The next major wave of disruption appears to be starting its tear through organizations everywhere. It's not a technology wave, it's a new way of doing business in our digital world.
Learning to compete using a digital business model appears to be comparatively easy if your company or organization was fortunate enough to be "born digital". For the 99%+ of organizations that aren't so lucky, the far greater challenge lies in transforming a function that was born in the physical world into a modern digital one.
In these digital business models, technology is used very differently. In a traditional business model, technology is primarily used to automate and improve the efficiency of existing business processes. In a digital business model, technology is used to re-invent and re-imagine the fundamental proposition of the business.
I've written a fair amount on this topic before. If you'd like to catch up, I've created a blog resource page that lays out the thinking at different levels: strategy, platform, leadership, new skills, etc.
By now I've seen plenty of strong differences between the organizations who are doing well at this strategic transition; and those that aren't. And, just like having the right conditions is a boon to growing crops, it appears that the same thing is true for growing digital business models.
Examples Are Everywhere
Quick: name an industry that was seriously disrupted by the internet?
You probably don't have to think long about it: media and entertainment, retail, travel, etc. -- the more you thought about it, the more examples you could come up with, right?
Now, take that familiar connectivity technology, and add in the current menu of heady business model ingredients currently at hand: social, analytics, mobility, cloud, apps, content, etc.
Obviously, the potential for disruption is much greater, isn't it?
That aggregated disruptive potential isn't lost on many entrepreneurs and venture capitalists. Not should it be lost on the leaders found within many more traditional organizations. A new transformation is at hand: what role will you play?
I break my customer interactions into three rough buckets.
- Those that are unaware that something substantial is going on, and are largely unengaged.
- Those that are quite aware that something substantial is going on, and have started to make many of the right investments in leadership, organization and supporting technology.
- Those that are clearly rocking it better than their peers.
It's this last group that's drawing my attention these days. What makes them different? What's their secret sauce?
In addition to many of the formal structural elements I've enumerated in past posts, there seems to be something more: a context, a culture, a way of thinking about things at hand.
They have succeeded in creating the fertile ground on which to grow their new business model.
So, without further delay, here's my quick list of cultural attributes that seem to always be at hand when I observe proficiency at transitioning to a digital business model.
- An intense, passionate and empathetic focus on the end customer.
There's always lip service to be paid about understanding the needs of your customer, and then there's the deeper reality: going beyond the analyst reports and survey results towards a broad pattern of direct customer empathy across much of the organization.
Since I tend to spend a lot of time with IT leadership types, its especially refreshing when I hear that sort of talk track from a part of the organization not especially known for customer empathy.
When considering any digital business model, the whole goal is to re-invent the value proposition for your end customer in a digital world, and not simply re-package physical experiences using technology. And, naturally, having a deep and nuanced understanding of what these people really want and need is a huge boon in this task.
- An intense, passionate and empathetic focus on all the people who help deliver the value proposition to the end customer.
Some of them may be employees (sales, support, etc.), many will be outside the boundaries of the company (partners, influencers, community, etc.)
Someone can really rock my world by not only demonstrating their empathy around the end customer, but also sharing how the extended ecosystem delivers that superior customer experience.
It's far too easy to focus on only one aspect or another; few can articulate the totality in a comprehensive way. But it's truly amazing when you see it.
- A culture of innovation
I was fortunate to have a brief interview with Bruce Strong who's currently writing a book on this topic. He's interested in using EMC as an example of how one company in a very competitive business works hard to create a culture of innovation.
But I think that many people might miss the real point of this whole innovation thing. I think the wider perception is that the goal is to come up with a handful of great ideas that can be put into practice using some sort of formal process.
That's nice, of course, but I've got a different view of the real goal here -- it's to create an environment where experimentation is encouraged everywhere.
For example: we expect you to innovate, we expect you to experiment, we expect you to make mistakes and gain learning along the way, we expect you to routinely challenge orthodoxy -- that's part of your extended job description that we forgot to write down.
Whether you choose to do this as part of some sort of formal innovation community or activity, or it's just a mindset you bring to work every day -- the end result should be the same.
