Resistance to Digital Change: The Fear Factor

An interesting pattern is emerging as companies enter the world of Digital Products and the Internet of Things. Many approach this new frontier with some hesitation – excited about products with new and differentiating features, and fascinated modern technology that can sense, communicate, and analyze the digits being generated by all of our widgets.

But the realities of their particular Value Chain may give them pause. Component makers are just a small piece of the bigger system – how can they expect to control their part of the cloud? Or maybe they are having trouble building a satisfactory business case – sales volumes in their particular niche don’t seem to justify the initial investment in data, code, and skills.

When I drill into these concerns, I see a recurring theme – fear of the unknown.

Understanding Customer Needs: A proven strategy for identifying opportunity is to connect with the customer, ask them what problems they are trying to solve – and work with them to identify (and then fill) a profitable niche. Sounds great, but how do you introduce something radically new, like data collection and analysis? It is difficult when you are working in an environment where customer and business line team (marketing, engineering) do not understand the technology enough to suggest new techniques for new problems.

Monetization: The world is full of imaginative ideas that leverage the power of information. Sounds great, but how exactly do you make money off this stuff? Will you see it in monthly data / service subscriptions, or as a separate SKU in your catalog? The former represents a wildly different way of thinking for some manufacturers, especially those who do not sell parts and service. Most monetization schemes are ultimately a different pattern of cash flow (pay by the drink versus all up front). This kind of change can have unanticipated ripple effects – a bit chilling for the risk-averse.

Product Design: A great way to address those first two points would be to approach the customer with a “Minimum Viable Product” – enough of a mockup (a sample app, even a sketched-up screen sample screen or two) to get them to understand what might be possible. But this is a different type of customer engagement than some folks feel comfortable with, especially when they consider the speed of iterations and the fast-twitch expectations of the digitally savvy.

Product Development: Digital technology is very attractive for product engineering teams – exciting, new, and kind of fun. But many of these teams have limited competency or experience in these technologies – it is magic to them. And for many firms, the customer-facing applications are often pushed to the last minute, almost an afterthought for the delivery of a fully finished product offering. People gravitate towards what they know, and avoid the mysterious unknown for as long as possible.

Breaking the Cycle of Fear

As time drags on and we press for insight into the delays, I really have to dig for the truth – some version of I don’t understand this or I don’t know how to do it. Unable to come up with a glib “next step”, the team simply kicks the can down the road, making soft plans to dig into the details later. As time goes on, this becomes a real challenge, as promising ideas lose their luster over time. When the delay is based on inattention and neglect (due to lack of confidence and/or outright fear of the unknown), it is a squandered opportunity and a massive loss of value.

The solution is to introduce accelerators to the process – bring in expertise from the outside, and apply it in a timely, controlled, and focused way. This “expertise”, by the way, is not necessarily in the form of expensive technologists in long-duration engagements.

• Skills training for your existing staff is a necessary investment, but one with a high payback. The key is to balance “just enough” training to be glib and knowledgeable to what is possible, so marketing and design teams can engage with customers and propose viable solutions for relevant problems.
• Templates and frameworks to accelerate the work, from people that have been there, done that with similar businesses. I’m not talking technology here; this includes tools for strategic focus, value identification, and product roadmaps. The most valuable will be financial models for your top line (revenue and growth), your bottom line (cost-to-build and cost-to-maintain), and the path to get there (roadmaps).
• Fail-fast, iterative development with tech firms that can deliver working models of databases and applications, so you can quickly get Voice of the Customer. Match these agile capabilities with a structured “stage gate” pipeline method, to accelerate and focus your engineering teams.

Do you have ideas and best practices to share?
Alternatively, are you looking for ideas in these areas?
Join in the comments (below) or contact us directly; let’s change the energy from fear to forward progress!