We all know change isn’t an easy thing to manage, but sometimes we may be a little naive as to root cause of some of the friction. 

Let’s face it, not everyone who works in an organisation actually wants to change, and after all …that’s fair enough, change is hard, learning isn’t easy, and it gets harder the older you get. But even at board level, the amount of times I’ve heard the phrase “lets just make a buck on the way down” would probably surprise you. 

Whilst in my heart I’ll always be someone who’s more interested in the story of growth, I can totally understand those that may choose to stay as they are, and ride the business they know and love, into the sunset.

I would argue that digital transformation is not simply about updating your technology. Just because you threw a tonne of money at Salesforce to upgrade your CRM it doesn’t suddenly turn you into Google. 

Instead, I would say it’s more about upgrading your thinking, or …changing the way you think.

Pretend for a moment that you’re the CEO of a large organisation, built in the pre-digital-era. How difficult would it be for you to reinvigorate your game plan, in order to capture the new opportunities of the digital world? It would be tough. The bigger you are, the harder it is to change. 

If you’re a small business owner, or you run a smaller line of business within a corporation then hopefully tackling change isn’t quite as daunting. 

Well at least, that’s the theory. But we all know theory is very different to practice. 

Reason 1 – Business Model is anchored in the past.

The first major factor that a lot of people don’t think about is the ownership structure of the business. 

A great example (and to be honest, it’s one of my favourites) is the retail king, Gerry Harvey. 

Very successful businessman, and a brilliant media talent. 

Over the years he has built an empire, and you have to take your hat off to anyone who has climbed to those heights from where he started. 

But back in 2008, he famously told the media outlet ‘Smart Company’ that online retailing “is a complete waste of time”, and those comments have been followed up time and again over recent years to the point where many have labelled him a “dinosaur”. However, I’ve always looked at that situation and wondered …how can a guy, who has been so successful, for so long, and achieved so much, just put his head in the sand like that?

Fast forward to 2019, and in the wake of Amazon’s arrival to Australia I would argue that his negative commentary on the future success of online retail in this market, is starting to show some cracks. 

But how has he held this line of verbatim for over a decade? 

Or more to the point, what is the “thinking” that is driving it. 

The key is to remember that when Gerry Harvey talks to the media, he is actually crafting his message carefully to two very different audiences. 

1. The everyday investors in his retail empire that is listed in the ASX, who all want to hear that Harvey Norman actually has a digital strategy, and is going to be competitive now and into the future. 
2. The Owners (and these would be major investors) of Harvey Norman stores. 

The piece of the puzzle that most people forget about Harvey Norman is that it’s actually a franchise. They’re not just in the business of selling TV’s to consumers, there in the business of selling businesses to investors. And those investors, (the ones who have bought the bricks and mortar retail model from him) are desperate to hear that the fundamentals of that business model are still relevant today, even though according to Scott Ewing (a Senior Research Fellow at The Swinburne Institute for Social Research), Harvey Norman’s franchisee sales revenue fell by 2% and the fees Harvey Norman Holdings received from their franchisees fell 5% in recent years. 

And it is exactly that type of underlying business logic that drives his commentary. 

Which brings us to the second reason. 

Reason 2 – Cognitive Dissonance is a real thing.

For the psychology majors among us (and yes you know who you are!), they will know the term cognitive dissonance. 

”Cognitive Dissonance” is a clinical term used in psychology which basically describes the discomfort people feel when attempting to hold on, and foster, values & beliefs that are contradictory to each other. 

For example, if you made a fortune out of business model “A” over the past 50 years, could you at the same time, really believe that business model “B” is the right way forward from here? 

Leon Festinger, (who was the psychologist that founded the Theory of Cognitive Dissonance) would probably disagree. But lucky we’re not all psychologists, right?

Gerry, and many other CEOs and Senior Executives, of companies big and small, have all built up a considerable amount of knowledge and experience on the business that they operate in. 

But all of that experience rests upon a foundation of business logic that is beginning to waver.

