Digital technology puts pressure on businesses to fundamentally change their strategies and cultures. And most leaders aren’t responding well.
Everywhere we look, companies are “going digital” — adding mobile apps, making customer service available online, solving problems via Twitter. But Deloitte Center for the Edge co-founder John Hagel III considers this window dressing, and fears many executives aren’t recognizing how business is changing at a fundamental level.
“I think there’s a tendency to look at digital technology and think about it more as an opportunity, a choice,” he told MIT Sloan Management Review. “The mounting performance pressure in our shifting business landscape turns this from an opportunity and choice into an imperative. The longer you wait, the more marginalized you’re going to become.”
The irony, Hagel notes, is that same digital technology that’s creating all this pressure also creates a very different approach to transformation that can help large companies to really become very different entities over time. “I’m an optimist,” he adds. “I actually view this ‘dark side’ and mounting performance pressure from an optimistic view, in the sense that the old approaches are just not sustainable, and some senior executives have seen the need for fundamental change driven by this technology. The big issue for them is how to get that change to happen in a large traditional organization.”
Hagel spoke with Gerald C. (Jerry) Kane, an associate professor of information systems at the Carroll School of Management at Boston College and a guest editor for MIT SMR.
Where do you think companies are today in developing their digital strategies?
Oh, I still think they’re way behind. Generalizations are always risky, but most of the executives I talk to are still very much focused on digital largely as a way to do “more of the same,” just more efficiently, quickly, cost effectively. But I don’t see a lot of evidence of fundamentally stepping back and rethinking, at a basic level, “What business are we really in?”
Why do you think that is?
Well, I think there are a number of factors. Part of it is just what I call the “dark side” of digital technology, which is mounting performance pressure, in part enabled and precipitated by the digital technology. In a world of mounting pressure, there’s a natural human instinct to stick to what you know. Don’t go out of your comfort zone because things are really scary out there.