In Part 1 we looked at two of the key impacts of fast technology change, and I ended by suggesting that best practice no longer works. Here's why...
Today, understanding best practice undermines any potential future. Its worth only lies in telling a CEO what not to do.
The changes we face require far harder skills: intellectual agility, a high risk propensity, an ability to work with contradictions. We need people who can cope with change as the new normal. We need intellectually agile people. People with deep conceptual ability who are able to assess complex variables and come up with novel solutions. The ability to deep-dive into strategic options is less important than the agility with which it is done. To get lost in the detail is to miss the opportunity.
All lines in business must go straight from how consumer problems are solved to how the business operations must support that. It is about reduction, where a business solution is the straightest line between problem and solution.
From simple things like digital communications, e-commerce and an explosion of user-generated content, to more complex things like Tesla, connected devices, IoT, AI, bio-mimicry, robotics and medical technologies – the impact of change has been dramatic and exponential.
This means new competitors with value propositions designed around the consumer from the outset. Many of the new technology brands have created such a competitive advantage that competitors find it very hard to compete, using their legacy structures. New technology brands solve consumer problems in a fast and seamless way. Their entire structures are designed around their value propositions. That is what true consumer-centricity is.
The implications for most companies are similar to renovating or building. Whilst renovating may often look like a better and cheaper option, at times it is better to redesign and build a house from scratch as the renovation will at best deliver an inferior product. That is the double-bind most companies are in. They almost need to erase their history and start again as the pain and costs of “renovation” will still leave them with an inferior product.
It will mean a company may be forced, defensively, to transform to protect its current customer base and expand within known parameters, whilst offensively, it launches new companies that originate from the consumer being centre stage, and then design the business operations around that.
Whereas the history of technology is process-driven, process is merely one element of the way technology will impact a company. If a company starts with defining consumer lifetime value and how best to drive that value through technology, it needs to start unpacking how every single aspect of its business model can adopt technology to create integration, efficiency, responsiveness and seamless connections. How must back-end systems support front-end systems so that they are seamless and consistent? How must technology support frontline staff? How must technology drive more efficient marketing campaigns? How can technology cut the costs of acquisition? How can technology enable better targeting? How can technology enable more seamless online engagement? How can technology enable connecting diverse data points to become more useable?
A simple way to do this, is to unpack the company business model into its respective areas.
Before I make everyone grab prescription drugs, let us pause first.
- Be as informed as possible. Yet, information overload is hardly the way to cope. It is not volume, but insight that matters. Instead of drowning in data, how can we reduce that to meaningful insight?
- Learn to work with contradictions. Contradictions enable agility and choice. The greater the degree of uncertainty companies can learn to live with, the greater agility they will have.
- Increase the tolerance for risk. Technology enables fast decisions, but also rapid prototyping and testing of new product and service ideas. Living with high levels of certainty is no longer possible.
- Become agile and flexible to change fast.
- Know what data matters and drive that.
- Adopt multi-disciplinarily as a norm: flat structures and no functional silos. Companies must be designed around consumer value propositions.
- Accept most of what they do will not have traditional yardsticks, benchmarks or processes.
- Always unpack the business model from how that enables and drives the customer value proposition.
- Understand that technology decisions can fast be overtaken by technology advancements. The advantage lies with the company that can best implement and leverage the technology to attain critical mass in the market.
- Create a culture of learning.
The end-result for most companies leaves them in a double-bind:
Technology enables far greater opportunities for innovation and design efficiencies within organisations. Hence, despite global uncertainties, higher potential revenue and margins are possible.
However, it will entail greater uncertainty, greater risk and greater agility.
The counter concern is that, in the current era, technology enables innovation to come from anywhere. Hence, the threat to companies that are lethargic and inflexible, is very high. Most traditional strategic interventions like benchmarking were defensive rather than offensive.
The decisions companies need to make today are more open-ended, varied, far harder and more complex.