Digital Transformation - Signs of Disruption

ORIGINALLY PUBLISHED: https://www.aibl.global/blog/digital-transformation-signs-of-disruption

You are reading the second article in the Digital Transformation series. The first article was titled Digital Transformation Explained. 

Estimated Reading time: 12 minutes, 57 seconds. Contains 2,591 words

INTRODUCTION

The goal of this blog article is to get you thinking about your organisation, your leadership collective, the wider industry, and if you are asking the right questions.

The digital innovation opportunity before us today in Australia is endless. However, many organisations, as the data suggests, are slipping behind.

Technology advancements are allowing problems to be solved faster than ever before. While incremental steps forward help resolve issues, this has blurred our thinking and culture into no longer thinking big. We need to think big, look at the significant challenges, and take big steps forward in our approaches to innovation. The problems may, in turn, be broken down into meaningful incremental steps, but should always be linked to big visions.

With the rise of digital innovation, new ways of doing business are forming, which are changing traditional organisational foundations. Customary economic laws from microeconomics such as supply-and-demand are facing continued tension. Consumers are demanding more, and all industries are struggling to keep up with the evolving needs.

The net result is that the status quo will no longer do. What got us to where we are, today, is likely not going to get us to where we want to be in the future. In all likelihood, the status quo will impede on our ability to remain competitive.

All the positive changes with advancements in technology have created a disequilibrium across all industries and markets.

History has taught us that when disequilibrium occurs, it is time for disruption.

Now is not the time to rest on our laurels; it is the time to challenge.

WARNING SIGNS – QUESTIONS & REFLECTIONS

Constant self-evaluation of not only ourselves but also our organisations is always required.

The following list of warning signs and scenarios are provided to help you start thinking more critically, being curious, and asking more questions. The list is far from an exhaustive one but should help to get you into the realisation that not asking the harder questions is doing a disservice.

• Your customers are not coming to you at a steady pace like they used to.
• Your customers are finishing contracts and moving elsewhere, i.e. your subscription renewals are in decline.
• You are having trouble attracting the new generations of employees to come work for you.
• Your staff are frustrated continuously, in-fighting due to cumbersome systems, and there is very little digital collaboration.
• Your marketing still is based around simple ads and age-old promotions. They don't deliver the results of the past.
• No one has ever talked about Customer Engagement, defined User Experiences, or considered the personas of your customers. There is no social selling strategy nor marketing funnels.
• Your website exists only to provide information. There is no journey or clear calls to action.
• Your technology feels old, clunky and slow. Not much is online, there is little integration, and it is a topic of constant jokes around the office.
• Your IT team or current IT provider hops from one initiative to another without any linking to a digital strategy. There is not a portfolio approach with a clear customer engagement benefit defined.
• Your organisation hasn’t changed in years, and there is little data used to back up decisions.
• There are no digital systems or reliable processes in place to measure the satisfaction of both employee and customer.
• If an outsider asked one of your employees what the organisational strategy is, would they be able to articulate it? Would they be able to articulate their role, and how they are using digital to differentiate?

KEY TAKEAWAY

Take an approach of curiosity to your organisation and ask questions. To understand where the gaps are, you first need to learn. Problems will not be defined until you have information at hand.

WARNING SIGNS – FOOD FOR THOUGHT

But what is at the root of these issues being prevalent in the first place? Could it be complacency or failure to learn and re-invent ourselves? Perhaps some helpful questions for us to check our assumptions, considering if we are at the point of knowing everything, and not needing to continue the pursuit of excellence.

Leaders need to continually challenge not only our expertise, but also that knowledge we possess, and where it derives. Incumbent cultures need fresh challenges concerning traditional thinking. As a leader, never discount the value of getting out to see things for yourself. 

Harvard Business Review (HBR), helpfully, lists the following seven warning signs that you have fallen into the expertise trap. Referenced from the article “Don’t Be Blinded by Your Own Expertise.” 

