It’s a tough world out there. Business and IT leaders continue to walk the high wire act – balancing innovation and technology advancements with costs, justifying massive investments and resources before the solution or offering is fully adopted by users.
A widening confusion about how to approach transformation exists – does the innovation mean that new technologies will completely replace the old? Should business leaders tear down and build completely new infrastructure ecosystems or modernize what they already have?
While some may think that this digital dilemma is unique to this decade, this tension between these two seemingly opposite concepts are not. Joseph Schumpeter’s creative destruction concept first developed in 1940’s addresses progress as a process of structural changes, driven by innovation.
Innovation can arrive in many shapes and forms, the choice of strategy employed might include different criteria of technical investments to date, available skills, organizational strategy, customer preference, marketing strategy, cost of implementation, and many more.
Schumpeter’s concept provides a good basis for leaders to understand the various approaches to transformation.
Business leaders should not only look at the new technology itself but also within the broader infrastructure ecosystem. They also need to anticipate, understand and bridge any potential conflict that might emerge when integrating old and new ecosystems.
Out with the old, in with the new?
Innovation moves at a rapid pace and there is a great temptation for business and IT leaders to bring in new solutions – tear down the hulking, seething legacy ecosystems and replace them with solutions that bring the promise of agility, speed and increased revenue.
However, for many organizations legacy systems remain critical to day-to-day operations. The strength and maturity of the infrastructure organizations already have in place can actually provide a solid foundation for integrating new technologies. In many cases, core business systems define the organization and are the organization.
Applications are built on these platforms – making insurance calculations, confirming holiday bookings, managing production lines at car manufacturers, processing and tracking parcel deliveries, offer priceless value. In many cases, replacing the whole ecosystem would be counterproductive.
What’s needed is a pragmatic approach that leverages the value of current IT systems but embraces the future needs. Instead of focusing on building solutions from scratch what’s needed is a lower-risk approach which recognises the assets that work but could the improved, while at the same time casting aside systems that won’t provide value.
The journey ahead
Before implementing a new technology or solution, organizations need to assess its potential. Just because the solution is praised by the market as revolutionary, it may not fit the distinctive business model of a particular organization or may not be compatible with the current infrastructure.
The best-case scenario for many companies: ensuring that a new technology’s dependence on other innovations is very low, creating an opportunity for plug-and-play within a legacy ecosystem.
In the instances when technologies do not fall into this plug-and-play model, the competition between new and old technology begins. Would this competition eventually lead to more complexity and even more investments?
Business leaders shouldn’t look at this ongoing competition as a strain; rather, analyze very closely how the old and the new technologies can coexist and think of the transformation as an ongoing process.
Organizations in the Asia Pacific region realize the importance and urgency to innovate and transform their business models and supporting IT infrastructure.
However, many still struggle to fully understand how to approach the innovation. They fear that they will either put substantial investments in technologies that are not yet fully compatible with their business models and infrastructure or miss the innovation wave.
What’s needed is a deep analysis of the old and the new, which will help to answer the most pressing question: “What technology should I invest in, and when?”. While the old technologies might need to be gradually replaced in the future, foundations should be kept intact in the meantime.