“Why the hell do we need Internet email?” my CFO asked me, incredulously. “We have perfectly good voicemail and fax systems!”
The year was 1994, and a top sales exec at Procter & Gamble was asking our agency about “this World Wide Web thing. Should we be on it?” I was trying to get our CFO to fund a domain and email server in order to demonstrate that we did indeed have the expertise to guide P&G through what would become a seismic technological shift (he eventually relented and we helped create pg.com, Version 1.0).
“BOOOO!” “GET OFF THE STAGE!” “Why would I sell my cars online?” “We don’t want your Internet!”
The chorus of boos was growing louder. This time it was 1999, and I was onstage at a national dealer association annual meeting, proposing to bring e-commerce to 1,200 very hostile car dealers. And they weren’t having any of it. They saw e-commerce not as a shiny new sales channel, but as a serious threat that gave buyers visibility into secretive dealer pricing and margins. But after an intense hour of countering objections that tested my debating and crowd control skills, my antiperspirant and my professionalism, they eventually relented and signed up for the first online test-drive scheduling system.
Fast forward to 2016 and I’m still guiding skeptical companies through the often-challenging process of digital transformation. Still. Because two universal truths still hold true:
- No one likes disruption.
- People, culture and process are still the make-or-break factors in successful digital transformation.
A rock and a hard place: the balance between productivity and disruption
People are the mechanism by which companies create value — yet once our teams find equilibrium with their skill sets, culture and process, prying them from that hard-won equilibrium is quite difficult. In a increasingly complex world, when it comes to getting work done, people like simplicity, clarity and routine. Job insecurities can create a culture of keeping one’s head down. And KPIs must be achieved. Bonuses, where they exist, must be had. Who wants to rock that boat?
But pushing against team equilibrium is the ever-accelerating flow of innovation, and increasing urgency from upper management to adapt. Continuous innovation is creating more connectivity, more engagement, new revenue opportunities, new competitive threats, and challenges to incumbent business models. Adapting to the right innovation is critical: 78% of businesses surveyed said that achieving digital transformation will become critical to their organizations within the next two years (MIT Sloan). 74% of CEOs are concerned about new entrants disrupting their business models (KPMG). And50%+ of executives and 10 out of 13 industries anticipate massive digital disruption in their industry over the next twelve months (HBR). Hesitation? Ain’t nobody got time for that!
There’s also a monetary incentive: according to McKinsey, digital transformation is expected to boost the bottom line for many companies by +50% over the next 5 years.
What’s an executive to do when their teams have found equilibrium around ways to achieve short-term revenue goals, yet short- to medium-term disruption is requiring immediate change? Answer: embark on a mission to transform the organization and increase talent resilience, through culture change, skills adjustment and process re-engineering.
Successfully advancing our clients’ digital maturity happens in that murky place between culture and disruption. That’s why my business partner Sean Moffitt and I are proud to announce today’s launch of our digital transformation consultancy, Precog Digital. Our goal? To bring clarity, rigor and politically-agnostic digital change that benefits the entire organization. Because…
We’re not there yet with transformation. Fortunately, some basic approaches can help.
For many of our clients, the thought of “digital transformation” creates an intimidating mix of fear, uncertainty and doubt. This from the May 2016 InformationAge:
“(There is) a growing sense of anxiety about embarking on digital transformation — 47% of companies haven’t actually started yet. 33% won’t execute this year.” (IDC)
So if you’re unclear about the What of transformation, and hesitant about the When, you’re not alone! Fortunately, some basic approaches can help reduce risk and pave the way to easier change.
First, a good Innovation Management Plan can detail the whys, whats, hows and the business case supporting the change. This plan should also identify and quantify the potential financial impact of competitive threats – which often come from outside your category. Tie the plan to management KPIs and you’ll have better chance of obtaining their support.
Next, you’ll need to foster a culture of risk-taking and agility. We know that’s easier said than done. Nurture a sense of fearlessness and curiosity within your teams. Explain the stakes – and the opportunities. Encourage employees to rethink processes, tools and new products in their own terms (but arm them with some thought-starters).
Conduct hackathons and innovation days. When employees come to you with their first tentative efforts to propose change, they will likely need your guidance. Do not shoot their ideas in the head. Put some basic governance guardrails into place to allow teams closest to the work to have the autonomy to find new equilibriums. Incent them to succeed. And if they can’t or won’t, make the required talent and structure changes. The stakes are that high.
Google and 3M are great examples of companies who have encouraged fearlessness. For example, 35% of 3M’s company revenues come from products released in the last four years. That’s the kind of leadership needed to guide, nurture and support the changes required to succeed.
As far as agility goes, consider working with management and Human Resources to turn annual reviews into quarterly performance sprints. Focus each employee around a max of 3-4 key goals. Remind them that “Perfect” is the mortal enemy of “Done.”
Recognize that not everyone is digitally-minded. And that’s okay.Of course most CEOs, COOs, CMOs and their teams should “be digital.” But the reality is that tech knowledge and comfort come more naturally to some rather than others. Don’t try to force everyone into Innovation Conformity, but definitely encourage a mindset of curiosity, exploration and freedom from worry that “no good idea goes unpunished.”
Operational teams will need to identify and choose the tools and platforms that work best. These may not initially meet with IT’s approval depending on security concerns. Software platforms like Evernote, Slack, and Trello might be inexpensive ways in which to achieve faster workflows and reduced costs – but might also draw objections from the CTO. When the team chooses its tools, adoption comes much more quickly (think about the adoption rates when a platform was last forced on you *cough* *Yammer* *cough*). You’ll need to champion your team’s selections with your CIO/CTO and try to find some mutual goals.
Remember: commonly-held assumptions often block transformation. You’ll need to challenge everything you know about your current business model and product/service offerings. And as you consider how to deliver value to customers, be sure to stress-test each idea. An innovation that can’t survive simple tests isn’t something you should sell to management or bring to market.
It’s all on you, leader
Finally, as a leader, you’ll need to provide constant feedback and communication — to upper management, employees, and the board. You will need to be the champion, owner, spirit guide, cheerleader, and management whisperer for this change, which means that you will need to truly believe in the value of the effort. Create communications plans with regular Transformation Updates, success stories, team transformation and innovation awards, and the real value provided by ad-hoc digital projects, competitive advantages gained, customer experiences improved, talent that’s been transformed, and ways the company has future-proofed against revenue threats.
The list of shuttered companies who failed to anticipate is long.
Don’t let a natural reticence to disrupt your team’s equilibrium turn your firm into another Radio Shack, Blockbuster or Borders. Leverage smart disruption to effect positive change and revenue growth.