Fintech hub Stone & Chalk’s chair Craig Dunn has urged boards and companies to challenge their thinking and “compete to innovate continuously” to avoid being negatively affected by digital disruption.
Speaking at the ACS Reimagination 2015 conference, Dunn said digital disruption was “right up there” in the challenges that listed companies and boards knew they faced.
“I’d argue that many businesses today, no matter what industry they’re operating in, have already come to the conclusion that the digital changes starting to impact their businesses are likely to be very profound,” Dunn said.
“They may not fully understand them, but they get it’s really important.”
Those that didn’t get it and underestimated digital’s importance would “do so at their own peril,” Dunn warned, adding they would be “condemning themselves to significant costs”.
While difficult, Dunn said businesses and boards needed to ask and answer tough questions internally around their digital preparedness.
“Businesses [should] think more deeply about what type of business they really are in, and whether the capabilities that have enabled their success up until now are the same capabilities that will ensure their success into the future,” Dunn said.
“How can one predict the capability set a business will need into the future, and how should a business invest today for a very different and seemingly unpredictable future?
“These aren’t easy questions to answer, but in my view we need to be thinking [about them].”
To assist businesses, Dunn outlined ten things that were uppermost in his mind when meeting with executives about doing business in the new digital world:
- Add value to customers to stay relevant
Businesses should think of customers “as partners and not simply targets of their economic activity. That means solving the problems that customers think are important in ways that noticeably improve their lives.”
- The need for speed
While scale and cost efficiency is still important in many industries, the capacity to move with speed and agility is potentially going to be even more important,” Dunn said. “The greatest enemy of speed and agility in any organisation is complexity.”
- Crave 'new'
“A key underpinning to almost any successful culture going forward must be an attitude of constructive paranoia and creative restlessness,” Dunn recommended. Your key people must crave new ways of doing things, always asking is there a better way, and who can we partner with importantly to learn from to make this happen. Open and hungry minds in my view are the most powerful and important asset of any business.”
- You’re not an island
“No company, big or small, can innovate alone,” Dunn advised. “Why would any smart business assume they have all the smart people in their business?”
- Be open
As traditional, vertically integrated business models are challenged, so is the level of control they try to exert on their operating environments. And that might be a good thing, according to Dunn. “There are huge benefits in working in an open system and partnering with others,” he said. “It can reduce the multiple capability sets that you need to develop in your business. It can enable you to move quickly to source capabilities that in hindsight you wish you’d developed in the past. And it can limit the big bets your business has to make on highly uncertain futures.”
- Scan the world
“While it might be impractical to be abreast of everything happening around the world, the more people that you have in your business scanning the world and looking to learn from significant new advances in science, technology and design, the better,” Dunn said. “In the future, the speed at which your business learns will be just as fundamental as the speed at which your business can execute change.”
- Keep learning
"Re-educating, re-training, and learning new things and new ways of doing things is just how it is nowadays," Dunn said. Constant learners could help alleviate skills and capability gaps such as those around cybersecurity, cloud, agile at scale and data analytics.
- Ban narrow
“Every revolution in science and technology changes community expectations, but sometimes the people at the very top of organisations are not always best to read and interpret those changes,” Dunn said. “In part, the time pressures they work under means that more often than not they tend to act with narrower networks and networks that are far too familiar to them.
“There is more and more academic research in the US that shows that the generation of new ideas is more likely to come from people that span broad networks and have access to diverse, often contradictory information and interpretations.”
- You can’t ignore regulation
“Regulation always has and presumably always will continue to impact how industries evolve and the speed and way that new advances are brought to market,” Dunn noted. “This is particularly true in highly regulated industries like financial services. You can’t ignore regulation.”
- Change - or someone else will do it for you
“If you have parts of your business that are earning supernormal returns or that are heavily cross-subsidising one customer group or one product group at the expense of another, and if you also have real friction points or pain points with your customers, you are going to be disrupted,” Dunn said.
“My experience is it’s very difficult as an incumbent business to deal with this sorts of challenge.
“But if businesses over time don’t share excess or supernormal margins with their customers, and aren’t prepared from time to time to cannibalise their own business, then unfortunately someone always will. It is simply a matter of time.”