We are living in a time of unprecedented change, one that is exciting for those embracing the opportunities technology and digital capabilities present. However, many are finding it difficult to come to terms with the pace of change and are struggling to cope in this digital age.
Most organizations feel compelled to make significant changes to remain relevant and compete effectively in their markets. Some organizations are more aware than others of the need to embrace change and have established strategic transformation programs in response to the risks presented by innovative disruption. Still, many organizations are getting left behind.
Digitalization and the Pace of Change
The pace of change and associated business transformation activities are accelerating rapidly, making it increasingly important for organizations to develop conscious and effective digital strategies that are built into their business-as-usual activities and enable them to manage the risks and embrace the opportunities digitalization can deliver.
Innovative disruption and the organization’s ability to respond to change are cited annually as top risks in our recurring Executive Perspectives on Top Risks survey, as are cybersecurity and privacy, and these risks have moved rapidly up the agenda as organizations embrace digitalization.
Even those with strong brands and the resources to pay salaries well above average levels recognize that attracting and retaining talent has become a significant, business-critical issue, as fast-growing digital leaders lure away individuals capable of driving a digital agenda and helping the organization achieve its long-term strategic objectives.
As a result, the average tenure of organizations on indexes such as the S&P 500 is on the decline, and many forecasters predict that as many as half of the incumbents will be replaced within the next decade.
The top spots are becoming more and more prominently occupied by young, “born digital” companies heavily focused from “day one” on using technology to build stronger relationships with their customers, provide innovative products and services, and improve operational performance and decision making. More traditional businesses can learn a great deal from these younger, leaner companies, especially when it comes to organizational culture and encouraging digital change and innovative thinking.
Therefore, business leaders are increasingly recognizing the need to transform their organizations. Many, however, underestimate the extent of change required at the core of the organization to compete in the digital age.
Organizations often consider digital transformation a definitive outcome and wonder what it should involve and how long it will take to finish. However, digital transformation should be viewed much more as continuous evolution. It is about an iterative journey, not a definitive, unchanging destination.
As soon as the organization achieves one goal along the path to digitalization, many more will emerge on the horizon. The competitive landscape is continuously changing, and new, innovative technologies are constantly being developed. Organizations must establish digital strategies that can respond and evolve in line with these ever-changing environments. A mission and vision are important, but it is also vital to avoid focusing too much on the destination.
Imagine the preparation of a group of explorers planning an expedition. The goal might be to reach the summit of Mount Everest. Successful explorers would not embark on this challenge lightly and without consideration for their individual capabilities. They would view it as a long-term objective and undergo an initial process to assess their fitness and evaluate whether they are physically able to undertake the challenge. They would seek to understand their team’s strengths and weaknesses, identify areas for improvement, and set short-term goals.
Similarly, organizations must consider the broader journey to digital transformation. They should take time to assess their capabilities and identify areas to be addressed to ensure they are equipped to make the journey. It is not enough to paper over the cracks or ignore weaknesses at the core of the organization. It is a combination of mission, clarity of business, determination to succeed and core competencies that ultimately will lead to success.
Therefore, leaders should allocate more time to improving the organization’s digital competencies. This will ultimately set them up to progress successfully along a path that will take them closer to their longer-term goals over time. It will also help them accelerate their change initiatives.