Resilient Disruptor or Digital Relic: Which One Are You?

Don’t fool yourself; digital transformation is not new. Every new technology has a shelf life –consider the Walkman cassette player, the fax machine and the telegraph.

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If you still think your business is indestructible and undisruptable, consider that in 1998, a dynamic HTML website with e-commerce and all the bells and whistles would probably cost you about $1 million.

Today, anyone can go to Wix.com and, without being a developer, create a commercially viable website and have it hosted for $12. This is how technology is compounding the velocity of innovation in terms of scale and cost.

Do you still think your business is safe? What was once a barrier to entry could now be an opportunity for disruption.

If, as a leader and as an organisation, you don’t pivot in line with industry trends or advances in technology, products, services or customer tastes, then you will invariably be toppled from your perch as an industry frontrunner.

The secret, therefore, is to introduce new products or growth strategies ahead of each point in the corporate lifecycle and before the inevitable decline. This is known as the S-curve of innovation, and it highlights the value of constant evolution based on an astute reading of the environment, technological potential and consumer relevance.

Thanks to fast-moving technological advances, the S-curve for today’s businesses is shortening. This means that company lifespans are shortening, eroding that critical time in the market to build customer loyalty and a solid and reputable brand.

Looking at trends on the S&P 500 in the United States, in the 1960s, the average life span of a company based on its existing value proposition was 53 years.

In the 1930s, that figure stood at 90 years. Fast-forward to 2027, and projections are that 75% of existing S&P 500 companies will no longer be on the list. In fact, by then, the average S&P 500-listed company will only survive for 12 short years.

To combat the threat of sinking into an inevitable decline in relevance, many companies today are embracing digital transformation. For many, digital transformation is linked to integrating new technologies, such as artificial intelligence (AI) and cloud-based solutions, into a business to streamline operations and ensure relevance in a digital world.

This might be the view in many C-suites, but it misses the important point that digital transformation is not about technology. It is a mistake to assume that adopting any high-tech advances will save a business at odds with its value proposition.

Digital transformation, as McKinsey recently noted, should be less concerned with “how companies use digital and more on how they become digital”.

This shifts the focus from digital transformation to business transformation, which in turn makes technology a vital enabler rather than the hero of the story.

Why digitalisation is not digital transformation

Amid the hype around digitisation, it’s crucial to distinguish between adopting new technologies for efficiency and fundamentally reimagining a value proposition.

Adding a front-end widget to an existing value proposition is not a digital transformation. For digital adoption to make an impact, it must align with business strategy, involve employees, and adapt swiftly to a fast-paced world.

Consider Toys R Us. The US toy retailer’s failure to innovate and adapt to changing times and technologies led to its downfall. As Mark Cohen, director of retail studies at Columbia Business School, noted, Toys R Us couldn’t keep up with market changes or customer behaviour.

Meanwhile, in 2018, Amazon hit a trillion-dollar market cap, highlighting that disruption isn’t about products but adapting to new consumer buying patterns and expectations.

Consumers now favour the instant gratification that Amazon offers, and visiting a toy store seems inconvenient. Digital adoption alone couldn’t save Toys R Us from this shift.

A common mistake businesses make is over relying on IT departments for digital initiatives rather than integrating digital transformation into their overall business strategy.

Reengineering existing systems to fit current processes is incremental innovation, not true transformation. Leaders must focus on reinvention, recognising internal weaknesses and potential areas for disruption.

Reinvention requires resilience and a willingness to unlearn old ways. Management professor Oren Harari’s quote, “The electric light did not come from the continuous improvement of candles,” underscores this point. Leaders must envision the future and strategise accordingly, using data to inform decisions and spot blockages and opportunities.

In today’s uncertain business environment, leaders must build their capacity to handle unpredictability. They should trust their teams to maintain operational excellence while they explore new directions and transitions without compromising existing value propositions.

Courage, resilience, and an openness to possibilities are essential traits for modern leaders.

Leading in an age of disruption requires embracing possibility. Successful digital transformation demands leaders who are unshockable, courageous, and resilient.

They must challenge their value propositions, have a keen interest in emerging technologies, and see the potential in innovation. With such leaders, businesses can confidently disrupt and transform.

By Tony Christodoulou

Tony Christodoulou is part of the GIBS adjunct faculty, specialising in Information Systems, Strategy and Tech Disruption. Join Tony and our curated lineup of guest speakers and industry specialists at this year’s Visionaries in Tech Conference 2024 (gibs.co.za) as they share their invaluable insights, groundbreaking initiatives, and success stories, offering a unique opportunity to delve into the technologies and strategies shaping our digital future.

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