In a world of digital natives, businesses need to embrace discontinuous thinking

LESS than 20 years after Apple launched the iPhone, almost seven billion people, 86 per cent of the world’s population, have a smartphone – more than those who own a toothbrush or have access to electricity and an indoor toilet.

And, boy, are we making use of these devices. Singapore residents spent an average of 5.3 hours a day peering at their phone in 2022, according to industry tracker App Annie – receiving, as a reward, dopamine-induced gratification from every glance at this ultra-addictive and hypnotic screen.

The societal consequences in terms of shortened attention spans, distraction and ultimately disconnection from our fellow human beings deserve a rigorous and wide-ranging debate. Meanwhile, companies have to deal with the economic consequences of this change.

Within the next two years, 75 per cent of the global workforce will be digital natives: those born after 1980, who grew up surrounded and shaped by smartphones, computers, the Internet and, most recently, social media. They are different from preceding generations in the way they think and, specifically, in what they expect from corporate brands.

Digital natives do not understand analogue concepts such as linear television or newspapers, which they regard as relics of a bygone boomer era. They call a Grab rather than hail a taxi; order most of their meals online and never visit a bank branch.

Customer service and user experience are top-of-mind for digital natives and are much more important to them than loyalty to a particular brand. In fact, they are quick to cancel people, ideas and brands that offend their sensibilities – just ask Bud Light.

In these circumstances, traditional advertising tends not to work. What counts is digital word of mouth, lateral referrals rather than guidance handed down from on high: businesses no longer tell consumers what a brand is; the latter tell each other.

Most corporations, however, are still being led by digital migrants – Gen X, Baby Boomers and “Builders”, born before 1946. The average age of board directors at S&P 500 companies is 62. This is potentially dangerous. As the Dunning-Kruger effect demonstrates, people tend to be most confident about a topic they know little about – and this position is, all too often, the one found in boardrooms at established companies. It is only as their knowledge and competence increase that they recognise their limitations.

These corporate leaders acknowledge a need to change; they may even recognise that their business model is being fundamentally challenged by the rise of the digital economy, leading to some sleepless nights.

But they have not yet grasped – and given their generation, may not be able to grasp – that their organisation requires a transformation, a fundamental overhaul. We are experiencing a fourth technological and industrial revolution and incremental change won’t cut it.

Failing to adapt to such paradigm shifts carries a high price: not just a decline but, in all likelihood, growing obsolescence and eventually complete disappearance. Kodak, Blockbuster, Nokia and BlackBerry are all examples of companies that “did nothing wrong” as then-Nokia boss Stephen Elop put it during his last speech, with tears in his eyes. These companies continued to act according to existing parameters and did not understand that their environment had changed fundamentally.

The key to surviving discontinuous change is to solve old problems in new ways. A logical application of the marvel of electricity to the issue of lighting would have produced electric candles, not the lightbulb. Or, as Henry Ford said: “If I had asked people what they wanted, they would have said: ‘faster horses’.”

Consequently, the rewards of an innovative leap in thinking can be enormous. The second industrial revolution enabled the rise of modern industrial companies from Ford to AT&T – disruptors in their time; and the fourth, digital revolution has already brought us Google, Amazon, Netflix, Uber and other network-based giants.

This, then, is a challenge for the CEO and the entire leadership team, not merely a technology project to be led by the CIO. Unfortunately, this superficial approach, analogous to putting digital lipstick on an analogue pig, is how most companies are still dealing with digital change – and explains why the majority of such attempts fail.

The writer is chief business officer at Circles, a global technology company based in Singapore