6 Outdated Ideas That Harm Your Digital Business

February 19, 2020

Contributor: Laura Starita

Obsolete ideas about what works in business can prevent organizations from forging a new digital path. Embrace new approaches to enable digital growth.

U.K. grocery chain Tesco generates $150 million in supply chain efficiencies via analytics. Oil and gas giant BP saves $7 billion a year with Internet of Things (IoT) sensors. Hershey saves $500,000 per batch of candy with machine learning and IoT.

These examples of bottom-line benefits share a common thread — a maturing approach to digital business. Instead of simply translating a traditional process into a digital equivalent, the organizations changed their process by optimizing it (e.g., supply ordering) or doing something that wasn’t possible before (e.g., IoT-enabled predictive maintenance). Yet too many businesses set their aims too low when it comes to digital ambition.

“Sixty percent of enterprises are digitally vulnerable,” says Dave Aron, Distinguished VP Analyst, Gartner. “While 82% of CEOs have plans to transform, only 22% understand the need to make significant changes to their business model.”

One source of digital vulnerability: Conventional thinking. This mindset prevents leaders from embracing a transformative approach. The six outdated ideas that follow are hampering digital growth. Update them to drive an organizationwide appetite for digitally enabled growth.

Outdated Idea 1: IT alone is responsible for digital

C-suite leaders tend to look to their CIOs for guidance on how to integrate digital approaches throughout the organization. While the CIO has a critical role to play, IT can’t drive digital transformation alone any more than marketing can be solely responsible for the customer. Senior leadership determines corporate strategy, and then IT — along with its peer functions — pursues departmental priorities to support it. 

Digital is not a self-contained project or initiative within IT, or elsewhere. Digital technology plays a role in all business activities, from who makes decisions and how they make them to the resources employees can use to collaborate and do their jobs.

Recommendation: Promote holistic ideas of what digital means for the organization and encourage business leaders to consider digital as part of every decision or initiative.

Outdated Idea 2: Global roles are fixed

Geographic stereotypes like “East Asia is the place to go for manufacturing and India for business process outsourcing” are outdated and limiting. Global economic shifts are spreading wealth, talent and industrial capabilities around the world. Successful digital businesses will think creatively about location. They’ll reach across geographic boundaries and transcend geographic stereotypes to access the talent, resources and partnerships that drive success.

Recommendation: Adopt a mindset for a multipolar world. Promote broad diversity in teams and invest in multicultural awareness for all employees.

Outdated Idea 3: Growth evolves from core positions

Strategists used to pursue organic growth through product or brand extensions that leveraged existing core competencies. Digital capabilities and data expand the possibilities. Just as Amazon Web Services grew out of the company’s in-house data center, so too can legacy firms build capabilities that evolve into new business lines.

Recommendation: Look for new markets where in-house digital capabilities and data resources unlock opportunities. Explore partnerships with organizations that have complementary skills for these new markets.

Outdated Idea 4: CX happens inside the organization’s boundaries

Customer experience (CX) has long focused on customer interactions with a product or service. The borders that mark where one product experience ends and another begins are becoming porous, however, as people interact with both physical and digital platforms as part of a holistic customer experience.

Take transportation: A self-driving car shared by multiple owners will someday charge by distance traveled, calling for each owner to pay their share of insurance, tolls, fuel and wear-and-tear. And fees will transfer automatically via digital currency exchange. To the customer, it’s all part of getting to work. To companies, the intersection of mobility with insurance and banking requires an expanded view of the customer experience. Such cross-industry experiences will be the norm for digital businesses.

Recommendation: Think of CX as an integrated cross-market effort. Explore opportunities through the lens of customer behavior. Sector overlap is a natural consequence of how customers operate in the real world. Look for opportunities to exploit it.

Outdated Idea 5: Enterprise success is only about processes

At one time, efficient execution of core business processes determined strong, or weak, performance. Companies that still operate with a process mindset view business activities as predictable and repeatable. A digital mindset requires openness to spontaneous and sometimes one-off opportunities to solve customer problems. Process thinking is not totally irrelevant in a digital context, but it has to serve products capable of flexibly serving customer needs and behaviors.

Recommendation: Communicate how placing too much emphasis on process can lead to rigid approaches incapable of capturing new opportunities. Integrate process and product teams to design digital products and services that take both sides into account.

Outdated Idea 6: Agile practices make for agile organizations

Agile development enables tech teams to deliver new functionality and still pivot quickly when new needs arise. The proven benefits have encouraged agile’s spread to non-IT departments like marketing and operations. It’s still not enough. Agile can’t operate solely at the level of process or function. Digital business requires agility across the organization applied to strategy, culture, investments and other areas. 

Recommendation: Cultivate an adaptable culture, enabled by a leadership growth mindset. For concrete priorities, embrace a product management approach that encourages fast, incremental deliverables and the ability to shift and adapt as necessary.

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