Delaying Digital Transformation Is Super Risky

February 28, 2017

Open any business publication and I can guarantee that you will find multiple articles about digital disruption and the almost universal need for digital transformation.

And yet, when I talk to senior business and IT leaders of mid-sized businesses there is usually no urgency to address this topic formally. Most are content to wait for a competitor to do something and to then be a fast follower.

Unfortunately this strategy is no longer viable in our digital world and will probably lead to disaster!

To understand why, I'll introduce you to 3 little-known facts that companies with strong digital DNA know very well ... and will use against your company.

  What do you think? Am I exaggerating or missing something?


I'll conclude with some thoughts about what you should do today, even if you are not yet fully prepared to commit to a digital transformation.

1.Every Industry Already has Digital Masters

One of the most common misperceptions is that some industries will not be affected by the rapid advance of our technological capabilities.

The argument goes something like this:

My industry is very different from the music industry, or car industry, or <substitute any other industry that has been disrupted> and we have enough time to change and counter any threat if something changes.

While it may be true that some industries are more severely disrupted at this point, a well-known study referenced in the book Leading Digital clearly shows that every industry already has a significant proportion of companies who are so-called Digital Masters (i.e. they not only use advanced digital technologies but they also know how to use them effectively).

Even more scary is the fact that this research was performed in 2013 and the percentage of Digital Masters seems to have only increased since then.

Aha, I hear you say. My industry is not listed here and it should be safe.

So, do yourself a favour and search Google for tech startups in your particular industry.

Exploring the results will give you a feeling for how many startups actually do consider the industry viable for disruption. 

My guess is that you will be surprised by how many there are.

One such industry that is often regarded as fairly immune to the onslaught of digital technologies is the restaurant and food industry.

It took me only a few seconds to find The Future of Dining: 99 Startups Reinventing The Restaurant to get a first impression of all the areas technology companies have identified as being in need of improvement.

The below info-graphic clearly illustrates just how much change is coming to a supposedly "safe" industry.

Now imagine you are a restaurant chain who is facing off against a more digitally-enabled competitor who has made customer experience their top priority and is investing in some of these technologies while also developing leadership acumen to leverage them effectively?

How long will it take your customers to find out about this superior experience (assuming, of course, that the quality of the food is comparable)?

Ok, I hear you say, but these are just technologies that are affecting the current value-chain.

Indeed, but we can take this argument one step further and consider true disruption as written about in Disrupting Food: These 13 Companies are Leading the FoodTech Revolution.

From chefs for hire to food printing, these business model could do to the food industry what Uber did to the taxi industry.

And the most important thought I want to leave you with is that these companies already exist today!

And they are thinking about your customers!

2.Digital Masters Rely on Exponential Technologies

Even when leaders are aware of these Digital Masters, the next mistake they make is to assume that their business business model is similar to what has come before.

And this is probably completely wrong!

Digital Masters believe that technology is their single biggest competitive tool and they know just how important it is to invest heavily in so-called exponential technologies.

If you have not yet heard of this key term, do yourself a favour and watch this 5 minute video created by Peter Diamandis, one of the most important supporters of the exponential mindset.

In the video, Peter introduces 3D printing, Artificial Intelligence (AI), robotics, synthetic biology, biotech & bioinformatics, nanotechnology, neuroscience and sensor networks as potent examples of exponential technologies.

The most important message of this video is to realise that even while the power of these technologies grows exponentially, their associated costs fall dramatically.

And what you can bet on is that the Digital Masters in your industry are either already leveraging or planning to leverage one (and sometimes even a combination) of these technologies in a bold move to fundamentally transform their business model.

And while their current performance may look underwhelming, don't disregard them as next year already things may look very different (as they are building on exponential technologies).

Before you know it, this competitor will offer a competing service that is not only much better, but also much cheaper than the best you can come up with.

3. Developing Digital Leadership Skills and Mindsets Takes Time

My conclusion after facilitating many BTM Mastermind Groups and reading even more books, articles and studies is that the technology is less important than the capabilities and the mindsets of the people that need to make it all happen.

What this means is that even when you decide to lead your organization on a digital transformation, your initial momentum will be very slow as your people will not be comfortable with change.

And unfortunately this is exactly what needs to happen during a digital transformation journey, as Matthew Guest highlights so well in the below table that compares the differences between the "old" and "new" ways:

Any Change Management practitioner or transformation specialist will confirm that changing deep-rooted behaviours is one of the most difficult and time-consuming tasks in any major transformation.

Putting all three of the facts in this blog together, we can now finally see the magnitude of the risk we are taking when we are delaying the digital transformation in our business:

By the time you first feel the effects of a digital master on your bottom line, it will in all likelihood be too late to mount a meaningful response as you still have to invest in elemental mindset changes whereas your competitor relies on exponential technologies to grow from strength to strength.

Even if you are still not entirely convinced, there is a silver-lining and some action steps for companies that want to be fast followers.

How to Reduce the Risk from Delaying Digital Transformation

Before you think that I am advocating going on a digital transformation at all costs, let me tell you about its dark side.

Transformation efforts in general, and digital transformation in particular, are usually expensive and time-consuming!

If your company is more risk-averse by nature, a potential strategy would be to learn how to really become a prepared fast-follower instead.

Please note, I am not saying you should put your head in the sand until you are forced to change.

No, what I am proposing is a much more active response that acknowledges that digital change will happen but you just don't know when.

In their digital transformation framework, IMD and Cisco highlight the 3 core capabilities any organization should start working on today to establish a foundation for digital business agility.

1. Hyperawareness

To respond fast, the first step is to learn how to sense technology trends, recognise changes in the competitive landscape and to recognise game-changing ideas where-ever they orginiate. 

2. Informed Decision Making

Collecting information in the previous step is not enough and the next step is to figure out how and when to prioritise the insights and decide how to best respond. This capability is very data-driven, collaborative and requires good information management abilities.

3. Fast Execution

Even the best decisions mean nothing if an organization still believes in the traditional, slow way of implementing major changes. Embracing experimentation and failure while rapidly iterating and doing in weeks what traditionally would have taken months or years is a critical ability to cultivate as soon as possible.

There is a chance that you have read up to this point, agree with everything I have said and still don't see an opportunity to get the ball rolling in your organization.

The "way we do it here" syndrome is just too strong!

I have good news for you!

From our experience with BTM Masterminds we know it is possible for one, enlightened leader to start waking up an entire organization.

The question then is, are you the leader that will get the ball rolling?


Although not every organization can or should start their digital transformation immediately, every single one has to do it at some stage or risk going out of business.

This article introduces 3 little-known facts that go a long way towards explaining why this is so and, more importantly, why it is so critically important to start preparing for this future now.

While there may be time to delay a digital transformation, it is absolutely high time to start changing mindsets and to actively prepare for what surely has to come!

About the author

DX Sensei, Mastermind Facilitator, Abundance Thinker or CEO, call me what you like, but know this: I am extremely passionate about helping IT leaders from mid-sized businesses discover their true potential and realise just how important they are to helping their employer survive and thrive in our increasingly digital world.

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