Monday morning’s news informs me that troubled travel industry giant Thomas Cook has finally ceased trading, a loss with widespread and painful consequences for its staff and customers. Amongst the factors said to have contributed to its demise are rapidly shifting market conditions. Travel writer and broadcaster Simon Calder comments that the organisation “wasn’t ready for the 21st Century”, undermined by the ease with which individuals can now arrange their own global travel online. It seems that Thomas Cook, having successfully navigated a 178-year journey from its beginnings as an organiser of railway outings, was too slow to reinvent itself this time.
Innovation and disruption
The disruptive potential of digital innovation is a topic that took centre stage last week at the Halifax Digital Festival morning conference ‘Tomorrow’s Business – The Digital Revolution’. Our venue was Bertie’s tea rooms in Elland, its sparkling chandeliers adding a dash of Victorian grandeur and echos of past industrial transformation to the occasion. By the mid-nineteenth century the impact of the first industrial revolution had radically altered the commercial landscape, our built environment and our way of life. The advent of the railways in the age of steam opened up the opportunity that cabinet maker Thomas Cook leveraged when he founded his company in 1841.
Here in 2019 we’ve convened around all things digital, possibly witnessing the acceleration of what Klaus Schwab has called the ‘fourth industrial revolution’ – an era in which adoption of technologies such as Cyber-Physical Systems (CPS) and Internet of Things (IoT) will dramatically reshape our industries and the patterns of our daily lives. Some of today’s presentations stress the innovation imperative: big things are happening; don’t be caught napping and end up on the wrong side of change; catch the wave or be taken down by it. There’s a good deal of enthusiasm for technologically-enabled opportunity coupled with an underlying acknowledgement of its seismic potential and long reach.
This can be tricky territory for leadership. Established firms may be highly competent in managing continuous innovation – improving what they already do – but might lack the entrepreneurial edge to deal with discontinuity. Discontinuous innovation is the game-change stuff, the new business models or technologies that disrupt the order of things and can tip the balance of power in favour of smaller, more agile, ambitious new entrants.
There are some examples here today. We hear from Jon Fenton of FeTu on disrupting the £34 billion compressor sector with an innovative heat engine designed to reduce global energy consumption and emissions. Chris Bingham of the Craggs Energy Group describes developing an online-only company by rethinking the fuel sales business model. Tech, he says, is “not as important as you think”. It’s about approaching the market from a different vantage point, designing in a ways that weren’t previously possible, mapping the whole customer journey and removing unnecessary processes.
Technologies and humans, all mixed up together
So technologies are significant but there’s more to it when it comes to fully realising the transformative potential of digital. This returns to an assertion that Malcolm Seagrave of AND Digital spoke about in the first keynote: digital is 10% technology and 90% human. Yes the tech has an important role but leadership and culture are key when it comes to enabling (or sabotaging) change. He talks about the importance of openness to learning, of breaking down silos and building cross-functional teams. To maintain an innovative edge you need tenacious customer focus and to be willing to continually disrupt one’s own business from within.
It seems to me that the more we embrace digital technologies the more we challenge ourselves to revisit the very human business of doing business. We’re questioning our operating assumptions, finding new ways to create relationships and establishing new rules of engagement once we’re connected. We move back and forth between analogue and digital, professional and personal, our attention held by an embodied encounter one moment and a virtual encounter the next. Sometimes we deliberately mix it all up to create engaging new experiences like the augmented climbing walls that Dan Edley of Fired Up Technology shows us in his discussion of gamification in the sports and leisure industry.
Once-solid boundaries are being reshaped and redefined as our digital journey progresses. When Jane Rutter shares stories from digital and creative web agency Zeal she talks about social media blurring the lines, so that what used to be B2B (business to business) or B2C (business to consumer) is now moving towards H2H (human to human). Jane also talks about the potential for creativity in this space, how an imaginative response online (for example, the student and the ASOS dress) can lead to levels of engagement that once would only have been achievable with the help of a significant marketing budget. It’s this creative capacity for problem-solving that also makes a career in digital highly resistant to the threat of automation, according to skills and employment data presented by Sue Cooke of 3M BIC (3M Buckley Innovation Centre).
Challenges of digital disruption
There’s a good deal of mental and emotional agility required to build a successful enterprise and retain the capacity to stand back and look again from a new entrant’s perspective. Awareness of the bigger picture helps – staying in touch with customer needs, keeping an eye on fringe markets, making the time to pull up from operational necessities and remembering that the current trajectory is a choice that comes with a shelf-life.
Creative destruction, a concept popularised by Joseph Schumpeter, is the process through which established ways of doing things become overturned. In this respect the newbies have less to lose and a good deal less change to manage than the market giants when something comes along that shakes up the dominant paradigm. While the tangible, physical aspects of organisations such as premises or equipment may be complicated to reconfigure, my experience is that the real complexity in leading change lies with the intangibles such as embedded cultural norms and ways of thinking.
The status quo hangs together only after a lot has been invested to get things the way they are. Only some of that investment is financial; so much of what holds an organisation in place is what’s going on in people’s heads and hearts. One of the questions that came up in the conference Q&A had to do with the difficulties of bringing the rest of the organisation along and that old chestnut ‘resistance to change’. I’m of the opinion that resistance is useful information. It alerts our attention to something important that needs to be understood, but that’s another story.
Klaus Schwab talks about the digital revolution calling for a different, ‘more human’, empathic kind of leadership, skilled at building collaboration and co-operation rather than falling back on command and control. I’m inclined to agree. I also see tremendous yet-to-be realised potential in the possibilities of organising – organisation not as a thing but as an active process that can find shape in many different forms.
Reflecting on the leadership challenges of our digital era I’m drawn to the alternative definition of revolution, as an ‘instance of revolving’.
Each cycle of disruptive change brings an invitation to learn, share, strengthen our relationships and develop the resilience to respond creatively when the next wave of uncertainty gathers on the horizon.