The Digital Rule Book - Reinventing Business in the Digital Age
Innovation has been on the corporate radar for many years, but today it’s integral to businesses’ ability to transform themselves for the digital age.
The reason? Multiple revolutions are happening at the same time, each reinforcing one another. The new edition of Ascent Look Out explores them all: accelerated multi-sided globalization, financiarization that increases business fluidity, sustainability constraints exacerbated by demographic shifts, forcing us to invent new ways to use our world's limited natural resources and, above all, the digital revolution.
After powering first business and then people, information technologies are now going the last mile: digitizing things. This revolution will transform the way we interact with our environment for ever, marking a definitive step into the digital era.
Hiding below the surface of the innovation iceberg
To characterize this move, the media repeatedly focuses on the obvious: the “uberization” of industries as startups rise to 'change the world' in markets across the US, Europe and Asia. It highlights bubbles of new players drawing billions in venture capital funding and initial public offerings (IPOs), hoping to find the unicorns of tomorrow.
Too often, however, it neglects to acknowledge the profound changes that are silently rising at the heart of core industry players. Indeed, the third digital revolution – explored in Atos' Ascent Journey 2018 vision – is not just about streamlining productivity or communication, as the first two were. It, at last, combines the digital and physical worlds into a new blended ‘digical’ universe, a term first coined by Bain.
It’s no secret that the most publicized digital companies are now investing in new and diverse hardware domains – Google in robots, Amazon in drones, Apple in cars and so on. Startups are often portrayed as leading the innovators that will redefine the data economy of tomorrow. Yet, many of the most fundamental disruptions expected in the coming years will arise from ‘traditional’ players striving to reinvent themselves in the midst of Industry 4.0, smart cities, connected stores, smart utilities and more.
Reinventing the innovation game
What are the rules of this secret reinvention game? How will companies successfully transform years of assets and change corporate culture?
Through our co-innovation expertise and experience studying innovation best practices with our customers, we have developed five golden rules, which will be discussed in this three-part series.
Rule number 1: Recognizing the pace of change
Change is hard. Oddly enough, it’s especially hard for the companies that have been the most successful in the past. The underlying syndrome is well-recognized over-confidence, clutching at outdated models and, above all, inertia.
All too often, enterprises delay recognizing that they need to change. They go through a common process: denial (‘It’s marginal'), anger ('Why don't regulations stop that?’), haggling (‘Which defences can we build?’) and depression (‘Couldn’t we partner or buy someone?’) before final acceptance, when it's nearly too late.
So, what is the secret to avoiding this pitfall? Businesses must constantly question the status quo.
The early warning signs of change are usually easy to spot, well before they become visible on the revenue curve. They might include customer behavior shifts, competitiveness declines or talent drying up, for instance. Companies need to react at this early point in time.
What's required? In a nutshell: companies should make innovation part of their cultural mindset – not for innovation’s sake, but in a pragmatic way. Today's rise of Industry 4.0, smart cities and connected health is an excellent testimony of this best practice.
Management plays a crucial role in making this happen. Harvard Business Review highlighted a few years ago that only 13 percent of factors stalling growth were external. That means, in 87 percent of cases, successful transformation in a changing landscape falls squarely on management’s shoulders.
Look out for my next article in this series where I explore other ways in which businesses can reinvent themselves in the digital era.