Four Steps to Cure ‘Uberization’ Anxiety SyndromeMay 31, 2016
In the past 18 months, have you or your colleagues experienced any of the following symptoms: sleepless nights, paranoia that nimbler companies are stealing your customers, fear of sliding into corporate irrelevance? If so, you might be experiencing classic symptoms of chronic “Uberization” anxiety. You’re not alone. In the age of digital disruption, it’s a common condition seen among business and IT leaders alike.
Sufferers see, or imagine they see, small start-ups coming to disrupt their entire business model. Uber, a transportation broker based out of San Francisco, is a frequently cited and often misunderstood example. Critically, Uber didn’t invent the bulk of the technology (such as the car or the smartphone) that underpins its service. Rather, what many digital disruptors like Uber do is look at established, sometimes ancient, customer experiences — such as hailing a taxi — and reimagine them transformed by a combination of slick apps, real-time intelligent analytics and a mosaic of “cloud” services delivering everything from compute power to payments processing.
The most terrifying aspect for many business leaders is that these disruptors appear to come from nowhere. Rather than following the established business playbook, leveraging the power of their balance sheet, these businesses are often “capital light,” using innovative financial models to grow rapidly as demand rises. Understandably, many larger enterprises worry, “Can Uber happen to my industry, and can we adapt?”
The answer to addressing such anxiety is action. While there is no way to eliminate disruption, you can take steps to proactively exploit the tactics of the disruptors to modernize existing offerings, innovate new ones and improve your ability to respond to change.
Many companies are taking steps to do just that. In the next two years, 67 percent of global 200 enterprises will have digital transformation as a central part of their corporate strategy.1 By 2020, nearly half of all enterprises will have advanced digital transformation initiatives.2
Despite the apparent enthusiasm, our own research has shown that many of these same enterprises are grappling with the challenges of where to start and how to deal with the scope of the change required. While every enterprise is different, we have observed four key steps that successful digital transformers are taking and that you can adopt to ward off chronic Uberization anxiety:
- Educate yourself
- Foster innovation
- Reimagine the status quo
- Establish a resilient platform
Without a doubt, the most overlooked element of addressing Uberization anxiety is that of re-education. This is especially true of business executives who, through experience, have learned to treat their IT team as a capital-intensive, back-office function that overpromises and under-delivers. Many IT professionals encourage that view by demonstrating limited understanding of the day-to-day operations of the business.
Contrast that approach with the most successful innovators today. Headed up by technology-savvy executives with business-school backgrounds, these leaders are as comfortable with conversations about free cash flow as free disk space. Fortunately, for established enterprises, many positive role models already exist, with the CEOs of Fortune 100 firms such as GE and Daimler making a point of publicly stating their need to “go back to school on software and analytics” or calling out the role of digitization in industry.
This change may be daunting for your established executives and frustrating for up-and-coming talent who say their employer “just doesn’t get it.” Critical to overcoming that obstacle is a thoughtful change-management program, starting with building a culture of innovation and experimentation.
Here again, stereotypes often obscure pragmatic reality. Innovation is not a synonym for invention. The majority of digital disruptors do not invent the bulk of what they use; instead they combine off-the-shelf technology and services in unique ways to create new experiences or to streamline existing ones.
A frequent mistake by many business leaders, however, is to form innovation teams and charter them with coming up with the “next big thing” — an approach that rarely works and doesn’t scale. More successful is fostering a culture of innovation across your entire organization.
One proven approach championed by Ahi Gvirtsman, HPE software’s head of innovation and developer programs, is the Innostream. Launched in 2011, the Innostream is a combination of training and enablement, innovation coaches, and community and executive sponsorship grounded in the principle that anyone can be an innovator when backed by multidisciplinary teams. Critical to the success of the Innostream is the Innovation Council, a venture capital-like model that evaluates, selects and nurtures innovation initiatives through to commercialization and often into the early years of their release to maximize organizational learning and business agility.
