Disruption from new technologies and new business models fundamentally changes companies’ competitive positioning. Most CEOs and boards of directors today recognize their business is at risk if they don’t change, as disruptive competitors will gain ascendency over them. Because they recognize the power of disruptive technologies and the need to change, many invest in pilots to determine whether a technology can create the desired performance outcome. Unfortunately, pilots rarely deliver real value. Furthermore, look at Amazon, GE and other firms that successfully incorporate disruptive technologies into their business model, and you’ll realize they don’t use pilots to drive change. Why not?
Pilots often succeed in demonstrating a technology is useful in achieving company objectives. What happens next is an “evangelist” communicates the success, believing this will result in the organization implementing the technology and driving change. Sounds good, but there’s little evidence that this works. I’ve observed countless pilots over more than two decades, and very few resulted in meaningful changes to competitive positioning. There are three primary reasons why this happens.
1. Pilots represent tremendous risk for an organization
Pilots only illustrate a sliver of impact; they deal with only small aspects of a business problem. To advance competitive positioning requires a lot more change; the technology itself is only a small part of the change. The changes required within an organization to scale and use disruptive technologies is quite broad and very deep and affects many aspects of the organization. It often requires rethinking policies, procedures, other technologies, talent, organizational structure and ecosystem.
That high degree of change represents tremendous risk for an organization. The more disruptive the technology is, the more interrelated and complex the changes are. And the higher the odds for employees and managers’ resistance to change.
2. Taking a technology-first approach is a mistake
Pilots fit well in a technology-first approach to change and business transformation. It enables experimenting with how to get the benefits of a technology and learning to use it. Problem is, this is a futile approach and a waste of time. It puts the cart before the horse. As I’ve blogged before, starting business transformation from a technology approach makes the technology impotent. Technologies don’t drive benefits; they enable a business model change that drives the benefits.
Therefore, we need a much more realistic approach to driving change. I mentioned Amazon and GE before. They don’t experiment with technologies and then use those examples to drive change. They use a business-first approach. They ask what they believe about their business and what would make a dramatic impact on the business. They build broad, deep organizational support for the business objective before they look at technology. Once they have enough stakeholders thoughtfully committed to the need for change and committed to a clear objective, then they introduce technology that meets that need. They put the horse before the cart.
3. Change is easier said than done
Success in driving deep change throughout an organization depends on people. Some employees want to thwart change, either because they’re not prepared to change, don’t think the vision is possible, are incented to continue doing the status quo or because they perceive change is not in their best interests.
The solution to managing their resistance to change starts with realigning them to the new goals, the new vision. Alignment is complicated. But it’s doable with a combination of organizational incentives along with individual incentives as well as crafting a set of metrics that reinforce change and measure progress to the goals.