7 Characteristics of Organizations that will Thrive in the Digital Era

Businesswoman staring out the window with data moving by

In the revised introduction to their 2014 book, “The Second Machine Age—Work Progress and Prosperity in a Time of Brilliant Technologies,” the authors indicate they made a mistake in their original version. Their admission: a scant two years since the original publication, Erik Brynjolfsson and Andrew McAffee, noted technology watchers and prognosticators offered, “the pace and breadth of technological progress have continued to surprise us.” And, “Some of the entrepreneurs, investors, researchers and executives that we trust most have told us the technology-based future is arriving much faster than they thought.”

Change is Changing: 

Our largest and long-standing firms are experiencing declining life expectancy and they will likely be supplanted in size, scale and reach by new digital industries described by McKinsey as: The Digital Dozen. Noted management author, Clay Christensen, has suggested that by the year 2027, 75% of the current Fortune 500 (largest companies) will be displaced. The names on the list will not be simple like-kind replacements, but new firms born of digital DNA. 

In my own travels as a consultant and speaker through the world of business executives, I find three dominant themes emanating on uncertainty as a result of the rate and scope of technological change:

  1. This is not affecting us and given the conservative (or regulatory driven) nature of our industry, it won’t for a long time.
  2. It affected us and we are struggling to figure out what it means and how to respond.
  3. We are doing everything we can to reinvent ourselves before it impacts us.

    The first group is bound for the ash-heap of history where great and lesser brands who resist and even resent the idea they must change, end their days. To borrow from Hemingway, their decline will happen gradually, until it happens suddenly. 

    The second group has perhaps the most difficult challenge: striving to recover and reset and then accelerate in the middle of a systemic disruption in their business and industry.

    A great deal of capital and energy will be expended in these pursuits and much of it will be wasted.

    The third spot: striving to identify a position and move to it ahead of the tsunami of technological change is challenging but hopeful. This requires a fundamental rethinking of everything about an organization, its purpose, structure, systems, processes and yes, the type of leadership necessary to move from survive to thrive.

    In the vernacular of video gaming: this third group must master the art and science of constantly leveling up.

    For the balance of this article, the focus is on exploring the essential personality traits of digital explorers—those firms deliberately striving to leave their analog ways and soon-to-be outmoded business models behind in search of a series of a series of temporary safe havens from which to operate.

    7 Key Characteristics of Organizations that will Survive and Thrive in the Digital Era: 

    1. Organizational structure will emerge as a competitive tool. The core theme reflected in the organization’s structure will move from control to create. For most of the history of management, the emphasis has been on finding ways to efficiently control workers in pursuit of translating inputs into well-defined outputs. The new structure must free knowledge workers to facilitate endless exploration and experimentation.
    1. The speed of movement from experiment to marketplace idea will prove critical. Consistent with the move from control to create, the operations theme of businesses will be on finding ways to enable ideas and experiments to be tested for stickiness in current and new customer groupings. Product management and project management are more important​ than ever, albeit their practices must evolve from today’s current state.
    2. Marketing is truly the purpose of the organization. Proving once again that Peter Drucker was right and ahead of his time, marketing will emerge as the single most important mindset in the organization. For those of you in marketing departments feeling vindicated with this statement, no need to declare victory. The issue is marketing as a mindset of every person in an organization, not the department.
    1. Leadership will be redefined in the vein of those who help secure safety and success in dangerous situations. While battlefield analogies are often cliché, the lessons of our special forces and soldiers engaging an often unseen, unpredictable and deadly enemy will flow through to our commercial pursuits where teams will form, disband, and reform to pursue a never-ending series of marketplace skirmishes.
    2. Individuals will assume responsibility for a perpetual state of leveling up in their own careers. The closest comparison is a participant in a massively multiplayer online role-playing game (MMORPG) who is responsible for learning to survive and succeed in real-time in the face of unknown and often unseen adversaries. This individual understands the importance of constant learning as a means of survival and success. She accepts the hard work of grinding  and she recognizes the reality that she must adapt or perish. A new metric analogous to the “health points” in gaming will emerge and this metric will reward experience, adventures, learning and growth, not just vertical ladder climbing.
    3. Strategy will emphasize the development of ecosystems of partners to reach customers or strengthen the value of individual digital components. Those who create and control the platforms win as long as marketing is capable of helping the firm leverage the math and value of the network effect.
    4. Corporate euthanasia will become the norm. Those groups charged with governing these new firms will accept the limited life span of all organizations and work diligently to move capital to new ventures, spin-offs, and extensions and away from yesterday’s businesses and technologies.

    The Bottom Line: 

    This is a brave new world with unparalleled opportunities and unrivaled challenges. The epicenter of this world and of success in this environment will be the knowledge workers who look at the bleeding edge of ideas and look ahead to removing burdens for mass-micro audiences ahead of lumbering competitors. While some declare this era the rise of the robots, I believe this notion is too simplistic: it denies the potential of humans to create new over and over again.