When faced with the impending wave of uncertainty that accompanies digital transformation, the question often arises: “Why do we need to transform?” It doesn’t always take this form; and, instead it might be framed as: “What happens if we do nothing?”
CONI – the Cost Of Not Investing
To help answer this, a decision-making board, or executive, might tackle the answer with a well-used process that tries to land on a ROI for that transformation project.
This process works well when you’re working out what a new capital investment will return to the business in terms of lower costs (higher profits), new products (more revenue), or a new market opportunity (potentially, both).
We suggest a new term is considered: the Cost of Not Investing, or CONI. In other words, instead of trying to calculate a return on an investment in terms of an increase, calculate the cost of doing nothing in terms of lost market share, reduced profits, loss of brand equity, or a lost opportunity afforded by a slower-moving competitor.
The climate in which digital transformation is considered to be the answer is often one where customer numbers, or revenue, is in decline, or costs – especially people – is rising more rapidly than can be feasibly passed on to customers. It might also be that a new market entrant is digitally enabled and engaging well with the market – better than the incumbents faced with the question of what to do.
Alternatively, a once-leading competitor might appear to be stumbling by not keeping up with market trends and transforming their business accordingly. More agile and driven competitors could take this opportunity to get the jump on these market stalwarts and we see this happening in many industries today already.
Seeing digital transformation as an opportunity starts to align positive action in the business with a general uplift in performance.
Connecting the business core and CONI
When digital transformation is seen through the lens of ‘if not, why not?’ it allows the business owners and leaders to return to considering the mission that caused them to start the business in the first place.
It could be that not doing what’s needed to make the business deliver a better service to the market and community stops that organisation from ultimately achieving the goals that inspired the genesis of its formation, or causes it to miss an opportunity to do more and improved.
Realising and articulating the need to transform in terms of why people come to work every day also provides an opportunity for leaders to take those people on the journey of transformation and keep them informed along the way, bringing the narrative back to the core purpose of the organisation.
And if that approach is taken, it’s our belief that a lot of the internal resistance to transformation – one of the key reasons for the failure of transformation projects, according to Gartner and many other analysts, would simply be much less of a problem.
You invested in the business idea for a reason, so don’t let CONI hold back your future relevance or goals.
This article first appeared on LinkedIn. Anthony Woodward is the CEO and Founder of Accelera Group