All organisations and industries are built, to varying degrees, around (traditional) assumptions and beliefs surrounding value creation as well as a resultant set of behaviours. This ‘mental model,’ has often been found as unfit for purpose in the digital economy and inverting some core beliefs is a prerequisite for changing wider business models and any successful digital transformation[i]. All too often however, technology is diagnosed as both the problem and solution; both the cause of disruption and the answer to it. In some cases this is true; but in many cases it is the friction of new technology against legacy systems, legacy processes and legacy people that causes problems.
Prior to the Uberisation of many industries, a general belief pervaded that physical assets were durable and reliable, yet the creation of platforms for under-utilised assets (in Uber’s case, cars) brought this into question. Business models and their components have changed as a result – we are not witnessing a merely technological response. Indeed, for GE this inversion meant transforming from a manufacturing company into an IoT based analytics one and divesting various (mostly hitherto successful) parts of the company along the way. New structures, new talent and new management forms have all been necessary. Clearly, adding new technology onto the old business models wouldn’t have worked – it would have allowed them to do things differently, but not different things.
The process of digital transformation is so problematic for this very reason. The requisite changes in ways of doing things runs contrary to layers of accumulated and established ways of working, both within management and the day-to-day operations of workers. Its’ strategic nature means that it directly threatens management practices that have little changed since the 1980’s and in some cases are little changed from their 19th century military origins. That said, certain cultural characteristics can better enable transformations than others. Harvard Business Review[iii] notes the following as propitious;
- A strong, shared sense of purpose
- Freedom to experiment
- Distributed decision-making
- Open to the influence of the external world
More specifically, leadership behaviours, job descriptions and roles and the systems and processes that allow people to work must be changed if the way people (and technology) work and act in an organisation are to improve.