In The Directors’ Cut, a thought leadership publication based on interviews of 50 CEO’s and 50 Chairs of the ASX100, I commented on how Australian corporates were generally late in embracing digital or online business models. In a number of industries, intelligent Boards and C-suites observed trends overseas but didn’t act until disruption was on their door step.
So what are the plausible reasons for not acting:
- a pushback from the CIO – stating that the current systems are not capable
- a perceived view that the new online models are an ‘aberration’ rather than a permanent change
- that it is economically irrational – “I will be disrupting a high margin legacy business with a lower margin startup that may not last”
- we don’t have the capabilities required to run a different model
To me, while the reasons given may have short-term merit, they have the potential to be company destroying.
Creating a strategy that creates options for the organisation – through taking investments in potential disrupters or trialling alternative models is essential. The objective has to be to enable the organisation to learn about new potential models and/or to have a foothold if alternative models become significant.
A statistic that highlights the importance of having a foothold in the online world for me is, that we are arguably the number one country in the world for consumer takeup of technology/digital, yet our corporates rank 28th in the world in the use of digital. This indicates that our corporates are not delivering what customers want and are effectively driving customers away to be serviced by offshore entities with stronger online offerings.