Going back to companies that are making the leap to digital business models faster than the rest -- you'll see clear evidence of widespread experimentation and innovation patterns almost everywhere. Sure, there's some governance and rationalization to keep things from getting crazy, but you can see obvious signs that everyone is helping out.
- A culture of engagement
It seems that there's this natural human tendency in working individuals everywhere to slowly disengage with the world around you, and progressively go far deeper into that small bubble you're personally involved in.
As a result, you end up with a familiar landscape: big functional silos comprised of smaller functional silos, all supported by a caste of knowledge workers with deep expertise around one set of topics or another. All of those focused skills and perspectives are useful in both worlds -- physical and digital -- but they're inevitably organized around history, and not the future.
Engagement: the proactive act reaching out and driving meaningful dialog with others who don't sit next to you in the org chart. For example, I move around the EMC organization quite a bit. I always take the time to understand what's going on with other people: their challenges, opportunities, perspectives, etc. And it's a rare interaction where I don't get something from them, them from me, or hopefully both.
Going back to the organizations I've observed that are very proficient at making the transition to a digital business model, you'll always find a culture of engagement -- people reaching out across the organization (and often outside the organization) to get ideas, perspectives, advice, help -- whatever.
- A clear mission statement from the top
Specifically: the world is changing, our industry is changing, we must change, it's not an option, we can do this, it's a journey, let's get started, etc.
The words and concepts might vary, but the intent is always the same: whatever we were doing that got us to this point won't be what we're necessarily doing going forward.
Call it the "burning platform" if you will -- everyone on it will have to jump, sooner or later.
- Dual org charts: influence and authority
While every organization respects and responds to executive authority (or should!), you'll always notice a second "org chart" at work in these very progressive organizations: one that's influenced-based vs. authority-based.
The influence-based relationships and priorities appears to do well to overcome the natural stove piping that inevitably results from traditional (though necessary) hierarchical models. People do their day job, but also spend time helping out on projects elsewhere in the organization.
And their boss is fully supportive.
- Resources aren't painfully scarce
While everyone would like a huge budget and headcount to get their projects done, a certain leanness encourages innovation and experimentation I've found. That being said, there's a difference between being lean/efficient and being in abject resource poverty.
I find in the more proficient organizations they can easily get the basics: access to information sources, the ability to host small-scale tools and applications readily, some modest funds available to buy a toy or two, etc.
Nothing really excessive, just the raw materials for experimentation and innovation at the intersection of social, mobile, analytics, apps, content, etc. Larger and more formal initiatives inevitably require larger and more formal resources to be allocated; but a lot can be learned -- by many teams -- at a much smaller scale.
Indeed, I believe that this is one area where progressive IT groups can enable digital business models by making modest pools of resources and assets easily available across the organization.
- There's a will to change
I don't know how to succinctly describe this, but it's very noticeable when you're talking to these very progressive organizations. Once you get them going, they can rattle off each of their change initiatives, why the change is being made, what progress they've made, and what remains to do.
Not only can they tick off the elements, they can often go even farther and connect the dots between them in deeper ways.
This leads to discussions along powerful lines, e.g. we're now taking what we've learned around analytics, and applying it to social. Or building apps that report back how they're being used and by who, which drives even deeper understanding.
The passion and enthusiasm that radiates from these people as they're telling you about what they're working on -- well, it's downright infectious.
Just to be clear, the cause and effect here is simple: the fact that these organizations have wonderful corporate cultures enables them to better tackle any major challenge that comes along, including (but not limited to) the transformation to a digital business model.
If you go back through my ad-hoc list, these are the same sorts of things things all the management gurus and business experts harp on: culture, innovation, etc. If I put my EMC hat on for a moment, I feel we're pretty good at all of these as well.
No guarantee of outcomes, of course, but certainly reassuring.
The message here is clear: great corporate cultures -- comprised of great individuals -- can do great things.
They're thus far better equipped to handle any radical, transformational thing that comes along -- including something as disruptive as a shift to a digital business model.