Adapting to the digital economy
Most organizations are failing to grasp the impact of digital and simply not adapting fast enough to the emerging post industrial economy.
The web has changed the rules of business. The best practices of the industrial economy no longer apply in the digital age. What was once safe ground is no longer so, and organizations need to adapt.
Sector after sector have been transformed by the new digital economy. Newspapers have found advertising revenue and readership evaporate, music retailers have shut their doors in the face of digital downloads, and companies like Blockbuster have been supplanted by digital offerings such as Netflix.
To think your sector will be an exception is to under-estimate the profound impact of the web on society and business. It will not be long before new post-digital companies begin to disrupt your sector too. Even if they are not here now, things have already changed. Digital companies such as Twitter, Facebook and Google are redefining customer expectations. You may not be in competition with these companies, but your customers use their digital products and so have similar expectations of service from you.
The problem is that most traditional businesses have huge legacy to overcome. Legacy in process, culture and leadership that are no longer relevant in the digital age.
Learning from the past
Many compare the current digital transformation to the industrial revolution. However, I believe it has more in common with the arrival of electricity. It took well over a decade for companies to realise they no longer needed to build their factories near water, now that they had a new power supply. They just couldn’t shake that old way of thinking. A lot of businesses are in that place today.
Part of the problem is that most senior management teams are not digitally savvy. They do not understand the full extent of the impact and benefits digital has for their business. They see digital as a marketing tool, when it has the potential to revolutionize every part of their business. Companies need digital leaders at the highest level of the organization to shape strategy for the company as a whole.
In the early days of electricity, companies had chief electricity officers. Senior company officials whose responsibility it was to integrate this new technology into the business. Although this thinking feels absurd today, at the time it made sense. We no longer have that position because electricity has become a fundamental part of working life. We need to go through the same process with digital, using our digital specialists to help integrate digital into the heart of our companies, not just adding a digital team to our marketing department.
Get a digital mentor
Perhaps it is time for you to add a digital mentor to your board. This doesn’t need to be a permanent member of staff, but somebody who can sit alongside the leadership team and give advice about how digital can be used to achieve business objectives and meet targets.
But adapting to digital isn’t just a matter of hiring a digital adviser and sitting back. It will require a willingness to change fundamental aspects of your business.
Are you willing to retire products that have served you well in the past, but don’t make sense in the digital age? Are you willing to take risks and experiment with new digital offerings? Are you willing to change the working practices that are not compatible with the fast moving nature of the web?
The web is unlike any other medium. The rate of change is phenomenal and companies need to be agile if they are to keep up. This means ditching many of the committees, working groups and processes that have stood your organization in good stead for years.
Changing your processes
In the past the emphasis was on quality assurance, because the cost of a mistake was high. Failure was not an option. But in the digital economy failure is to be embraced as part of the learning process, because correcting course can be achieved at next to no cost. Experimentation is the new planning, and innovation the only option.
Change is coming anyway, its just a matter of embracing that change before your competition does. Is that something you are willing to do?
Digital brings incredible change, and with change comes significant danger. However, it brings opportunities too. Opportunities to outmaneuver the competition, break into new sectors and transform your offering. For example, who could have imagined 25 years ago that the cost of distributing music would fall to essentially zero or that even the smallest cottage business could sell their products worldwide at minimal expense.
The idea of digital adaptation is becoming increasingly crucial for the survival of businesses in the 21st century. It is a topic that I am intensely passionate about and has become the focus of much of my work with clients.