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Interim business modes can qualify scale at a reducing marginal cost

"Successful innovation leaders cannot allow strategic conversations to stop at the aspirational level. They must insist on drilling down to the next level of managerial choices that are necessary to gain the desired outcome." - Bill Fischer (legendary IMD Professor)

Years of research on transformations show a consistently low success rate: less than 30 per cent succeed. In 2019 a McKinsey survey found that only 16 per cent of respondents say their organisations’ digital transformations have successfully improved performance and equipped them to sustain changes in the long term. An additional 7 per cent say that performance improved but that those improvements were not sustained. Why could that be?

  • Transformation outcomes become blurry. Often, the perceived results at the beginning of a transformation are not as compelling as it progresses due to unanticipated market changes.

  • Do transformations measure milestones, such as a system go-live rather than customer adoption? Go lives rather than outcomes are false positives.

How could an organisation approach a transition to a new business model?

Existing/Traditional Business - is to be maintained and not neglected. Refining and not stagnating this business is important.

Interim business - is an explorative mode to seek outcomes that may enable a digital future. Use this to qualify possibilities with mini outcomes rather than milestones. As per Sheryl Sandberg’s video above, scale is the objective. What is even better is a broad impact (i.e. scale) and decreasing marginal costs.

Digital Business – legitimise a proven interim business. Usually, the existing / traditional business will continue to evolve and be complemented by the digital business. A great digital business consists of customer intimacy and global scale. They are potentially dichotomies; however, within an exceptional digital organisation, they are not.

What is that, really?

An overused great example is Uber, who have closeness to its customer through location and previous transaction data. They also know what type of customer you are by the rating the driver applies. Uber’s scale is impressive and could be considered a benchmark. Their consistent global experience is achieved with a focus on reach (i.e. scale) rather than deep investment in owning parts of the supply chain: cars and depots.


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