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Paranoia is back in fashion

Blog: The Digital Enterprise

“Only the paranoid survive” observed Andy Grove as he navigated Intel through waves of technology-driven disruption. Paranoia is back in fashion. Senior executives are increasingly nervous as digitally native new entrants (Amazon et al.) win share and destroy margins. Small start-ups have become dangerous competitors in short order. New competitors are emerging from left-field as digital mega-brands transcend sector boundaries. New risks are present, both strategic and operational.

Businesses are right to be paranoid. Digital lowers barrier to entry for competitors. Digital businesses are leaner and fitter. Digital drives winner takes all dynamics. Incumbent businesses in many sectors are already watching digital disruption damage the bottom-line.

Paranoia requires therapy. An effective treatment regime for digital paranoia should have the following characteristics:

1. Allow time for deep reflection. Digital creates complex strategic dilemmas as well-honed business models are dramatically disrupted. The future context is hard to predict. True insight takes time and effort.

2. Begin treatment right away. The digital space is changing rapidly. Better to start building capabilities that are directionally correct than to wait for a perfect answer.

3. Stay the course. Upgrading the customer experience is usually a good start. But successful digital businesses are ‘digital to the core’, requiring a transformation of underlying capabilities such as processes, systems and skills.

4. Take responsibility for the outcome. Digital is a core competence that can’t be outsourced, although an eco-system of partners is usually needed to help deliver.

In summary, paranoid businesses need to get some therapy. But it needs to be the right therapy or the paranoia may prove justified. After all, competitors really are “out to get you”

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