Michael Lenox‘s latest book is Strategy in the Digital World, published by Stanford Business Books. He is also the co-author of The Decarbonization Imperative and Can Business Save the Earth?. He is the Tayloe Murphy Professor of Business Administration and Senior Associate Dean and Chief Strategy Officer at the University of Virginia’s Darden School of Business. His work has been cited by numerous outlets including the New York Times, the Financial Times, and the Economist. He has been recognized as a Faculty Pioneer by the Aspen Institute, as the top strategy professor under 40 by the Strategic Management Society, and one of the top 40 business professors under 40 by Poets & Quants.
* * *
Before discussing Strategy in the Industrial Age, here are a few general questions. First, was there a turning point (if not an epiphany) years ago that set you on the career course you continue to follow? Please explain.
In my mid-twenties, I was on a path as a technology consultant working for one of the big consulting firms. As I considered the impact I wished to have through my career, I looked to others that inspired me. My parents were educators, my dad was a high school principal and my mom a high school guidance counselor, so seeking a career as a professor should not have come as a total surprise. Ernest Mead, a professor at UVA, was an influential mentor. He taught until he was 96, his passion for teaching and his desire to advance students never waned. He
believed in being a lifelong student. I wanted a career where I was so passionate that I would
never want to retire. I have found it as a professor.
Who and/or what have had the greatest impact on the development of your thoughts about organizational transformation? How so?
There are too many people and influences to name. I will cite an example from my formative years that influenced where I directed my doctoral studies. As an engineering student, I wrote a thesis on the risk of large-scale chemical plant disasters, those that involved multiple fatalities. While the thesis was highly technical, it became obvious in my research that the core of the issue was people and the incentives and structures that enabled and constrained their behavior. When I decided to pursue a PhD, I pivoted to studying economics with a specific focus at the intersection between technology, management, and policy.
Here are a few of my favorite quotations to which I ask you to respond. First, from Lao-tse’s Tao Te Ching:
“Learn from the people
Plan with the people
Begin with what they have
Build on what they know
Of the best leaders
When the task is accomplished
The people will remark
We have done it ourselves.”
I agree that leadership involves learning from and empowering others.
From Michael Porter: “The essence of strategy is choosing what not to do.”
I use this quote all the time! This is absolutely critical in digital transformation.
From Voltaire: “Cherish those who seek the truth but beware of those who find it.”
In a similar vein, beware of those who tell you they know where technology is going!
From Alvin Toffler: “The illiterate of the 21st century will not be those who cannot read and write, but those who cannot learn, unlearn, and relearn.”
This is something I highlight in the book. I believe that continuous learning is crucial in the rapidly evolving digital age.
From Margaret Mead: “Always remember that you are absolutely unique. Just like everyone else.”
This is a great reminder of what we call the Strategist’s Challenge – to find unique valuable competitive positions, often in a crowded marketplace. If you aren’t unique, you are likely to fail.
From Maya Angelou: “I’ve learned that people will forget what you said, people will forget what you did, but people will never forget how you made them feel.”
Great quote. I agree on the importance of empathy and connection.
From Charles Kettering: “If you’ve always done it that way, you’re probably wrong.”
This is one of the biggest challenges for historically successful companies in
the face of digital disruption, clinging to what made them successful in the past, hindering
progress and innovation
From Thomas Edison: “Vision without execution is hallucination.”
I had never heard that one before! Good lesson for strategists.
From Theodore Roosevelt: “People won’t care how much you know until they know how much you care.”
In the book, I talk about the importance of humility. I think it is the basis for many positive characteristics including empathy.
Finally, from Peter Drucker: “There is surely nothing quite so useless as doing with great efficiency what should not be done at all.”
In the book, I talk about how too many digital transformation efforts are like improving the efficiency of the engines in the Titanic. If you don’t redirect the ship, you are still going to hit the iceberg.
In your opinion, what are the defining characteristics of a workplace culture within which personal growth and professional development are most likely to thrive?
A culture that encourages growth and professional development is characterized by an openness to innovation, a willingness to embrace failure as a learning opportunity, and an emphasis on continuous learning and improvement. Creating an environment where individuals
feel supported and encouraged to take risks and learn from their experiences is key.
Looking ahead (let’s say) 3-5 years, what do you think will be the greatest challenge that CEOs will face? Any advice?
One of the greatest challenges will be navigating the rapid pace of technological change and its impact on industries and business models. CEOs must stay informed, adapt to emerging trends, and make strategic decisions that position their organizations for success in the digital
age.
Now please shift your attention to Strategy in the Digital Age. For those who have not as yet read it, hopefully your responses to these questions will stimulate their interest and, better yet, encourage them to purchase a copy and read the book ASAP. First, when and why did you decide to write it?
I decided to write the book because I recognized the critical need for a guide that helps business leaders understand and navigate the complexities of digital transformation. I wanted to provide practical insights and frameworks to help leaders develop winning strategies in the face of technological disruption. This is first and foremost, a book about strategy. Digital technologies are redefining the basis of competition, creating novel ways to create value for your customers, proliferating new business models, deconstructing value chains, and frequently
leading to competitive reordering.
To what extent (if any) does the book in final form differ significantly from what you originally envisioned?
The final book closely aligned with my initial vision. I had been teaching a course and consulting organizations on the topic for years which informed my view. However, the writing process allowed me to refine and strengthen the frameworks and examples, ensuring they
effectively conveyed the key concepts and practical applications of digital transformation.
