Digital Transformation Gamechangers — not Technology
What changes the rules are disruptive forces driven by technology. Technology is often a mere enabler of a disruptive force; very seldomly is the disruptive force technology. The disruptive force is the mere fact that people change the way things are done!
“Clearly, the thing that’s transforming is not the technology — the technology is transforming you.” Jeanne W. Ross of MIT Sloan
So what do we mean when we talk about a disruptive force?
Disruptive forces are things that turn convention on its head, and by doing so, change the rules of the game!
It’s best here to give an example of each of the above.
In the past, starting a business heavily dependent on IT or some specialized physical capability (plant), and all of that was a costly endeavor.
Take IT, for instance; the cost lies in the hardware an organization needs to acquire to build a data center and the cost of developing software, and the cost of employing all kinds of specialists to make the total package work!
One could say that the barriers to entry in this type of business were quite high. Not only because of the cost involved but also because of the scarcity of skills and talent!
Three disruptive forces changed this forever!
Enters the cloud — cloud providers provided consolidated hardware, middleware, and connecting software solutions without the customer having to make any (never mind huge) investment in building infrastructure.
Cloud providers make it VERY easy for new customers to use their products and services because they provide a base level of service for free or virtually free. As the new customer starts using more of the services, a sliding-scale payment model kicks in.
There is an additional benefit because using cloud-based resources allows for elasticity in cost (pay per use) and elasticity in use (scale, even if only for a short period).
The small software start-up needs hardly any budget for hardware and infrastructure. Similarly, elastic solutions exist for software also! The tools are available for free, or for free for a while, or a meager cost that scales by use.
The start-up can perfect their new product, say a SAAS (software as a service) application, test it, get beta customers to try it, and even get the first few paying customers before they ever have to pay a cent! Even if there is a cost, it would be nowhere near a similar start-up investment, say 15 years ago; it would be peanuts!
But what about talent? It would help if you had programmers; they are scarce and cost a lot. It’s a massive commitment for a start-up to employing people, especially in countries with stringent labor legislation where you can’t hire and fire people as you need them.
But, as long as the owners have some software development skills, they can “outsource” much work to freelancers. This approach is VERY different from outsourcing work to a company and very cost-effective!
With the advent of the Gig-Economy, tons of gigger’s (freelancers) are available for hire on several websites. All you have to do as a startup owner is to post the job spec, wait for a few quotes, accept the best candidate’s quotation, and specialist in China, England, Wales, the USA, Canada, Mexico, or India (this is where freelances that worked for us in the past worked from) do a part of the work!
If you like the freelancer's work, you use them again; if not, you move on!
Different specialized skills are now easy to get; if you need a specialist for a short period, it’s as easy as posting a job on the gig platform you use!
Sometimes it will cost you a bit more per hour if you are looking for a top-notch specialist, but you don’t have the ongoing employment costs. Our experience is getting the job done better and cheaper by carefully selecting the right freelancers to do jobs for us!
There is no up-front hiring cost, no worrying when an expensive resource is sitting on the bench with no work, or worries about leave or sick leave pay.
Yes, the platform charges a fee or a percentage, but in turn, they handle the admin, the payments, disputes, etc.
So just by using technology and a shift in human behavior enabled by the technology, you don’t need a Million Dollar up-front investment. If you have a great idea today, you can most probably get by with a few thousand in start-up funds!
Yes, someone needed to invest, but even that probably started small. Someone becomes an intermediary, a platform that enables new technology and social connections to make your startup work.
Platforms are online businesses that facilitate commercial interactions between at least two different groups — with one typically being suppliers and other consumers. The primary determinant of whether something is a platform is when the assets or resources used to create value to the end-to-end transaction the platform facilitates are not that of the platform.
In my example, PeoplePerHour does not employ the resource who wrote the software for me, and neither does the software written by the freelancer belong to PeoplePerHour. As a platform, their role is that of a trusted intermediary that helps create value for both the buyer and the seller!
Platforms typically act as intermediaries (intermediation) but sometimes also removes existing intermediaries (disintermediation).
In my example, there are, therefore, three disruptive forces at play — they are:
- Cloud — The cloud provider ensured that you need not make ANY capital expenditure. They remove a HUGE barrier to entry!
- The Gig-economy — People who love what they do but hated doing it for a boss can now contact their skills to people who appreciate their work. They can sit in the comfort of their own home and earn a living. They can make a HUGE improvement in their standard of living, reduce stress levels, and most of the time; they earn more than they would have if they worked for a boss. For the customer, it means excellent inspired work of superb quality (once you perfected your “hiring” criteria) with NO ongoing employment cost! The cost for any piece of work is most probably the same or lower!
- The Platform — created a marketplace and ecosystem on their platform and has solved all the problematic issues of contracting with people sitting all over the world! It’s easy to sell your services; it’s easy to get talented people to do a job. The platform’s value proposition far outstrips the fees they charge!
These three types of disruptive forces seem to be the dominant;
- a technology that removes barriers to entry,
- a platform or new business model that removes barriers to entry,
- a social or socio-economic trend (behavioral shift) that enables the removal of barriers to entry because the convention shifted.
If you can leverage any of these during your transformation journey — you will greatly benefit!
If your competitor leverages any of these, you stand to be disrupted.
You then have two choices to make:
- Join them by also leveraging the same disrupting forces, or
- Find an even bigger disrupting force to leverage to your advantage!
We don’t want to give a specific list of disrupting forces, as people tend to get fixated on the list, and by the time you read this, the list would have changed in any case!
Disrupting forces are only disruptive for a while. The moment their adoption becomes commonplace or commoditized, it ceases to be disruptive (or at the very least loses its effectiveness as a disruptive force).
The only way to stay ahead of the pack is to continually evaluate what the disruptive forces in your market, industry, and economy are — it’s a never-ending job!
This article is part of a series exploring the use of Agile ADapT™, a Digital Transformation Method for incumbent organizations struggling to compete in the digital age.