What Drives a Business Forward in Digital Evolution?
One of the world’s leading management consulting firms, McKinsey & Company, works with large corporations and formal organizations to facilitate major change management and strategy formation.
The McKinsey Quarterly, an overview of business management issues, recently published the results and findings of a major survey of global business executives. The survey focused on the process of adopting of a fully digitized business platform.
The basis for the survey and the reason for asking the questions is the fact that leading organizations today generally share a certain combination of attributes. These are:
- renewed strategic vision
- expertise in their operational domain
- access to and use of Big Data
- adoption of the best available technology
On first glance, there are no surprises in these findings.
Corporate Culture Is the Critical Factor
Further examination of the results, however, uncovers the sticking points. The survey reveals 3 main stumbling blocks in the path of a business trying to evolve fully into the digital age. All 3 of these obstacles arise not as a result of technical or operational issues, but as a result of organizational culture.
The main cultural obstacles that get in the way of digital progress are identified as:
- silo mentality among functional departments
- fear of failure and resulting risk aversion
- inability to form a unified view of the customer
The report goes into some detail explaining the interplay of these 3 factors in reducing the effectiveness of digital transformation efforts. None of these factors are new in the corporate environment, but they take on added significance in the hyper-fast pace of digital commerce and our online, on-demand world.
From Global Conglomerate to Corner Store
These challenges are not exclusive to big business. In fact, they apply right down to the level of the sole proprietor and SMEs as well. Identifying, addressing, and overcoming the problems is just as important in small, locally focused companies as it is in global corporations.
For the successful migration of any company from the legacy operations of pre-digital processes and methods, each of these 3 obstacles must be dismantled and replaced by a mind-set that reflects the needs and opportunities of the digital age.
The research in the report, however, shows that organic ‘natural’ change fails to resolve these problems quickly enough and leads to negative financial results. In order to exploit first-mover and early-follower advantages, deliberate digital strategies must be formed and enacted to accelerate the necessary cultural change. Each of the 3 barriers can be broken down with new perspectives
1. The Only Thing to Fear Is Risk Aversion
Risk aversion prevents fast response to new opportunities, changing customer needs and expectations, and evolving market dynamics. Strategic goals and budgets should be tied to frontline autonomy to innovate and take action.
2. One Customer Completely Defined
Products and services have value only to the extent that a customer says they have value. Every employee within a business, and every business process, should have a clear understanding of exactly who, what, where, and why the customer is in the demographic spectrum.
3. Break Down the Walls
In a digital age, more than ever, silo based mentality and territorial turf hoarding simply does not work. Collaborative, horizontal and vertical integration of all company resources are the only way to proceed.
Setting Free the Digital Dynamo Within
The central conclusion of the McKinsey report is that data-driven information and analysis are the key building blocks of digital prosperity. Digital reinvention is a strategy with specific building blocks and core concepts.
If your business is faced with making a major leap into the digital marketplace, remember that it is not a leap of faith that is required. It is a process of analyzing and understanding the cultural attitudes and preconceived ideas about the things that make your business what it is.
Cultivate a culture that celebrates calculating and taking risk as a necessary exercise, that combines the collected wisdom of employees in one shared business vision, and that embraces one unified view of the customer in all their wants and needs. Actively promote and reward these behaviors regularly with your team. Outsource the expertise needed to achieve maximum ROI with the resources you have on hand.
Put these global business principles to work in your own corner of the internet and you will find the agility and responsiveness in your business to produce world-beating results. An online site audit is the place to start. Paul Teitelman, a veteran of online business and digital transformation with corporations large and small, can be your guide to success in the digital age that awaits.