Reality Check: Are You Stuck in the Digital Knowing-Doing Gap?

The 6 Reasons Your Company’s STUCK and What To Do About It

According to the article, Why Companies Don’t Respond to Digital Disruption, published by The MIT Sloan Management Review, “Data from our digital leadership research suggests that many corporate leaders may need a reality check on the threat level posed by evolving digital technologies.”

The research conducted captures the surveyed results of thousands of employees on the topic of all things digital. A few particular stats were interesting:

1.) When survey respondents were asked to what extent they believed that digital technologies would disrupt their industry, 87% replied that those technologies would greatly or moderately disrupt their industry. 

2.) In a related question, 84% of respondents agreed or strongly agreed that becoming a digital business is important to their organization’s success.

3.) When survey respondents were asked whether their companies were adequately preparing for digital disruptions most likely to occur in their industry, 44% said their companies were doing enough, 31% said their companies weren't doing enough, and 25% neither agreed nor disagreed that their companies were doing enough.

To summarize, 43% of respondents believe that digital technologies will disrupt their industry - and they are not confident that their company is doing enough.

43% of respondents believe that digital technologies will disrupt their industry - and they are not confident that their company is doing enough

This highlights a 43% gap.

The survey respondents were working in organizations where the need to increase the digital capability was clear, however, the right activities to make employees believe their company was on-pace with digital disruption simply weren’t in place.

Why? Now that is what I call a digital head-scratcher.

The Digital Knowing-Doing Gap

If digital is an existential threat to organizations, why do so many of them seem stagnant to employees? The answer is “The Knowing-Doing Gap”. This is a well-known phenomenon in business that highlights the fact that companies struggle to turn knowledge into action. When you look at the 43% gap through that lens, the gap becomes more understandable - and perhaps not that surprising.

However, this gap is still quite concerning in respect to digital technologies, because companies that want to thrive through an increasingly digital age simply cannot afford inaction. The threat of digital disruption evolves and grows much quicker compared to other threats that companies encounter, which is why staying in the Digital Knowing-Doing Gap is more dangerous.

If it’s such a dangerous place to be, why are so many companies lingering in a Digital Knowing-Doing Gap? 

Here are six reasons why:

Reason #1: Leaders aren’t convinced it affects them.

Leaders, owners and board members within companies sometimes wait for evidence that these digital trends affect them, directly, before they feel compelled to act. If margins remain solid and growth is taking place, the risk still feels remote. Yes, they're aware of the trends, and yes, they've heard the disruption stories.

They know that Kodak went out of business due to inattention to digital trends. They know that Amazon has disrupted and destroyed countless businesses. But they're waiting for the evidence that it affects them directly. The issue is, by the time disruption appears on your financial reports, you may not have enough runway to react.

Reason #2: Leaders have numerous competing priorities.

Another common issue is that leaders are busy. Very busy. They lead growth initiatives. They lead cost-effectiveness initiatives. They deal with required system upgrades and technical debt. They navigate changing regulatory waters, and they try to deal with newer risks like cyber-security. They have many competing priorities. 

Digital often gets categorized as “Important”, but not “Urgent” as a result. So as each quarter goes by, digital doesn't move from knowing to doing. They know it’s important, but nothing gets done.

Reason #3: Lack of funding.

Digital sometimes has no clear path to a funding model. If you approach digital as requiring a massive transformation, it can be quite daunting to consider. It may require a new funding model, or perhaps a new category in the budget. That can be a hard pill to swallow for board members and owners that often optimize profits in the short-term.

Reason #4: Digital is more than expense management.

A number of organizations have launched continuous improvement initiatives like Lean Six Sigma, and other cost-effectiveness measures, with the notion that these initiatives will also lead to digital innovation. 

The programs are effective for managing cost and improving quality. They work to optimize the expense side of your ledger, which means that the results they deliver are capped at a percentage of your expenditures. Digital innovations can also drive revenue, or at least protect revenue, once the expense side is optimized. However, it requires a different approach.

Reason #5: Baby boomers are in the leader’s chair.

A number of executives and business owners are in the baby boomer demographic and are approaching retirement in the short and medium-term. This may affect their willingness to tackle an initiative as large as digital transformation this late in their tenure. They are concerned about risking their legacy and starting something that can't be finished.

Reason #6: It’s hard to ask for help.

It can be hard for established successful business leaders to ask for help in this area. Digital's foreign to many and some of the techniques advocated don’t make a lot of sense compared to typical approaches in a lot of industries. Furthermore, these leaders are typically used to having mastery of the topics that affect their business, so it's quite uncomfortable and unusual to find themselves in this situation. Finally, it can be hard to actually find the right help, however, that is next step once the willingness to ask for help emerges.

So what can you do about the thinking-knowing gap as a business leader?

Action #1 - Optimize Your Bias for Action

First, you must evaluate your corporate bias for action. Digital progress calls for assembling plans to add digital enablement to your business strategy. Then it calls for getting in motion quickly. While in motion, you check in on the plan often, make adjustments, and stay in motion through the course corrections. It's not something that lends itself to long studies and waterfall-type approaches, which are more comfortable for many leaders. It's about assembling a plan with a duration of one year - max - then learning by doing.

Action #2 - Understand Your Culture

Think about your culture and understand it through the context of digital. There are some excellent tools out there to assess your culture, compare it to your business strategy, and understand any gaps. If you have a culture built on reliability, predictability and avoiding risks, digital will be harder for you and you should know that upfront. Many mature cultures are unwittingly built to stamp out experimentation. Because digital calls for experimentation, you need to be aware of the upcoming headwinds.

Action #3 - Observe and Learn

To "Observe and Learn" is something that was taught to me by Gijs van Wulfen, a European innovation leader and a good friend. Get out there, see what others are doing, and get further context on what’s possible. Visit a digitally disruptive leader. Meet with someone who is innovative in your industry - perhaps in a non-competitive region. Attend some digitally-focus get-togethers, such as CollisionConf, or Peter Diamandis’ Abundance360.

Looking for The Digital Fast Lane?

If you want to make an even larger impact in your industry, you must increase your organization’s digital capability. To take a first step towards finding out if your company is ready to be modernized with digital, take our free, 7-question Digital Snapshot Quiz.