Quite often when you pursue a resolution to this conflict, it leads you down a road that ultimately makes you choose one of three possible choices; 

1. Recognise the situation for what it is, and seek to fight the good fight. Begin work on the very hard, and expensive exercise of transformation, which usually ends up toying with a notion like “how can we actively disrupt ourselves?” but ultimately if you can make it through, you’ll become your own version of Marvel Films, or the highly successful Lego. 
2. Pretend everything is ok. Brick and Mortar franchises still work. Print advertising is just having a bad day. Etc. Hold your breathe and hope for the best, and you’ll probably become Nokia.
3. Recognise the situation for what it is, and buckle up. Look for some glory (like Bruce on the asteroid), and ride it all the way home in style. (a.k.a. …make a buck on the way down). 

For those that choose option #1, bravo. Hand something down to your kids that isn’t like climate change. Make no mistake, it won’t be easy, just because you made the choice in the first place doesn’t automatically guarantee success. Know that many with the right intentions may still fail.

But, (and its a big but) if you do choose to transform, whatever your business, you’ll probably need some help. 

Reason 3 – You Need Help

Even the great G.E. chose to get some outside help with their transformation, hiring Eric Ries the author of The Lean Startup to create “G.E. Fastworks” a program informed by Lean Startup principles, which was designed to take the flexible and transparent characteristics of a startup and combine them with GE’s size and resources to provide a pathway internally within G.E. through which idea’s could develop and innovation could be fostered.

Unfortunately, not all businesses are as well funded, or as insightful as G.E. but any company that has decided to change and embrace digital is going to need all the help they can get, because as we said at the beginning, change isn’t easy, it’s tough. It’s especially difficult for publicly listed companies (or other company structures where you have to answer to shareholders on regular basis) that can make it a real struggle. 

It’s a tough order for any team to not only deliver the forecast return for your shareholders today & pay them a decent dividend, but simultaneously build the business of the future, without dropping a cent on the way through. 

Privately owned businesses are, generally speaking, a little more free to make whatever decisions they please. 

By getting outside help you get a fresh perspective on your business, and can create a program similar to that of GE where there is a ‘go fast’ mentality, and it can be immune from other internal forces that may seek to stifle its growth. 

Reason 4 – You Need to Know Where to Look

There are some areas where you can look to see if you’re organisation is engaged in digital transformation, and these area’s aren’t just relevant for big corporations, they’re relevant to SME’s as well. 

 So whether you’re an owner of a business, or an employee in a business here are some areas where you can focus your attention;

• Take a look at the pipeline of future products and services that your company is creating.
  • Firstly, is there one? 
  • If not, create one!
• Culturally, do they value innovation? Is it included in their mission statement? 
  • Think Silicon Valley’s “innovate or die”
  • Or is that word synonymous with risk, danger and a quick exit?
• Are you including data as a central pillar in your strategic planning?
  • Do you have the tools to do this?
• Do they have a list of digital transformation strategies that exist for the “why” over the long term, rather than specific “outcomes” related to a P&L boost in the short term?
• Is there a vein in the company that fosters digital disruption, digital innovation, and provides a pathway for idea development?

Unless you’re working as part of a platform based business model today, (like Uber or AirBnB), it’s highly unlikely that you’re aligned to a central digital business strategy, and are working everyday with the right action plans and digital tools to be competitive in the future. 

That doesn’t mean you need to give up, and quit, or sell your business. What is does mean is that you need to embrace digital as a core part of your strategic planning process, even if it means going back to business school and throwing out some of that foundational business logic you’ve held so dear for so long (scary i know). 

But I also know, that if you don’t challenge that fundamental business logic you learnt 20 years ago, then any digital transformation initiative that you come up with will be fundamentally flawed. 

You can’t just buy some technology off the shelf, plug it in, and away you go. Although there are many, many snake oil salesmen out there with the latest shiny new toy who will make you believe that. 

Recognise that the external environment has changed. What you thought were your strengths, weaknesses, opportunities and threats even 5 years ago, are likely to be very different today. 

Today’s SWOT analysis needs to cover things like data collection, and business innovation, platforms and customer networks. 

You need to change your thinking. Your underlying business logic. And that is tough. 

But if you’re lucky enough to be part of a business that does want to tackle digital transformation. Then go for it. Grab arms with your teammates and work hard, …for the future (long term) is bright.

Stu Stevens

MD & Founder of Remap Online

Building brands and transforming business’, through Creative, Content & Commerce.

If you’re a business that is looking to embrace the digital future, and you’re looking for some help. Please, reach out. We’re here, and we have a lot of experience in helping the brands of today transform into the business of tomorrow. Contact Us today!