Strange as it sounds, the main challenge for some people today is that their business isn’t in crisis. No blockchain or platform or AI startup is threatening to disrupt their market—yet.
If you know what we’re talking about, you could well be one of the world’s frustrated changemakers. You can see that change is essential, but you’re struggling to light the spark because your business’s indicators are all annoyingly positive. If this is you, what can you do? Should you hope for—or, even, engineer—a crisis?
This was one of the questions a group of business transformation leaders took on recently, at our Make Change Happen event in Munich, Germany.
“It would be a lie to say that a good crisis or a good disruption doesn’t help,” said Roman Lentz, Chief Digital Transformation Officer at global building materials firm Heidelberg Cement. “Because if you honestly look at organizations that change the fastest, they’re the ones with their backs most strongly against the wall… And frankly, that’s my challenge, because we’re not in crisis. We’re producing healthy margins. We’re not seeing cement being disrupted any time soon.”
Sandra Schiller, Head of Product Management for Valves and Automation at Georg Fischer Piping Systems, agreed. A crisis, Schiller noted, “can force through faster changes.”
But this doesn’t mean you should wait for a crisis, as London’s black taxis discovered, a few years too late.
“Black taxis were untouchable,” said Ben Terrett, CEO of Public Digital, a firm that partners with IDEO and specializes in digital transformation. “So untouchable that some of their services and ways of operating were protected by regulation. They have special parking spaces in London, special streets only they can go down… certain roads only they can pick up from.”
But then wave after wave of digital disruption flooded in as they sat behind the wheel, watching their dominion ebb away. First, GPS meant that the traditional cab drivers’ knowledge of London’s labyrinthine streets was no longer the golden ticket it had once been.
Then Uber arrived, and its bookable, predictable, low-cost rides started to eat into the black taxi business. So how did London’s cabbies respond?
“Their defense has ended up being reputation,” said Terrett. “That’s basically their only defense: ‘But we’re the black cabs!’”
Turns out customers weren’t as attached to the reputation of London’s cabs as cabbies were—and they couldn’t compete with the convenience and cost-cutting of on-demand services. Now the London Taxi Drivers Association (LTDA) wants to sue Uber for the earnings its 25,000 members lost in the first five years they were operating in the city. The LTDA estimates that cabbies lost £10,000 each per year, and has been taking legal advice to sue for £1.25 billion.
It didn’t have to come to this.
“What’s interesting is that people have been trying to help them—by building services on top of their service,” said James Higgs, Executive Director for Digital Transformation at IDEO London.
In 2011, the year before Uber launched in London—Hailo, now MyTaxi, tried to bring the predictability of a booking app to the black cabs.
“Taxi drivers didn’t even want that,” Higgs said. “They would charge you an outrageous minimum fare… they even resisted companies trying to help them deliver a better service!”
We don’t want to pick on London’s iconic cabs and their drivers. They’re not even employees of a centralized company that one could point a finger at—they’re self-employed. But we think there are lessons here for us all.
“The black cabs are a good analogy for a lot of businesses,” said Terrett. “I can see lots of industrial-era companies who, when digital organizations go after their market, their defense is ‘well, we’re us, we’re the number one brand in this market.’ That’s no longer a good enough defense.”
Here are three key takeaways for businesses looking to inoculate themselves for potential disruption:
Just as you shouldn’t wish for a crisis to happen, so you shouldn’t wait for a crisis to happen before you change.
“It’s really nice if you start in a safe environment in order to secure your future business,” says Georg Fischer’s Schiller. “It’s not about securing your business tomorrow, it’s about the business for the next few years. And as we are a 200-year-old company, we really would like to be around for another 200 years: And so we have to start working now.”
The leaders of large industrial companies like Heidelberg Cement and Georg Fischer are investing in digital transformation programs now—because, while there may be no Uber for cement or pipes or any of their other product lines yet, there’s probably an entrepreneur somewhere pitching an idea that sounds something like that to an investor right now.
And because, however unlikely it might seem to some today, it’s certain that digital transformation—defined by Tom Loosemore, a partner at Public Digital, as “applying the culture, practices, processes, and technologies of the internet era to respond to people’s raised expectations”—is going to disrupt every industry, including the one you work in.
Instead of thinking of digital disruption as a threat—you’re better off picturing it as a friend.
OK, so it’s a friend who needs a lot of hand holding at first. But as long as you’re prepared to invest the time and approach it from a human-centered point of view, digital transformation will make many things a whole lot better. It will increase your productivity, your pace of innovation, your rate of learning, and your customers’ expectations—and it’ll help you deliver on them.
When Georg Fischer’s design teams, for instance, began creating digital prototypes, so they learned new, more flexible, agile ways of working. And they started producing a new, digitally-enabled ‘smart part’ that alerts machine operators to problems in the system, so their customers now have more control over operations.
So, don’t sit by the curbside, your legacy engine idling, as you wait—hope even—for a crisis to come. Instead of clinging to what is, use digital to prepare for what might be. Welcome change in now, from a position of safety, and maybe you can secure your business’s long-term future—and save a cool £1.25 billion.