Michael Wade – Part 1: The Legacy of Success
Michael Wade IMD Professor of Innovation and Strategy and Cisco chair of Digital Business Transformation has done, in addition to teaching, a great deal of research on digital transformation in very big legacy companies.
Typically, these very large legacy organizations, not the start-ups, the digital natives, or even the internet giants, are struggling to understand the change, understand the digital disruption, and respond to the disrupted threats in their own environment.
The Digital Vortex
Today many companies are thinking about what they should do. I have noticed that there is big hype around digitalization, and organizations can easily fall into the trap of thinking that we have to change everything.
”We are going to be destroyed if we don’t become digital today. That’s not the case for all companies” Michael Wade
IMD Research Center has done research in different industries around their vulnerability to digital disruption, and we have found quite large variation. Some industries are closer to the middle of what we call the Digital Vortex, and they are feeling much more pressure to transform.
If you look at the industries in the middle of the Vortex, these are typically the industries, where the product itself can be digitalized, e.g., technology products, services, media and entertainment, financial services, hospitality, and education. These types of industries, where the product itself can be digitalized or delivered through digital means.
But then there are industries, where the physical product cannot be digitalized very easily, like oil and gas, energy, health care, pharmaceutical, and manufacturing. These other industries, which are more towards the edge of the Vortex, are not as vulnerable and the stress to transform is not so visible.
”The danger for these traditional industries is when they think that they maybe be safe” Michael Wade
Every industry could be pulled very quickly into the middle of the Vortex through some digital technology, technique, or business model.
For example, the taxi industry. It is an old and used example, but it is also an interesting one. You don’t expect, when you think about digital disruption that taxies would be disrupted, but in fact we have seen very clearly that they have been disrupted. The hotel industry is another good example.
So I think that even if organizations do not see the immediate threat, the why -question is obvious. Organizations should think in terms of being more prepared. In case they are pulled into the middle of the disruption, can they adapt.
Leadership best practice: Organizations that are prepared, are more likely to adapt and succeed if digital disruption strikes them.
The very first step of the preparation is that the leaders and top management admit that digitalization can affect their organization.
Michael Wade IMD Professor of Innovation and Strategy and Cisco chair of Digital Business Transformation
I define digital business transformation as organizational change through the use of digital technologies to materially improve performance.
It is a simple definition, yet difficult to master.
Certain industries have been on the vanguard of this changes. Other lag behind.
Eventually, digital will become the ‘new normal’