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Effects from the COVID-19 pandemic and the resulting economic disruption still loom large over businesses around the world.
Digital-native organizations (DNOs) already using cloud infrastructures and mobile apps to conduct business with customers adapted quickly to the new digital normal. However, despite their best efforts, some established enterprises remain stuck in their digital transformations and cloud adoption journeys. Companies that have struggled to adapt face a huge — and perhaps existential — challenge on how to remain relevant in this new digitally-oriented world.
Although digital transformation may be daunting and complex, these established businesses should look at the practices and attitudes of DNOs, who don’t see technology as simply an enabler of business strategy, but as a fundamental part of the strategy itself. Three areas, in particular, can help lead to better business outcomes in this digital-first world.
Redefining the leadership mindset for digital transformation
Although there are several differences between established enterprises and their digital native counterparts, one of the most striking is how they define leadership in their respective organizations. Established businesses reward leaders for maintaining stability and performance, while digital natives reward innovation and disruption.
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By focusing on innovation, the DNO mindset allows for cross-team collaboration, taking everyone’s knowledge and expertise into consideration, which ultimately enables the company to become more flexible and drive faster decision-making. The inherently collaborative nature of DNOs also encourages leveraging expertise and capabilities that come from an ecosystem of partners.
In a positive sign of change, the executive frame of mind is starting to shift as leaders embrace innovation ahead of stability. According to the 2022 AWS C-Suite Report, when asked to rank their top business priorities, 52% of executives selected growth-focused priorities, while only 38% chose to prioritize stability-focused objectives.
Adopting scalable digital tech infrastructure
Another challenge established enterprises face in their digital transformation is around their cloud transformation journey. Established enterprises have historically invested money in building on-premises infrastructure to suit their needs; however, relying solely on this infrastructure slows down progress. Digital natives who were “born on the cloud” build very little when it comes to tech infrastructure and prefer borrowing from outside sources. All of these digital native tools are “plug and play,” which have allowed cloud-native companies to move much faster when it comes to deploying new applications leveraging AI technologies.
This scalable technology approach allows these companies to constantly have access to the latest and greatest technology. Another benefit is not having to worry about challenging infrastructure issues. Digital natives’ cloud infrastructures not only give them simplified IT operations, but allow them to focus on more important issues, such as deploying and integrating new systems. Just as importantly, they can focus on keeping customer data safe.
Established enterprises can leverage their expertise and industry knowledge while embracing a more DNO-like model. Tech leaders in established companies understand the challenges with new technology solutions, which allows them to anticipate any complexity and understand how the new technology will integrate with existing systems. A scalable technology infrastructure allows companies to build and buy their digital platform to best suit their needs.
Embracing an innovation mindset
Many established companies can be overrun with processes that may limit creativity. Many of the leaders at these companies are also incentivized to lead large teams of employees, creating additional friction that limits agility and ultimately threatens their success in digital transformation.
As inherently leaner organizations, digital natives have less friction by way of leaner, looser processes that allow work to get done more quickly. With this smaller size, DNOs can even experiment more often. They find great value in small but continuous innovation through faster cycle times during experimentation.
Digital natives also take advantage of open innovation to drive better outcomes. According to recent research by the IBM Institute for Business Value, organizations embracing open innovation have a 59% higher rate of revenue growth compared to those that don’t. A culture steeped in innovation enables increased collaboration both internally through cross-team collaboration and externally by harnessing the collective value of employees, partners, vendors and customers to drive innovation and growth.
Putting transformation into action
Traditional organizations may talk the talk when it comes to digital transformation, but the global upheaval of the past few years has demonstrated that they need to act, and quickly. These lessons from digital native organizations — changing your leadership mindset, using scalable technology, and open innovation — provide a roadmap for established enterprises and their transformation journey.
Organizations should now ask themselves: how can these insights be applied to our business?
Mahmoud Elmashni is managing partner of global strategic partnerships at IBM Consulting.
Rohan Karmarkar is director of GSI solutions architecture at AWS.