In 1997, the release of Clayton Christensen’s The Innovator’s Dilemma introduced “disruption” into board rooms and c-suites — businesses now had a shared language to discuss how startups were using the web to steal market share.
But after two decades, and the implosion of giants like Kodak and Blockbuster, organizations of all shapes and sizes still struggle to adopt or sustain businesses built on emerging digital channels, technologies, and platforms:
- Despite a recent surge in digital subscriptions, the New York Times hasn’t yet offset the continued free fall of print ad revenue.
- Even some Silicon Valley giants typically thought of as disruptors are facing growing pains. Snap’s (Snapchat) stock has slipped since their highly anticipated IPO. The cutthroat culture that helped Uber smash through barriers-to-entry has been revealed to have come at a steep cost to employees and drivers. Now, Uber is more vulnerable to other disruptors like Lyft (whose customer base has grown 7% since late January).
The numbers vary from white paper to white paper, but it’s safe to say around 84% of companies fail at digital transformation efforts aimed at minimizing the risk of digital disruption.
In a March/April issue of HBR, Doug McMillon, the CEO of Walmart was asked what has been the biggest challenge of their digital transformation. He answered, “Speed. If you compare our e-commerce business with almost anybody else’s, you’d say it’s a pretty good business. In fiscal 2016, our global e-commerce sales increased about 12%, to $13.7 billion. But when you look at what the leader is doing, we’re far short of where we should be. And that’s just in e-commerce; there’s a lot of other digital conversion that needs to happen. We’re thinking in the right way, and we’re moving but not fast enough. I’m frustrated by that.”
Speed. Speed. Speed. Almost every organization wants digital transformation — and they want it now. But why do they all struggle with it?
Part of the problem is that digital disruption is often framed as a singular event. The result of a eureka moment in which a brilliant software engineer codes something that sets in motion the future, or end, of a business.
In truth, the reports of your business’ immediate demise have been greatly exaggerated.
But, the long-term success and viability of your business is inextricably tied to its ability to innovate and ward off digital disruptors. Disruption just doesn’t happen all at once — it happens over a thousand cuts.
When a customer searches for your products on their smartphone and instead finds a frictionless “one-tap” or “card-swipe” digital experience built by your competitors — a single cut.
When a customer tweets a complaint or concern at one of your social media accounts and it goes unanswered, but is quickly fielded by your competitor — a single cut.
When a talented employee is looking to leave a larger footprint in the world and puts in their two weeks notice because there aren’t other options inside your fixed org chart — a single cut.
Because businesses are instead framing disruption as a singular event, they are also framing the solution — digital transformation — as a singular event. A single partner, initiative, or project is deemed the solution and all the resources the company can afford are thrown at it.
For the sake of throwing grenades, let’s say the solution is an engagement with a large consultant. Months and millions are spent on a strategy deck that promises to outline the future of your business. But that digital transformation strategy is obsolete by the time the ink dries on the printed deck.
Digital transformation is actually about small graduated wins that better allow your organization to adapt to change. The elusive speed to change that Doug McMillon and other CEOs crave is unlocked by identifying opportunities that are low cost in time and resources, and high in potential value.
Don’t try to change faster — change smaller.
Big all-in-one bets on digital platforms are risky. For one, fads will come and go — ask anyone who heavily invested into capitalizing on the success of FarmVille or MySpace how that worked out.
Two, platforms that are here to stay like Facebook or Google can roll-out changes at any time that drastically affect your ability to leverage them for business outcomes. That’s not to say you shouldn’t optimize your business for digital platforms, but don’t base your entire marketing strategy on a single iteration of the newsfeed algorithm.
Platforms, consumer tastes, everything in digital constantly shifts to new fronts — all being a “digital” organization means is that you are equipped to adapt.
Even many tech companies commonly described as disruptors started out as one thing but were able to become something else entirely. Paypal started as a company that developed security software. YouTube was an online dating service. Slack was an online video game.
But this goes beyond startups in their infancy. Tech giants are constantly tweaking their business models to position themselves for the future. Just look at Netflix’s journey from mail delivery DVD rental service, to streaming giant, to production studio. Or Amazon’s investments into drones and frictionless stores. Or how Google restructured into Alphabet to isolate their profitable search business and give their big venture bets the best chance to succeed.
Looking for an example outside Silicon Valley? Disney’s $1 Billion investment into digital magic bands has paid dividends by turning Disney World into a giant computer that understands “where guests are, what they’re doing, and what they want.”
I don’t think I’m going out on a limb if I assume that your company doesn’t have a billion dollars to invest into a digital transformation, so let’s talk about a simple, practical example.
I’m the Founder and Chief Creative Officer of Digital Surgeons and we were recently hired by a hundred-year old organization with franchise locations around the world. Known for their best-in-class management training, they came to us with a laundry list of digital transformation initiatives that would allow them to better communicate globally.
Our first step was break all their digital experiences into a series of steps and stages that would enable us to make a dent.
We started with their monolithic franchise website with thousands of pages. Applying lean startup and agile principles, we released a minimum viable product (MVP) of the site that featured only its most essential components. Over the next several months, we are going to roll out changes and updates based on how users actually interact with the site.
Again, these are gradual evolutions to the digital experience.
If we had gone away and put our headphones on to finish this massively scoped project in one fell swoop, it would have been a year or two process. Others may argue that it’s still best to do things once the right way. But we believe by slowly changing the experience, we can test and learn from real digital products in the market. This allows us to understand how to best deliver value for their customers as needs change over time. The digital experience that they need today is vastly different than the experience that they will need two years from now.
Businesses that want to avoid the fate of Blockbuster or Kodak aren’t going to do so following one meeting, strategy deck, or project. They need to play the long game.
Digital transformation isn’t a single tactic. It isn’t a single strategy. It isn’t even a single outcome. It is a process. But don’t let the enormity of the undertaking deter you.
It’s time to take the first small step to future-proof your organization.
Let's have a conversation about the graduated steps that can secure growth for your business.
Originally published on LinkedIn.com