THE ‘AHA’ MOMENT…
I’ve been talking about how important it is for boards and management teams to be digitally literate for a number of years now. I first delivered a keynote titled “are you ready for tech to turn your business upside down?” in 2005. (To an admittedly somewhat bemused audience). Fast forward a decade and it’s clear to see that I'm not the only one examining the digital capability of companies - every analyst of every listed company answers that question with buy / hold / sell recommendations every day. The fact that ‘digital-ness’ is affecting share price is one reason it’s getting so much attention, certainly.
Through my client projects, in London and internationally, I work with many leaders who - through circumstance - haven’t yet prepared for digital transformation. No company or sector is immune from the disruption that can be caused by the creation of a new technology powered business model.
Uber is one of the case studies I talk about most, with its meteoric rise to a $50bn valuation, but digital disruption is everywhere you look. From mobile-only banking platforms like M-Pesa in Africa, to the Just Eat / Deliveroo shake up of take away food, and the Spotify / Netflix / Apple Music battle to banish all physical media from the home.
THE BIG ISSUE
MIT, Harvard Business School and INSEAD have all recently released research on executives’ preparedness for the next wave of digital disruption. And the results are grim. From a third of future revenues being at risk from new market entrants to 9-in-10 CEOs confiding that they don’t feel they have enough digitally-native talent at the top table, enterprise is simply not ready. If you analyse the FTSE 250 and Fortune 500, less than 20 - yes, just TWENTY - companies have a clear digital and strategic lead on the board.
THE EASY FIX
There are quite a few ways to plug the gaping voids companies are now finding themselves with. A combination of expert counsel from consultancies like ours, Non-Executive Directors, special advisors and the adding of senior digital and commercial operators to boards - nickname ‘unicorn’ hires because of their rarity - all helps.
But it starts much deeper than that - companies have to believe.
For the past decade I have stood in front of audiences of every type, sector, seniority, etc. The message has been clear - disruption is coming (and you’re not going to like it). For the most part, people believed me - but usually questioned the rapidity of change. In recent years we’ve seen major moments provide proof-points of the effects of disruption to accompany the anecdotes, predictions and hypotheses. We needed these - because they turned doubt in to belief. And, helpfully, use a little fear to gain traction.
After all, if you thought $1bn for Instagram was a high price for Facebook in 2012, you probably accepted it more readily after the $19bn purchase of WhatsApp just two years later.
THE DNA OF DISRUPTION
I get asked a lot “what is the DNA of digital transformation?” and “how do we do it?” The answer, of course, is not a simple one. But there are clear characteristics of true disrupters that any company can (and most companies should) be trying to embed in their teams: size - small enough to be nimble, big enough to scale; speed - fast enough to stay one step ahead, patient enough to get the product right; and agility - with the ability to pivot an entire company on the spot, immediately, to react to the world around it.
JOINING THE DOTS
Replacing half of your executive team with hires out of Google, Airbnb and PayPal might very well give you the jumpstart your business needs in order to disrupt the competition. But true disruption requires a top-down, then bottom-up, cohesion. One of the issues many of my clients face is the stark reality that the board has lagged behind digital to the point it can’t brief its management team - who, in turn, can’t lead the troops on the ground.
Even just 20 years ago, the thought of a graduate analyst knowing more about the market a company is operating in than the CEO was both rare and amusing. Now it’s increasingly common - and understandably scary.
Some of this feels to be to do with tangible skills - few CEOs can code, would understand how to write a digital platform strategy, or could properly assess a CTO candidate etc. But, in reality, that’s not the most important thing. The C-suite never understands every single detail of every single role. That’s, indeed, why there is a hierarchy of command-and-control.
But it’s a serious concern that the very language used in today’s disruptively led changing market is alien to many leaders. The decreasing ability to communicate with one ‘common language’ has made it harder to talk about how to push forward digital agendas, how to topple new technology competitors, and how to lead the digital-first teams of tomorrow.
It’s the resulting confidence gap that I spend much of my time coaching leaders on.