CIO Insight: An introduction to Digital Disruption
Earlier this month I attended the Gartner Symposium in Barcelona. It is billed as the most important gathering of IT leaders and provides insight, strategic views and trends that will affect businesses over the next 12 months. This was my first time attending the event and I must say I was blown away by the sheer size, quality and quantity of the various sessions. The big focus and underlying message was Digital Disruption and how the opportunities it provides can transform businesses. Pause here for a second, the biggest gathering of IT leaders and the focus was on how digital disruption can transform businesses. IT Leaders need to be business leaders.
So, what is Digital Disruption – I was interested to hear the response from family members and colleagues. They focused on the word disruption and assumed the phrase Digital Disruption to be a bad one, perhaps an attack on the business as an example. This couldn’t be further from the truth, in fact the only negative side of this phrase is those who choose not to embrace it.
Digital Disruption is much more than improving efficiency within a business, it is essentially a transformation aided by emerging technologies, processes and business models to positively impact the value of an existing service or product. By connecting all the different parts of the business, greater working relationships can be formed with partners, customers, suppliers and even organisations typically seen as competitors.
The word disruption is used due to the disruptions this business transformation has on the current marketplace.
I have some good examples which demonstrate Digital Disruption far better than I can explain.
Think of Netflix, they disrupted the movie rental market. Blockbuster was the go to place if you wanted to rent a movie, it is safe to say they dominated the market in the UK but they failed to innovate and failed to leverage the emerging technology available to them. Netflix saw an opportunity, they started with a delivery service and then moved into providing movies digitally. Blockbuster didn’t see it coming and furthermore weren’t agile enough to adjust to the demand of the market.
A somewhat controversial disruptor, they came into a market that had been stable for around 4 centuries and completely tore up the rule book. They saw an opportunity to digitalise the way we consume our travel and align it with the on demand needs of the market.
This example is slightly different as it is an insight into the future. Lego, who have a fair proportion of the market they operate in see future disruption coming from horizontal markets. The CEO explained how he anticipates the likes of Facebook and Google being the biggest rivals over the next five years and that Lego must innovate and change their own business model to compete. He sees the rise in virtual reality being the big trend and expects the physical and virtual worlds to collide. He understands the importance of adapting in a market disrupted by technology companies.
How to begin thinking about Digital Disruption
Before businesses can disrupt, they need to analyse the various markets to uncover the opportunities. The Lego example perfectly demonstrates the need to think outside of your market vertical. So where to start? I’ll try and help.
Stage one; Detect and analyse the market demand. What could you change about your own business to improve the experience or value for the customer. Is there anyone that already does this and how do they do it? What are the trends or culture shifts signalling to your business?
Stage two; How quickly can you change or adapt? What, if anything would prevent such change? What is the impact of not adapting? How can Technology support this?
Stage three; Could your products or services be used to solve the customer needs in other markets? Do you have visibility of other markets? What will you do with your existing offerings? How quickly can you shift resources and capability?
Gartner described this as the Three Elements of Digital Business Transformation.
This is where some of the more established organisations struggle, as implementing Digital requires changes to the business strategy and a focus on digital outcomes. In some cases, a digital strategy can replace the business strategy.
The basic principles should include;
- Agile change management processes
- Getting products or services to market quickly
- Engaging and welcoming feedback with the customer base
- Limiting the time & investment
- Adopting a culture which accepts and learns from trial and error
Some organisational processes may not lend themselves to this new model or will take time to implement such change. This opens opportunities for creating a start-up incubators or partnering with a similar organisation. These should be void of such processes and lend themselves to an agile approach. As these initiatives grow and begin to take products to market funds can be reinvested in talent or speeding up the organisational change. This entrepreneurial model should help attract and retain staff with digital skills.
The business must take the journey to digital whilst supporting and maintaining the existing processes, applications and infrastructure. The IT team can help this by operating in two modes…
Digital Disruption Needs Bimodel IT
I’ll be writing a more in-depth piece on what Bimodel IT is but for the purpose of this article let’s summarise. Bimodel IT is two working speeds of the IT department. The first, referred to as Mode 1 is the traditional IT speed, focusing on governance, safety, return on investments and doing things in the right way. The second speed, Mode 2, is a new way of working for the IT department. Doing things fast, being agile, driving innovation, driving delivery and adding value to the business.
It is easy to see it is this type of model that is required to help drive Digital Disruption. Mode 2 is essential as a digital business contains much uncertainty and the need for agility and flexibility depending on what the market is demanding. The digital world is also one which requires collaboration so the need to provide innovative, flexible working practises is also essential.
There are some common mistakes when it comes to Digital Disruption, the first of which is that Digital Disruption is the responsibility solely of IT. It should sit with the business and in many cases the CEO. Where IT come into it is that most business trends have a meaningful IT component to them and thus IT needs to be woven into the planning process of the organisation. IT leaders can help drive this through Digital Disruption.
Secondly, as discussed you need to understand the market and the demand. Don’t start by launching new digital products and services without analysing the market and engaging with your customer base.
Many businesses see the likes of Netflix and Uber being successful at Digital Disruption and try to imitate start up organisations. The problems arise where traditional businesses do not have the business model and processes in place to adopt the agile, adaptive approach of a start up.
Digital Disruption is not just cloud. I’ve seen and heard lots of people trying to sell or buy Cloud based products because they wish to drive the necessary transformation. Digital Disruption is made up of multiple components such as Cloud, Social, Mobile, Virtual, Analytics, process redevelopment, IoT, business remodelling and importantly, people.
Finally, the business strategy must reflect the areas in which Digital Disruption can exploit, it takes time but enabling disruption must become business as usual. A realistic timescale depends on the business but for the analysis of the market data to be relevant I would suggest a timescale of 12 months to execute on the transformation. This will enable you to create a platform from which you can drive Digital Disruption.
Digital Disruption is changing industries all over the world, altering the way we as individuals and our businesses operate. It brings a whole host of opportunities across industries we may not have had access to previously.
Digital Disruption is more than providing the platforms, it should be business focused, identifying opportunities through customer engagement and collaboration, implementing solutions to improve business processes, services or products and providing agile ways of working to an ever-changing workforce.
Digital should become the DNA of any organisation, woven into the business strategy and the day to day operation of an organisation. This is not something IT can do alone and nor should it be – but don’t wait for the business, get started.