Don’t wait for a crisis to go digital

crisis sign stormy skyI read an article on ft.com recently about digital developments in the retail banking industry. As well as giving some good examples of how technology is being used by banks in areas such as improving security, cashless payments and mobile transactions, the article also contained an interesting observation about why Spanish banks in particular are being the most innovative.

Explaining why these banks are often leading the way in developing digital offerings, Alex Bray from Misys, a financial software company, commented that “a lot of banks there had near death experiences so were pushed to offer something different.” In other words, when faced with a major crisis, these organisations were forced to try something radical, to take some risks that they would otherwise not have taken.

“Necessity is the mother of all invention” is a proverb, which suggests that new thinking, ideas and ways of doing things are often created when one is faced with difficult or challenging circumstances. And if you look at the number of wartime inventions and advances it is easy to see that there is at least some truth in the saying. Synthetic oil and rubber, jet engines and the jerry can were all products of World War II while the origins of facial tissues can be traced to World War I and instant coffee was first developed for the soldiers in the American Civil War. When faced with a major crisis, threat to life or when all traditional solutions to a problem have been exhausted then we will try something new or take a risk that we may not otherwise have taken. And sometimes that produces a new solution, invention or approach.

The Spanish banks were faced with going out of business during the financial crisis and so were forced to consider more radical actions then they would have done under normal circumstances. They were forced to go digital. But for every company that has successfully innovated itself out of trouble there are many that failed and went to the wall. Waiting until your business is struggling before you go digital is a risky approach.

A study by MIT Sloan Management Review and Capgemini Consulting found that the most frequently encountered obstacle to a successful digital transformation was no sense of urgency within the organisation. In other words, when an organisation is doing well and there is no impending crisis or threat to its performance, it is less likely to see digital as a priority. Yet Forrester survey found that 93% of business executives believe digital will disrupt their industry in the next 12 months. So if they do not act soon, these executives may soon find themselves in a crisis and being forced to go digital. Some will succeed but many will not.

A crisis creates a sense of urgency. It also creates energy and a sense of togetherness as the whole organisation is working for one thing: the survival of the company. And a crisis also forces people to be open to new ideas, to try new things and to take risks. So how do CEOs create the same conditions within their organisation without taking it to the brink of existence? How do they create urgency, energy and togetherness in a business that is not in crisis?

All transformations start with a vision from the top. The CEO and the board need to create a credible and compelling vision for the business in the digital age. And this vision has to be shared with the rest of the business. The MIT Cagpemini survey found that in organisations where the leadership team had shared their vision for digital 93% of employees agreed that digital transformation was the right thing to do. A compelling and credible vision that is shared will therefore get the kind of buy-in required to transform a business; it will unite the organisation and generate urgency and energy in the same way as a crisis.

But creating a compelling and credible vision is not easy. Despite demonstrating the importance of defining and communicating a vision, only 36% of the respondents to the MIT Cagpemini survey said their senior team had actually done so.

Digital requires a new perspective on the organisation. It is about looking at the business from the customers’ perspective. It is about understanding what outcomes or benefits the business provides for the customer, and asking what additional or new outcomes or benefits it could provide in the future. The creation of a vision for the digital age has to take the same approach. Instead of using current capabilities, products and services to shape the vision, organisations need to use customer outcomes and benefits to define the future direction of the business.

Consider this simple example for a media business: a traditional vision statement would read something like to be the leading media business in the world. This focuses on the industry in which the organisation currently operates which in turn is based on the capabilities that it currently has and hence the products/services it currently provides. At its most basic level a media business provides content for its customers. So rewriting this vision from the customers’ perspective may give something like to be the leading provider of content in the world. Already this opens up a number of customer-driven possibilities that are not necessarily limited by what the organisation currently does. The future products and services of this business will be shaped by the customers’ content needs, and by how and when they want to consume this content.

Creating a vision for the digital age is essential but it is also difficult. It requires a fresh perspective on the organisation and what it provides for its customers. Whereas vision has traditionally been the result of an inside-out exercise – looking at the current activities and capabilities and using these to define a future state – in the digital world it needs to be the product of an outside-in approach.

This may not come naturally for some organisations and external help may be needed to create a customer-driven vision. But it does not have to take months or involve an army of consultants either. A few focused sessions with the senior team may be all it takes to define and articulate a new vision for the digital age, and to identify the first few steps along the transformation journey.

There are many other aspects to being a successful digital business; leadership, culture, governance and IT capability are all important factors in ensuring digital success. However, without a clear and compelling vision, organisations are likely to lack the urgency, energy and unity required to transform into a digital business. CEOs should act now to create a vision for their business in the digital age or they may be facing a fight to survive in the future.

If your organisation wants to develop a vision and strategy for becoming a digital business then please contact me or visit my website, axin.co.uk.

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  1. […] has to be shared with the rest of the business to maximise the chances of it becoming a reality. In Don’t wait for a crisis to go digital I described how creating a vision for the digital age required a fresh perspective on the […]

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