How to ensure your organization thrives in the age of digital transformation
Don’t be fazed by the headline-grabbing disruptors. The secret to success is to use your unique advantages to fight back and win.
In 30 seconds
Most incumbent companies find a way to survive, even in the face of a really disruptive technology.
Leaders need to keep in mind two possibilities at once: radical transformation and continuing as is
When responding to a new technology or competitor, you have four options: double down, fight back, retrench or migrate away
The stories of companies that died horrible deaths in the face of disruption are legendary.
Take Kodak, which invented the digital camera in 1975 and put billions of dollars into digital technologies. Then it took the decision to put all its energy into trying to sell ever higher-quality traditional film to its most sophisticated customers. Digital cameras rapidly improved and became mainstream, and by the time Kodak figured out that digital cameras were a genuine threat, it was too late. Kodak scrambled to adapt but they never recovered.
Blockbuster video offers another cautionary tale. The retail video rental company failed to anticipate the shift to streaming services and went bankrupt in 2010. Its executives weren’t stupid, they made sensible decisions that in retrospect were disastrous.
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‘Blockbuster’s executives weren’t stupid, they made sensible decisions that in retrospect were disastrous.’
What most people don’t realise is that these painful examples are the exceptions, not the rule. The vast majority of incumbents find some path to survival, even when faced with a really disruptive technology.
Sometimes, the new technology becomes good enough for adoption by the mainstream market and renders the old technology obsolete. Or, the new technology matures to a point that it is attractive to one segment of the market but not others, so the two can co-exist. In trade publishing, for example, e-books can co-exist with paper books. Online shopping co-exists with retail shopping. Incumbents have a range of different tactics available to them in response to disruption, and trying to fight back directly may not be the best idea.
Kodak’s major competitor, Fujifilm, diversified – adapting its existing in-house technologies to meet the needs of future markets. Likewise, the educational publisher Pearson diversified into adjacent markets, applying its expertise to grow in areas such as professional certification, assessment, language learning, work-based learning and virtual schooling – surviving disruption and going on to enjoy a resurgence.
Three things to consider when you’re facing digital disruption
There is no simple formula for incumbents when facing digital disruption – every industry has its own dynamic and circumstances – but in our experience there are three interlocking elements to the puzzle:
Structure: what is the right organising model for addressing a disruptive threat?
Mindset: how should you and your colleagues think about the threat?
Identity: how does it affect your company’s purpose?
The trick is to simultaneously keep in mind the possibility that your industry is going to be radically transformed, while also keeping in mind the probability that in fact it will be just fine. A clear sense of identity, or “North Star”, will help provide some consistency around the difficult choices you need to make.
Knowing how and when to respond to new technologies is an obvious challenge. For most companies working their way through a major digital transformation, the old Facebook approach of “moving fast and breaking things” is not the way to go. Your customers won’t thank you for breaking things they value and rely on. Rather, an iterative approach to strategic change enables you to learn rather than guessing.
Move too quickly and it will cost you. In the entertainment industry, Time Warner’s $165 billion merger with AOL in 2000 was notoriously ill-fated. In energy, British Petroleum (BP) launched a renewables strategy, “Beyond Petroleum”, under then-CEO John Browne in the early 2000s, but it was too soon and they had to close it down, after spending billions of dollars. Bernard Looney, another of BP’s CEOs, tried a similar approach when he took the reins in 2020. Again, in February 2025, the company found itself having to backtrack.
How to respond to a new technology or competitor
Essentially, you have four options when responding to a new technology or competitor: double down, fight back, retrench or migrate away. We go into more detail on each of these in our new book, Resurgent: How Established Organizations Can Fight Back and Thrive in an Age of Digital Transformation. We also delve deep into business models, ways of working and infrastructure (de-jargonised, so you will be able to hold your CIO to account and make sure they understand the business consequences of their IT investment plans, rather than having to blindly trust their judgement).
Whatever your response to disruption, you are confronting an uncertain future. You need a clear vision of what a digital-first future for your company looks like, and you need to drive consistently towards that – bearing in mind that the pacing of that digital shift will depend in part on your customers’ behaviour.
‘Whatever your response to disruption, you are confronting an uncertain future’
How can leaders bridge the old and the new, embracing new innovations while keeping the show on the road? This goes far beyond figuring out what to do about the technology. The leadership task is a mighty one, and we have identified some key tactics to help leaders stay on top of the process. Change is challenging, for three reasons.
One, change itself is messy and uncertain. Implementing something well is extremely difficult. People lose faith, and confuse correlation with causation. The changes you’re having to make because the analogue business is under pressure can appear to be causing the problem.
Two, no company is an island. Your customers and your markets are also in a state of flux. This means your changes may need to be accelerated or reversed – and that’s disconcerting. Three, your colleagues just want it all to be over. They find the constant change exhausting and too much to cope with. Your middle managers have to translate grand visions and strategies into practical, pragmatic reality at the same time as reassuring their bewildered teams.
‘Transformation is becoming harder because the rate of technological change is increasing’
Beyond that, transformation is becoming harder because the rate of technological change is increasing, which provokes anxiety and creates a knowledge gap. Companies have to work extremely hard to remain relevant. And, change is messy. A statistic that’s often quoted is that 70% of change programmes fail. In reality, some aspects always succeed – something positive always emerges – and good leaders adapt and find ways to move forward.
Where does GenAI come into all of this?
Finally, we must of course look at the role of Generative AI. New technologies tend to be overhyped in the short term but underestimated over time. How, then, should you use AI to improve your business productivity? We suggest following these four principles:
Take a pragmatic, fast-follower approach to AI investment. The risks of investing in the wrong technology, or getting in before it’s ready for use, are huge. Experiment in multiple, low-cost ways and keep an alert eye on how things are evolving. Making big early bets is unlikely to pay off.
Invest in workplace and process redesign. If you try to optimise outdated processes using new technology, you end up frustrating your employees rather than enabling them.
Remember that AI is at least as much about people as it is about technology. How can you rethink ways of working and learn quickly from what your employees are telling you about how they are using AI, what works and what doesn’t? How can you equip your people with the skills and confidence to use AI well?
Become a responsible user of AI. This means being proactive early on about how you are going to use it transparently, responsibly and ethically. Consider how you will protect data integrity and privacy, respect intellectual property, enable human interpretation and oversight, and maintain accuracy. And work out how you will take an environmentally sustainable approach.
The best leaders aren’t just good at inspiring others to achieve a challenging goal – they are also clear about what they stand for as individuals. Human integrity around what is right and wrong has always mattered, and it will matter even. more as the world becomes increasingly influenced by AI.
