The ultimate pivot
The word ‘pivot’ denotes a rapid change from one strategy to another, which quite often involves changing your business’s original strategy, its target market and its pricing.
Most pre-digital incumbents don’t pivot, and perhaps don’t even know how, because they have been focused on sustaining innovation, which in the past was a more than adequate approach.
But that’s no longer the case. If you’re serious about ushering your company into the digital age, you need to pick up the pace and learn how to pivot.
A game of risk and reward
The pivot is mainly about risk and reward. Those making the decisions recognise that to continue as they are will yield a lower likelihood of long-term success.
When a start-up pivots, it effectively abandons everything to do with its past strategy and approach in favour of a new direction.
It makes sense in this context as there isn’t much for the start-up to lose, and keeping both strategies running in parallel would be an expensive distraction and would likely create confusion for prospective customers.
But for an established business, the pivot requires deeper consideration, as millions (or billions) of dollars in revenue and thousands of jobs may be at stake.
Why you must undergo a dual transformation
So, as the leader of an established business, the question you need to ask is: how do we pivot without compromising our entire operation?
A successful pivot would, in the medium term, mean changing the nature of the product or service offered to meet new and emerging demands, while in the short term continuing to exploit current resources and investments.
It becomes a juggling act of sorts that involves digitally optimising your existing economic engine so as to squeeze as much as possible out of it, while building out your new economic growth engine to meet new demands.
We refer to these two engines as Engine A and Engine B. The idea is to serve your current customers while also building out the capabilities to meet the needs of your future customers, even if these sets of customers are the same.
Innovation consultant Scott Anthony refers to this approach as dual transformation.
It is essential to make the distinction between your Engine A and Engine B, because monolithic transformation is simply too big a task when you’re dealing with thousands of employees, expectant shareholders and legacy systems.
This twofold approach has its own challenges and complexities, but will help you create an organisational design that remains relevant well into the digital future.
To learn more, check out our book, Chasing Digital.