Why Are Organisations Failing To Adapt To A Digital Future?
BY NIGEL ADAMS
There are few things more frustrating than initiating a service request through your digital channel of choice, only to be kicked out halfway through and told to call the contact centre, fill in a paper form or visit a store.
Our expectations have been set by the digital giants: Google, Alibaba, Amazon, Facebook etc. Anything that falls short of their benchmark-setting experience doesn’t quite pass muster. Failing to adapt can have dire consequences for an organisation. Kodak, Blockbuster and Borders are cases in point.
Why Are Mature Organisations Failing to Adapt?
It’s not an executive blind spot. A 2018 KPMG survey of 220 leaders across Australia, found that digital transformation is the number one issue keeping leaders up at night. A North Carolina State University survey of over 800 CEOs, directors and senior executives worldwide found that a fear existing operations will not be able to keep up with those “born digital” is the number one rated risk.
Nor is it for a lack of trying – a recent Harvard Business Review study found that organisations spent $1.3 trillion on digital transformation last year. Unfortunately, 69% was wasted and numerous studies from the major consulting firms have found that the likelihood of success is below 30%.
What’s causing this?
1) It’s Hard!
The root of the problem is: mature organisations must digitise before they can become digital. Digitising an organisation goes to the very heart of how an organisation creates and delivers value and then turns it on its head. But after decades of corporate evolution, delivering value today is dependent on thousands of process fragments stitched together by a tangled web of legacy systems. Unpicking the mess is not for the faint-hearted. It’s hard and takes time.
2) The Rules Are Still Being Written
The task is made harder by the fact that legislative and regulatory frameworks are struggling to catch-up. Playing by the rules is tricky if the rules are still being written and debated. Even trickier if they are riddled with conflicting requirements. And of course, there is the not insignificant issue of tax in a digital world – technically complex and politically charged.
3) Ethics and Morals
If these challenges are not enough, digital capabilities like Artificial Intelligence are also raising many ethical questions. Examples include the liability associated with driverless cars, the morality of contract workers listening to and transcribing Alexa conversations, accountability for Robo-advice, the right to privacy and data protection not to mention the military implications. This requires broad engagement and careful consideration. All of which takes time.
While digital may deliver a host of customer benefits in terms of ease of use, lower costs, 24×7 availability etc. it comes at a cost. The rapid growth of cyber-attacks, fraud and money laundering is a direct result of the move to digital. Whether it’s compensating customers or investing in additional infrastructure and controls, it takes time and is expensive.
Are They Really Failing To Adapt?
While it’s tempting to conclude that organisations are failing to adapt, it’s probably not the right conclusion to draw. Whether it’s driverless trucks in open cast mines, online learning as part of mainstream education, a raft of government services available on mobile, automated dairies, millions of sensors relaying soil conditions to control irrigation or a simple click-and-collect retail service – the reality is digital is touching every part of our lives and the vast majority of organisations are adapting.
It’s very difficult to determine how far through the transition any organisation is, let alone the economy as a whole. And, as with previous industrial revolutions, there’s no real endpoint. It’s just a continuum – the s-curve flattens out for a while before resuming a rapid growth trajectory. Some industries will respond faster than others.
Some organisations will respond faster than others. Some will survive and thrive, others will fall by the wayside. Pace and breadth aside, it’s no different to any other period of significant technological change and organisational evolution.