Cover Story in”People and Management” HR Magazine September 2017

Innovator, Disruptor or being Disrupted!!

By Anju Sabharwal, Founder & CEO – People Bridges ( HR consulting and coaching firm)

“As a talent acquisition team, we have got to beef up and redefine the digital plan because the traditional ways of recruitment and selection are not yielding the desired results” states the CHRO of a multinational company!!

There are many stories like this expressing serious concern about how companies and industries are being disrupted by digitally-savvy start-ups. Automation, Artificial Intelligence, Robotics, Mobile, Cloud Computing and Data Analytics are a few examples of digital disruption. Disruption is quickly changing the way we work. It’s creating a new, big opportunity for us provided we can keep up and get ahead of it otherwise we will continue to feel threatened by it and may perish soon.

The panic felt by the traditional companies is emanating from the fact that digital disruptions are more difficult to adapt to than earlier technology-triggered shifts due to their virtual nature. Digital disruptions mostly exist in the virtual world, which makes them difficult to recognize until after the impact is felt. Additionally, virtual technologies are quickly changed and easily scaled. The unpredictable rate of digital evolution combined with customer empowerment is making the challenge of dealing with disruption even more difficult.

As per the IBM Institute of Business Value CMO study – the biggest worry of CMOs is not website traffic, building great content, or lead generation; it was start-ups developing mobile applications that might disrupt their entire business model. And their primary question was “How do I go to market first with my own disruptive model?” For CMOs, it is imperative they focus on enriching customer experiences, embracing innovation and informing every decision with data-driven insights.

In this shifting landscape, we need to challenge ourselves, embrace disruption and think at a different level in order to survive and march ahead. Experience and knowledge of traditional industries combined with “Start-up” thinking is the key way forward. I propose MACE (the dictionary meaning of MACE is ‘chemical used in an aerosol to handle attackers’) framework to deal with digital disruption:

Monitor Pulse – Firms need to actively monitor changes in their environment in order to see the threats sneaking up and get a pulse of external factors like shifting customer behavior and consumer needs. Companies need to pay attention to areas where start-ups are identifying and addressing a customer pain point. Firms need to stay connected with their customers to keep pace with changing trends e.g. Amazon encourages customer reviews on products to bring innovative ideas to market. Out of the 500 products released by Amazon Web Services in 2014, 90 % were determined from customer requests.

Acceptance & Adaption – Companies often find it very hard to acknowledge that their old business model does not work anymore. e.g. Blackberry had never experienced a serious setback so the thought that their business could evaporate was inconceivable to them. They were so confident about their hold over the business user segment that it didn’t even dawn on them that the iPhone or the Android devices could become legitimate threats. They saw the onslaught coming but more or less ignored it. Companies need to accept the changes happening in the market, become flexible, adapt & recreate corporate missions/operating models/goals to gain competitive advantage. Continuous reconfiguration is must – companies should develop the ability to continually reallocate resources and reorganize themselves rapidly.

Continuous Ideation and Innovation – In order to generate new ideas, o rganizations need to adapt to a whole new “open” culture. They need to increasingly rely on external partners (customers, suppliers, distributors etc.) as well as internal teams to innovate. Organizations need to be able to transform existing jobs to suit the needs of the digital age. Organizations need to let go and innovate freely rather than limiting themselves to mastery within their core business. They need to understand that the rhythm of digital transformation is determined by the customer. As a result, everything must be designed and developed based on the customer’s needs and priorities. Cisco, for example, is actively involved in studying disruptions in the market and growing its product portfolio by co-creating with both external and internal stakeholders. Large companies may also consider an open innovation model by engaging closely with the start-up ecosystem by setting up innovation labs & incubators and partnering with start-up accelerators.

Evaluate: Companies need to learn to spot the early warning signs of disruption by looking at the right data and evaluating it correctly. Focus on leading indicators (information on where a company might be headed rather than only lagging indicators eg. financial information, profitability). An example of a leading indicator could be data that shows a new product from an unconventional competitor gaining popularity with customers. This could be an early warning sign of disruption. Mobile phones and other digital devices make it possible to capture large amount of data on consumer data and market patterns but unless firms know how to use the data to their advantage, the entire exercise of collecting data will be futile. A prime example is Netflix which measures all aspects of customer interactions and continuously refines its analytics capabilities to develop new products.

Conclusion: Digital disruption is a reality of economic life and is here to stay. New digital technologies are not concerned about organizational history or tradition. In fact, they sweep aside existing approaches and models, creating a new world order. Digital disruptions are in many ways a very democratic force and they can just as well originate within a two-person mini start-up as they can in a billion dollar organization. These disruptions might make many firms feel vulnerable and uncomfortable; the winning strategy is to see it as an opportunity. Digitization is affordable & accessible and firms can create a system to manage innovations in order to build adaptability. Given the opportunities for greater customer penetration and product distribution, firms should explore a universe of potential ideas by building an innovation ecosystem, internally and externally that fosters open innovation.

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