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Are you a resilient disruptor or digital relic?

by Antonios (Tony) Christodoulou
Technology might enable digital transformation, but the secret sauce lies in strategic, courageous and resilient leadership with an appetite for possibilities.

Don’t fool yourself, digital transformation is not new. Every new technology has a shelf life – just consider the Walkman cassette player, the fax machine and the telegraph.

If you still think your business is indestructible and undisruptable then consider that in 1998 a dynamic HTML website with ecommerce and all the bells and whistles would probably cost you about $1 million. Today, anyone can go to Wix.com and, without being a developer, create a commercially viable website and have it hosted for $12. This is how technology is compounding the velocity of innovation in terms of scale and cost.

Do you still think your business is safe? What was once a barrier to entry could now be an opportunity for disruption.

If, as a leader and as an organisation, you don’t pivot in line with industry trends or advances in technology, products, services or customer tastes, then you will invariably be toppled from your perch as an industry frontrunner.

The secret, therefore, is to introduce new products or growth strategies ahead of each point in the corporate lifecycle and before the inevitable decline. This is known as the S-curve of innovation, and it highlights the value of constant evolution based on astute reading of the environment, technological potential and consumer relevance.

Thanks to fast-moving technological advances, the S-curve for today’s businesses is shortening. This means that company lifespans are shortening, eroding that critical time in the market that it takes to build customer loyalty and a solid and reputable brand.

The S-curve pattern of innovation

Looking at trends on the S&P 500 in the United States, in the 1960s the average lifespan of a company based on its existing value proposition was 53 years. In the 1930s, that figure stood at 90 years. Fast forward to 2027, and projections are that 75% of existing S&P 500 companies will no longer be on the list. In fact, by then the average S&P 500-listed company will only survive for 12 short years.

To combat the threat of sinking into an inevitable decline in relevance, many companies today are hitching their wagons to the notion of digital transformation. For many the idea of digital transformation is linked to the integration of new technologies such as artificial intelligence (AI) and cloud-based solutions into a business as a means of streamlining operations and ensuring relevance in a digital world.

This might be the view in many C-suites, but it misses the important point that digital transformation is not actually about technology. Assuming that adopting any and all high-tech advances will save a business at odds with its value proposition is a mistake. Digital transformation, as McKinsey recently noted, should be less concerned with “how companies use digital and more on how they become digital”.

This changes the game from digital transformation to business transformation, which in turn shifts the focus to technology as a vital enabler rather than the hero of the story.

Why digitalisation is not digital transformation

Despite all the hype and bluster around digitising and digitalisation, it is important not to confuse the operational importance of embracing new technologies to create efficiencies and the fundamental reimagining of a value proposition. Just sticking a front-end widget on an existing value proposition does not equate to digital transformation. Instead, for digital adoption to really make an imprint, it must be linked to business strategy, to the way a company engages with its customers, suppliers and employees, and to the digital dexterity with which it can adapt in a fast-paced world.

As students of business, we know how a lack of innovation, an inability to change with the times and incorporate technology, resulted in the downfall of US toy retailer Toys R Us. As Mark Cohen, director of retail studies at Columbia Business School, explains, Toys R Us simply failed to progress. “[Retailers today] have to morph, they have to modify. They have to represent the changes into 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,” he said.

Conversely, as Toys R Us was floundering in 2018, another retailer was making headlines for hitting a trillion-dollar market cap for the first time in its 24-year history: Amazon.

When you line Toys R Us and Amazon up and consider the merits of both companies, it’s clear that disruption doesn’t have to be about a product or service. After all, demand for toys isn’t changing, but what has shifted are consumer buying patterns and an expectation of choice. Consumers no longer see a visit to their local toy store as an enjoyable family outing; it’s become an inconvenience and a non-productive activity. In short, the supply chain has been impacted by the desire for the sort of instantaneous gratification that an Amazon offers ahead of a Toys R Us. No amount of digital adoption was going to soften that blow for Toys R Us.

Where are businesses (and leaders) getting it wrong?

In my experience there are some pretty clear tell-tale signs that an organisation is going in circles when it comes to business transformation. One of the most common signs is putting too much stock in IT and abdicating responsibility for all things digital to the IT department, rather than realising that digital transformation is a business strategy conversation that involves all at the roundtable.

Of course, existing systems must be re-engineered to fit current business processing requirements, to optimise and streamline and automate processes, but that is not system-wide transformation. It may fall under incremental innovation or improving services, but it is hardly likely to steer a business in a brave new direction by identifying its own internal weaknesses and potential areas for disruption.

Similarly, if you think implementing a new technology is the pinnacle of success and can be done using the business’ existing capabilities, then stop. Start thinking about reinvention as the cornerstone to everything you think you knew about digital transformation.