1. You’re unfamiliar with new technologies or approaches in your industry.
2. When someone asks why you or the company does things in a certain way, you think, “Well, that’s how we’ve always done it.”
3. When making decisions, you focus on how much risk your options pose rather than on the opportunities they represent.
4. You discover that colleagues are working together in ways you haven’t—such as Slack, texts rather than email, and mobile rather than desktop.
5. You keep proposing the same old strategies and tactics to address new challenges.
6. You try to make old solutions ever more precise rather than pioneering entirely new ones.
7. Millennials leave your team faster than they do other teams in your company.

We never like it, but a hard dose of reality in the form of a self-check is something we all can use from time-to-time.

One of the essential tenants a leader can possess is the ability & willingness to change. Such change only comes from extraordinary leaders who are relentlessly obsessed with learning, listening, and never being satisfied with where they are or what they have.

Perhaps you can take these questions away and reflect on them. An idea is to share them with your leadership teams, and schedule some dedicated time at the next meeting to discuss.

KEY TAKEAWAY

Organisations and their senior leadership must remain visionary, and be consistently pressing forward. For this to be possible, the leader must be skilled at not only digital innovation, but also leading people. Being adaptable to change, and willing to embrace new technology and ways of thinking is paramount.

LEARNING FROM OTHERS BEFORE US

The adage of “if it ain’t broke, why fix it?” is often thrown around. On the other hand, there are other adages such as; “change is the only constant in life,” (Heraclitus) or “progress is impossible without change, and those who cannot change their minds cannot change anything.” (George Bernard Shaw).

The business landscape has many organisations that failed to recognise the change that disrupted their industry. Let’s take a quick walk through some examples:

• Nokia: in Stephen Elop’s, now famous speech, after Microsoft acquired Nokia; “We did not do anything wrong, but somehow we lost.”
• Kodak: Today, just as everyone says to “Google it,” we used to say it was a “Kodak moment.” How did this downfall happen? They didn’t lose to the digital camera; they lost to the online photo-sharing platforms. They were trying to expand their incumbent printing business into online printing vs. understanding that online photo sharing was the new business. There was little recognition, study or participation in the emerging market of the time.
• Blockbuster: Famously quoted at verbatim, went bankrupt in 2010. Then CEO, Jim Keyes is famously quoted for saying “Neither RedBox nor Netflix are even on the radar screen in terms of competition.”
• Toys R Us: How can toys not sell? Perhaps a topic for another blog is around Economic Rent, and the failure to understand bloated, traditional supply chains. “Retailers today, especially in any kind of fashion or trend segment, have to progress. They have to morph, they have to modify. They have to represent the changes in the marketplace and their customers’ behaviour. Toys R Us has never been able to wrap their arms around the changes necessary, and this is the inevitable outcome.” Mark A. Cohen, director of retail studies at Columbia University’s Graduate School of Business, a former retail executive.

Digital transformation is an all-of-organisation mindset and not limited to new technology. Digital transformation transcends the technical arena, and should never be limited to the latest shiny object. For this to be true, leadership needs to be the driving force behind innovation, recognising that traditional tenants of organisations, walls and geographic boundaries are being torn down.

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“80% of today’s CEOs believe digital disruption is imminent, and almost half think their business model will be obsolete by 2020“

— Harvard Business Review Analytic Services Survey, Competing in 2020 Winners and Losers in the Digital Economy

Recognition must recognise the fact that no industry is immune, and revolutionary change is already at our feet. In turn, this speaks to massive opportunities before us, but before getting there, let’s dig a little deeper into the relationship of leadership to innovation.

KEY TAKEAWAY

Leadership has a core responsibility to lead innovation. An organisation without innovation is well on its way to becoming a museum. 

LEADERSHIP & INNOVATION

The organisation will live or die by the decision of leadership and their ability to learn, absorb new information and be advocates of change. The Australian Institute of Company Directors (AICD) has just released a helpful report in conjunction with the University of Sydney Business School.

You can read the report, which I recommend, but at a high level, the key findings were:

• Finding 1: Australian directors recognise the importance of innovation, but more needs to be done to prioritise its delivery
• Finding 2: Australian boardrooms have low innovation and digital literacy levels
• Finding 3: Board-Executive collaboration leads to better performance

The AICD CEO and Managing Director, Angus Armour, sums it up helpfully by stating “The study tells us that innovation is often missing from Australian boardroom agendas. It reveals that traditional risks are the focus rather than the risks – and opportunities - associated with innovation and disruption.”

