Digitalisation is a mega trend that will influence the building of a future society. As a mega trend, Digitalisation has the ability to find ways to by-pass any obstacles and resistance in its path to influence tomorrow. But many companies and organizations try to resist the mega trends in different ways and live with the illusion that it is possible to contain the digital movement. History tells us that this is not possible and any such attempts are doomed to fail.
I am sitting in a coffee shop in Sollentuna with a view of the bus station. It is a Monday morning and the commuters are heading into Stockholm on this first day of spring. Even though we had a few months of winter, everybody know that spring is here to stay. The trees are still bare but soon they will be dressed in green leaves and cast comfortable shadows in the summer heat. No idea to resist the seasonal movements. My thinking is that most trends or seasons (changing the nature of our society) are out of our reach to control. New political, technical or economical force erupt and despite our attempt to control, these forces will change our society in one way or another. Digitalization is one of these mega trends, accompanied by globalization and urbanization, and will change our society to something unknown today. But today, I see many companies and organizations trying to resist digitalization but not accepting its fundamental effects – for example, the way companies need to be governed.
During the last couple of hundred years, we have seen several global mega trends and events that changed the world community. For example, Liberalism, founded on the ideas of equality and liberty, evolved in the Age of Enlightenment and was defined by John Locke in the 17th century. The mega trend of Liberalism travelled quickly in Europe through secret meetings, newspapers and general word of mouth. The force of liberalism was a grass-root movement that erupted and could not be stopped – despite attempts by various rulers and governments. Ambition to contain the mega trend Liberalism resulted eventually in revolution, great war and the crash of empires – to eliminate all resisting forces. Most mega trends cannot be contained and those who survive the fundamental shift in the society are those how quickly grasp its potential and find new ways to leverage the new ideas. Those how try to resist (or don’t acknowledge the shift in market/society) will by all certainty be phased out. That history can tell us – and current mega trends are no different.
For me, digitalization is not a technical evolution but rather an industrial and/or social revolution – driven by citizens and customers on grass-root level. There are endless possibilities to change the way we live, work and communicate with new technology, and the change is appearing in a speed we have never seen before. Even our social and political structure, based on democracy and social liberalism, will probably be adjusted in some way by digitalization, globalization and urbanization mega trends. Scary! But what is important is that is that the mega trend force cannot be stopped – it will find new ways to disrupt. One interesting example is the streaming or peer-sharing (bit torrent) of media (for example The Pirate Bay). It is a movement enabled by new digital technology and challenge the social, legal and economic structure of the society. People can share protected content through the internet without any cost. Media content became worthless over-night. The over-mature media industry is severally challenged by new digital movements. The question I ask myself, without going into the ethical dilemma, is whether this movement can be contained by legal actions? Sites can be closed, but if the force is great enough, the digital movement will find new ways to disrupt. The media industry does not have a chance stop the mega trend! We can see the same trend with other movements in Uber, AirBnB, Ryanair, Skype, Spotify, etc. We saw taxi companies in uproar against Uber demanding legal actions to stop the new digital company – the result was taxi companies adapting new digital business models and focusing on customer experience to compete with Uber. The “traditional companies” decided to follow the digital movement to survive. The traditional players trying to protect a status quo in the industries does not stand a change! Why resist?
When studying companies (in various industries) in detail, we notice that “digital companies” differ from “traditional companies” in the way they are managed and governed. The “digital companies” have customer experience and the rapidly changing market as a starting point for the corporate governance. These are vital characteristics of corporate governance to survive in digital markets where change is fast, fierce and the future. Speed is built into the management system (company DNA) to quickly respond to new customer demand, competition or trends. The question is often how to minimize governance to allow for innovation and creativity in product units working close to customers. Too much bureaucracy, processes and control will obviously have the opposite effect. However, “traditional companies” have been built in a different, predictable and slow, market condition – where productivity, stability and control are the starting point for the corporate governance. Bureaucracy, processes and control are its vital management system to survive, and give the shareholders and market analyst a predicted performance. When the “traditional company” clash the digital market with “digital companies” – the outcome is uncertain. In fact, most of the “traditional companies” will not survive the digital revolution because they simply cannot handle the speed of change.
It takes a “traditional company” 18-24 months to react to a digital trend – what can happen in that window of time? What can Google do in that time?
Business has no sentimentality. Companies that cannot compete will be phased out without pardon. Companies that learn how to align to the new market pre-requisites will survive. But what is remarkable in this industrial revolution is that many “traditional companies” resist the digital mega trend – by legal actions, by keeping its “traditional” corporate governance or pretending that it still year 1985. We all know how that is going to turn out. Even though all companies acknowledge the need for speed and agility, most companies keep its traditional corporate governance system with opposite effect. Digital transformation is not about technology but rather about leadership, change and governance all captured in corporate governance. Those how understand this paradigm shift have at a chance to survive. Still most “traditional” companies regard digitalization as a technical evolution and not a management and governance revolution. Be ready to be phased out!
To transform one’s corporate governance system is probably to most daring and challenging task to do. I have full understanding that many senior executive resists any change of the corporate governance system as it might jeopardize the company’s performance and their own position. Why embark on a journey into the unknown when the current system works quite well? What if the market predictions are wrong and we embarked on a devastating journey for no reason? How can we motivate our staff to be part of the change journey after decades of heavy control and demotivating positions? These questions are relevant but I would probably ask myself – what if you don’t change?
- Do your homework and study how your industry is changing and the level of unpredictability. How is your industry affected by digitalization and new innovative competitors? What does this mean for your company? What is the probability of survival for your company based on the industrial evolution?
- Ask yourself: what are the main internal and external forces affecting the digital transformation of your company? Is it leadership, culture or your offerings? Is there a plan on how to overcome these challenges? Is your company accepting or resisting the digital movement?
- Contact Hans Gillior – expert in digital transformation! Our company has a unique analytical tools and methods for addressing the fundamental forces jeopardizing digital transformation. For example, we carry out a digital stress test where we go through 10 real-life scenarios of the digital market, and identify current bottle-necks, unclear governance, ineffective decision-making and other obstacles for change and competitiveness
As the morning proceeds, snow starts to fall from the sky in this first day of spring. The warm winds from the weekend are long gone and the snow pausing the warmer weather to come. There is always short-term resistance to mega trends that might pause the movement for a brief moment of time – but will never be able to stop the moment in the long-run. Rhetoric to make countries or companies great again are only illusions of the ability to stop or pause a mega trend from changing the world community. To go back to a time where the effects of digitalization, globalization and urbanization did not exist. What we have learned from history is that this tactic is not ever successful. It is not possible. Only those accepting changes and the new pre-requisites (and deal with the fear and frustration of change) of competitiveness and society will succeed. Will you?
Hans Gillior – Senior Advisor and Digital Guru