

From travel policies and financial incentives to IT equipment and systems, a lot of existing processes won't help the new, digital DNA.

You're essentially reimagining your company culture, which tends to alienate some people, who in turn will fight the new folks in order to maintain the status quo, unless you shift their perception about the evolution. In the meantime, the old ways of doing things will continue to remind everyone how slowly the innards of a large company change and undermine your effort to make the troops believe you've crossed the chasm.

Keeping these process changes in check is a real job — one that will require a real chief of staff.

4. Sell what you have, build what you sell – in lockstep

This is possibly the single largest yet neglected issue.

When trying to scale a new business in a large organization there is an inherent time lag (often 6–12 months) in adoption between the existing sales force (including pre-sales) and digital groups. The problem is only made worse because of the rapid pace of change in technology, as there will be many changes that the digital folks will embrace fast, while the pre-existing sales group will struggle with. Moreover, there is no way to build a great new digital business without including clients into the co-innovation process - so you do need the sales force to even write code. Kids in the basement spinning up great software is a myth. Kids incessantly talking to initial clients is the way startups work.

Thus, the Lean startup principle is a fantastic idea that is also somewhat straightforward to execute in a small organization where many both sell and design the product. That is much less the case in a large organization where the connection to the market is held by the established organization's sales force (or, at best, some overlay sales with the new genome). Commercially scaling up the next, great new thing is hard when client signals can't be picked up easily outside of the digital group, if that group isn't able to connect daily with the market.

What's more, simply training an established sales force is often difficult. They won't take the risks that digitally savvy people would. And they will take risks that will kill the first implementations (legacy integration nightmares, anyone?).

That's why collateral such as case studies and other product marketing can be so beneficial. Unfortunately, these pieces often don't get attention because of the belief that “innovation leaders" are able to evangelize enough of the client base by themselves. Which is, in my experience, a gross overestimation of people's capabilities and time, especially because innovation deals can be killed at any of stage of a sales funnel by any of the more-numerous people from the pre-existing organization.

To succeed in the new business model, sales groups will also need to make very specific changes to their standard practices. For instance, deal qualification, remote participation by experts in client meetings to make them more available to multiple pursuits, and practices such as design thinking workshops so more people from different backgrounds can cooperate and productively leverage the new digital capabilities.

In my experience, very few innovation leaders — or consultants — think through those aspects. In a way, they fail to see the process of scaling innovation from a human-centered standpoint, and as a result they don't attack the structural friction that relentlessly saps the new teams of their energy and time. 

5. Tech matters — but not the way most people think

I put this principle last deliberately. Obviously, the issue surrounding the lack of technologists with the right new skills is a big deal at the moment and getting a lot of attention. But, if you can clear the other hurdles discussed above, it becomes much easier to make do with scarce technical talent. Conversely, if the other stressors aren't addressed, there is no way that you will be able to afford to hire and retain enough tech gurus to create and sustain momentum for digital innovation.

Overall, building a digital business in a large organization is not about shiny tech toys. It is about ascertaining what the technology can do in your specific business domain and building a nurturing mechanism to make that digital innovation go from a sapling to a tree — while preventing the pre-existing oaks from depriving it of the light it needs.

It is a lot less about the stereotypical, ego-centered tech supermen and the heroics of radical disruption, and a lot more about building an ecosystem that harnesses the collective intelligence and power of both the new and existing.

[This article was originally published in professional services firm Genpact’s research blog, together with many others related to digital innovation.]