‘Disruption’ and ‘transformation’ are two well-worn words in today’s business world and for good reason. Most Fortune 500 executives that we speak with are deeply focused on how to make the changes required and in many cases this means a significantly different way of doing business.
While business transformation and disruption are not new business concepts, we hear a higher level of urgency that did not exist in the past when talking about these concepts. We also hear more clarity about how to proceed in building change.
The three things leaders believe they have to do: move fast, access talent, and stay relevant.
The pace of technological change is faster than ever and leaders in established companies realize that there is no longer an opportunity to stop and admire innovations and successes.
As one senior executive shared, “We launched a new product and immediately small competitors emerged. Faster, cheaper and lower quality, but they have so little risk and they can take share in the market very quickly.”
Executives that demand faster and faster delivery from their teams will win the day because the barriers to entry for startups are very low. It used to be that established enterprises could move to scale and sustain scale for long periods of time, helping them to build very strong, recurring revenue businesses. Those days are gone as startups take share from the most established customers that large companies have serviced for decades, creating an even greater need for speed.
We also hear that speed is a relative concept. Often enterprises believe they are moving quickly, but when we test this with their customers we learn that they still aren’t moving fast enough. Advisory boards and strategy groups often provide our clients with a quick litmus test on how much faster they may need to go to stay ahead.
Access to talent.
A recent Fortune newsletter by Adam Lashinsky pointed out that established older companies fear they cannot compete with startups for talent. Our discussions with executives tell a different story.
Most of these leaders are clear that access to talent is critical to winning, but they also recognize that they have an advantage. They can draw talent from all over the world and invest in that talent in ways that small companies simply cannot. While some talent is only interested in working in more entrepreneurial ventures, many leaders in large established businesses can create an environment that is appealing to this need.
A CIO of a large financial services company recently mentioned that he has created a developer environment in Silicon Valley that is larger than most technology firms in the Valley. This is a self-contained developer environment where they have access to all of the benefits of Silicon Valley and they have the financial backing to make investments they need to be successful. This access to investment, innovation and opportunity make this large established firm more appealing for many than a small startup.
Stay relevant — whenever, wherever customers need.
“The thing that keeps me up at night is how to remain relevant.” ~ CMO of a Fortune 500 Company
Perhaps the most challenging for established companies is understanding if they are still relevant and, if they are not, trying to figure out how to move toward re-establishing relevance.
Relevancy changes for customers depending on the situation and pressures. Every step of the customer journey requires an understanding of what is contextually relevant in a way that is actionable.
Determining what is relevant to customers is a constant challenge, and for large established companies it requires a very different approach as loyalties are no longer strong enough to overcome the need to try the next new, faster, cheaper thing.
Leaders are focused on tapping customers on an ongoing basis through advisory boards, research studies, test and learn strategies or strong account management is critical to ensuring that what is important to the customer is continuously understood. With B2B companies this is particularly vital, especially if the loss of a client means millions of dollars in lost revenue that is challenging to replace.
In the past 2–3 months we have heard a change in tone from one of fearing the ankle biter disruptor to clarity of those areas that are most important to their focus—speed, access, relevance. As one executive noted, “It is no longer analyzing the problem and fearing the future, we are clear on what it takes and now we need to execute at speed.”