Why transportation needs to embrace disruption to transform

I’m guessing most of us are familiar with the story about how Kodak was unable to successfully shift their business model when digital cameras came on the scene and changed everything. However, what you might not know is that some employees at the company encouraged Kodak to adapt to industry changes. Kodak did invest in new technology, built one of the first digital cameras and one of the first photo sharing websites. But these efforts alone were not enough, ultimately Kodak failed to truly understand what consumers wanted and were unable to successfully transform.  And Kodak’s not the only one. Blockbuster and Borders also failed to adapt to changes happening in their industries. Which begs the question, how do we make sure our companies don’t become ghosts like these ones?

We’re living in a time when transportation is undergoing major change and disruption, unlike anything we’ve experienced before. People see there is a better, more efficient way to get from point A to point B. Companies are building shared services around cars, bikes and scooters that are revolutionizing the transportation industry. Not only that, but these changes are affecting a wide range of peripheral industries. For example, vehicles that are smarter, safer and more efficient will mean less car repairs, fewer trips to gas stations, less insurance, as well as very non-intuitive effects like less organs that may be available for transplant donations. Consumers expect large platform companies to play a roll, so as the Googles and Amazons of the world encroach on new markets, such as transportation, existing companies in those markets will have to understand how consumer mindset is changing and rapidly adapt.

So, with these changes, what should we do? We can’t idly sit by and react to the changes as they come. Instead, we need to be proactive. We need to not only anticipate the changes, but be the change. Instead of letting changes disrupt us, we must understand why these changes are occurring and embrace the disruption.

How do we do that? With the right leadership.

Transformation is not easy, and people tend to resist it. To lead through the disruption, you must have a thick skin and be very committed to your journey. If you are in one of these companies being disrupted, you will find that the momentum will be to keep to the status quo, to keep seeing these new trends with your filter of the way things have worked in the past. But the successful path forward is about seeing the macro trends that are occurring around you. Kodak’s struggle was not because they didn’t move from film to digital photos, the trend they failed to adapt to was consumers desire to be more connected to family and friends in real-time.

Arity was born out of the idea of embracing disruption and doing more than just leading through it, but in fact leading the disruption happening. Allstate foresaw the changes coming in the transportation industry and considered how they would affect the insurance industry decades into the future. Rather than sticking their heads in the sand, Allstate formed Arity to deeply understand the changing transportation ecosystem, embrace the disruption and position itself to assist a series of industries navigate consumers transitioning from current to new forms of mobility. Allstate recognized the opportunity was to build a new business that could help the industry rather than simply make changes to its existing business model.

It hasn’t been easy; like at Kodak, many people within the enterprise are hesitant to completely embrace bold moves, like creating Arity. They may not see the need for change. But I know my job as a leader is to help push people out of their comfort zones for everyone’s benefit. As my leader, Allstate’s CEO Tom Wilson, says, “Leadership is getting people to where they wouldn’t go on their own.”

True transformation is more than just a buzz word – it’s hard work that is necessary to survive. Transforming requires leadership and commitment, understanding not only what is happening, but why, thinking far into the future, and being willing to embrace the challenges that disruption brings. Getting everyone on board can be a huge challenge, but it’s so worth it! And it’s necessary, if we want to survive radical transformation happening across every industry.

My advice? Embrace this moment in time, a wonderful opportunity awaits, and your company has what it needs to be a success story. Seize the moment and make it happen!

Gary Hallgren presented a talk called “Embracing Disruption to Transform” at the 2018 MIT Symposium on digital transformation hosted at Allstate.