Do or die: the case for a digital transformation strategy
The digitisation of our world cannot be reversed. In fact, it is speeding up. We have entered an era of exponential growth, and traditional organisations must come to terms with the shifting of power underfoot and start implementing their own digital transformation strategies if they are to remain in the game.
In 1965, American Engineer Gordon Moore observed that the number of transistors in a silicone chip would double every 18-24 months. Essentially, Moore’s Law predicted that technological advancement would take place at an exponential rate, much like population growth. According to Principal Research Scientist at MIT, Andrew McAfee, if we apply Moore’s Law to the inception of Information Systems Technologies in the 50s, the world truly entered an era of unprecedented, exponential growth in 2006.
Since then, we have experienced the unincumbered explosion of digital technologies across the world. We’ve welcomed Instagram and Snapchat. We’ve said hello and possibly already goodbye to TikTok. Airbnb have changed the accommodation industry forever, despite owning no real estate. And while it took Facebook 3.5 years to amass 50 million customers, Angry Birds did this in 15 days. And according to McAfee, “We haven’t seen anything yet”.
Out with the old power, in with the new
These new technologies have altered society’s power structures as we know them and have given rise to what is termed ‘new power’. If this new form of power is best epitomised by Wikipedia, ‘old power’ is best wielded by the Britannica Encyclopedia. New power is open, participatory and peer-driven. Old power is tightly held by few and jealously guarded. New power is about uploads and distribution. Old power is about downloading and capturing. New power is built on values such as radical transparency, participatory culture, and crowd wisdom. Importantly, organisations based on new power speak to the needs of modern society, and as such, pose a threat to traditional organisations.
The ill-fated future of those banking on tradition
One industry standing on the precipice of this change is one of the oldest of old power institutions: banks. In a little over a decade branches and people have been replaced with apps and clicks, and the continued rise and success of the digital-only neobank is forcing them to, albeit at times slowly, respond.
Tom Blomfield, co-founder of one of the UK’s first neobanks, Monzo, touched on legacy banks’ inability to recognise their digitised offering as a credible threat.
“Two or three years ago they were very dismissive. They said that we were never going to get to scale, but we hit a million customers and they stopped saying that. Now they’re saying we’re never going to make any revenue. And then we’ll make revenue and then they (legacy banks) will die.”
Monzo recorded unicorn status in 2018.
Jeremy Heimans, author of ‘New Power’, acknowledges this inherent bias flowing within traditional organisations as being a key barrier to real change. Heimans suggests, “if you’re old power, you would do well to plant a sceptic at the heart of your organisation and say, 'do you like what you see?'." Traditional institutions have several options at their disposal as to how they may respond but turning a blind eye cannot be one. Failure to innovate leads to irrelevance and ultimately demise, a narrative played out to perfection by Kodak.
Importantly, challenges are not isolated to old power institutions. Crucial to the continued growth of new power organisations is an aversion to complacency. Heimans notes that as new power organisations reach a critical mass, it is important that they uphold the new power values on which their success was built. At face value, digital only platform, Uber, exemplifies a successful new power model, however their values have been compromised. CEO Travis Kalanick, notes that “once we get rid of the dude in the car, Uber will be cheaper”. Attitudes at odds with the values of participating communities run the risk of losing their new customer base as quickly as they arrived. In the case of Uber, the devaluation of its own community led to the unionisation of its drivers and left space for new competitors. Power today may be potent, but it is certainly fickle.
If you want to be in front of this change, rather than behind it, our Melbourne MicroCert in Strategy in a Disruptive Environment will provide you with the skills and knowledge required to examine the transformative impact technology is having on your industry, develop the critical thinking required to evolve ‘old power’ business models and consider and adapt emerging organisational structures.