Over the past decade, we’ve seen a wave of disruption hit industry after industry. It started with publishing: Books, newspapers and magazines got hammered by new digital publishers. Established media outlets got scooped by bloggers, and ad spending was suddenly split between online banner ads and traditional print.
The disruption was even more profound for the music industry. Illegal file-sharing, enabled by websites like Napster, generated copyright battles and outcry from artists like Metallica. The industry got turned upside down as more and more consumers turned from physical CDs to digital downloads and streaming – new business models that needed to be tested and refined before announcing success.
Where was your business during the digital content upheaval? Chances are you were watching safely from the sidelines. Well, your turn may be coming – along with a lot of business leaders – to see your industry engulfed in chaos.
Welcome to the Internet Era
News, stories, music and images were in the first wave of disruption because their content is easy to digitize and distribute. The next wave will be a melding of physical and digital processes. Think Airbnb and Uber. Both created logistics layers that enable private parties to exchange cash for services in real time. The Internet of Things will allow any industry with physical units to track, optimize and reallocate them at algorithm speeds. Gartner predicts that by 2017 digital businesses will be in the thick of it, grappling with fresh capabilities to digitize physical processes in way that lets businesses use embedded data for competitive advantage.
Why so soon? Sensor technology is getting more powerful and less expensive. Memory is cheap, and more intelligent chips have the potential to reshape analog processes and products in the real world.
It’s Not About Technology
Most established businesses are not wired internally to deal with sweeping changes that could torpedo their business models. So the first step to prepare for disruption is not really about the technology. It’s more important to evaluate and update the culture and the internal management of a business.
Gartner analyst Carol Rozwell talks about “five digital freedoms” – new rules that can guide organizations on how to build a culture that will be resilient in the face of change. In her post, Storm-Proofing Your Organization, Rozwell talks about how the freedom to try and fail is antithetical to traditional management practices – and can bring much-needed flexibility and resiliency into corporate cultures.
The five digital freedoms are:
- Employees must be free to connect with other employees
- They must be free to contribute their ideas
- They must be free to create and experiment
- They must be free to choose their work environment
- They must be free to challenge leadership
This is a massive reimagining of how things usually go in the business world. And the challenge should not be underestimated. At the core, what Rozwell is saying is that traditional top-down management may not work in this new era. Leaders must learn to let go of the decision-making process, to listen and to include more voices. That can be scary.
But to get started, Gartner offers a few tips. Rather than trying to do everything at once, try a few basics to get started.
- Examine and identify the types of disruption coming at your business. Ask: Which of the five freedoms might be best to help adapt to this change?
- Examine employee performance metrics. Ask: Are you judging employees by criteria that encourage them to cling to old habits rather than taking risks and trying new things?
- Examine training programs. Ask: If we implement management and cultural changes, will employees understand and believe in them enough to really embrace them and use their new power effectively?
Getting ready means granting people a measure of autonomy and control. It means preparing for new technology challenges and new ways of accessing the human ingenuity within an organization’s brain trust, no matter where people sit on the org chart. Like earthquake-proof buildings that flex with seismic unrest, companies must be rearchitected with flexibility and resiliency in mind. Because when it hits, disruption will ripple across industries, breaking structures too brittle to survive.
Image credit: Ines Hegedus-Garcia