In the 1990s, Harvard Business School professor Clayton Christensen coined the business term ‘disruption.’
It describes a process where entrenched, dominant products or service providers can be unseated in the market by upstarts offering solutions that more effectively address the same problem. Since then, we’ve felt the impact from the rise of Uber, Airbnb and Netflix. Out of fear of losing the competitive edge, we are inspired to shake things up in a similar fashion.
Here’s where harsh reality hits – most ‘digital transformation’ or ‘disruption’ projects don’t result in ground-breaking and positive change. They have the opposite effect. Seventy percent of digital transformation projects are expected to fail. In monetary terms, large enterprises throw away an estimated average of US$400 billion per year on digital transformation programs that fail to deliver promised benefits.
Companies are now facing ‘self-disruption’ – it is self-inflicted, negatively interrupts a business, and might even jeopardise its long-term viability. That said, there are companies who have done things the right or better way. Here’s what you need to know for your organisation to effectively ‘disrupt’ itself.
Have an overarching vision for transformation
Most companies are now reacting to ‘disruption.’ However, many seem to believe that a firm can ‘digitally transform’ with a few well-scoped projects within silo-ed departments. However, what really makes a difference in a company’s performance and value is an overarching vision that unites any digital transformation efforts across the organisation.
Understandably, businesses are scrambling to adapt to the increasingly fast-moving, digital-oriented world. Before plunging into digital transformation however, they need to take a hard look and consider where traditionally disparate roles and responsibilities can come together to create business processes that are as fluid and agile as consumers demand, and as ever, geared towards a shared business goal.
The need for cultural, behavioural and capability transformation
“Culture eats strategy for breakfast.” This phrase, originating from management guru Peter Drucker, underpins what it really takes to achieve long-lasting digital transformation. Breaking down siloes will go some way to forming the sort of structure that favours agility and innovation, but changing the mindset and behaviour of employees is key.
When RSA Group embarked on their digital transformation journey, their group Chief Information Officer first took a good 18 months to educate employees about their new digital strategy and its promised benefits. This was a necessary exercise to win the buy-in of the very people who would enact the changes about to take place. Marriott Hotels took another route, by using an internal platform called Work Patterns to spark a culture of collaboration, experimentation and risk-taking that gave innovative projects and initiatives company-wide exposure.
The need for cultural change is further set against the backdrop of a shortage in digital and IT skills. While 91 percent of global IT leaders acknowledge that IT departments are important to innovation and growth, 54 percent predict that they will struggle with the lack of IT talent in the next 12 months . Bringing the workforce up to speed is sure to be a long and difficult process, but companies can get creative. Other than changing hiring practices and upskilling existing employees, firms can explore partnerships or alliances with other companies as well as employee exchanges to enable the cross-pollination of knowledge and skills.
Digital transformation needs to generate real value for customers
On ‘disruption,’ Clayton Christensen said that “great new ideas don’t emerge from within a single person or function, but at the intersection of functions or people that have never met before… An innovation will get traction only if it helps people get something that they’re already doing in their lives done better.”
The Australian airline Qantas has taken an intentional approach to digital disruption. It has evolved to a level where it can operate in a more efficient manner, enable customer self-service and deliver a great customer experience. The company looks at the entire customer journey end-to-end, from the time the traveller enters the airport, to the time the traveller boards the aircraft and questions if a particular activity can be done digitally. If so, they then consider what that means for the customer experience.
Business leaders are understandably afraid of falling behind in a time where industries and economies are facing widespread disruption. It would be a misstep to ignore this as it could leave businesses vulnerable to making poor decisions.
By being the voice of reason and leading an intentional approach that incorporates design thinking and design-to-zero, you can help your organisation curate and adopt the right technology where necessary, not out of anxiety or desperation, but for the longevity of the business and its customer relationships.