3 lessons from digital natives to boost companies’ transformation journeys

by Janice Allen
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The effects of the COVID-19 pandemic and the resulting economic disruption are still profound for businesses around the world.

Digital-native organizations (DNOs) that already use cloud infrastructures and mobile apps to do business with customers have quickly adapted to the new digital normal. However, despite their best efforts, some incumbents remain stuck in their digital transformations and cloud adoption journeys. Companies that have struggled to adapt face a huge – and perhaps existential – challenge in staying relevant in this new digitally oriented world.

While digital transformation can be daunting and complex, these incumbents should look at the practices and attitudes of DNOs, who see technology not just as a tool for business strategy, but as a fundamental part of strategy itself. Three areas in particular can contribute to better business outcomes in this digital world.

Redefining the leadership mindset for digital transformation

While there are several differences between incumbents and their digital native counterparts, one of the most notable is how they define leadership in their respective organizations. Established companies reward leaders for maintaining stability and performance, while digital natives reward innovation and disruption.

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By focusing on innovation, the DNO mindset enables collaboration between teams, taking into account everyone’s knowledge and expertise, ultimately allowing the company to become more agile and drive faster decision-making. The inherently collaborative nature of DNOs also encourages leveraging expertise and capabilities that come from an ecosystem of partners.

As a positive sign of change, the mood of the executive is beginning to shift as leaders embrace innovation over stability. According to the 2022 AWS C-Suite Reportwhen asked to rank their top business priorities, 52% of executives chose growth-oriented priorities, while only 38% chose to prioritize stability-oriented objectives.

Adopting a scalable digital technical infrastructure

Another challenge that incumbents face in their digital transformation is their journey to cloud transformation. Incumbents have traditionally invested money in building local infrastructure to meet their needs; however, relying solely on this infrastructure slows down progress. Digital natives who are “born in the cloud” build very little when it comes to technical infrastructure and prefer to borrow from external sources. All of these digital native tools are plug and play, allowing cloud native companies to go much faster when it comes to deploying new applications that leverage AI technologies.

Thanks to this scalable technology approach, these companies have constant access to the latest and greatest technology. Another benefit is that you don’t have to worry about challenging infrastructure issues. Digital natives’ cloud infrastructures not only provide them with simplified IT operations, but also allow them to focus on more important things, such as deploying and integrating new systems. Just as importantly, they can focus on keeping customer data safe.

Established companies can leverage their expertise and industry knowledge while embracing a more DNO-like model. Technology leaders in established companies understand the challenges of new technology solutions, enabling them to anticipate any complexity and understand how the new technology will integrate with existing systems. A scalable technology infrastructure enables companies to build and buy their digital platform to best meet their needs.

Embrace an innovation mindset

Many established companies can be swamped with processes that can limit creativity. Many of these companies’ leaders are also incentivized to manage large teams of employees, creating additional friction that limits agility and ultimately threatens their success in digital transformation.

As inherently leaner organizations, digital natives have less friction through leaner, looser processes that help get work done faster. With this smaller size, DNOs can even experiment more often. They attach great importance to small but continuous innovation through faster cycle times during experiments.

Digital natives also benefit from open innovation to achieve better results. According to recent research from the IBM Institute for Business Value, organizations that embrace open innovation have a 59% higher rate of revenue growth compared to those who don’t. A culture steeped in innovation enables greater collaboration, both internally through cross-team collaboration and externally by leveraging the collective value of employees, partners, vendors and customers to drive innovation and growth.

Turn transformation into action

Traditional organizations may speak the language when it comes to digital transformation, but the global turmoil of recent years has shown that they need to act quickly. These lessons from digital native organizations — changing your leadership mindset, leveraging scalable technology, and open innovation — provide a roadmap for incumbents and their transformation journey.

Organizations must now ask themselves: how can these insights be applied to our business?

Mahmoud Elmashni is a managing partner of global strategic partnerships at IBM Consulting.

Rohan Karmarkar is director of GSI solutions architecture at AWS.

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