What’s Your Digital Business Model?

Transform Your Business

Digital transformation. We read about it often. Organizational leaders struggle to determine the possible threats, the impending changes needed, the opportunities that are possible.

Peter Weill and Stephanie L. Woerner’s new book, What’s Your Digital Business Model?, provides a strategic framework for thinking about these issues. Peter is a Senior Research Scientist and Chair of the Center for Information Systems Research at the MIT Sloan School of Management. Stephanie is also Research Scientist at the same institution with a specialty focusing on how companies manage organizational change caused by digital disruption.

I had the opportunity to speak with them about their research and new book.

 

Rate Your Digital Readiness

How would you rate most organizations readiness for the era of digital disruption that we are in and are facing?

Most organizations we talk to and research know they have to change to stay relevant and have improved in some areas (perhaps they’ve worked on business process optimization or they’ve automated a lot of processes). However, as customer experience demands have increased, we find that many older, bigger companies have not made the improvements and changes needed to address those demands. Plus the leaders of the average large company (more than $7B in revenue) identified that 46% of their revenues are under threat over the next 5 years if they don’t change.

 

Fact: large companies predict 46 percent of revenues are threatened in the next 5 years absent change.

 

How was the research developed?

The book is based around six questions we think every executive and organization has to be able to answer in order to be competitive in the digital economy. We started this research by interviewing leaders from large, global companies, asking them to describe their most important digitally-enabled business transformation initiative. From there we developed a model, tested the preliminary findings in more than 50 workshops with senior executives, identified capabilities needed, conducted several surveys to test those capabilities and show links to financial performance, and interviewed many companies to help us understand what it takes to transform a business. The book resulted from five years of research which shows that the senior executives of top performing firms honestly answered the six questions. To help, each chapter concludes with a self-assessment on one of the six questions. The reader can then compare their self-assessment results to top financial performers to help leadership teams understand the gap they have to close.

 

Needed: Honest Conversations about the Future

Of the six parts, is there one step that more organizations get stuck in than another?

Probably the hardest question for most organizations is having an honest conversation about whether they have leadership, at all levels, who will persevere and successfully deliver the business transformation. Along the way the culture will have to change and adapt to the new digital business model and often this means changing people at the top. But it is not just the top layer of leaders that has to change. Successful transformation requires getting the whole company to behave differently – from the board to the lowest level of employees. For example, DBS Bank in Singapore, which was one the Euromoney’s most digital banks in 2016 has managed to get 14,800 of their 22,000 people involved in a digital innovation activity every week.

 

“Successful transformation requires getting the whole company to behave differently – from the board to the lowest level of employees.”

A Digital Wake Up Call

digital darwinism

Digital is Everything

 

“Digital isn’t a thing, it’s everything.” That’s the first line I read on the back cover of Tom Goodwin’s new book, Digital Darwinism: Survival Of The Fittest In The Age Of Business Disruption.

That’s the type of attention-getting line that speaks to the massive transformation in today’s organizations.

Change or become extinct is a powerful message.

Tom is the EVP, Head of Innovation for Zenith Media. His role is to understand new technology, behaviors and platforms and ideate and implement solutions for clients that take advantage of the new opportunities these make possible. He was also voted the #1 voice in Marketing by LinkedIn with over 580,000 followers on the platform. An industry provocateur and commentator on the future of marketing and business, Tom recently wrote Digital Darwinism as a wakeup call to traditional businesses.

I recently spoke with him about his book.

 

““Digital isn’t a thing, it’s everything.” -Tom Goodwin

 

The subtitle of your book is “Survival of the Fittest in the Age of Business Disruption.” What defines the fittest?

I believe the fittest companies are those with the balance of a solid business plan for today and for the future. This can either be because they’ve established a defendable niche for now and ahead (like Amazon or Tesla) or because they have a team and culture that is able to adapt to the changing marketplace. Good examples of this are Facebook, Netflix, and Google. Fitness both in nature and business is about agility and the ability to change as the world does, but also about the quality of the business model today. There are too many companies that are widely celebrated, like Dollar Shave Club or Movie Pass, that offer hockey-stick user growth and happy customers, but don’t appear to have a semblance of a business model that can ever make money.

 

“The fittest companies are those with the balance of a solid business plan for today and for the future.” -Tom Goodwin

 

Innovate with Purpose

Mature companies often have a huge desire to innovate and launch various initiatives. What are some of the biggest mistakes you’ve seen them make in their pursuit of innovation?

Most innovation failures come from companies who do one of two things wrong. The main one is not going deep enough. They offer surface level improvements on the façade of a deeply troubled foundation. Retailers who need to close stores or entirely rethink distribution models or procurement flows, end up making a store in San Jose with a smart mirror, as it’s way faster and cheaper and offers distractions. Or car companies that celebrate apps where you can start engines remotely, while they are behind on electric propulsion. The issue is that most CEOs don’t have the time or thirst for risk to make proper changes.

