The recent McKinsey Global Survey on digital strategy reaches a very simple conclusion – every company needs to become a tech company. And, it continues, if you can’t or won’t make the transformation, your top competitors will leave you in the dust.
The authors of a companion McKinsey article wrote, “Whether it’s been the shift to online working, the spike in online demand, or the increase in cyber assaults, technology has emerged as a critical business capability. Companies can no longer afford the long timelines and often-disappointing business returns that have hampered many of the large tech-transformation projects of the past.”
Technology Adoption Rates Have Increased
The survey shows that the pandemic has increased the rate at which companies are adopting technology and has forced them to reconsider technology’s role in their overall business strategies. The companies that reported better overall technology capabilities, talent, leadership, and resources are also reporting better economic outcomes.
The companies that have already made significant investments in their digital resources are planning more … soon. Technology spending has increased during the pandemic, even if companies have cut spending in other areas. Companies that have not made technology a priority will find it increasingly difficult to compete or even to catch up.
Rapid Change Challenges Business Models
The pace of business may have changed fundamentally, but increasing speed isn’t the only issue at hand. Business models are rapidly becoming obsolete. The survey found, “Only 11 percent [of responding companies] believe their current business models will be economically viable through 2023, while another 64 percent say their companies need to build new digital businesses to help them get there.”
Determining who will lead the creation of new business models depends on the size of the technology investment the company has already made. Those companies who are most effective in meeting this challenge don’t rely on one individual to lead technology planning. In the most successful companies, the C-suite leaders and business-unit heads are leading the technology- and digital-related thinking. These companies are hiring executives who are already technically savvy.
That makes sense if you consider that more than half of respondents said their companies are using technology to differentiate themselves from the competition. Another substantial percentage said they plan to increase revenues with innovation – selling products and services that don’t exist today. Leaders can no longer operate without a digital frame of reference.
What Does This Mean To Your Organization?
The conclusion of the McKinsey survey is that no organization profits by ignoring its digital presence or its technology foundation. Even those who are moderately well-positioned have work to do.
“Our survey results confirm not only that a strong technology foundation is critical but also that leading companies are far ahead of competitors in building theirs,” the survey report concludes. “For everyone else, the time is now to make bold investments in technology and capabilities that will equip their businesses to outperform others in a rapidly evolving landscape.”
How Does Technology Disruption Change Your Culture?
As with any disruption, there will be winners and losers. The pandemic has accelerated the adoption of technology to a rate we haven’t seen before. Some companies began meeting these challenges very early and are ahead of their competition. Others are trying to catch up. Still others haven’t noticed there’s a problem.
Regardless of the direction you plan to take, it will affect your culture. As the role of technology changes, employee roles might change as well. Your board might need to explain how digital technology will help keep pace with competitors. HR leaders may need to evaluate the need for employees with new skills and the impact artificial intelligence might have on the type and number of employees. Financial officers might need to respond faster to larger technology spends or oversee the acquisition of digital companies (yes, this is happening in associations too).
Survey results indicate, however, that “the majority of current leaders lack the knowledge or experience to pioneer ways to apply new technologies or consistently identify how new technologies can transform their business. They need to become technology ‘leaders’—rather than ‘enablers’ or ‘obstructors’—at their respective organizations.”
If this is true of your organization, PROPEL can help you navigate the issues that make it harder to move the organization forward. If your leaders need to change their mindset, that’s a culture issue. If disruption has a major impact on “the way we’ve always done it,” that’s a culture issue. You don’t have to change everything about your organization, but you may need to redefine what’s most important to it. That’s a culture issue, and we can help.
Photo by Tyler Daviaux