I recently attended a program at the Connecticut Forum entitled “Disruption! Innovators in business, media and culture,” and was reminded that disruption is happening in all industries in diverse ways. Suggested in the preface to the forum is the idea that the disruption that we have heard about is connected to “disruptive innovation,” a term coined by Clayton M. Christensen to mean “when a small company with fewer resources can successfully challenge incumbent businesses.” Facebook, Netflix and Amazon were cited as examples. Basically, it is a new idea that prompts a shift in an industry, giving us a new way to operate.
While the panelists talked about their experiences – journalist Ezra Klein and his vox.com business as new purveyors of information, culinary mogul Danny Meyer and the different ways he has set standards with his staff at his restaurants (no tipping!) and attorney Anjali Kumar with experiences working at two great industry disruptors, Warby Parker and Google — I could see the changes from these entrepreneurs were reshaping their industries and how they operate.
Disruption is occurring everywhere, now more than ever, as technological advances come more quickly and smart, daring entrepreneurs are willing to take risks with their new ideas to drive change. We have heard of Skunk Works, originated by Lockheed Martin in the 1940s for the advanced development of projects without bureaucratic impediments, and Google’s “20 percent time” to give employees time to think about new ideas to benefit the company. It is not only the new small companies that work on innovation, but larger ones honing in on new processes that will create industry change.
“Hollywood thinks it is threatened by technology. In fact, the battle is over – and Silicon Valley has won. With theatre attendance at a two-decade low and profits dwindling, the kind of disruption that hit music, publishing, and other industries is already reshaping the entertainment business. — Vanity Fair, Hollywood, 2017, “That’s All Folks”, By Nick Bilton, p. 141.
Vanity Fair recently highlighted the disruption in its industry that technology has wrought. The key here is the delivery of the entertainment: instead of going to it, now you bring it yourself – in your own time and on whatever device suits your convenience. Movie delivery made easy. While that industry is dealing with illegal downloads and trying to hold onto the traditional delivery – just a little bit longer – they are challenged with releasing movies for personal (paid) consumption versus trying to drive people to the theater for big box office numbers. And, what happens when a consumer cannot get it—they opt for an alternative – YouTube, Facebook, Instagram, Netflix or wait. The rush to see the latest release right now is waning.
So with technology disrupting the delivery of the news, how we shop, and entertainment delivery driven by disruptive ideas or the companies mining their employees’ brains for the next big thing – are we at a crossroads for business operations?
Well, as Vanity Fair states, “look what Silicon Valley has already done” – look what digitalization has already done to how businesses operate. While the tone may be more frightening for Hollywood’s norm, the tone for digital disruptions is welcomed for the positive effect on operations. This improvement is for the better – with gains in efficiency, productivity, labor, more data analytics and transparency.
Information management has become increasingly more difficult in organizations with more unstructured data. With digital assets to manage along with paper-based files, the task is daunting. We are really looking at a few key points:
- Handling/storing/securing the structured and unstructured data
- Finding information within the data stored
- Using that data efficiently – with automated workflow
- Establishing a content management system or replacing an outdated legacy system
- Consolidating to one-platform for ease and integration
For the visionaries running the business – large or small – they probably know that if they have not adopted a digital strategy they are behind. In fact, they are losing out on what digitization can do for their businesses. Similar to the news, shopping, restaurant, and entertainment changes, they are opt-in. Can you still get a paper newspaper? Yes. Can you still go to an eyeglass store in the mall? Yes. And, they are plenty of restaurants from which to choose – quick service to full service. Business is no different.
CEOs can continue along the same manual operations path for their processing, use paper, route approvals without the benefit of automation and patch an old system. But those businesses will suffer in the long run. Chances are management probably has more innovative technologies in force at home. It only makes sense to bring that innovation to the office, and reap the benefits a digital strategy can provide for the entire operation.
“A solid, industry-specific digital strategy and cutting-edge execution can set the stage for increased revenue growth and a better return on investment.” – McKinsey & Company, “Facing up to digital disruption: Reinventing the core with bold business strategy, March 2017
Will it flip the business on its head? McKinsey indicates that “going digital is now a core strategy for many organizations around the world.” I call this the Operational Imperative for Digital Transformation. (I also call it Achieving Digital Nirvana.) Depending on the industry, digitization could mean e-commerce or better deployment of a business’s offerings through a more robust website, but I’m referring to the workings of the business itself. McKinsey calls this “digitization of processes,” replacing labor with software.
What can businesses do? Innovation will continue and the late adopters will find themselves behind. Every business should assess their needs, their problems to find the best solution. But, as I noted earlier, there are some common ones for everyone. Specific industries see the problems manifest in different areas, e.g., education — admissions review; insurance — claims processing; hospitals — doctor Credentialing; ABC Company — AP/AR and XYZ distribution — Workflow.
Embracing the benefits of digitization and building a strategy to implement the change for industry-specific business operations truly is imperative today. Without thinking and planning how to leverage today’s workplace innovations for the business model– businesses are at a disadvantage and will be left behind – especially as new ideas become reality and drive the disruptive changes further.
As McKinsey says, just because you are running quickly “if you’re running in the wrong direction, it’s actually worse than standing still.” Make a strategic plan to help move your company in the right direction. Embrace digitization within your business model. Don’t be left behind.