I know you thought we’d left it all behind with Rod’s last blog on robots, but here are some final observations prompted by Amazon’s annual shareholder letter.
With all the recent discussion around the insights from Jeff Bezos and the Amazon shareholder letter, including JT’s recent blog on high velocity, high quality decision making, I’ve been thinking a lot about the culture in digital disruptors, and asking myself why many long-established incumbents find it so hard to get on the exponential change train.
The truth is, companies like Amazon and other digital innovators – in addition to great leadership, customer focus and superior execution – also have one big advantage over most incumbents.
- No baggage.
- No entrenched norms from a long-established, long-running business that originated pre the digital era.
- No expensive legacy assets that anyone feels the obligation to use and milk.
- No existing complicated processes, that all employees and customers are accustomed to.
- No internal culture clash between two different ways of doing things – the black hole of “how it’s always been done” vs the cult of new ideas.
- A clean-sheet mindset, and perhaps less of those senior managers who’ve built careers on “the formula which has always worked before”.
- Less fear of losing (profits, market share etc), and more fear of missing the opportunity (new customers, new segments).
And what this enables Day 1 companies to achieve, is action. That decision velocity we talked about last week. For many corporates, the layers of governance and analysis that JT discussed in his blog last week is put in place to minimise the perceived risks around action, but what hardly ever gets talked about is the real risk of inaction. The missed opportunity cost of standing still, not making a choice and moving forward.
Because taking action sometimes involves detailed and onerous planning, followed by the mobilisation of huge armies of people, for many companies, the risk of action is incredibly high. But by lowering the cost of action to a point where the cost of inaction is far greater than the cost of action, there should be no more excuses for doing nothing. This is where lean digital start-ups give us a great template to work from.
Digital disruption within an incumbent can require a bit of organised schizophrenia. It’s nice in theory to think we can just implement whatever the sensible solution is, but as with any organisation, personalities, egos, misunderstandings and different ways of working can be as powerful barriers to success as not having the right solution.
Keeping the lights on in your core business while at the same time taking a parallel bet on an alternative digital path can be a really tough juggle. Resource contention often makes this impossible, which is why there is often a bit fight internally for one or other approach.
So how do you push through this? There is no magic formula, as having two vitally different cultures and streams of work co-existing within one company requires lots of open communication and the right kind of leadership. We’ve debated within our team many times the approach to take in rolling out digital initiatives – go hard and fast, with a team off to the side…. versus building capability and taking people along for the ride. Whichever camp you are in, here are a few thoughts on the subject:
Acknowledging the symbiotic relationship between “existing” and “new/digital” worlds. More often than not, the existing business is funding the new growth streams…. and the new growth streams are providing a vitally important option play for the incumbent’s mainstream business. So like it or not, Core and Growth need each other, and it’s in each other’s interests to ensure the other is successful.
Remembering that the “Us vs Them” should refer to the marauders outside the company, not internal competing business units
Digital workstreams are put in place to accelerate and improve competitiveness to the outside world, not to exacerbate the internal competition between the core business and the digital teams. A constant reminder by leadership teams that we’re on the same team is necessary, and reminder that the main competitors are those outside the business.
Choose your language carefully…. and play nice everyone
In creating the burning platform for change, language can be a very powerful tool to paint this picture and motivate action, but it can also alienate and create barriers. Loaded language does not always work well in the world of fragile corporate egos, so choose your words wisely.
So digital team, when you talk about being “customer-led” and “how things are all broken in the existing business”, don’t be surprised if your core team colleagues feel a little miffed by the suggestion that there is little meaning in anything they are working on in their day jobs.
And core team, when you ask, with crossed arms, “how is this different to what we’re already doing”, or suggest that you could be doing far more profitable things with that capital budget, recognise that your digital colleagues will feel as if you’ve burst their bubble, and will stop reaching out to you to share new ideas.
It turns out the human connection in building relationships applies even in (especially in?) the corporate world and you attract more bees with honey.
Focus on the risk of inaction, not the risk of action
Let’s face it, the digitalisation of your industry is a mathematical certainty. For those struggling to take the plunge, I challenge you to ask yourself a few questions.
- What revenue or opportunity are you missing out on by delaying action each week?
- How can you reduce the cost of action to a point where it is a “no brainer” to have a go?
- How can you reduce your “hypothesis-decision-action” cycle to a few weeks, not a few months?
- What is the collective cost of the people writing and reading the papers and analysis, and how could you divert this energy into testing some real products in market with real customers at low risk?
How about some alternative questioning to determine risk in your business?
Instead of asking “what is the size of the prize?” or “Is this worth going after?”, what about asking: “what will happen if we don’t do this?”
Instead of asking “how is this going to cannibalise our business”?, maybe ask “how do we make this a success to create new demand, win in market and eat our competitors alive?”.
Digital team, find your tribe
There are always those in any organisation who are fiercely enthusiastic about innovation and new digital initiatives, whether in your team or not. Find them and recruit them to your cause – if to do nothing else than to evangelise, but even better to act as an informal council in testing new ideas.