Interestingly, in early October 2019, I attended a Data61 conference (D61+LIVE). The advertising stated it to be; Australia’s premier science, technology and innovation event. At the event, I sat in the audience to listen to a panel that included the following people:

Credit: CSIRO D61+LIVE, 2019

Moderator:

• Elysse Morgan, ABC

Speakers:

• Andrew Stevens, Innovation and Science Australia
• Gail Williamson, WiseTech Global
• Kevin Bloch, Cisco
• Dr Stephanie Fahey, Austrade

There was a lot of healthy discussions, and one of the topics discussed was around the role of innovation in organisations of Australia. There were some frightening stats thrown around regarding the belief in our Australian board rooms that innovation is optional, and the R&D landscape in the Australian market.

One alarming statistic was the R&D grant in Australia being reduced by $4bn over the past 2-years. While this potentially may be a government or political issue, it highlights the fact that Australia now has one of the lowest R&D levels in the OECD, below Slovenia and Greece.

Perhaps the seriousness of digital disruption and digital innovation is not taken seriously enough in our country, not only just by our government, but also by organisations as a whole?

Perhaps I am wrong, but the evidence is suggesting that our country is beginning to lag in areas of innovation.

If innovation is not a regular topic of discussion in your organisation, you do not need to boil the ocean, so to speak, from day 1. The AICD report outlines five key recommendations to ensure innovation has the necessary priority it deserves:

1. Lift directors’ technology and digital literacy.
2. Set clear expectations of management regarding calculated risk-taking to drive innovation.
3. Develop a shared language with management and clear narrative for investors/members on innovation.
4. Ensure innovation features regularly on boardroom agendas.
5. Establish a budget and executive incentives for long-term innovation.

While these stats may only appeal to the audience of the AICD, they apply to any organisational owner or organisational leadership team. They raise essential points around recognising that innovation must be at the forefront of conversations. How it must be on the regular agenda, and there is an absolute need to educate the leadership team.

One of the core failures of innovation is using yesterday’s thinking to solve today’s problem. Look at what is possible today, what is coming and think through applications which no one would ever have imagined is possible. Mindset changes like these are fundamental to the value of digital innovation.

KEY TAKEAWAY

Innovation is not optional. Leadership has a personal responsibility not only to educate themselves on digital & innovation but the organisations they steward.

SOME CLOSING THOUGHTS

I opened with a series of questions about potential issues in your organisation. If any of the items speak truth into your situation, perhaps it is time to start thinking seriously about having a digital transformation strategy. Or maybe some of the opening questions have challenged where your mindset is as a leader?

The fact is that disruption is not new, nor is innovation. Disruption and innovation have been occurring for as long as humankind has been walking this earth. What is changing is the rate of change. The reality is that digital is merely enabling disruption to occur at unprecedented levels and speeds than ever before.

Your operational models, no matter your organisation type, are being challenged. There is guaranteed to be a mismatch from what you believe to be accurate vs. the reality of the digital future of your industry. The ability of your leadership team to recognise these nuances and emerging trends, to have the strategic foresight to think through the megatrends, to review your industry and adjacent industries and to challenge the status quo is paramount for survival. And if you are the leader of your organisation, all this starts with you!

On a positive note, the speed of innovation does not mean all existing organisations are dead. While new organisations are popping up at rates never seen before, their challenge is the lack of an established client base. Whereas, the strength of the existing organisations is possessing an established client base.

It is time for big thinking and big moves, but everything doesn’t have to change overnight. The current organisational models can be supported so long as new models are being invested in and implemented. You will often hear me refer to this as the Mode 1 and Mode 2 operation of an organisation.  

However, as always, the bottom line will be the risk appetite of your organisation, and the willingness to invest in new digital platforms.

The opening statement of my website states “are you having the right conversations?” In this light, I will leave the final closing thought for Mark Sanborn who is one of the top leadership speakers globally, with a list of over 2400 clients;

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“Your success in life isn’t based on your ability to simply change. It is based on your ability to change faster than your competition, customers and business.”

— Mark Sanborn