Despite the emergence of digital roles, MIT Sloan Management Review and Deloitte found in their 2015 survey of managers and executives the following three things:
1) Most executives think their companies are not adequately preparing for digital disruption
2) Nearly 90% of them actually anticipate that their industries will be disrupted
3) Only 44% of them say their organizations have adequately prepared for the disruptions to come
Is anyone responding to disruption appropriately?
Take a look at Nordstrom which has linked its data on customers to their supply chain data to create personalized shopping experiences. Or look at Intuit which has outlasted VisiCalc and Wordstar by continually disrupting itself. According to Geoff Colvin of Fortune Magazine, successful incumbents are 'more likely to follow the trajectory of Kodak. And have what Geoffrey Moore likes to call a “Kodak Moment”'. For this reason, Geoff says it should come as no surprise that Fortune 500 CEOs say their single biggest challenge is 'the rapid pace of technology change'.
What can you do?
Responding effectively, Geoff claims requires a business with the ability to continually disrupt itself from within. Geoff believes this requires business leaders that see their business as disrupters see them. Clearly, businesses built to last cannot stop their self-disruption process. Are there more examples of proactive self-disruption? How about Netflix moving from DVDs by Mail to an Online Streaming or World Wide Network. Or how about Amazon moving from Books by Mail to Kindle Readers.
What is the role of leadership in digital disruption?
According to 'Winning the Long Game', strategy and leadership are intertwined even though most consider them separately. This matters because in digital disruption you need both. Preparing for a digital future requires that a company’s activities, people, culture, and structure are aligned to organizational goals. Incumbent business leaders often find themselves constrained by a lack of resources and a lack of talent. They also feel the pull of competing priorities, leaving executives with little time to manage digital initiatives. Geoffrey Moore suggests that incumbent business leaders, for this reason, only allow one digital initiative at a time into what he calls the transformation zone. For this initiative, leaders need to 'play to win'.
According to Gerald C. Kane, Doug Palmer, Anh Nguyen Phillips, David Kiron, and Natasha Buckley ('Aligning the Organization for Its Digital Future', MIT Sloan Review, July 2016), digitally maturing organizations integrate digital into their company’s overall business strategy. They create cultures that encourage team members to take on risk. This includes rapid experimentation. They also invest in talent including developing leaders who excel at 'soft' skills. They, in particular, embrace digital congruence—culture, people, structure, tasks, and company strategy aligned with each other. This provides the ability to deal with the challenges of a constantly changing digital landscape.
In particular, these firms are able to leverage new and disruptive opportunities and constantly renew their structure and resources. They have the ability to adjust to changing market conditions because they have created leaders that have the ability to vision and lead. At the same time, they have the cohesion and flexibility to change as needed. In other words, they have organizational cultures that are enablers of strategic change. According to Steven Krupp and Paul Schoemaker, organizations today need leaders who can think and act strategically when confronted with volatility, uncertainty, complexity, and ambiguity. These leaders can set the right strategy and then deliver results efficiently. So what do these strategic leaders do differently?
1) Anticipate changes in market environment by staying closely connected to customers, partners, and competitors. This also work at seeing sooner and scanning wider.
2) Challenge assumptions and the status quo by surrounding themselves with people who think outside the box. This involves seeking more diverse points of view and sometimes even looking in the mirror.
3) Interpret a wide array of data and viewpoints rather than looking for evidence that confirms prior beliefs. This can be about amplifying signals or connecting the dots. Think here about what JC Penny’s leadership is doing to make them a data-driven versus belief driven company.
4) Decide what to do after examining their options and then exercise courage to get it done.
5) Align the interests and incentives of stakeholders
6) Learn from success and failure by encouraging experimentation.
Clearly, digital disruption requires a management team that has put together the right culture and capabilities so that it can continual tweak and adjust to market changes. This requires strategic leaders that can anticipate the future and get their organization behind the changes needed to prevent a Kodak moment. Otherwise, as Peter Drucker said, 'If leaders are unable to slough off yesterday, to abandon yesterday, they simply will not be to create tomorrow'.