Ditching the dinosaurs: how to stay relevant in the age of the startup
by Christopher Schlaeffer
Whether you love it or hate it, there’s no escaping the fact that the widespread adoption of digital technology has changed our everyday lives. How we hail a cab, book a hotel, connect with friends, and voice our opinions has been transformed beyond recognition.
With these new technologies placing customers firmly in the driving seat, the benefits for consumers are clear. However, for businesses operating in this brave new world, the picture is a bit more nuanced.
For the Airbnbs or the Ubers, or for tomorrow’s tech darlings, there’s an uphill struggle against suspicious and hostile competitors. For incumbent industries, the very fundamentals of the way in which we operate and approach our business strategy is up for debate.
Already, the effects of this change are clear to see: a recent study by Capgemini reveals that the majority of companies in the Fortune 500 of the year 2000 are no longer with us. There is no doubt that many of these seemingly-stable enterprises were left behind due to the advance of technology and their failure to effectively pool and deploy collective knowledge that would have allowed them to adapt or to overcome their challenges.
So, we need to go digital. Adopting digital tools, practices and technologies – or digitalization – is no longer optional: it’s our reality.
With so much at stake, it’s only through effective leadership that the right culture can be fostered and the smartest talent promoted. With this in mind, it’s startling that a 2015 Harvard Business Review study found that only 19% of leaders are viewed as strong in digital leadership and management.
Managers and leaders need the right combination of vision, collective acumen and teamwork to make sure digitalization is effectively implemented within an organization. They need to recognize and anticipate trends, interpret the data and ensure they aren’t left behind. It is a process VimpelCom is currently undergoing as we move from being a traditional telecoms company to a digital services provider. For us, that means centralizing infrastructures and frameworks, while pooling assets and data to create an agile, streamlined entity that puts our customers first and provide the products and services our customers need.
All too often, as companies mature, they become segmented into departments with separate silos, creating an unintentionally competitive atmosphere between teams that holds back the collaborative approach and the sharing of knowledge needed to achieve common goals. Avoiding this takes conscious strategy, consistency and effort, but what traditional leaders perceive as a chaotic structure is actually the secret sauce that allows digitally native companies to iterate, collaborate and ultimately, deliver.
Digitalization – and by this, I mean an authentic, cultural paradigm shift, not just token efforts – has the power to burn these barriers to the ground. It allows talented people to be effectively deployed to the tasks at hand. Pooling data centralizes infrastructures, frameworks, assets and enables teams to gain better insights that provide better products far more quickly than traditional systems and structures ever could. Digital communication technologies have opened up new opportunities for how work gets done. Could we have imagined just five years ago that a leading British bank would have introduced “Facebook at Work”, bringing familiar social tools into the workplace? These tools, backed up by front-leading management, encourage collaboration and enable employees to communicate more efficiently and stimulate non-hierarchical communication and discussion. 70% of participants in a recent survey agree that the use of digital media for work is on the up and up. Company leaders have to engage with their employees and explain the rationale for digitalization and their vision for the company’s future.
Established companies aren’t all doomed to be the next Blockbuster: in fact, they already have considerable advantages over Silicon Valley startups. They have built up an enviable resource of data; sought and retained talent and perhaps most importantly, gathered insights on their customers that cannot be quickly replicated. Management and their teams possess a collective acumen built up over years. How this data and knowledge is applied will determine their ability to respond to customers’ needs. Above all, it requires an understanding and vision from the top about how digital tools will be used to the company’s advantage.
A notable success story in this area is global retailer Wal-Mart. In the US, Wal-Mart has benefited from years of Point of Sale (POS) systems data that can be used in myriad ways, including inventory management, cost reduction and assessing customers’ buying behavior; ultimately leading to double-digit revenue growth. The opportunities for incumbents today are just as great; however success will depend on whether the management understands how digitalization can be used to their advantage.
Digitalization can transform organizations into agile, innovative providers of the goods and services their customers’ need. To get there, they’ll need persistence, data smarts and a shared collective vision. Ultimately this will determine which companies succeed due to digitalization and which fall by the wayside.