technologies have abetted Uber and
Airbnb’s rises to prominence, their most
significant gains have come from leveraging the mainstream networking
technologies already in consumers’
hands: mobile phones, apps, and websites optimized for quick transactions
and location tracking. It’s often easier to
achieve impact with technologies already
in widespread use than it is with emerging technologies.
As obvious as that point may seem,
many leaders ignore it. They think they
have to be positioned to pounce on the
next wave of emerging technology, when
that next wave is often difficult to predict
and is, by definition, not yet conventional
enough to produce a major impact.
MYTH #3: Profitable companies are
the most likely to launch successful
digital transformation projects.
REALITY: If things are going well —
defined crassly as employee and
shareholder wealth creation — then
the chances of transforming anything
meaningful are quite low.
Failing companies are much more motivated to transform themselves, simply
because they need to change something —
if not everything — quickly. Successful
companies, especially if they’re public
companies, are understandably cautious
about change. Think about it: How many
successful companies — without market
duress — have truly transformed their
business models? Change is expensive,
time-consuming, inexact, and painful. It
also makes the leaders who suggest it easy
targets for in-house politics, especially
when the change initiatives move slowly
And despite what the best-selling
business authors, pundits, and huge-
fee-collecting lunchtime speakers will tell
you, the truth is, most human beings are
resistant to digital change when it hap-
pens in the organization where they’ve
grown comfortable. That means that
transformation efforts are often con-
strained. Yes, resistance to change can
disappear quickly when a company
begins to fail. But until that day
arrives, it’s difficult to tell everyone to
fix what’s perceived as unbroken.
Where is there the least resistance to
digital transformation efforts? At companies hemorrhaging customers and cash,
and at startups with investor cash to burn.
That’s because digital transformations
work well when you have money to spend
and a high capacity — and rationale —
for taking risks. By contrast, established
companies are “established” for a reason:
They’ve reached consistent levels of profitable revenue generation, driven by
well-understood processes that make up
an ongoing business model. They are
therefore typically unwilling to upend
those processes as long as they continue
winning in the marketplace.
MYTH #4: We need to disrupt our
industry before someone else does.
REALITY: Disruptive transformation
seldom begins with market leaders
whose business models have defined
their industry categories for years.
While market leaders pay lip service to
their role as innovators and disruptors,
they are usually unlikely champions of
change — until their profits begin to
fall and their shareholders scream for
Historically, industry disruptors have
often been startups making bold bets on
old industries. Examples include Airbnb
(hospitality), Uber and Lyft (
transportation), Amazon (books, retail), and Netflix
Does this mean there’s no possibility
for industry leaders to disrupt themselves?
No. But let history serve as a helpful re-
minder: Disruption seldom comes from
established companies with consistent,
profitable revenue streams.
MYTH #5: Executives are hungry for
REALITY: The number of executives
who really want to transform their
companies is relatively small, especially in public companies.
Digital transformation requires strong
support from upper management. And
while the concept of digital transformation can be sold up the management
chain, simply selling the concept isn’t
enough. Transformations require overt,
continuous support from the senior management team to succeed.
And it’s this sort of support — public,
persistent, enduring, and unwavering —
that’s more difficult to secure than one might
assume. Many executives are suspicious of
risky change efforts that might affect their
status in the company. Many executives are
also challenged by the sheer complexity of
digital transformation projects, especially
when they learn how long they take. Moreover, as we’ve already discussed, executives
are reluctant to tweak existing business
models that are consistently generating
wealth for themselves and their shareholders.
In short, there’s a wide gap between
what executives say about digital transformation and what they do. It would be nice
to think that executives are primarily motivated by what’s best for the long-term
health of the company, but their motives
are often more complex.
Stephen J. Andriole is the Thomas G.
Labrecque Professor of Business Technology at Villanova University in Villanova,
Pennsylvania, and is the author of the
book Ready Technology: Fast-Tracking
New Business Technologies (CRC Press,
2014). Comment on this article at
http://sloanreview.mit.edu/58317, or contact the author at firstname.lastname@example.org.
Reprint 58317. For ordering information, see page 4.
Copyright © Massachusetts Institute of Technology,
2017. All rights reserved.
Five Myths About Digital Transformation
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