'Experiment, incubate, pivot': Making the most of disruptive technology

How can established businesses embrace disruption before it sinks them? Tech chiefs share their secrets.

CIOs at large businesses must adopt the collaborative and innovative habits of startups in order to survive. Image: iStock
Startups often make much of their capability for disruption. They claim they can shake up the status quo and create new products and services and ways of doing business. But for a CIO who also has to worry about keeping an established business operating effectively, harnessing disruption can be tricky.

Corporate tech leaders must embrace change and lead their organisations to a brighter future by taking advantage of new technologies - but also have to be wary of moving too fast and breaking too much. So how can CIOs make the most of disruption? ZDNet investigates by speaking with the experts.

Recognise that startups have an inherent advantage

The underlying importance of systems and services means every business is now, in effect, a technology company, believes Adam Thilthorpe, director for professionalism at BCS, who opened the organisation's recent Leaders for Change breakfast event in Shoreditch, London.

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Thilthorpe refers, for example, to the effect of Uber on the transport sector. Another notable case study is online letting specialist Airbnb, which has redefined the accommodation rental sector, creating a business worth billions of pounds and a valuation higher than traditional hotel chains.

Upstarts that take advantage of the new combination of digital technologies will continue to emerge. But change is not just confined to startups. In the new era of constant change, big businesses must keep transforming in order to maintain a competitive edge and to keep customers happy. Smart CIOs will play a crucial role in this process, finding ways to help ensure their organisation is not left behind.

"Disruption for disruption's sake is not enough," warns Thilthorpe, who says that - in a situation where change is the new normal - IT leaders must analyse whether they have the capability to help change their organisation for the better. As Thilthorpe warns, if a CIO does not disrupt the IT organisation or the wider business, then someone else probably will.

However, creating the time and mental space to step back and challenge accepted business models is difficult, says Ian Cox, former CIO and now consultant at Axin. The inability to create thinking space explains why startups have a clear advantage: they are not constrained by the need to protect existing revenue streams and do not have an existing business to manage. Yet CIOs at established enterprises must find a way to respond.

"The risk of being disrupted has never been higher and the time it takes for disruption to happen is shorter than ever," says Cox. "Organisations, therefore, need to be proactively disrupting themselves; challenging their business models, developing technology-enabled enhancements and alternatives to their products and services."

Cox, who has written extensively about such developments in his book Disrupt IT, points to the efforts of some large organisations to address the need to reinvent through the creation of labs and incubators. Such programmes can give larger firms access to the kinds of ideas that are usually easier to create and foster in a startup environment.

Cox, for example, refers to Coca-Cola. The soft drinks giant has a mentoring programme and provides technology startups with advice and guidance on how to market their businesses. Coca-Cola also introduces the startups to its partners and customers, and in return gets exclusive access to solutions for the seven-month period that the young businesses are in its mentoring programme.

Take steps to create an experimental environment

Coca-Cola, of course, is not the only firm trying to hook into the startup culture - and CIOs are not immune to embracing the power of incubation. Forward-thinking IT leaders have already taken steps to embrace disruption. Take John Lewis CIO Paul Coby, who has used his internal JLAB programme to push his organisation into new areas of customer service.

Other examples include esure IT and operations chief Mark Foulsham, who uses cross-departmental hackathon programmes to encourage staff across the business to explore digital technology. And Jim Anning, head of data and analytics at British Gas Connected Homes, is using his specialist unit to help his firm create a strong foothold in the Internet of Things marketplace.

In fact, such is the power of disruption that Richard Norris, head of IT and business change at Reliance Mutual Insurance Society Limited, says all CIOs must help their businesses to identify opportunities for innovation-led change. Norris implemented a digital innovation group at Reliance about three months ago. Drawing people from across the business, the learning group analyses how digital disruption can affect how services are taken to market

"Hardware disruption is taking place and that will continue to evolve as people plug more things into the internet," he says. "There's also disruption in terms of distribution, such as selling products and services in a different way. And then there's data disruption, which allows organisations to take information and create clearer opportunities in regards to serving customers."

The broad church of disruption comes as no surprise to Ade McCormack, who is a consultant that helps businesses understand how the world is changing. He suggests technological change is now faster than ever before, yet he also believes such volatility is just a warm-up for the main act.

A new, digital economy is emerging which represents a step change from what has occurred before. In this new digital age, C-suite leaders must think about how to make their business models more asymmetric. McCormack points to Google, which offers most of its services for free, yet is still highly profitable.

"The IT industry as we know it is dying," says McCormack, who says CIOs who do not embrace change will be disrupted. For IT leaders who are keen to meet disruption head on, McCormack offers four best practice steps, which he presented to technology chiefs at the recent BCS event in London:

  1. Transform the CIO - Some IT leaders still do not get business; technology management is difficult but the business needs digital leaders, not IT managers.
  2. Change the technology organisation - With the right leadership skills, you can start to transform the IT function.
  3. The next destination should be the boardroom - CIOs should strive to make all executives tech-literate.
  4. CIOs should then look to transform the wider organisation - Change can be tricky in big organisations, where underlying corporate structures have bashed the creativity out of people.

The simple message, says McCormack, is that CIOs who want to make the most of disruption will need to restart their traditional approach to business. Such CIOs must develop a new version of their organisation that is more in line with a lean startup. "Experiment, pivot and move with the market," he concludes.

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