Why change can be good for Scottish business
People want what’s best for them, and they can switch on a dime, because there’s always a new disruptor disrupting the last disruptor. So companies should just strive to keep changing and adapting to their customers’ needs”. So says Ben Chestnut, founder of Mailchimp one of the most successful small businesses in the US.
‘Disruption’ sounds painful and it certainly is when you are running a business that suddenly finds itself losing profit and market share to a competitor who is providing a product or service which makes yours look expensive or ‘old’. It can feel even more painful when you are part of a public-sector body that is not meeting expectations in the full glare of citizens, media and the government.
Disruption has always happened, but both the frequency and scale of disruption have increased significantly as a result of digital solutions.
Digital enables business model innovation, for example, platform businesses, direct-to-consumer, product-as-a-service. These new models typically allow customers to configure exactly what they want, rather than take what they are given, and they also cut out non-value adding intermediate costs.
And there is potential for much more disintermediation across both the private and public sectors.
So, disruption is here to stay and will impact most businesses and public services and therefore citizens. And, indeed it will affect the robots as the latest ‘guilty as charged’ cause of future disruption.
The big question therefore is how can organisations use disruption to their advantage and ensure their strategy, products and services, structures, processes and culture enable them to be the disruptor – “Saint” – and not the disrupted – “Sinner”?
Every leader should understand why and where disruption is likely to occur. Common types of situations where disruption takes hold include:
‘Take it or leave it’ – where there is limited choice of product features or service options.
‘Expensive and idle’ – which features an expensive product or a service that is only used occasionally.
‘Channel obesity’ – where there are high non-value added costs of intermediaries.
‘Binary setting’ – which is an offline product or service that can’t adjust to customer expectations.
In the past, these kinds of features were regarded as positive ‘barriers to entry’ or profit levers, forcing customers to pay more. Nowadays they are strategic vulnerabilities and open-door invitations to an organisation’s competitors.
How do you turn disruption to your advantage?
Be a Saint and think like a disruptor
Accept that disruption is inevitable and therefore be self-critical about your business model and vigilant about technologies and/or customer expectations which could challenge you.
For example, the internet of things (IoT) and artificial intelligence (AI) have the potential to disrupt all industry and public services through a combination of connectivity and analytics.
Rather than wait on disruptors arriving with new products using these technologies, or public outcry at dissatisfaction with public services, leaders should scrutinize the end-to-end processes of their organisations to identify where these technologies can deliver a step-change in performance and transform value for customers, and then develop new products and services – even if the current business seems to be doing well.
Invest in disruptive options
When disruptive opportunities are identified, be prepared for the business case to look different to what you are used to. Budgeting and performance management rules may need to change so that disruptive ideas that challenge the existing way of doing things get a fair hearing.
For example, we at AAB know of one highly successful manufacturing business which is adjusting its investment criteria to support new disruptive opportunities. The company board is familiar with business cases for new product lines, however, they also see the emergence in their industry of new information services and platforms using data generated from manufactured units to provide enhanced control and analytics.
We also know that public sector bodies are adapting their governance mechanisms to reflect the agile delivery of solutions and services that is occurring.
Adapt your planning and performance management cycles
The traditional annual management cycles are simply too slow to capture disruptive opportunities or adjust assumptions and plans. We suggest combining annual refreshes with monthly updates, particularly in resourcing plans, to enable you to test market movements, improve outputs and outcomes and make necessary in-year adjustments.
Recognise talent comes in many forms
Becoming an organisation which is comfortable with both digital and disruption does not mean firing everyone over 40 – thankfully for this author!
The reality is that most workplaces today are multigenerational. Millennials may be more digitally native than older staff, but their experience can give them a deep operational understanding and an ability to see patterns across time and business cycles to help sense disruptive opportunities and threats. Leaders should nurture talented individuals who prize customer value, have an awareness of emerging technologies, are data savvy and can deliver change without drama.
So, Saint or Sinner? To retain that halo and stay relevant and high performing, you need to think like a disruptor, be resilient and accept that you are not immune to the inevitable and relentless changes in customer expectations.
