One of my favourite quotes is, “The world will never be this slow again”.
It is clear to everybody that business challenges are accelerating. Countless industries were experiencing massive disruption before the pandemic struck. You only have to consider how many areas in our personal lives have become increasingly digitally-enabled – the way we shop, bank, consume media and communicate, to name a few – and the same is happening in the business world.
Corporate jeopardy has been accelerating due to increasing economic volatility and digital disruption.
You can see evidence of this in the fortunes and valuations of organisation’s in both the S&P 500 and the FTSE 100. Since 2000 over 40% of the companies have dropped out of the indexes because they’ve underperformed, failed, or been acquired. Startlingly, even before the pandemic, McKinsey predicted that 75% of today’s S&P 500 wouldn’t be here in 2027.
I enjoy change, but as my old CEO at Cisco, John Chambers, used to say, “change is great as long as you’re the one that’s driving it”.
That is the challenge: how do you become the one that is driving it? How do you move from being a disrupted company to a disruptive company or an agile, fast follower?
Customer experience expectations have increased.
As people have a good experience in one aspect of their life, they expect a similar frictionless experience everywhere.
The impact of COVID-19 on customer behaviour was immediate and widespread across all industries. Covid further increased the necessity of people using digital to self-serve or resolve their problem quickly.
You only have to consider the online giant Amazon – perfectly poised to take advantage of the online world we were forced to turn to – they saw a boost in revenue of 35% in the first three quarters of 2020. (Forbes, 2021) and in Q3 of 2020, they also announced an increase in 37% of net sales, hitting $96.1 billion in revenue. (Amazon, 2020). In my next article, I will share some inside insights into its culture of innovation which allows them to trailblaze.
The bar that has been set will continue to rise as we move into the ‘new normal’ and other businesses increasingly deliver customer experiences that exploit emerging technologies like AI/ML, IoT, blockchain, autonomous things and AR/VR.
This growing pace of change drives a real sense of urgency for business leaders and makes them wary of making long-term plans and commitments. There has to be a better approach to transformation than a long-term transformation programme.
With risk, there is always opportunity.
Focused digital disruptors are changing the game on very established businesses and brands who thought that scale would protect their competitive advantage.
Some company’s fortunes have plummeted, but others have really soared amid all this change.
With risk, there has been opportunity. So, what can we learn from companies that are responding well to change or even driving it?
Here are my thoughts:
- The world hasn’t really slowed down, even though it may seem to have compared to the last year. In the coming months, we will see many companies believing the danger is over and it’s safe to return to their usual run-the-business mentality. A few, however, have recognised they have developed their change-the-business capabilities and can transform.
- To understand the opportunity and the risk, it is important to talk about how modern digital, agile organisations have new work cultures and have built transformation as a competency.
- These companies have typically organised into small, empowered business and technology teams embedded in the business functions themselves or work cross-functionally to solve problems close to the internal or external customers.
- They are prepared to fail fast and iterate. Fast prototyping is not a new concept, but with the right level of executive alignment and sponsorship, it can be highly successful in my experience.
- Executive sponsorship and alignment are critical to creating the right culture for these teams to solve problems, innovate at a pace, and be recognised.
For me, transformation as a competence is that combination of culture, people, and ways of working with easy access to technology.
In my next article, I will discuss building that competency and sharing my insights on Amazon’s culture and ways of working.
- The Case For Change: The Case For Transformation - April 26, 2021
- How the CFO can lead digital transformation to increase business agility - March 30, 2021