Why risk-averse businesses are doomed to fail

Technology isn’t giving business leaders a choice: it’s adapt or become extinct

Why risk-averse businesses are doomed to fail

If you’re too worried about losing what you have, you’re setting yourself up for failure. This has become a mantra for many business experts advising CEOs and boards about embracing digital transformation and product innovation. The disruptive force of technology, as well as challenger startups that use it smartly, are thorns in the side of many established players that have spent years building their reputation and a thriving customer base. It takes courage to agree to, let alone invest in, serious innovation. And it’s understandable why some may have concerns about prioritising new services over an established portfolio. But this, digital leaders claim, is precisely what must be done in order for businesses to avoid becoming obsolete.

Giants of business can’t trust that the old models will stand the test of time, especially given the rapid rise of game-changing technology like AI and the internet of things. Technology for its own sake will never be a shrewd investment, but there’s definitely a growing understanding that in order to compete, businesses must use technology to support their strategy. In some cases, they may even have to rethink their offering entirely. For instance, how many CEOs seriously considered, even ten years ago, that customers would be able to pay for goods without any cash passing hands or the need to key in a PIN number? The impact of technology is undeniable and early adopters are the ones making the biggest gains.

Even for small, agile businesses, this survival instinct and risk-taking approach has to remain strong. Take Shazam, the music app. Having begun life as an sms-based offering over 15 years ago, it rapidly reinvented itself once smartphones took off. It’s no mean feat to transform a product that quickly and there was no guarantee that Shazam would succeed as an app. Succeed it did though, and now the business continues to compete with rival tech companies that count their employee bases in the thousands. Shazam, meanwhile, still has a nimble workforce of around 250 people.

Companies like Shazam stay relevant because they don’t rest on their laurels. Instead, they continually reassess their approach and find new ways of reaching their customers – both old and new. Keeping the customer at the heart of everything they do is also a crucial part of survival. But while understanding consumers and using those insights to make sure your products stay relevant sounds logical, not all companies manage to do this. This can often be down to a flaw in the company structure or an unwillingness on the part of senior management to listen to product or service experts who are closest to the customers.

Embracing technological change might also mean partnering with the right people. Shazam, for example, partnered with Snapchat, which some saw as a risky move. Two publishers co-operating could be considered an admittance of weakness but Shazam’s executives were thinking ahead. They understood that 15-to 20-year-olds were using apps in a very different way to the brand’s existing, older users. The executives could see that Shazam needed to future-proof its audience, so the Snapchat partnership made perfect sense.

Sometimes protecting your brand and your current achievements is about taking these kinds of calculated risks, even when it means you might lose ownership of critical assets or weaken what was once a core strength. It’s often tough for a leadership team to acknowledge a weakness and identify where performance is poorer. But companies have to react quickly to consumer and technological change. The tech industry is littered with brands that have failed because they were afraid of change. To avoid being the next one, remember that fortune favours the brave.

This article comes courtesy of The Telegraph Digital Leaders conference, which brings together digital leaders to discuss how they’ve embraced risk and pioneered some of the most effective digital strategies in business.


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