The First Law of Digital Innovation, Part 1 of 2

George Westerman, Research Scientist, MIT Sloan Initiative on the Digital Economy

A while back, we posted an interview with @George Westerman—best-selling author and  Principal Research Scientist with the MIT Sloan Initiative on the Digital Economy—on how non-tech companies can compete and win on innovation in the age of digital transformation.

It was a popular post and Professor Westerman has been kind enough to let us share one of his recent articles in the MIT Sloan Management Review. This one is on innovation and why digital innovation is more of a leadership challenge than a technology challenge. Thought-provoking commentary and well worth the read.

(This post is the first installment of a two-part series and is republished with permission and is copyright of MIT Sloan Management Review.)

By now, most of us have heard of Moore’s law. The “law,” coined more than 40 years ago by Intel cofounder Gordon Moore, has helped to shape the pace of innovation for decades. Originally focusing on the computing power of semiconductor chips, Moore stated in 1975 that the transistor density doubles roughly every two years.

As technologies and computing architectures have changed, the doubling time and the performance measure have changed, but the nature of the law has not.

Computing power grows exponentially. This has been true for digital technologies in general, from processors to networking to DNA sequencing.

While people are now predicting the end of Moore’s law, exponential growth in computing power continues as new technologies and architectures emerge.

The relentless march of technology is very good for companies that sell technology, and for the analysts, journalists, and consultants who sell technology advice to managers. But it’s not always so good for the managers themselves. This is because Moore’s law is only part of the equation for digital innovation. And it’s a smaller part than many people imagine.

I’d like to propose a new law. It’s one I know to be true, and one that too many people forget. We can call it the first law of digital transformation. Or we can just call it George’s law. It goes like this: Technology changes quickly, but organizations change much more slowly.

This law is the reason that digital transformation is more of a leadership challenge than a technical one. Large organizations are far more complex to manage and change than technologies. They have more moving parts, and those parts, being human, are much harder to control. Technology systems largely act according to their instructions, and technology components largely do what they are designed to do.

But human systems are very different. While it’s relatively straightforward to edit a software component or replace one element with another, it’s nowhere near as easy to change an organization.

Organizations are a negotiated equilibrium between the needs of owners (or leaders) and the needs of individuals. This equilibrium is difficult to attain and even more difficult to change. Just think of the last time you launched a major new transformation in your business. Or when your boss did. Simply saying that you’re transforming doesn’t make it so.

You need to convince people that they need to change, and then you need to help them change in the right direction. If you do it right, you get them excited enough that they start to suggest ways to make even better changes.

Because digital transformation is more of a leadership challenge than a technical one, it’s essential to focus managerial attention on people’s desire to change and the organization’s ability to change.

(Stay tuned for the next installment of this digital innovation series, as Westerman breaks down his three-part strategy for converting digital transformation from a project into a capability.)

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