What should we do?

Reinvention implies a critical level of resilience, and an openness to doing things differently. It may also require a degree of unlearning in order to move forward. As my favourite quote, courtesy of management professor Oren Harari, goes, “The electric light did not come from the continuous improvement of candles.”

Ultimately, it’s the leader’s job to think about what the future should look like, and how to get there. There are any number of routes available to draw in the data needed to support future-focused decision-making, which is exactly what resilient leaders rely on to help them spot the blockages, hear what customers are saying and assess what their competitors are doing. These forward-thinking leaders know that what made them successful yesterday could be the root cause of their demise tomorrow.

If you think about it, this adapt-or-die approach is a fundamental of business. It’s not hard to pick out great examples of leaders with this reinvention mindset, the likes of Apple’s Steve Jobs, Alibaba’s Jack Ma and Discovery’s Adrian Gore, all of whom are adaptable, resilient, visionary and skilled at leveraging their existing capabilities.

Since the road ahead is uncertain, since any business journey currently is likely to be impacted by unknown events and challenges beyond the control of its leaders, those at the helm need to build themselves and their ability to deal with unpredictability. They do not need to be bogged down in operational issues, instead they should be trusting their people to achieve operational excellence while they focus on new avenues and directions for the future and how to make that transition without cannibalising the existing value proposition.

Courage, resilience and a possibility perspective

The cocktail of personal and leadership characteristics being required of today’s leaders requires the courage to act, the ability to lead by faith, an openness to listening, and the resilience to challenge the status quo by expanding thinking into the realm of possibility. Add to that a bold, people-centric outlook merged with a technological interest that invites digital in as an enabler.

The issue many corporate leaders face is that they are fundamentally afraid to fail. Unfortunately, in South Africa failure is seen as a stigma whereas in the United States it is regarded as a badge of honour; in fact, in the States the word FAIL is seen as an acronym for “first attempt in learning”.

The American approach to business and innovation did not spring up overnight, it’s the result of internalising the difference between – as author Simon Sinek puts it – failing and falling. It’s a mindset that thrives on feedback and appreciates that if you want to be the disruptor, then you have to start by disrupting yourself. Similarly, as a leader you need to help others in your organisation disrupt themselves and their own thinking, to build the sort of dexterity – digital or otherwise – that supports the personal reinvention that brings future value to any organisation and creates a culture that thrives on identifying possibilities.

About 16 years ago I was lucky enough to meet the inspirational conductor and author Benjamin Zander, who wrote the book The Art of Possibility with his wife, Rosamund Stone Zander. Years later I heard him speak at a forum about perspective and how it taps into possibility. The speech was about two shoe salespeople coming to Africa in the 1950s on a due-diligence trip. The one left thinking there was no potential on the continent since “nobody was wearing shoes”. The other saw nothing but a market waiting to be tapped because “nobody was wearing shoes”.

Leading in an age of disruption requires leading through possibility. Leading a true digital transformation requires people who are unshockable because they are courageous, and resilient because they are open to challenging their own value propositions. They need a keen interest in emerging technologies and a talent for seeing the art of possibility that innovation can enable. When you have people with these characteristics leading from the front, that’s when you can disrupt your business with confidence.

Choose your words carefully

As digital continues to take a more prominent role in our day-to-day and professional lives, it’s easy to label every innovation or shift that involves smartphones, AI, or a chatbot as digital transformation. It isn’t.

Digital transformation is the pinnacle of the Maslow hierarchy triangle for digital uptake. It is the point at which technology shifts and changes a corporate culture, impacts strategy and mindset. Many companies today that claim to be digitally transforming are, in fact, in the process of either digitisation (transitioning from analogue systems to digital technologies) or digitalisation (improving their current processes by adding the cloud into the mix, maybe a customer app or automated operational systems).

Pearls of wisdom

  • Technology is currently overpowering the conversation, but being digitally competent is only part of the digital transformation story. Understanding how to keep your value proposition relevant is another.
  • It takes everyone around the table at executive level to get on board with the business strategy underpinning a digital reinvention.
  • Those leaders who have a reinvention mindset are embracing of disruption, which implies a high a level of resilience. However, action is still essential.
  • If leaders don’t execute ideas, and if they don’t get the scars from trying, their business will never be a disruptor. 
  • New tech trends always need a solid foundation and digital dexterity, which involves seeing data as an asset while focusing on the customer.
  • It is vital to understand your future customer – and the relevance of your business to them.

Useful resources:
Gordon Institute of Business Science
Making an impact to significantly improve the competitive performance of individuals and organisation through business education to build our national competitiveness. GIBS is a leading business school in the heart of Sandton’s business hub, offering a wide range of executive and academic programmes.
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