If you are anything like me you’ll relish a good debate. There are people, of course, for whom a different viewpoint represents a challenge to their dignity, position or status. Not me. If I’ve learned anything in my years in management it’s that innovation is the product of contrasting viewpoints and, in an era when any business is only as good as it’s NEXT big idea that’s a valuable lesson. Your success in the digital economy may depend on how good you are at managing diversity

Transformation isn’t a one-time event

One of the reasons as many as 90% of transformations fail is because those leading the change treat it as a project with a beginning and an end. This is wrong of course. Transformation marks a shift from a state of order to one of constant change. Transformation is endless. In the digital economy digital businesses adapt to the demands of fickle customers in a blink. Products are no longer “what you do”, they are only “how you do it”. They are transient and increasingly short-lived. To keep pace with the digital economy every business has to establish a constant conveyor-belt of innovation.    

This is the antithesis of how businesses have previously operated. Success in the past may have come to those who could rinse and repeat a proven idea or model, but these days that’s a recipe for certain failure.

Be clear what it is you do

Successful businesses have shifted their focus from what they make to the issue they resolve for their customers. That’s your purpose as an organisation and the fact that you are able to do this do this is the basis of the relationship you have with customers. 

Today’s technology enables you to collect extensive customer data. More importantly though, while businesses in the past have been drinking from a data fire hose, technology now enables you to read and analyse far more of it in no time at all and that, in turn, will help you nail your customers needs. 

Understand what’s preventing you from doing it

A major feature of digital technology is it exposes existing organisational weaknesses. A real issue for many legacy businesses is that their best products and offers represent a compromise that’s no longer acceptable to consumers., employees and other stakeholders.

Such compromised solutions have usually been the closest an organisation could get to a real solution with the resources – which includes technology – at their disposal. Stakeholders – including customers and consumers –  have accepted this because compromised solutions have been the best available. However, as soon as someone develops something better all the players in that sector has to up their game to compete and digital technology has opened up a whole new world of possibilities to any business that wants to grab it. Theoretically at least it’s possible to delivering a solution that fits individual customers’ needs like a well-tailored suit and some businesses are delivering just this. This is no time to be trading on past triumphs.

Get to know your customer

Previous limitations of data collection and analysis has meant the relationships we had with our customers and consumers were generally pretty superficial. Often businesses have gone to market with products that they believed were a good idea, but they were guessing and many of products didn’t satisfy a genuine consumer need. 

Even when the error was recognised, modifying products and offers was slow, difficult and expensive. Some businesses just couldn’t afford to re-invent their proposition and instead turned to marketing communications to persuade people that they really did want or need the product in question. 

The connectivity of the digital age means consumers are now better informed, able to make comparisons and are usually confident that the perfect solution they are seeking is available somewhere, even if they don’t immediately know where. Digital businesses not only get closer to the customer need, but their processes enable them to modify products quickly and cheaply in response to emerging customer insights. It’s impossible for a traditional business to compete.

The meaning of customer centricity.

There’s a lot of talk lately of “customer centricity”, well this is what it means. Businesses that succeed in the digital paradigm are those that understand consumer needs and build an organisation that can deliver an answer to them. That’s a Brand-Led Business and the process of re-modelling an organisation so that it can compete in the digital economy I refer to as Brand-Led Business Transformation.

Understanding this, though, is often the easy part. In my experience, a bigger obstacle to business transformation is management attitudes and perspectives. These have to change and the key to doing so is your brand. If you understand that brands are communities of people with shared values and beliefs aligned behind a commitment to deliver a single, clearly defined “promise” you are part-way there.

If the focus of everyone in a business is to deliver the promise, adherence to established processes and conventions is less of an issue and it’s much easier to change attitudes that might hinder the necessary business re-engineering. 

One of the essential changes is that of the role of business leaders. I’ve spoken many times of the need for senior executives to abandon command and control in favour of facilitatory management, but the need for this becomes more obvious when you set it against the need for innovation.

Re-defining leadership

By definition most business leaders are boomers or older and despite what they believe there’s no way they can be fully attuned to the digital environment. Digital natives are different. They are influenced by technology in a way that older generations aren’t.  That means they see things from a different perspective, their responses to situations will be different and their solutions to challenges they encounter will be different too.

In his book Rebel Ideas Matthew Syed highlights how essential diversity is to innovation. The old concept of a business principal having all the ideas and dictating initiatives just doesn’t float in the digital economy. For one thing, to succeed a business must generate more innovations, have greater agility and have a wider viewpoint than one person alone could possibly provide. 

I know that many businesses believe they are innovating when they are only iterating or modifying an existing product or solution. In the same way, many organisations believe they are transforming when all they are doing is automating or changing an existing business model. The step-change represented by the digital economy is far more radical. Far from solving your problem, making an existing model more efficient through automation could be hastening your demise.

Innovation is the product of the contrasting perspectives of people with a variety experience and this includes a digital perspective. The wider the range of viewpoints the better. Managing diversity on this scale requires a very different approach.

Managing diversity

While many of the business leaders I encounter may nod in agreement to the principles I’ve explained, when they come face-to-face with diversity their enthusiasm often wanes. 

It’s even worse when they recognise the extent of the deficiencies in their internal expertise. That means having to bring in external resources, which some business leaders still regard as exposing their weaknesses to the outside world. Modern business models are very much built on external resourcing and if they want to succeed, this is a prejudice these leaders just have to get over.

Diverse project teams 

I’m not a great fan of dedicated innovation teams. It’s my belief that sustainable innovation is only possible if it’s ingrained in the DNA of the organisation. 

The approach I take to transformation takes care of this. Because we usually need to introduce new skills to organisations pretty quickly I build individual project teams for each component of the strategy, comprising a mix of employees and external contractors. My process uses the external experts to mentor employees in real time, which enables us to develop in-house skills where possible, although it rarely eliminates the need for outsourcing on some level in some areas. 

The process also ensures the solutions they come up with are truly innovative and incorporates rigorous monitoring of the performance of innovations at every stage in the development process against pre-set criteria.

However none of this works if business leaders hold on to their out-dated view of management. To transform an organisation quickly and efficiently requires leaders to become facilitators, opening doors to the innovations the wider community generate, authorising changes in processes and structure, facilitating investment and helping to break down silos. Most of all, the leader’s role is facilitating inclusion and managing the diversity that’s essential to real innovation and transformation.

Phil Darby
March 5, 2020

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