Navigating the new norm of disruption

| March 4, 2016

Digital disruption is becoming less about ‘disrupt or be disrupted’ and more about how to harness the opportunities disruption provides. Ahead of Digital Disruption X 2016, Carsales CIO Ajay Bhatia shares seven key elements organisations should consider in order to take advantage of the potential benefits of digital disruption.

Concentrate on effectiveness over efficiency

A big issue – particularly for larger organsiations or incumbents – is they concentrate too much on being an efficient business. For example, if a company runs five services, large businesses generally look for efficiency improvements around these five services. Whereas disruptors will start at the lowest value service the business provides and move upwards.

The issue is, big businesses don’t concentrate on making change on one service exclusively, which hinders long term benefits. For disruptors, their sole purpose initially is to disrupt incumbent businesses services. As a result, businesses need to concentrate on being effective at every individual service they provide. It is important to concentrate on effectiveness of services over efficiency during digital transformation.

Check your blind spots – there will always be a new competitor

A big issue organisations face during digital transformation has to do with the ‘blind spot’ of disruption. This involves an attitude of looking at new market entrants (who may start off in the lower end of the market) and not recognising the potential impact these new players can have on competition. The reality is that while disrupters might start at the lower end, they usually work their way up the value chain and in many cases become a competitor.

Focus on people, not technology

Culture and people is the big answer to responding to digital disruption. Harnessing disruption is not about technology or processes. It’s about people, culture and valuing talent to drive change and innovation.

Businesses often talk about the concept of ‘truth tellers’ within an organisation – talented people who tell the truth about how they see the world. However, these types of people can sometimes be seen as people who are abrasive or they are dismissed because of the things they say. But these ‘truth tellers’ are the ones who can inform you about an opportunity that could help innovate your organisation. People are a key element of innovation in any organisation.

When it comes to digital disruption, a lot of businesses relate new technologies to innovation and they become blinded by the technology, rather than people within the business. For example, big data is a buzzword at the moment, so a lot of businesses are integrating big data into their digital transformation strategies. However, it is what you do with the big data that is more important than using it. It is the people who decide what to do with the data.

Value talent over process

I’m of the opinion that large companies who are highly process oriented, create a disincentive for very talented staff to work for them. This is because these companies are dependent on processes – not people and talent values. Digital talent needs to be valued, and in order to take advantage of disruption, companies need to value talent over process.

In turn, this means the quality of people working for you are not the kind of people who would prevent or resist disruption. Disruption usually comes from lateral thinking. Large companies by their nature traditionally attract people who are more process minded.

Start thinking outside the box

From a disruption perspective, businesses need a diversity of thinking – and this diversity needs to come from all sources.

My first assertion comes from diversity of industry. For example, hire digital people into banking, or in energy. Or hire someone in the banking industry who has no experience in banking, but has worked for a startup.

I recently hired a product manager at Carsales who was previously an investment banker. I hired this person not because of the industry they previously belonged to – because traditionally investment bankers and product managers are completely two different jobs. I hired this person purely based on their talent and thinking without having any bias around their previous industry experience.

Another issue are unconscious biases that exist in many industries. No one will admit to having biases, but they do exist and create a lack of diversity. Unconscious biases create homogenous thinking, which is a complete fail for disruption.

Disruption needs a diversity of thinking. It needs people from different industries and different cultural backgrounds. Diversity is a competitive advantage when it comes to taking advantage of the opportunities digital disruption provides.

The customer needs to be at the centre of disruption

Like thousands of other companies in Australia, we have adopted an agile response when it comes to disruption. But for us, it’s the thinking around agile, rather than the actual methodology, that is more important.

In the Australian economy, it would be great to see more businesses adopting agile thinking. You need to inspire your people with a vision for digital transformation, but in most cases the project and outcomes you plan for end up being very different six months later. At Carsales, rather than running successful projects based on technology, our aim is to be really great at customer service – we don’t need to be great at projects. Projects don’t matter, customers do. It’s fundamentally different thinking.

For example, we may say for the month of December, we need to hit X metric for our customers. In our business our teams are called tribes, each of which are responsible for a customer set. We have seven tribes and each has a goal for every month or two weeks etc. Each tribe also has a dashboard next to them where those customer metrics are displayed. This means that when the tribe is not working to a particular project deadline, they are working towards customer metrics. This encourages them to be wrong, and along the way pivots our business thinking around how we are going to achieve customer metrics, rather than work on a pre-specified project that someone higher up in the organisation has created and is difficult to meet.

Empower your employees to drive innovation

We run hack-a-thons about ever four months to motivate our employees to drive innovation. The hack-a-thon usually consists of about 30 teams, made up of about five people on average. These teams come up with whatever ideas they like and work on transforming those ideas into products or services over the course of the two to three day hack-a-thon event.

Many companies use internal hack-a-thons to drive innovation, but the real success factor for us is that 50 per cent of our hack-a-thon projects actually go live. In most organisations, this percentage usually sits around 5 per cent or around that low single digital mark. We’re very proud to be achieving 50 per cent and this success comes back to the way we think about hack-a-thons. These hack-a-thons set a culture for the business and typify the kind of people we employee into the business – people who are innovative and want to contribute with new ideas.

An example of a service that has come from one of our hack-a-thons is our integrated car insurance ads. Previously, we used to run banner ads which advertised different types of car insurance to our customers. Now we provide the option for customers to calculate the insurance instalment they would pay every month, a feature which is provided by one of our advertisers. As a result, customers can actually see how much the car will cost to insure, which adds a lot of value to their decision when buying a car. At the same time, our advertisers are also happy because they get a number of leads out of it. This was an idea that came out of a hack-a-thon, and it has made us a lot of good money, but it has also made our clients and customers happy.

Another example is around an internal recognition system within our business. One of the ideas a team came up with was a product called ‘Shout,’ which involves an internal URL called ‘Shout’ on our intranet, where anyone can type a message to all employees about a great job they have done. It’s a recognition product that has changed the equation in our business. Now senior people in the business are not the only people responsible for recognition. Because this product came out of a hack-a-thon, the team that created it believe in it, are marketing it internally and as a result everyone is using it.

To learn more about the strategies needed to lead your organisation effectively through disruption, join Ajay at Digital Disruption X 2016.