Mark Bell is a director of Anderson Anderson & Brown Consulting.
“SEE THE WORLD THROUGH THE EYES OF GENERATIONS BEFORE US”
As an Inspiro-Bot, I generated the title of this article. I am an intelligent machine – sometimes known as artificial intelligence, or AI – set up as a web app to generate inspirational quotes.
In addition to producing inspiring quotations, my AI species can help banks detect fraudulent transactions and music streaming services tell you what songs you might like based on your past listening habits. We are even being used to develop new medicines.
However, the possibilities for my AI family have their limitations. We are not the next generation of creative thinkers or disrupters. We need to leave creativity and change to you humans. We can do many of your jobs better, but someone needs to drive us, maintain us, make sense of us, add emotion, and do all the other things only humans can do.
It is obvious that we machines will change how you work and interact, but how can your leaders support this?
Well, I suggest they see the world through the eyes of the generations before them. They might not have been able to predict exactly how the world would change, but a common theme throughout history is that change is constant. And that pace of change is increasing.
Your older generations may have told you of the need to develop resilience and agility to cope with continuous disrupters such as me... and future versions of me.
So how do your leaders build resilience and agility in their organisations?
· Communicate a vision. Workforce expectations are changing and people are much more likely to change jobs. This means to attract the best talent, your leaders need to focus on making people want to work for their organisation. Setting an ambitious vision signals a lot to team members.
· Get comfortable with a changing plan. The key to being OK with change is ensuring visibility across an organisation and assuring delivery in a new way. Being able to deliver successfully – and without drama – requires staff to know what the plan is and to be able to react as circumstances dictate. Agile delivery demands agile governance.
· Be proactive with data. Your leaders need to make sure decisions are based on evidence and that they leverage the power of data and the insights generated from it. This puts an increasing emphasis on data and analytics capabilities to help leaders make the right, and timely, decisions to enable the organisation to stay ahead of competitors and aligned with customer expectations.
· By considering these three aspects, your leaders can enable an organisation to effectively respond to, and indeed, take control of change.
· Remember – there will always be a place for creativity and a place for humans (as long as they adapt to change…)
As told to Lauren Cahill, principal consultant at Anderson Anderson & Brown Consulting.
How to be inspired when out of your comfort zone
Little doubt that the world is changing at a faster rate than ever before. New technologies are reshaping our physical environment and our experiences and, as citizens, we need to be able to adapt.
Do we just respond passively or do we try and assert some ‘people power’?
Disruption is good. The human factors in design, engineering and software development mean that our user experience is improving, for example, the smartphone revolution.
Driving a car is a different and better experience today than it was 20 years ago. Also, the benefits often extend further by removing unnecessary processes to save us time and money.
But disruption can also feel bad. Technological changes can be difficult for us to absorb because they force us out of our comfort zones by changing our experiences of services, our jobs, our workplace environments and – most importantly – our interactions with each other.
Arguably, our capacity for change reduces as we get older therefore we are less likely to embrace the new and, for some – particularly in remote and rural areas – basic connectivity poses challenges that no amount of ‘willingness to learn’ can overcome.
We are creating a risk of isolation, especially for those in our communities who need support and interaction to continue to live independently.
In some cases, we need an intermediary to balance out the technology – an actual human being.
What can we do to regain control?
· Put trust in, and embrace, technology. Yes, there are risks such as breaches to cyber security so we need to determine our individual risk appetite and then engage at home, in our communities and in our workplaces. It is better to be the driver rather than a passenger.
· Take every opportunity offered in order to develop fresh skills and acquire new knowledge to keep current in terms of employability.
· Retain focus and belief in our human interactions. Let’s prove Albert Einstein right when he said: “The human spirit must prevail over technology.”
The reality is that we are living in a disruptive world, in which the pace of change will most likely continue to accelerate.
As citizens, we will enjoy the good, manage the bad and, most of all, embrace the fact that technology change is – at its core – a human interest story and, therefore, we are in control.
Alex Matthews is a director of Anderson Anderson & Brown Consulting.