The Dark Side of the Digital Revolution

Digital technology puts pressure on businesses to fundamentally change their strategies and cultures. And most leaders aren’t responding well.

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Digital Leadership

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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.


Digital Leadership

As organizations rely increasingly on digital technologies, how should they cultivate opportunities and address taking risks in a fast-moving digital market environment?
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Comments (2)
Prabir Kumar Bandyopadhyay
I agree Jhon,what you have commented. I see some visible change in India ever since Vishal Sikka ,CEO of Infosys have stressed on Design thinking I find lot of Industries and B' schools have started organizing  training programs on " Design thinking". 

But CEO's must keep the career path of the Creative leaders in mind too. Rightly said this is not an issue with the Creative organisations as mentioned,the problem is with Service and manufacturing industries.

 You have a great point.
John Freeman
A very interesting article, I have a few additions to the culture of "scalable learning". First is that many companies outsource this skill to their creative and strategic agencies, who's lifeblood is saying "yes we can do that for you" without really knowing how.  Using their inbuilt confidence and reliance on core creative abilities to "think of something". Creative thinking uses a creative approach defined as the double diamond (zoom out zoom in) process. Creative agencies are built on "scalable learning". 

The second is that people do fear failure, not because they failed, but because they fear that their failures will be exploited by others for advantage. 
The third is that CEOs don't promote creative thinkers to positions of authority within their organisations for the same reason they like them. Creative thinkers think differently about problems and therefore, rub up against their organisations authority resulting in them being much harder to manage. As a junior in an organisation, thinking differently doesn't have any trail blazers. There is no senior role for you to aim for so you learn to conform. Your digital 'scunkworks' outposts demonstrate this. 

The creative industries of Industrial Design, Architecture, Games Design and Marketing (digital advertising, film and television) are stuffed full of people who's very purpose is to think differently. They are also rewarded for doing so. The question is where would you want to work? 

My fourth point is CEO tenure 9.7 years leaves very little time for transformation pain to turn into transformation reward for the CEO.