We live in a truly amazing time. Less than 40 short years ago there wasn’t such thing as digital strategy. The technology used to power the Internet and the Apple II had also just been invented. Fast forward just a few decades and now it’s an entirely digital world. The global Internet, IOT, artificial intelligence, GPS, social media, and smart phones are just a few of the many innovations that have happened since.
All this change has made it an exciting time to run and grow a business. In nearly every sector, there’s a high probability that the next big thing will include a digital innovation that doesn’t even exist yet.
“Winning companies use digital innovation to play offense, rather than defense”
It also means that it’s never been more important to have a solid digital strategy for your business. But without the right mindset, your digital strategy might still leave your organization out of position when the next big thing happens to your industry. So what’s the right mindset? Let’s start with a few lessons in digital history.
The Music Industry – Imagine you’re the CEO of $10B Ploygram in the 90’s. Unfortunately, you can’t see what we can see now. It starts with an obscure MP3 compression technology, then the move to digital and CDs, then the Global Internet, then powerful digital software that eliminates the need for expensive recording studios. Artists can record, market, and distribute their own music. And music is consumed digitally without a physical product. This picture likely seemed ludicrous to the CEO of a record company in the 90s. Their mindset was completely different and most of these innovations didn’t existed yet.
The Print Industry – As early as 1964, media theorist Marshall McLuhan observed that the industry’s reliance on classified ads and stock-market quotes made it vulnerable: “Should an alternative source of easy access to such diverse daily information be found, the press will fold.” Why would anyone in that industry have believed him? At that time the physical production of print media required multi-million dollar machines and highly skilled resources. Yet along comes the Internet, digital publishing technology, and social media. The barriers to print creation and distribution disappear and the era of mass content creation begins. An era where consumers expect not to pay for content. That’s a totally different industry mindset from even 10 years ago.
The Transportation Industry – Trains, plains, and automobiles are about as concrete as it gets. There will always be a need to move people around the world. Short of inventing a Star Trek transporter to ‘beam’ people around, is a pretty stable industry, right? Yet the Global Internet makes it easy for people to find and buy the cheapest airfares. Public GPS is introduced in 1995 and interactive maps change how people navigate. Once Uber brought all these innovations together, it radically changed how transportation is done. It also changed how we think about employment and kicked the sharing economy into high gear. Most taxi company executives still haven’t shifted their mindset.
The Auto Insurance Industry – You’re probably wondering why this one is on my list. This industry came about in the 1920’s because of a different type of innovation, the automobile. Since then it’s hasn’t changed much. But its about to enter its own cycle of digital disruption. Already the industry is using the Internet of Things (telematics) to measure and evaluate individual driver risk. But the advent of self-driving cars will eventually change everything. According to the US Department of Transportation, 94% of auto accidents are caused by driver error. Think about what happens when there are no human drivers. One thing is for sure, the auto insurance industry will look way different than it does today.
So what’s to be learned about mindset from these examples? The first is to think broader and longer term about your digital strategy. Looking at these examples that span decades brings the story into sharper focus. There are a few other interesting ideas that can be made about digital strategy and mindset.
The Whole is Greater than the Sum of the Parts – Digital innovation happens iteratively, but it’s also additive. MP3 formats didn’t seem like a big deal when it was invented in the early 90s. But combine that innovation with the Global Internet, smart-phones, and innovations in digital software and you get a major industry disruption.
Adapt or Die – One of my favorite lines from the movie The Social Network is: “anyone want to buy a Tower Records?” The disruption created by digital innovation can be unforgiving. What were once Blue chip companies like Kodak or Xerox are now casualties of the digital revolution. Conversely companies like Apple, Uber, and Amazon have generated amazing market value for their shareholders. Eventually companies that can’t adapt are overtaken and don’t survive.
The pace is picking up – the pace of digital disruption is clearly picking up. Digital innovations build on one another and can be put together in many different ways. The additive nature accelerates the pace of change. Digital disruption is no longer linear, but exponential. That means companies have less time to anticipate and respond to digital disruption.
“Anyone want to buy a Tower Records?” The disruption created by digital innovation can be unforgiving.
It’s never been more important to embrace the digital revolution. But the winners focus on using digital innovation as an offensive tool, rather than simply playing defense and reacting to competitors. Accomplishing this goal requires a growth mindset that’s is set on accomplishing a small number of high impact objectives as part of a digital strategy. Let’s talk more about those digital strategy objectives.
- Use digital to transform your products – nearly any product can be made better by embedding digital capabilities. You can add digital intelligence, solve new customer problems, or create new demand for your products with the right digital innovations. Just this past week I went to an event hosted by a company called Uptake. Uptake is creating a platform that adds digital intelligence to industrial equipment by improving uptime, minimizing failures, reducing fuel costs. If even industrial equipment can be transformed by digital innovation, then so can your products or services.
- Think long term, but act in the near term – Big digital innovations start small and often have to be matured and combined with other innovations to truly make an impact. Waiting until that happens means you’re too late. It’s important to keep an eye on digital innovations in both your own and other industries. But the future is difficult to predict. Use the long term possibilities to inform your near term goals. If you think the Internet of Things will be important to your industry, then get moving and start learning.
- Fail Fast and Learn – By far the single biggest client problem I see is fear of failure. Companies hang on to failing ideas and waste their money simply because they don’t want to admit it’s not working. In the digital space failure is the lifeblood of learning and success. Apple failed miserably with the Newton PDA’s in the early 90s. But that failure ultimately led to the iPhone and a $775B market cap. Accepting failure and learning from it as quickly as possible should be an integral component of any digital strategy.
- Embrace Change – OK. I know, embrace change. Duh. But what is the biggest theme through all the digital stories above? Massive change. It may have taken longer for some industries, but they all had their products and business models blown apart by digital disruption. It’s important to realize that the products your customers buy from you today probably won’t be the products they’ll want in 20 years. Even if they’ve been buying the same products from you for the past 50 years. At a minimum, how you make money will be different in 20 years. It’s better to accept that inevitability and put your energy into being on the winning side of change.
It’s exciting to live during this era of digital transformation. There are huge opportunities for big winners, and big losers. Adopting a longer term digital strategy with an offense, rather than defense, mind-set is critical to beating your competition and winning in the marketplace. Don’t miss your window of opportunity. If it hasn’t already, it’s coming your way.
I’m always publishing articles about delivering digital products and data-analytics.
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