October 6, 2017
On the whole, people don’t like change much, unless it comes with immediate rewards. We might think joining a gym is a good idea, and maybe it is, but when after a week or two you just feel sore and haven’t lost any weight or become any fitter – it can seem like a complete waste of time and money.
The same could be said of digital innovation, except in many cases, we don’t even know whether going digital is a ‘good’ idea or not. Digital change not only hurts (jobs are done differently or lost entirely) but it seldom comes with any guarantee of success. No wonder then that ‘resistance to change’ has been singled out as the biggest barrier to digital innovation in the 2017 Harvey Nash/KPMG CIO Survey (the world’s largest survey of its kind).
In this article, we address why people resist digital innovation and what can be done about it. But first, putting to one side digital, we all know that people resist change but why the fuss over innovation? Surely innovation is a necessary step in any kind of advancement and making progress is a good thing, right? When a new idea comes along isn’t it natural to get behind it and try it out?
Apparently not. Back in the nineteenth-century the philosopher and psychologist William James summed it up nicely: ‘When a thing is new, people say: “It is not true.” Later, when its truth becomes obvious, they say: “It is not important.” Finally, when its importance cannot be denied, they say: “Anyway, it is not new.”’
It does appear that people are instinctively suspicious of shiny new ideas. Trying to get them implemented is tough indeed. As the military adage goes, ‘No plan survives contact with the enemy.’ (Mike Tyson once tailored this message in his own style by declaring, ‘Everybody has a plan till they get punched in the mouth.’)
The above quotations come from Steven Poole’s ‘Rethink: The Surprising History of New Ideas’, which looks to history to find out why innovating can often feel like a ‘punch in the mouth’ – not just to those who have change thrust upon them but to the innovators as well! In fact, the often-quoted phrase about ‘winning hearts and minds’ is explained in Steven’s book as originating from the memoirs of Sir Gerald Templer, the British commander who led a counterinsurgency campaign in Malaya in the 1950s. As he put it: ‘The shooting side of the business is only 25 percent of the trouble, and the other 75 percent lies in getting the people of this country behind us.’ The answer lay, he wrote, ‘in the hearts and minds of the people’.
Coming back to digital then, why do people resist it? To help answer this question I interviewed Alain Waha, co-founder of SaturnF1 – a spin-off business from a large global industrial group with the specific mandate to execute a digital go-to-market strategy. (The fact that SaturnF1 is a ‘spin-off business’ gives us a clue as to how to overcome resistance to digital innovation, but more on that later.) Alain’s answer to why people resist digital is that ‘careers make people revert to “business as usual”’. That is, our jobs are usually defined based on success criteria: there is no reward for failure!
“In an innovative digital environment, continuous re-invention is required because technological advancement is exponential. And because it’s exponential, no-one quite knows where it’s going and there’s no chance to internalise at this rate.”
Co-founder of SaturnF1
To illustrate his point he asks me to imagine taking 40 steps to the back of the room. ‘If you were taking those steps at an exponential rate, guess where you’d be? The Sun.’
The pace of technological change is daunting to organisations as well as to the individuals involved. Legacy organisations have built up capabilities and offerings over many years. It’s a big ask to do anything but laugh at the suggestion to ‘disrupt’ the way things are done. If you’re creating a start-up business from scratch, failure is not something to be overly scared of. You hope you will be successful, but if the business flops then either improve it; try something else, or walk away. The entrepreneur rewards themselves by killing a bad idea quickly and putting it down to a learning experience. Failing fast and learning fast are seen as virtues. In an established company, failing fast seems like a very silly thing to do.
So, for those of us in legacy businesses contemplating a digital initiative, should we aim to reward learning rather than profitability?
“You can’t really reward on an individual basis. Instead, the Board should take a portfolio approach. You need to have a venture capitalist mind-set to decide which ideas should be backed. A venture capitalist will look at the overall internal rate of return of their entire portfolio, then balance new investments based on what stage you are at – seed stage, start-up, bridge etc. – and invest accordingly.”
Co-founder of SaturnF1
By spread-betting you’ll win some and lose some, but hopefully more of the former. To be in for a greater chance of success in selecting and achieving digital innovation, Alain says there are three predictors to consider:
Is the team great?
When considering how to implement a digital business for the group, Alain said the normal route would have been to go to an agency and outsource the project. While this would get the job done with a suitably skilled team and a proven track record, Alain says it wouldn’t work for them. They wanted to build a digital culture, so by outsourcing it as a project would mean that only the outsourced team builds up and retains the knowledge.