With a foundation like this in place, the question then becomes one of where to focus that innovation — and that answer is often surprising.
Reimagine the Status Quo
One of the great failings of digital-disruption programs is overlooking the opportunity to improve the everyday processes and interactions of your business. Take, for example, the simple process of booking and boarding a flight. What was once a process entirely guarded by travel agents and gate staff, paper tickets and impenetrable reservation systems with their mainframe-era user interfaces has progressively given way to online bookings, e-tickets, self-check-in, smartphone boarding passes and biometric border controls. Conceivably, the travel experience could be further improved with the application of wearable technology, smart luggage tags and the integration of services surrounding the journey such as transport, accommodation, language translation, e-wallets, credit card fraud detection and telecom data roaming, to name a few.
No industry should consider itself outside of the scope for change. If you are in manufacturing, distribution or other industries with physical goods, think about how “wrapping” such products with digital services could improve the value of those goods for end customers (e.g., whether through connecting products and analyzing the performance data to propose better self-service, offering proactive cost controls or delivering entirely new experiences). In many cases, this means embedding technology into what were previously “dumb” devices.
While the upfront investment can be costly, there are significant long-tail benefits you could achieve by harnessing the “data exhaust” of these devices to, for example, proactively catch and correct faults, detect fraudulent warranty claims or to create new products and services from the data itself, such as what Monsanto and John Deere are doing as part of their collaboration with farmers to improve crop yields.
Establish a Resilient Platform
The good news about digital transformation is that you’re only as good as your IT. The bad news is also that you’re only as good as your IT, in particular in your ability to capitalize on opportunities to innovate by combining and recombining devices, information and services in the form of new applications and experiences.
For many business executives, this has become such a source of frustration that they’re abandoning their existing IT teams for what they believe is the simpler, more agile world of so-called public cloud services; that is, pay-per-use technology services run by a third party anywhere in the world. In our experience, such services are neither as simple nor as effective as imagined for the fundamental reason that it avoids the core change in thinking needed — that like it or not, you’re running a technology company now and every technology company is only as good (and as differentiated) as the platform it’s built on. And poorly implemented public cloud services can be just as, if not more, costly, unreliable, insecure and fragile as your legacy IT.
To be clear, public cloud providers have a critical role to play in the digital economy. Most offer the ability to test and scale new ideas with little upfront capital, and many provide unique services that make no sense to emulate unless they are core to your business (for example, payment services). However, even disruptors who have chosen public cloud as their primary platform, such as Netflix, maintain a deep and talented bench of technologists on staff — everything from developers to architects, cybersecurity and risk experts to availability and resiliency engineers.
The critical step to establishing a flexible, resilient digital platform is to rethink your technology choice from being a black-or-white “in” versus “out” source to embracing a hybrid delivery model — in other words, rethinking your IT team’s role from being a “builder” to a builder/broker, a topic covered in greater depth in a series of case studies and best practices in the e-book, “Enter Service Brokering.”
Perspective: Your Key to the Cure
If you are experiencing chronic Uberization anxiety, don’t dismiss it. Rather, take it as a call to action. View the coming digital transformation for what it is: the fuel of the digital economy, an enabler and a threat only if ignored.
A Prescription for Next Steps
Digital transformation is moving toward an enterprise near you, but there’s no need to stick your head in the sand. Instead, prepare for the sandstorm by envisioning how digital transformation could transform your enterprise.
- Is digital transformation a key focus area for your business? What initiatives can you implement today to make it a central part of your strategy?
- Reconsider your customers’ experience. How could it be improved? How could digitization help?
- What steps could you initiate to begin to foster a culture that embraces innovation and experimentation among teams?
- What digital services available now could you leverage to improve the value of your goods?
1International Data Corporation, “IDC Reveals Worldwide Digital Transformation Predictions; Kicks Off IDC FutureScape Web Conference Series,” November 4, 2015, IDC press release, https://www.idc.com/getdoc.jsp?containerId=prUS40553515 (accessed May 31, 2016).