Let’s talk digital.
First of all, what is digital adoption, or digital transformation?
Someone who manages a restaurant might tell you that going digital is about embracing online ordering and contactless payment. A distribution center employee might tell you that it’s about analytics and automation. A C-level executive might tell you it’s about agile workflows and decentralized decision-making.
In a nutshell, transforming digitally just means using digital technologies to modify or create business processes, influence organizational culture, or change customer experiences, usually for the better.
Digital transformation isn’t some hidden trend. It’s all around us. There is so much of it, in fact, that most of us miss the forest for the trees, so to speak. Much of what we take for granted in today’s world – Netflix, Uber, LinkedIn networking – is all a product of digital adoption.
If it’s already everywhere, is there really a “lack” of it?
In a word, yes. Consider the number of small businesses that have permanently closed this year in the U.S. (roughly 100,000 and counting). What happened to them? You could blame it on quarantines and lost revenue, but then, why didn’t all businesses shut down? The answer is that the businesses forced to shutter weren’t able to harness the power of digital quickly enough. They didn’t know how, perhaps, to pivot their small-town diner into a “cloud kitchen” that used third-party delivery. Or resisted going remote, for instance, because it seemed too difficult.
It’s not only the small fish who pay the price of digging in their heels, though, and this has been the case since well before the latest global pandemic. Blockbuster. Borders. Toys“R”Us. Polaroid. Sears. Many multi-million dollar brands went bankrupt because of innovation lag. Their maximally-digitized competitors, meanwhile (think Netflix and Amazon) are at the head of the class.
Why do some companies fail to go digital when the benefits are so obvious?
Vijay Govindarajan, professor at Dartmouth College’s Tuck School of Business, has a surprisingly logical answer. When it comes to reigning in spending, he says, “Innovation is an easy target. R&D dollars by definition lead to uncertain outcomes.”
In that sense, companies who push back against digital adoption are just obeying the age-old advice to not switch horses mid-stream. Instead, they continue to put their trust in whatever they believe has underpinned their current success and focus on what they stand to lose rather than what they could gain.
To be clear, this is as natural a tendency as any in the world. We don’t just fear change and uncertainty – we’re genetically hardwired to resist them. And prior to the digital revolution of the last twenty to thirty years, it was an effective strategy. Today – not so much.
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What can innovation-minded leaders do to catalyze digital adoption within stagnant organizations?
This is a difficult task that goes beyond data and processes and can rely on effective communication as much as anything else. The number one thing to be communicating?
Digital transformation is not actually under the heading of research and development. It is not a singular concern, but one of technology, culture, and fundamentally, of business models themselves.
That is to say, digital transformation is transcendent of all traditional departments of a business, which include sales, marketing, human resources, and customer service (along with R&D and others). It must be thought of in the same capacity as talent, infrastructure, and corporate vision – in other words, as being fundamental and vital to the very existence of a company.
This ultimately means that digital transformation is reliant on leadership, first and foremost, to recognize the necessity of continual evolution and refinement. Once that reality has been established at the top level of an organization, the next step is simple.
Find people, either inside or outside the company, who are able and willing to help. Build a team of creative problem-solvers and start iterating. The “perfect wave” of software, technology, and skills is never going to land in your lap, and the longer you wait, the farther ahead everyone else will be.
Ironically, despite the explosion of data and information that entrepreneurs and corporate leaders now have access to, running a business successfully today requires more of the intangibles – like gumption and vision – than it ever has. With that in mind, the antidote to uncertainty surrounding digital transformation is just this: the courage to do what’s simply necessary.