It doesn’t address their desire to increase digital maturity and embed digital thinking. That is, the whole point of the exercise is not to build what is sometimes called a ‘point solution’ but to create an environment, internally, that continually innovates without constant recourse to external help. I asked Alain whether it would have made sense to acquire a digital business that met their needs. ‘Is such a business available?’ he responds. ‘How do you bring that know-how in-house? And if it’s really great it won’t be for sale.’ So that’s probably a ‘no’ then. But even if a suitable business could be acquired, it doesn’t automatically inculcate a digital culture: additional effort would still be required to create mechanisms for dealing with people and corporate culture.
Is it attacking a big problem?
As Alain says, ‘don’t start at the technology – look at the business problem being solved’. In his case this meant establishing omni-channel marketing; getting a salesforce fully connected through data, and enabling direct channels to dealers and end users. For an industrial group that is a big problem for which the solution will of course include technologies and agile methodologies: but the starting point was, ‘to do this in 12 months we couldn’t expect to be
successful by hoping the existing legacy teams could just do this’.
Is someone else already trying to solve the problem and has at least a partial solution?
If the answer is ‘yes’, then the chances are you’ve got yourself a business problem worth solving and the risk of failure is mitigated somewhat by whatever can be gleaned from others.
As an aside, it’s worth reflecting that the types of ‘problem being solved’ by digital are largely tackled by new business models rather than digitising existing business processes.
Back in the 1990s and for a least a couple of decades the emphasis has been on ‘business process re-engineering’ and looking at making efficiencies and incremental improvements. Today it’s all about ‘disruption’ to the fundamental business model itself, of which there are many successful case studies to point to: EasyJet, Uber, Airbnb, Amazon, to name but a few. Hence, while it’s demonstrably true that a start-up can risk doing business in a radically different way to its forebears and rapidly propel itself it to become a peer of similar stature to the established players – and in some cases even the market leader – the sustained track record in start-up ‘disruption’ means there are now solid foundations in place for legacy organisations to latch onto. No longer should the grandees of business be seen as dinosaurs unable to adapt, or as oil-tankers unable to turnaround quick enough. The time has come whereby legacy organisations can see what works out there, and use the new world of applications and APIs as ‘lego’ blocks to rapidly build and launch their own new business models.
Embedding digital maturity and thinking
The path that Alain took was to introduce a new business model: one that was ‘attacking a big problem’ and where at least a ‘partial solution’ existed (as others have already built omni-channel marketing and salesforce solutions). The group span off a separate company called SaturnF1. The chief reason for it being a spin-off was to address that third predictor of digital success – to have a great team. This is not to diminish the respect and capability held for members of the core business, but a recognition that different skills were required for the digital business and the timeframe didn’t allow for a managed up-lift in digital capability. Furthermore, the type of people willing and able to create a new digital business would very likely have been put off if embedded into a ‘business as usual’ team with its BAU culture and legacy technical environment.
Overcoming digital resistance
As with all change initiatives, success depends upon addressing the ‘hearts and minds’ of the people impacted. A digital endeavour is no different: you still need to build a compelling case for change; explain to people how the change impacts them personally, and motivate the entire organisation towards the change goal. No easy feat, and what makes digital change even harder is that the end goal is rarely as simple as, say, a new system or process. A digital change often brings with it a brand-new culture and an entirely different way of operating.
Hence, successful digital transformations require all of the traditional change leadership skills and strategies, but coupled with an over-arching approach that promotes digital acceptance. On the surface, an ‘over-arching approach’ may sound like just an additional layer of governance. But it’s far more than that. The truth is, digital projects and programmes are risky, and many will fail. This amplifies the anxiety felt by everyone involved. Therefore, organisations may well want to take a portfolio approach to digital investment by trying out a number of concurrent change initiatives and taking a Darwinian-style ‘survival of the fittest’ stance to see which one works.
In biological evolution, ‘survival of the fittest’ is a highly successful and efficient strategy (albeit slow!) Change in this context is only resisted if it has a negative impact on survival; positive change is actively encouraged. By adapting a streamlined version of evolution for our digital world, we may well want to emulate what nature teaches us. Namely, that if we encourage people and organisations to innovate, the reward for them is huge. The reward may even be survival itself!