The other issue is innovation with no sense of purpose. It’s adding a chatbot because your boss read about them one day. It’s an airline launching a mood-sensing blanket that gets press. It’s the VR experience to try to get promoted. We need to know why we are innovating and maximize against that.

 

“There are too many companies that are widely celebrated that offer hockey-stick user growth and happy customers, but don’t appear to have a semblance of a business model that can ever make money.” -Tom Goodwin

 

Common Traits of Disrupters

Tap Into The Creative Power of Constructive Conflict

creativity

Disrupt to Innovate

Teamwork. Harmony. Getting along.

If these words come to your mind when you think about brainstorming and innovation, you’ll want to pay close attention.

Because it’s about not getting along, about disruption, about disagreement, and about contrasting perspectives. That’s what makes innovation happen.

In The Innovation Code: The Creative Power of Constructive Conflict, Jeff DeGraff and Staney DeGraff introduce a framework to explain how different kinds of leaders can create constructive conflict in an organization. Staney DeGraff is the CEO of Innovatrium Institute for Innovation. And Jeff DeGraff is known as the Dean of Innovation, a professor at the Ross School of Business at the University of Michigan and a friend of mine for many years. I recently spoke to Jeff about his latest book.

 

“Disharmony is crucial to innovation.” –Jeff DeGraff

 

Many people think that conflict and in-fighting must be solved before you can innovate, but you teach that it’s a healthy part of the process. Why is discord a good thing?innovation code book cover

Innovation is simply a form of useful novelty. It’s the opposite of standardization. Positive tension is required to generate the energy required to create unique ideas. Apathy is the death of innovation, not conflict. So, to make innovation happen, you need to have divergent worldviews – points of departure. This creates new connections and forces ideas to morph into ever more potent forms. Take a good look at the most creative civilizations throughout history, and you will find they sit at the crossroads where a variety of people, and their ideas, meet both geographically and culturally: Athens, Hangzhou, Vienna, or New York. The same is true for teams and partners: Anthony and Stanton, Lennon and McCartney, or Shaq and Kobe. Every strength brings a weakness, and we need the “other” to push us forward and to overcome our own shortcomings. The key is to keep these conflicts constructive and focused on ideas, not personalities.

 

“Innovation is about constructive conflict-positive tension.” –Jeff DeGraff

 

4 Approaches to Innovation

10 Challenges that Defined the Company Disrupting the World

Disrupt the World

Chances are you’ve been on it today. More than 1 billion users visit it daily. Most of us start our day and check our personalized news feed, see who is celebrating a birthday, and keep up with our friends and family on the platform. It’s worth over $400 billion and is in the rare air of companies like Google and Apple.

Of course, I’m talking about Facebook (join me here). It’s not only changed the way we consume information, but also how we interact with the world.

In Becoming Facebook: The 10 Challenges that Defined the Company That’s Disrupting the World, Mike Hoefflinger takes us from the start of 2009 and its 150 million users to its explosive growth over the next several years.

Mike Hoefflinger is a 25-year veteran of Silicon Valley. After working directly for Andy Grove at Intel and as general manager of the Intel Inside program, Mike moved to Facebook to serve as Head of Global Business Marketing. During his nearly seven years there, the teams he built helped dramatically grow Facebook’s advertising business. He is now an executive-in-residence at XSeed Capital.

I recently spoke with him about all things Facebook.

 

FACT: Facebook generates more traffic to YouTube than any other source including Google.

 

Behind Facebook’s Unprecedented Rise

What are some of the factors behind Facebook’s unprecedented rise to its worldwide phenomenon status?

Any story of Facebook’s rise starts with Mark Zuckerberg. While it would be difficult to acquire his vision and intuition, we can learn from how he goes about moving Facebook forward. With Facebook’s mission to make the world more open and connected in place since its earliest days, Zuckerberg has always preferred doing to talking. Whether it is building and launching thefacebook.com, staying calm during stormy product launches or competitive episodes, making big decisions to grow the business, self-disrupting the company via large acquisitions to protect itself, or betting on futures others dismiss or don’t see (such as VR/AR and connecting the next billion Internet users), dogma and fear never swamp the doing.

 

Fact: Facebook tops 1.25 billion users per day.

 

Would you share some statistics on Facebook’s current reach? How often we access it? How it compares to other media?

It’s difficult to over-state how large Facebook has become. Not only does it serve more than 1.94 billion people a month—about two-thirds of all Internet users in the world—it serves two-thirds of those every day, on average once every waking hour. No wonder it is the single most popular mobile app ever. And while that would be impressive, the company is also home to three of the next five most popular global communications tools: WhatsApp at more than 1.2 billion users a month, Messenger at more than 1.2 billion, and Instagram with more than 700 million. With consumers on the way to making mobile the most important medium ever—it is forecast to eclipse the amount of time we spend per person on television in 2020—Facebook is its pre-eminent force.

