Embracing digital innovations is no longer an option for the C-Suite. Digital disruption is a fact of life. Period. Full stop. Material disruption is no longer limited to entertainment or transportation; the fact is, digital innovations will disrupt every industry. The decision that you as a C-level executive have to make is, will you be doing the disrupting, or waiting for another company to come along and disrupt you.
Awareness and willingness to act are on the rise, and it is paying off. A 2017 Gartner study found that 56% of CEOs who have adopted digital innovation initiatives see an increase in profits as a result. That number would likely be significantly higher, but far too often, CEOs delegate digital innovation efforts downstream or relegate it to the IT department. The result is surface-level change, imposed on a reluctant corporate culture, which ultimately has very little positive effect.
The fact is, the C-Suite has to be involved and committed to digital transformation from start to finish for it to be successful. It’s not enough to upgrade a few servers or implement a couple of AI systems. As noted in a recent Forbes article, “The ultimate goal of digital transformation is a fully integrated system, woven into every aspect of a company’s operations and strategy.” To do that, you need to foster a cultural shift as well as a technological one.
Where to begin?
Start by identifying the elements of your business that are most vulnerable to disruption and make those a priority. This serves a dual purpose; first, it helps to insulate you from external disruption. Second, these are likely customer or partner facing areas of your business and therefore, also areas where digital innovation can quickly start to generate improved growth, customer experience, and revenues.
Try to get literate in any tech you’re implementing that’s new to you. You don’t have to learn to code or become an expert in blockchain. Just do some reading, attend a seminar, or even do an online course, whatever it takes to be able to speak fluently about the digital innovations your company is undertaking. This will allow you to not only confidently make judgment calls about your digital strategies, but also to lead by example.
You Can’t Manage What You Can’t Measure
Gartner, as mentioned above, conducted a survey and found that nearly half of CEOs have no metric for measuring digital success. “Deeper transformation can only be achieved at scale if it is systematically driven.” This is where CIOs should be helping CEOs set success criteria. Mark Rasinko, Vice President and Gartner Fellow, explains, “You cannot scale what you do not quantify, and you cannot quantify what you do not define. You should also ask yourself: What is ‘digital’ for us? What kind of growth do we seek? What’s the No. 1 metric and which KPIs must change?”
Build a Dynamic Strategy
At the 2019 MIT CIO Symposium, Jeanne W. Ross, a principal research scientist at the MIT Sloan Center for Information Systems Research, said “Unlike past business success, success in the digital economy is not so much about brilliant strategy. It’s about being able to execute a constantly changing strategy.” Most companies aren’t built to be continually shifting strategies, so the goal, Ross says, is to implement processes designed for agility. For most established companies that means undergoing a massive structural change to both procedures and company culture.
It is crucial to integrate digital initiatives into the strategic planning process fully. If you’re using analog processes to implement digital efforts, you’re just not walking the walk.
Capitalize on Digital Opportunities
The best self-disruptors in the business world haven’t just disrupted their own business models, they’ve also branched out to build out entirely new businesses by capitalizing on digital opportunities. Amazon is a great example. They’ve built out their cloud service alongside their retail arm with colossal success.
Your people are your greatest resource. The power of intrapreneurship is enormous and, at many companies, untapped. Your company is full of talented people, hitting the daily grind, with little opportunity for stretching their creative, entrepreneurial muscles. And if they do get a brilliant idea, the last thing you want is for them to take it elsewhere. The solution is to create and maintain an intrapreneurship program. Intrapreneurship programs can be used to develop internal innovation initiatives or build new businesses.
Susana Jurado Apruzzese, Head of Innovation Portfolio at Core Innovation, Telefónica created an especially successful program called Lean Elephants. It utilizes an “innovation funnel” where employees submit ideas for the company’s opportunity areas. If selected, employees are allowed to work full time on their ideas.
Adopt Change
Large organizations aren’t built for sharp turns. The pace at which businesses are capable of change is nowhere near the rapid pace at which technology evolves. Companies are made up of people, and people get used to a particular way of doing their jobs. Multiply that by a few thousand employees, and it’s easy to see how the very people that give a company its might can also slow down its ability to make systemic, structural changes.
MIT Sloan Professor George Westerman’s recent research focuses on the challenges digital transformation poses for leadership. He points out that in born-digital companies, rather than being a source of inertia, people are “a source of continual innovation and energy.” The key, he says, is addressing digital transformation as a capability rather than a time-limited project.
To make this conversion, Westerman counsels executives to focus on change in three major areas:
- Change the vision – You must affect a company-wide paradigm shift and get crystal clear on what the reasons for change are.
- Change the legacy platform – Ditch outdated business practices and Jurassic IT systems that are bogging the company down.
- Change the way the organization collaborates – Make improving company-wide communication and connectivity a top priority. Without clear communication, you’ll end up with one leg of the company limping along behind the rest.
The Way Forward
From Western Union president William Orton, turning down the chance to buy the patent for Alexander Graham Bell’s telephone in 1877 to Blockbuster CEO Jim Keyes declaring that “Neither RedBox nor Netflix are even on the radar screen in terms of competition,” in 2008, there are plenty of cautionary tales of executives who famously missed out on seismic shifts in the market. Fortunately, in 2019, there are significantly more resources and processes available for embracing digital innovation opportunities so that smart executives can make sure they’re the ones driving disruption, rather than getting driven out.