What are the tensions between current constraints and the need to grow value? 

Most large, well established businesses have a gravitational pull towards long held enterprise practices

If we expand on this industrial to digital paradigm and the situation of most senior leaders in large organisations having come from the pre-digital era, it comes as no surprise that their bias is towards what they are familiar with and therefore been successful with up to this point.  Unfortunately, these biases can limit access to the more emerging and newer practices where customer value can be created through using software and information in conjunction with traditional business models.  The challenge is to find a place for both Mode 1 (industrial / traditional) and Mode 2 (digital) to coexist and generate value in alignment with each other and at the same time, to some extent, independently from each other. 

Confusing as that sounds, it stands to reason that the service or product offer to the customer needs to be as seamless as possible, however, the internal mechanisms of control and creativity are more often in conflict. The different speeds which the traditional business model / Mode 1 uses for control vs the faster moving ‘discovery’ oriented practices which come from the digital / Mode 2 parts of the organisation do not align.

An incremental approach to change where a fundamental approach is required.

The quest for growing customer value and business value is one where the time taken plays a crucial role.  Taking too long to adapt and remain relevant means organisations are faced with an increasing risk of disruption or some form of erosion of value.  A mind-set where past successes are assumed to provide some certainty of a predictable future is no longer true. This is often characterised with a change appetite which is at best ‘incremental’.  Considering how digitisation has created a new level of speed, the question of ‘incremental’ to ‘fundamental’ change, for significant parts of the business model is critical.  In other words, a ‘wash, rinse, repeat’ approach to business could lead to irrelevance.

Adopting an incremental approach to change, where a fundamental approach is required, can have severe strategic consequences in that the organisation may not sufficiently adapt in time and instil the maturity of capabilities needed to compete against those who do get it right. 

NEXT: Part 3: A new mind set and approach is needed