Has Success Made You Overlook the Threat of Digital Disruption?

20 Questions to Help You Get Past Success Bias

Industry after industry has faced digital disruption. None have been immune, yet companies can continue to enjoy industry leading success while a competitor or start-up builds a disruptive product or business model.

For example, Steve Ballmer, former CEO of Microsoft, famously said that the iPhone wouldn’t sell.1  How did he come to that conclusion? Microsoft’s success biased his understanding of his competitors’ innovations and market structure. Microsoft was selling millions and millions of phones for $99, and Apple hadn’t sold one, and when it did, it would be selling the most expensive mobile phone at more than $500. Looking back, he realized he didn’t see Apple’s business model innovation of carrier subsidies and that the market was not following the PC model of separate vendors of chips, hardware, and operating system.

Psychologists know this success bias phenomenon as the Einstellung Effect.2 Researchers presented test subjects a situation with two solutions, a familiar sub-optimal one, and an unfamiliar optimal solution. The test subjects quickly discovered the familiar solution and said they were actively searching for a better solution, but eye tracking software uncovered that they were fixated on aspects of the problem related to the first solution they found, the familiar one. This is why this bias blinding phenomenon is so difficult to overcome – you don’t know that it is influencing your thoughts.

How do you overcome the blinding effect of the Einstellung Effect? First, acknowledge that no industry or firm is immune despite their current successful business model. Then, acknowledge that the velocity of change has increased, and market irrelevance could only be a couple of years away from a previously market dominant position. It only took the once invincible Blockbuster two years to lose 75% of its market valuation to the start-up disruptors Netflix and Redbox.3

With this mindset established, lead your team through specific diagnostic questions to expose digital disruption vulnerabilities. The questions are presented in a random order to help disrupt your success bias.

  1. Can you articulate specific digital threats to your retail organization?
  2. Can you quantify the revenues that are at risk of digital disruption?
  3. Do you have a plan to defend or replace threatened revenues?
  4. Have you used digital technology to create new customer value?
  5. Have you identified changes in customer needs?
  6. Have you increased the frequency of customer contact?
  7. Are you more focused on customer relationships over episodic transactions led by customers?
  8. Do you have a digital platform that delivers consistent, connected, and personalized experiences across all devices and channels a customer may use?
  9. Are you making evidence-based decisions?
  10. Are you collecting data from new sources?
  11. Are you connecting at a deeper level with existing customers?
  12. Are you connecting with new partners?
  13. Are you meeting your customers’ privacy concerns?
  14. Can customers search for information and pricing on your products?
  15. Have you built new ways to connect with partners (APIs, SDKs, microservices…)?
  16. Is someone with authority leading your digital transformation?
  17. Have you made a substantial change to your business model?
  18. Are you hiring staff with specific digital competencies?
  19. Has your leadership invested time in becoming digitally literate?
  20. Do you have a single view of all your interactions with customers?

If you answered “no” to any of these questions, you have uncovered a potential vulnerability to digital disruption that requires your team’s immediate attention. Don’t let your current success blind you to the changes you need to make to avoid digital disruption.

If you would like to learn more or discuss your answers to these questions, including how to mitigate your vulnerabilities to digital disruption, you can reach out to Kevin Struthers at [email protected].





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