The phrase “innovate or die” has long been a mantra for businesses in the technology, media and communications (TMC) industry. As Satya Nadella wrote to employees on his first day as CEO of Microsoft, “Our industry does not respect tradition — it only respects innovation.”
But the results of a recent survey, Executive Perspectives on Top Risks for 2017, from Protiviti and North Carolina State University’s ERM Initiative, suggest that many executives in the TMC industry group now consider “innovate or die” to be more of an urgent warning than a motivational slogan. They are concerned that their firms will struggle to sustain the agility needed to compete in an increasingly complex and dynamic technology landscape.
According to the survey, executives’ top concern for 2017 continues to be the same as the two previous years: Rapid speed of disruptive innovations and/or new technologies may outpace our organization’s ability to compete and/or manage the risk appropriately, without making significant changes to our business model.
There are two key reasons this risk continues to preoccupy the minds of executives and directors at many TMC companies:
- Rapid changes are becoming routine for organizations. More important, these so-called “changes” are anything but ordinary; rather, they are industry-shifting innovations, especially in the areas of digital transformation: mobility, data analytics, artificial intelligence and robotics, 3D printing and sensors, that require more than a mere adjustment to one or two parts of the business. These are shifts that have executives thinking more about how — and if — they can effectively harness these forces of disruption to shift their own internal operations and those of their partners in the supply chain to maintain a competitive position.
- Disruptive companies that are created today are launched with systems and processes incorporating current digital capabilities; often, these companies enjoy an “out of the gate” advantage over more established companies that must make substantial changes to legacy systems and processes to compete.
The way for TMC companies to keep pace with agile competitors is, of course, to become more agile themselves. Following are strategies these organizations should consider adopting so they can compete effectively in the rapidly evolving digital economy while managing risk appropriately:
- Make innovation a top — and ongoing — priority for the entire organization; an innovation mindset should be deeply engrained in the corporate culture.
- Strive to become an “early mover” — e.g., become adept at detecting early signs of market shifts that affect the validity of the enterprise’s critical strategic assumptions and make decisions on whether to act on those signs.
- Encourage cross-departmental collaboration on technology and innovation initiatives, especially at the C-level, so that the business, IT and internal audit leaders understand and are actively discussing potential risks and opportunities.
- Ensure discussions about technology risks are happening at the board level.
A final suggestion for TMC organizations to consider as they work to become more agile: Make sure employees are engaged and committed to new corporate strategies, which increases the likelihood of gaining a sustainable competitive advantage.
To this end, TMC companies should take the advice of Pat Wadors, senior vice president of LinkedIn’s global talent organization, who wrote recently: “Leaders in today’s organizations [must] figure out the best ways to identify, reward, and motivate top agile talent while supporting the constant need to learn. To atrophy is to lose in the market.”