Digital Transformations, What does it mean ? With SPEED becoming the norm for success in the 21st century Networks era, the challenge of running and in parallel reinventing a company is the biggest challenge of any CEO or other senior executives and only a small percentage of companies find a way to address it successfully. In fact the majority of the transformations are failing for many reasons. As short term issues need to be addressed in parallel with creating the future (long term), Transformational leadership with involvement of senior, middle and lower management is paramount for success.
So what can you do to create successful transformations in the 21st century? What can we learn from successful companies like Google, Amazon, Apple, Nestle, IBM and other ones who belong to the small minority that know how to balance present with future?
The answer is: Beyond the right people in the right job having the right company culture and organize differently for the current businesses than the future businesses:
The subject has been discussed extensively in many articles and please find more at
Business Dynamics . Here I quote only the key attributes of a successful culture:
- They have a Transformative Company Purpose.
- Trust among people and open minded culture
- They challenge themselves being connected with communities & crowd.
- Embrace exponentially growing technologies + multiplication/convergence effects
- Embrace Autonomy and Speed.
- Learn faster through experimentation and fast failure is encouraged as it is learning.
- They think in multiple time scales (short, medium and longer term)
2. ORGANIZE DIFFERENTLY
A. The current businesses
are focusing to delight existing customers, grow and generate income to support the organizational objectives at large. They have established customer base, go to market channels and processes. These are major assets for an incumbent company and any disruptor would love to have these assets. Their focus is to innovate and grow the business within their market segments and product portfolio without creating new business beyond their core. As they are big business units (at least 10—15% of the overall company) they are not flexible enough to behave like start-ups or compete with start-ups! They focus mainly on Routine/Sustaining/Incremental Innovation.
How to defend your mature business from disruption?
- Monitor through experts (need to find the right ones) technology breakthroughs and major customer behaviour changes or many failed experiments. Partnering with start-ups and/or accelerators is a good way of monitoring technology and new business model breakthroughs.
- If you find out signs of disruption or even disrupted first decide if you could upgrade your current products/solutions to delay the growth of the disruptor and neutralize the attack (Microsoft has done this consistently e.g Internet Explorer versus Netscape and Office move to Cloud). Then continue to improve till you neutralize the disruptor completely.
- If neutralization of the attack does not work and the disruption is too fast and strong then shed tangible assets, work to slow down the disruptor (pricing, long term contracts with customers,.. ) and use your intangible assets (people, brand, expertise, patents,..) to change fast business model and diversify if possible. E.g Fuji Film moved from Chemical Film to Cosmetics and Kodak has started recently using their technology and know-how to innovate in the Green Printing market segment.
With existing businesses the statement disrupt yourself is nonsense because you do not kill your own business. What you need to do is focus to innovate with different business portfolio than the existing mature businesses.
B. The future businesses
are set up separately (within an incubation structure and sometimes start-ups are acquired to become part of the incubator) working like start-ups to discover a viable business model before they run out of cash. Their focus is to create new businesses based on a new business model (Disruptive) or develop new technology (Radical) or a combination of both (Architectural).
Their leaders report directly to the CEO or other member of the senior Management, they have their own processes and metrics suitable for their business model and different than the current incumbent businesses. When a new business grows fast and has the potential to become more than 10 % of the company sales within 3-5 years it is selected to become a separate business unit and the growth engine for the whole company the years to come. Transforming a start-up to become the growth engine of the whole company needs the attention of the CEO and the whole Management team. An initiative like this requires a lot of resources and it cannot be more than 1 every 2-3 years. Microsoft, Alphabet (ex Google) and Salesforce are companies that operate in similar ways.
What do you think?
Can you run and reinvent your company? How can you apply this in your company?
Thank you very much.
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Mike Mastroyiannis is Business, Management & Executive Coach and Management Consultant for among others Transformational Leadership, Business Transformations, Exponentially Disruptive Innovations. He has served as CEO of business units in Multinationals, founded or lead start-ups and serves in advisory boards. He can be reached through LinkedIn or email email@example.com