Why SMBs Need to Create a Culture of Ambidexterity.
Over the past few years, few would disagree about the urgency for small to midsize businesses (SMBs) to adopt a digital-first culture. In a recent report published by Salesforce, 71% say their business survived the pandemic because of digitization. For those SMBs that did survive, digital adoption wasn’t just about a technology solution, rather it was about leaning heavily into a strategy that was focused on the issues the business needed to solve and deploying a leadership team that was agile and empowered to create a culture of ambidexterity.
IDC reported that “Global spending on the digital transformation of business practices, products and organizations is forecast to reach $2.8 trillion in 2025, more than double the amount allocated in 2020.” In 2019, of the $1.3 trillion that was spent on digital transformation, an estimated $900 billion went to waste.
How could this have happened? The answer here resides in not having a clear strategy about what the issues are that the business needs to solve and/or the lack of an organizational mindset for leading the change.
In his book, Building the Agile Business Through Digital Transformation, Neil Perkin emphasizes three foundational truths about digital transformation:
It’s inevitable: Change is a constant. In most cases, the train has surely left the station whether you’re on it or not
It’s not just about technology: It requires strategy process, culture and people
It requires comprehensive change: How the company’s resources, priorities and processes need to shift
Clay Christensen, who has authored books about the theory of disruptive innovation, defines this crucial shift as the “transformation and reinvention of the resources, priorities and processes of a company in order to be fit for purpose in a digitally empowered world.”
“transformation and reinvention of the resources, priorities and processes of a company in order to be fit for purpose in a digitally empowered world.”
This SMB Trends 2021 report validates the above statement and demonstrates how an increasing number of SMBs are prioritizing their digital transformation agenda to win in a digital-first economy:
The top focus areas for technology adoption for growing SMBs are: a) customer service, b) email marketing and c) e-commerce
7 out of 10 SMBs say their customers expect online transactions, and nearly the same proportion have an e-commerce presence
72% of SMBs have increased their online presence during the pandemic
71% say their business survived the pandemic because of digitization
These SMBs are accelerating these technology investments with an eye toward increasing productivity (62%), improving business agility (60%) and increasing data security (54%)
Creating a Culture of Ambidexterity
How is your organization structured? Is it comprised of leaders who approach the business from an analog methodology and that are focused on the product, profits and competitive landscape? Or are your organization’s leaders leveraging digital expertise driven by the customer experience? Do they understand where and how technology can remove pain points across the business and are they constantly exploring opportunities to benefit from strategic partnerships to accelerate growth? Why not have a combination of both—i.e., a leadership team built on ambidexterity?
“How is your organization structured? Is it comprised of leaders who approach the business from an analog methodology and that are focused on the product, profits and competitive landscape? Or are your organization’s leaders leveraging digital expertise driven by the customer experience?”
An organization and a leadership team that is comfortable as well as capable of thinking with both the left and right sides of their brains will not only be agile and proactive in addressing the current and future technology needs of the business, but will have the mindset and fluidity to quickly pivot to address the changing customer and consumer expectations.
HBR took a closer look at what ambidextrous leaders think about when applying the “7 Ps” of marketing:
Product: How can we reimagine each of our businesses from a truly customer-centric perspective and determine which analog business practices can be exploited and which digital business practices should be explored?
Price: How does our balance sheet change when rethinking strategy, culture, talent and operating models to support a hybrid business model?
Promotion: Make sure value creation for customers and the power of strategic partnerships is clearly understood for both analog and digital business practices, and, in particular, in defining the customers who value both.
Place: Understand value creation and the power of strategic partnerships for both analog and digital businesses, and, in particular, defining the customers who value both. When is location relevant and to whom?
People: What skills and talent (existing or through recruiting) are needed for future sustainable success as a hybrid business? What talent gaps do we have? What are our talent hiring and learning development strategies to correct this?
Processes: How can we unlock and leverage our data to propel continuous innovation and improvement lifecycles for both analog and digital businesses?
Physical Evidence: How do we define this now as a hybrid business?
For SMBs, the conversation around digital transformation can be daunting on so many levels. However, as indicated above, it requires a dramatic shift in the SMB mindset and culture, and this is accomplished by looking both inside and outside of the organization to ensure that the right C-suite pieces are in place, thereby creating a business that is designed to be scalable at speed, adaptive to the customer needs and is led by a leadership team built on ambidexterity.