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Trends – Expert view

Removing resistance to digitalization.

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About Michael Wade

Michael Wade, a professor of innovation and strategy at the IMD business school in Lausanne, Switzerland, specializes in digital transformation – organizational change through the use of digital tools, technologies and business models designed to improve performance.

For Michael Wade, writer, teacher and “researcher in all things digital”, as he likes to introduce himself, the Covid-19 pandemic also brought positive aspects. With his team he continually collects a myriad of data on digital transformation projects around the world, and has naturally been exploring the effects of the pandemic.

Michael and his team track the pandemic’s impacts. “The results of the research are quite clear," he says: There has been a significant acceleration of the digital transformation organizations during the pandemic. By forcing people to work from home, the pandemic removed a major barrier to digital transformation.

“People all of a sudden saw the potential that digital tools and technologies could bring to how they lived and worked, and that unblocked a lot of the digital transformation resistance that existed before.”

“People realized that you could actually be quite effective and efficient away from the office. That’s opened a number of avenues for further transformation.” This led to the widespread adoption of several technologies that have been around for years, including videoconferencing in the cloud – initiatives that are often an organization’s first foray into digital transformation.

Wade is also seeing high interest in nascent technologies such as augmented reality, blockchain and artificial intelligence (AI). “If I were to pick one that might have the largest impact, it would be AI, because it can impact almost anything an organization does," he says, “but we are not at the point of AI's full maturity yet. The opportunities and possibilities it brings will only become clear in the next several years.”

“People all of a sudden saw the potential that digital tools and technologies could bring to how they lived and worked.”

The pandemic’s winners and losers

Wade has written extensively on the topic of not just surviving, but thriving during periods of major change – such as a pandemic. He believes there are three types of companies:

“A key piece of whether we come out on the winner or the loser side is trying to think differently and more innovatively.”

For that last group, says Wade, “the actions that we take today are going to significantly impact whether we come out on the winner side or on the loser side. And I think a key piece of that is trying to think differently and more innovatively.”

Wade and team have collected data suggesting that at the beginning of the pandemic – in March and April 2020 – the companies who performed the best were the ones focused on business continuity and cost containment. But by the summer, the dynamic had changed, and organizations focused on innovation were the top performers.

A great example of this shift is Airbnb. Early in 2020, Airbnb was thriving, but once the pandemic hit, the company suffered $ 1 billion in cancellations in just a few weeks. By focusing on local travel and longer-term stays, offering customers a place to ride out the quarantine or to work, the company lessened the impact of the pandemic.

“It’s really hard to change your mindset in a crisis," says Wade. “The focus becomes short-term because you have to survive.” The companies that have managed to do it have carefully considered their competencies, and then thought creatively about where they could use those capabilities to do something new.

High expectations for digital transformation in 2021

Prior to the pandemic, data collected by Wade and his colleagues demonstrated that up to 87 percent of digital transformation projects failed to reach their objectives. He expects to see an improvement in that rate in 2021. “I have a positive outlook for digital transformation in 2021, because I think the pandemic removed much of the resistance that has plagued these efforts in the past," he said, “and also due to the increased maturity that organizations built during the pandemic around digital.”

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