“How did you go bankrupt?” Bill asked.
“Two ways,” Mike said. “Gradually and then suddenly.”
– Ernest Hemingway, The Sun Also Rises
You have a great business. It’s always been a great business. You have a website. You also have a mobile app for your customers. At the end of the day, these are ”add-ons” because your customers interact with you mostly by coming into your physical location to enjoy your products or services. So, you’re done, right? You’re ‘digital enough’ and you can focus on your core business—or so you think.
That would be nice but, if history is the judge, this is likely not the case. More likely, you’re under the sway of one or more mythologies that will create a significant crisis in your business as digital transformation shakes its very foundations—forcing a new approach to design and innovation.
Now, when we say “mythology,” it does not mean that something is untrue. A mythology is simply a story that creates a mindset and related behaviors to navigate the world. Whether any mythology is factually verifiable is immaterial in this context.
Let’s take a look at three specific–potentially dangerous—mythologies that could be present in your business.
Mythology #1: “We Have a Great Business”
Our business is verifiably great. We have lots of revenue, good (if not, great) profits and a demonstrated history of success. Shouldn’t we acknowledge that and celebrate our success? Perhaps.
Why this mythology might create a risk in your business is because it’s fundamentally backwards looking. Secondly, you may have a great traditional business with digital touchpoints. That doesn’t mean you have a digital business with a digital culture.
The better mythology to inculcate in your culture aligns with Jeff Bezos’ famous mantra: “It is always Day 1.” This mythology has generated a forward-looking mindset that has helped Amazon to navigate, both in good times and bad.
If you want to know what a digital transformation looks like, consider Netflix, Valve and Spotify. Each of these firms develops minimally viable products and services with continuous and iterative input from real customers, allowing them to make decisions rooted in real-time data and based on business needs.
Think your legacy industry can’t be that agile? Look no further than fashion maven Fitflop. Their entire business, including human resources, is run based on the principles of the agile manifesto. And they make shoes.
Mythology #2: “We Are Customer Focused”
Over the last 10 years, nearly every company in the world has attempted to move this mythology to the forefront of their business. It makes perfect sense because where and how business value is created is ultimately defined by your customers’ willingness to pay for your products and services.
Just like the mythology above, however, it might be focused on the past,—mainly on your historical customers. Not only are customer demands changing in a digital world, your customer base is also dramatically changing. Your Boomer customers are dying (despite advances in healthcare) and the following generations are often expecting value in completely new ways. Digital transformation has created a very specific set of customer expectations.
For instance, if you’re an auto insurer, the coming generations don’t want to own a car. Instead, they’ll rideshare or rent in hourly increments. Therefore, they don’t want an annual auto insurance contract; if they want insurance at all, they expect it by the mile or by the minute.
If you’re still focused on Boomers, your IT systems, business processes and organization are designed for patterns that are quickly fading. If you’re in the grocery game, your customers are expecting curbside pickup or delivery, and it’s likely that you still haven’t figured out how to do those things profitably. But you’re going to have to—and soon.
Mythology #3: “We Innovate Constantly”
But how do you define innovation? Do you actually have a definition? Most likely, innovation is not defined in your enterprise. It’s probably more like NSFW content—everyone assumes they’ll know it when they see it.
Why is this a problem? Imagine that innovation had a specific definition. For example,“the introduction of a new or changed process, product or service that changes key performance indicators by 15% or greater.” This would mean that you would accept that you could only declare ‘innovation’ after you had the measurement. Which, in turn, would mean you would accept that is the outcome of disciplined experimentation. This new mythology would mean that you would have a mindset of constant experimentation. That you would expect a lot of your experiments to fail. And that failure would not stop experimentation.
Firms that consciously shift these mythologies to ones that help them stay focused on the future, on identifying emerging customers and committed to constant experimentation will succeed in the age of digital transformation. The ones that don’t will go bankrupt. Slowly, and then all at once.
Learn how digital transformation and innovation strategy can drive measurable results for your business.