 

CEOs Who Transform How We Live

What can we learn from great CEOs like Mark Zuckerberg?

Zuckerberg has become a member of a very small group of CEOs in the last five decades who run consumer technology companies that invent the future for us, create the things we cannot live without, and touch hundreds of millions, and sometimes billions, of lives: Intel’s Andy Grove, Apple’s Steve Jobs, Amazon’s Jeff Bezos, Netflix’s Reed Hastings, Alphabet’s Larry Page and Tesla’s Elon Musk. After observing them the last 25 years in Silicon Valley, I’ve detected three things these product-centric founding CEOs have in common:

(1) They pursue an achievable-unachievable mission—something so big it cannot be completed, but one that offers moments of success along the path to bring confidence and momentum to employees, customers and observers.

(2) They are able to see—and willing to pursue—things that are very clever, but appear foolish in most minds initially. This way they avoid the food-fight of ideas everyone else thinks are clever, a road to nowhere of ideas that not only appear foolish but actually are. They usually know something—especially about technology and customers—that no-one else does.

(3) They are running 21st Century Medici Academies that attract the best talent. 500 years before Silicon Valley, the Medici family of Renaissance Florence built facilities, bestowed patronage and hosted discussion forums for the brightest minds of the period, including Michelangelo, DaVinci and Botticelli. The vision, scale and success of these modern-day CEOs make their teams highly attractive for today’s builders with the biggest dreams.

 

The Speed Factor

Put the Power of Disruptive Innovation to Work for You

Disrupt Yourself

Companies think about it all the time. Innovation. A new idea, one that will catapult the organization to the top.

Individuals don’t always think about the power of disruption and innovation to reinvent themselves in the same way.

 

“Disrupting yourself is critical to avoiding stagnation.” -Whitney Johnson

 

Whitney Johnson is one of the world’s leading management thinkers and is a former an award-winning Wall Street equity analyst. Whitney’s latest book, Disrupt Yourself: Putting the Power of Disrupt Innovation to Work, is all about putting the power of disruptive innovation to work on you.

If you want to be mediocre, this is not the book for you. But, if you’re daring, put the power of disruptive innovation to work on your own career.

Whitney recently shared with me some of the highlights from her book and research:

 

7 Variables to Mastery

 

7 Variables to Mastery

1: Take the right risks

2: Play to your distinctive strengths

3: Embrace constraints

4: Battle entitlement

5: Step back to grow

6: Give failure its due

7: Be discovery driven

 

 

You’ve identified 7 variables to move from gaining competence, confidence, and finally, mastery.  Is there one that most people struggle with?

One of the hardest is entitlement, the belief that ‘I exist therefore I am entitled’.  Sadly, I see it in myself all the time.  It comes in many guises, like cultural entitlement.  We all need to feel that we belong.  A sense of belonging gives us the confidence we need to try something new.  But as we begin to see the fruits of taking the right kinds of risks and playing to our strengths, it’s easy to start believing ‘this is the way things should and will always be’.  The nanosecond we start believing this, we stop learning.  So that right when you are feeling the most competent, and have the confidence to try something new, you begin to stagnate, potentially even backsliding.  If you want to enjoy the hypergrowth of disruption, of moving forward not back, battle entitlement.

Copyright Whitney Johnson. Used by permission. Copyright Whitney Johnson. Used by permission.


Identify Your Distinctive Strengths

I have always been a fan of working on strengths. How do you identify your distinctive strengths?

It’s easy to identify your distinctive strengths, after the fact, because they are what make you a fish out of water.  It’s figuring out your strengths in the first place.  So here’s a clue:  What compliment do you habitually dismiss?  You’ve heard it so many times that you are bored.  Or you wonder why they are complimenting you because it is as natural as breathing. Malcolm Forbes said, “People tend to undervalue what they are, and overvalue what they aren’t.” Take note of that compliment.  It’s likely a strength.  Then find ways to apply or use that strength where others are not.

 

“A distinctive strength is something that you do well that others within your sphere don’t.” -Whitney Johnson

 

Like Jayne Juvan, a partner at a law firm in Cleveland.  As a third year associate, she started blogging. There was some political flak.  Law firms tend to be conservative.  The partners didn’t see the opportunity.  But she didn’t back off.  Good thing. When the economy came crashing down in 2007, she sidestepped layoffs because she’d landed clients on social media.  She also had a compelling case to make when she was up for partner.  Learning the law was her pay-to-play skill, social media her distinctive strength.

 

“Beware the undertow of the status quo.” -Whitney Johnson

 

When to Make Your Move