Digital Disruption, Transformation, and Generative AI

As digital transformation continues to reshape the business landscape like never before, TWIPLA's Jorge Cuevas sat down with renowned advisor and Harvard Business Review Advisory Council member Tony Moroney to hear his insights on how companies can successfully adapt and thrive in this rapidly evolving environment.

What does digital disruption mean for traditional business models?

Leaders must anticipate and embrace innovation, leveraging sensemaking, adaptability, and communication skills for a rapidly disrupted, hyper-connected, digitalised world if their organisations are to survive.

Digital disruption, an inevitable force of transformation, reshapes traditional business models. As markets and customer preferences evolve, traditional businesses must rethink their strategies or risk decline or extinction.

The competitive landscape is also being redefined, with barriers to entry consistently being lowered, allowing startups and tech-savvy companies to challenge established players. The global reach now enabled by disruptive digital technologies exacerbates the threat, making adaptation a matter of survival.

Over the past few years, disruption has accelerated, if anything. From extended reality to generative AI, from 5.5G and immersive technologies and digital worlds to cybersecurity and the promise of quantum computing at some future date. This relentless pace of disruption has left many executives and their businesses wondering how they can survive, never mind harnessing the benefits of digital disruption.

This is not surprising as most of these technologies are new, at least in their current form. The critical challenge executives face is making sense of them from a business perspective and taking steps to ensure their business remains relevant and competitive in the future.

Leaders must anticipate and embrace innovation, leveraging sensemaking, adaptability, and communication skills for a rapidly disrupted, hyper-connected, digitalised world if their organisations are to survive.

Notwithstanding, while technology is crucial, the real challenge that cannot be understated is transformational leadership. The weight of this role in navigating the digital transformation is significant and cannot be overlooked. It's not just about adopting new technologies but about leading the organisation through a fundamental shift in mindset and culture.

What are the key challenges for businesses embarking on a digital transformation journey?

Leaders must recognise this is about hearts and minds and address employee fears while simultaneously inspiring, aligning, and achieving organisational buy-in. This means addressing what transformation means for our people and explaining their roles (and skills) in digital transformation today, tomorrow, and in the future.

Embarking on a digital transformation journey presents a multitude of challenges for businesses, often making the journey more complex and demanding than initially anticipated. One of the most significant obstacles is the lack of a clear and comprehensive strategy.

Arguably, most businesses don’t set out to digitally transform. Instead, many implement technology and wonder why the organisation has not changed. The simple answer is that a digital technology overlay on an otherwise analogue organisation, with an analogue mindset and culture, will always be suboptimal at best. 

Ironically, organisations would be better served if they dropped the word digital and focused instead on transformation. Transformation implies transformative change through people, not just incremental change or new technologies.

It is driven by a vision of what it will take to remain relevant and competitive. It is based on an understanding that the world is increasingly digitalised, which has implications for what our customers and stakeholders will expect.

Leaders must, therefore, anticipate and embrace innovation. Leaders must also create a clear and compelling future vision and communicate it effectively. They must also break down silos and promote cross-functional teamwork based on customer expectations. 

Ultimately, leaders set the direction for their organisation, guiding it through the complexities of the digital age. Critically, though, we are not transforming because of the technology. We may use technology to transform, but it is not the reason for transformation.

Leaders must recognise this is about hearts and minds and address employee fears while simultaneously inspiring, aligning, and achieving organisational buy-in. This means addressing what transformation means for our people and explaining their roles (and skills) in digital transformation today, tomorrow, and in the future.

What are some innovative ways companies are using AI to differentiate themselves from their competitors?

AI is not a silver bullet. It is a disruptive technology and should be an integral part of every organisation’s digital transformation. The concern is that notwithstanding its potential, many organisations will continue to look at AI as a means of automation and cost reduction.

Adopting generative AI presents a unique challenge. Previous technological disruptions took time to evolve and disrupt, with the speed of adoption determined by factors such as awareness, internal adaptation, and ecosystem readiness.

However, most customers and employees now enthusiastically use generative AI, with its performance and accuracy steadily improving and heightening expectations.

But AI is not a silver bullet. It is a disruptive technology and should be an integral part of every organisation’s digital transformation. The concern is that notwithstanding its potential, many organisations will continue to look at AI as a means of automation and cost reduction.

While this is important, arguably, it's table stakes as almost every organisation will do this, and as such, it will not create a competitive advantage. If an organisation wants to use AI as a basis for differentiation, it needs to look at how AI can create new value and insights and pivot its organisation accordingly. 

To succeed, organisations must develop the capability to leverage data and analytics to gain new insights into customer behaviours and expectations. This means investing in technologies and systems, including scalable and flexible AI-ready infrastructure, data analytics capabilities, and cybersecurity measures to leverage and protect their digital assets.

However, AI will only be as good as the data used to train its learning models, yet many organisations do not have robust and complete data. This has to be a key starting point.

Another critical area is the ethical and responsible use of data for AI within the business. It is concerning that organisations are not giving this sufficient attention. Every employee has access to generative AI on smart devices, and studies have already shown that these technologies are being used, often without guidance or permission.

Leaders must set the tone regarding what is right for their customers and stakeholders. If we support our employees with supportive guardrails, we can harness tools such as AI to add tangible value and, in the process, differentiate our business.