Perspectives of Biz Transformation in a Digital Age

Most, if not all the traditional businesses are sensing the necessity to 'embrace' change. The need for finding ways to reinvent themselves as Eco-system providers rather than maintain status quo is pushing organizations into utter chaos. Board rooms are increasingly witnessing meetings where the higher ups are desperately trying to come up with re-positioning strategies to keep pace with the new kids in the block (read Google, Facebook, Alibaba etc.).

The Internet Companies armed with their robust technologies, analytics capabilities and most importantly the intrinsic knowledge of customer behaviors, needs or even whims for that reason, are only a few years away from establishing themselves as the sole provider of every basic human need. Yes the idea sounds far-fetched and improbable at this point. But the hard truth has shook age-old organizations from their decades of complacent existence into a frantic trails for ways to stay relevant.

As a "Connected Car" enthusiast striving to bring about such a change in a very traditional automotive company, I would like to voice some thoughts on how traditional companies can ride the lesser understood phenomenon of a technology disruption wave and emerge as a winner.

"That's how its been done for years"
It is the perfect recipe for disaster when decision makers are incapable to envision the future. Given most new age companies are nimble and fluid in terms of idea creation and execution, traditional companies find it hard to keep pace. To even announce a strategic re-haul it takes months before all the "required procedures are completed". This procedural / hierarchical decision making systems are stalling companies in proceeding any further.

Grey Hair Vs Dark Hair
In a traditional company when all of the board members are people in their late fifties who have spent half their lifetime in the respective industry, the scene is totally different in a new age organization where Idea influx takes a front seat and age and unduly credited "years of industry experience" step aside to make room for innovation and robustness. Non existence of hierarchies and set norms allows freedom of expression of thoughts/ideas and speedy execution.

It then becomes a priority for traditional organizations to rethink their basic modus operandi. But how! There lies the dilemma in that, while the new age companies hold assured / prospective revenue generation streams in the newly envisioned digitized business models, the old organizations still have their cash generation streams entirely based on old economy business models.The fear of loosing/destroying what has already been built/owned makes it difficult for these organizations to freely open themselves up to change. And this is indeed a relevant concern. Treading uncharted waters without caution may result in confusion that can topple legacies that have bound organizations, some of them for as long as a 100+years.

This is where organizations have to demonstrate prudence in how they find that perfect balance between embracing what is new without disturbing what is already there in place. As much as I understand this is easier written that implemented, traditional organizations do not have a choice but to take this road.

It becomes easier for these organizations to maintain their core business as-is, while developing newer competencies and business models. Thus organizations should fork out to maintain and develop, simultaneously. Time to time the new and the old entities should come together and evaluate what aspects from the new wing can be incorporated into their core businesses. Instead of an overnight upheaval that can cause utter chaos and haphazardness that may undermine everything the organization ever stood for, this incremental approach can help companies incorporate the digital transformation in an organized/steady pace.

I call this "The Rhombus Model for Business Transformation". The figure below tries to explain the model in detail. The success of businesses as we all understand will greatly depend on how adept they are to imbibe the new age business models into their traditional businesses thereby reducing cost, increasing efficiency and becoming more consumer oriented.

I would like to close by taking the example of Haier, a company that has more or less managed a transition into the internet age. According to Zhang Ruimin, CEO Haier, “If we don’t challenge ourselves, someone else will.” There can't be a statement any more truth bearing than this. Change is difficult but essential to ensure survival. The challenge is not just about talking about the change or even taking that first step but also about maintaining the enthusiasm and not resting until a recognizable, sustainable and revenue assuring transition into the internet age is confirmed.