I agree with you: “Digital technology is changing the underlying basis of competition for a wide swath of businesses and industry.” In your opinion, what are the nature and extent of those changes?
Digital technology has fundamentally altered the competitive landscape, enabling new business models, enhancing customer experiences, and driving operational efficiencies. Organizations must embrace data and analytics, leverage emerging technologies, and adapt
their strategies to thrive in this rapidly evolving environment.
What are the unique leadership challenges that a digital transformation poses? How best to respond to those challenges?
Digital transformation demands leaders who can navigate ambiguity, inspire innovation, and drive cultural change. They must be adept at leveraging data and technology, fostering collaboration, and cultivating a culture of experimentation and continuous learning.
In your opinion, which disruptive technology has had the widest and deepest impact on businesses and industry?
It's challenging to pinpoint a single technology as the most impactful since the influence of technologies like artificial intelligence, blockchain, and IoT varies across industries and are constantly evolving. In this current moment, generative AI’s ability to automate tasks, derive insights from data, and enhance decision-making has significant potential across sectors.
Process for deciding which technology would benefit an organization:
Lenox: In the book, I present the idea of the digital transformation stack. This includes your underlying digital infrastructure – how you collect and process data through, for example, remote sensors or cloud computing. This is then complemented with your data and analytic
capabilities, perhaps using blockchain or AI, which support the third level of the stack, the digital applications you create for various business functions. All of this flows up to your digital strategy which articulates your desired competitive position in a digital transformed marketplace. The technologies you adopt need to be aligned with this strategy.
By which process should business leaders decide which technology (ies) would be of greatest benefit to their organization?
In the book, I present the idea of the digital transformation stack. This includes your underlying digital infrastructure – how you collect and process data through, for example, remote sensors or cloud computing. This is then complemented by your data and analytic capabilities, perhaps using blockchain or AI, which support the third level of the stack, the digital applications you create for various business functions. All of this flows up to your digital strategy which articulates your desired competitive position in a digitally transformed marketplace. The technologies you adopt need to be aligned with this strategy.
Please explain what the Strategist’s Challenge is, and, why it is uniquely significant..and daunting.
Lenox: The Strategist's Challenge entails aligning an organization's values, market opportunities,and capabilities to establish a valuable and defensible competitive position in the digital age. It is significant because organizations must reconcile their existing strengths with evolving market dynamics to create new sources of competitive advantage.
What is the annealing process and which dos and don’ts should be kept in mind when beginning one?
The annealing process refers to the early stages of a new technology where there is yet wide agreement on what this technology will look like and whether, even, if it will provide useful in the market. Dos include fostering a learning mindset, embracing experimentation, and empowering employees to contribute to innovation. Don’ts include resisting change, relying solely on past successes, and paradoxically, over-reacting to potential emerging technologies.
What are the defining characteristics of a winner-take-all market?
Lenox: Winner-take-all markets are characterized by network externalities, where the value of a product or service increases as more users adopt it. A dominant player gains a significant advantage due to the reinforcing nature of network effects, making it challenging for
competitors to catch up.
How best to establish a dominant competitive advantage within one?
In the face of a potential winner-take-all market, a firm must decide whether they want to go for the dominant position or perhaps go after a different part of the value chain that leverages the platform play. Developing a dominant platform is difficult and sometimes it is best to leverage your existing strengths to compete in a less contested space.
With uncommon skill, you examine three frameworks that can be of significant benefit to a successful digitcal transformation. What are the strategic objectives of each? First, setting a baseline.
Setting a baseline involves assessing an organization’s current competitive position. Analyzing the digital environment entails understanding market trends, customer behaviors, and competitive dynamics. Formulating a digital position involves identifying strategic
opportunities and aligning them with the organization’s strengths. Specifying how to capture value involves designing and executing initiatives to create and extract value from digital transformation.
I agree with you that “digital technology holds promise to help address the world’s most pressing problems.” In your opinion, which of these problems seems to be most difficult to solve? Is doing so also most urgent? Please explain
One of the most challenging problems to solve is achieving a sustainable and equitable digital future. As technology advances, organizations and societies must address issues of privacy, security, ethical considerations, and inclusivity to ensure that digital transformation
benefits all stakeholders.
James O’Toole asserts in Leading Change (1995) that the greatest resistance to change tends to be cultural in nature, the result of what he aptly characterizes as “the ideology of comfort and the tyranny of custom.” What do you think?
Cultural resistance is a significant challenge in driving digital transformation. It often stems from fear of job displacement, resistance to new ways of working, and the comfort of familiar practices. Overcoming resistance requires effective change management, clear communication, and creating a culture that values experimentation and continuous learning.
In your opinion, which of the material you provide in Strategy in the Digital Age will be most valuable to those now preparing for a career in business or who have only recently embarked on one? Please explain.
For those preparing for a career in business, the book provides a comprehensive understanding of digital transformation and its strategic implications. It equips them with frameworks and insights to navigate the digital landscape. For small-to-midsize company owners, the book offers practical guidance on leveraging digital technologies to compete effectively. Fortune 500 executives can gain strategic insights and learn from real-world examples to drive digital transformation within their organizations.
Any final thoughts?
Thank you for the opportunity to discuss my book, Strategy in the Digital Age: Mastering Digital Transformation. Readers can learn more about my work and connect with me through my website by clicking here. Also Twitter and LinkedIn.