What Enterprises Can Learn from Digital Disruption
Digital disrupters have changed the rules of competitiveness. Savvy enterprises are paying close attention.
Digital disruption continues to change industries. Companies are moving further into the cloud, they've become more agile, and they're obsessed about customer experience. Digital companies realize those aren't innovative traits anymore, they're tables stakes.
“The biggest differentiator is that can-do attitude and the ability to get stuff done in contrast to losing yourself in beautiful visual concepts, frameworks and go-to-market strategies, and engaging with all these strategy consultants for a six-month engagement, and they build beautiful slides,” says Bernhard Schaffrik, principal analyst at Forrester. “If employees find out this is just pleasing investors or window dressing for marketing efforts, they'll leave.”
It's one thing to sound like the disrupters and quite another to behave like them. The result can be a great sounding story that lacks substance.
“CEOs are supposed to be held accountable for nothing getting done. As long as the short-term results and growth rate are good enough [they can get away with it], but that's basically a kind of credit they're consuming from the company's future,” says Schaffrik. “A couple of years later, you see all these big companies struggling, and they have to fire people, and they have to get rid of certain brands. And these brands are then purchased by digital powerhouses who are going to digitalize them, and that's a shame.”
Transform Concepts into Action
One key trait the digital disrupters share is their propensity to move quickly. While Mark Zuckerberg's “move fast and break things” mantra isn't appropriate for every company, organizations must be willing to take risks. While Amazon, Facebook, and Google have succeeded at many things, they've also failed miserably along the way. They realize the price of innovation is occasional failure and the lessons learned from it.
Bernhard Schaffrik, Forrester
“In some cases, you actually need to exchange top management for people who embrace giving up control to a certain extent, who are willing to take risks, including with their annual bonuses,” says Schaffrik. “If leaders embrace risk and experimentation that's going to spread across the company.”
Operating in today's climate means updating mindsets, processes, budgeting cycles, incentive systems and traditional ways of working. It's not about ping pong tables and arcade rooms. It's being better at delivering on core competencies than competitors and having the digital savviness required to succeed in a digital-first world. However, the most valuable trait is curiosity because curiosity leads to experimentation, innovation, optimization, and learning.
“Disruptors face the challenge of explaining the concept and the benefits of the new approach. Many organizations struggle to grasp it and operate under the inertia of business as usual,” says Greg Brady, founder and chairman of supply chain control tower provider One Network Enterprises. “The COVID-19 pandemic has opened the eyes of many executives to the shortcomings of the old way of doing business.”
Some organizations attempt to mimic what the digital disrupters do. However, their success tends to depend on the context in which the concept was executed.
For example, Zappos disrupted ecommerce by offering free returns as well as free shipping. One can order as many pair of shoes as they'd like and return all of them -- free -- while having the opportunity to try the shoes on in the comfort of their own home. By introducing that policy, Zappos provided customers with a new level of convenience and lowered the buyer's risk. However, Zappos merchandise pricing is often higher than competitive sites. What some copycats learned the hard way is that free shipping and returns need to be built into the sales price of the product, which is difficult to do if the business is known for below-market pricing.
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