Getting Digital Transformation Right: The Henry Ford Way
I read an interesting Harvard Business Review article today. It revolved around how companies need to change their culture and thinking before changing their strategy. It reminded me of an anecdote an old client mentioned regarding how they approach innovation. It goes like this: When Henry Ford created the motor car, he didn’t set out to create a faster horse. In other words, he looked at the method of transportation current at the time (horse and cart) and didn’t just think about how to improve it. He figured out how to completely transform the transportation industry as he knew it. The result took the horse out of the equation completely. Enter the modern-day car.
The point of the anecdote rings just as timely today. To transform, innovate, or whatever today’s buzz word is, you can’t just look at what’s in front of you. You need to think about what the future holds, how people (or companies) will use your product or service, and apply that thinking before you press “Go” on a new service line. What will the company of the future really want from my organization? How can I hire the best talent to meet that need? And with so much uncertainty in areas, such as regulation for example, how do I even plan for that?
The HBR article uses the US airline industry as its example of successes and failures in adopting new strategies, and I see this echoed across the financial markets. Today, everything is about digital transformation. Are the banks (retail or institutional) nimble enough to walk the talk as they enact “customer first” business strategies that demand a significant rethink of how they use technology? Have they made the mental strategy changes they need to properly adopt a digital first approach? Or will their efforts only go halfway and leave customers feeling like they didn’t get it quite right?
I keep coming back to the Henry Ford example, as it’s a good reminder that you should never shoot an idea down regardless of how “out there” it seems at the time. But more than that, it’s an example of why thinking about your strategy and whom you really serve first is vital. Could Henry Ford have created the car if he looked at how to create a faster horse instead of how to more effectively move people from one place to another? Companies must think about the strategy, not the outcome, as disruptive business models alone don’t work. HBR puts it nicely: “Copying a business model without copying a mental model will lead to disappointing results. You have to change how you think before you can change what you do, and then change what you measure to close the loop.”
Now, that’s a valuable lesson for any business.