Carve outs, (hidden) startups, basement initiatives, buy-in´s, takeovers, talent scouting… the “dinosaurs” are going digital and depending on their need and speed and vision and volatility try about every trick in the book to get on top of what’s the most complex of all challenges for the old asset builders; becoming a true digital operator. In spite of all efforts, many projects fail to deliver full benefit.
Asset builders are cultural dinosaurs when it comes to Innovation. Dinosaurs that know they have to invest in next-generation technology with a new mindset before extinction hits them. That will allow them to move towards new efficiency and economic benefit coming from digitally enabled new services.
Unlike more service and technology-driven organizations or the networkers, they have to deal with the sticky legacy of industrialization, like oversized organizational layers and conventional mechanisms that keep them firmly anchored in the past. That legacy represents often high capital expenditure with declining returns that triggered the need to change in the first place.
Embracing a digitalized and asset-lighter model means divesting the passive infrastructure and aggressively pursuing active sharing while dedicating more resources to providing a first class customer experience. It also means shredding the Dinosaur’s rulebook and that’s the biggest challenge of all. The Rulebooks of companies with traditional cultures are maintained by an army of watchdogs trained to maintain status quo at every price and totally unwilling to collaborate or even let go of a single rule in the book. That’s why so many of these companies initiate digitalization efforts far away from- or even invisible to the Dinosaur who would eat it for breakfast.
The challenge lays in how to re-engineer the organization in the meanwhile so the digital initiative can survive once it becomes ready to scale up. Legacy companies never integrated change into their DNA in the first place, so the cultural gap between “as is” and “to be” is often up to a 100%.
Let go of 25% of managers and too obstructive watchdogs
Over 70% of such projects fail to deliver. Many studies from McKinsey, Kotter or IBM, for example, show time after time the perpetual nature of failure and its reasons.
More radical approaches to digital change in legacy companies are needed as the speed of changes increase and businesses get more volatile every day. Digitally enabled organizations work with agile week- and even day cycles as where Asset Builders work with yearly (or longer) cycles. That’s unsustainable. The conscious mind of Dinosaur managers understand the challenge and the roadmap, but the >90% of their unconscious minds firmly stick to the RULEBOOK as they themselves are the PRODUCT of often decades of indoctrination and a perpetual heritage of those who built the company and are actually long gone. The System, in fact, sustains itself and nobody questions it. Recent studies show that up to 25% of higher management in legacy driven companies are to some extent psychopathic (average in any normal population is around 1%). This is not an accident. It’s the traditional way industrialized organizations created passive/aggressive fear driven cultures as it was the cheapest way to control workforce and keep them literally aligned in dumb mechanical work processes.
If a legacy company wants to go digital, it will need to carve out that 25% of the chain of command. It needs to happen swiftly and with chirurgical precision while not making the mistake of cutting out the embryos for turn around and be sure the new hires bring the right attitudes, mindsets and behaviors. That’s the essential job of a leadership (not management) team together with a specialist team of CM/HR/psychology/Organizational redesign experts.
It doesn’t make sense trying to re-educate them, nor does it make sense trying to bypass them appointing “Change Champions”. This is just trying to work around an identified show stopper.
While at it, the whole workforce needs to be subject to critical review as well as most have been hired still under the premises of bringing the suitable character of obedience and submission, as where the now shifting organization needs large numbers of open and collaborative characters and related skill sets to push the cultural adaption forward.
There is no “soft way” out of the woods if you are a Dinosaur, but it can be done in an ethical and socially responsible way.