Click 'Read Original' for details. Recently, I spoke with a friend from an FMCG brand. This company is an absolute leader in terms of scale, market share, and brand awareness, yet its digitalization capabilities are severely lacking. For example, they have hundreds of thousands of retail outlets nationwide. If they wanted to know which terminals had a monthly sell-through of 5 cases, could they pull that list immediately? Unfortunately, no! Moreover, distributor management is just basic entry of inventory data; the SFA used by sales reps is merely for show, and the data cannot be trusted; they invest hundreds of millions in terminal expenses each year, but they have almost no terminal information. You might think that a large enterprise's digitalization level shouldn't be like this, but that's the reality. This is the current state of most companies—they all talk about digitalization, but in reality, they are still at a stage where even obtaining decent basic data is very difficult. Many companies have leaders who emphasize the importance of digitalization in meetings, have set up digitalization departments, and invest heavily in systems, tools, and budgets each year, yet they see no substantial changes in business operations. So, where is the problem? There has been much discussion on this. Let me share my view, with two key concepts. 01 The first is status quo bias. Status quo bias refers to the tendency for people to prefer maintaining the current state over change, unless the benefits of change are extremely high or the costs of not changing are extremely high. In other words, it's either pleasure-driven or pain-driven. Why? Because change inevitably means "losing" something in the present, while the future "gains" are highly uncertain. When future gains are hard to outweigh current losses, the psychological aversion to loss kicks in, and people stay the same. This applies to individuals, and even more so to organizations. For example, if a company implements a new policy that affects some people's interests, it meets resistance. Even if leaders push it firmly, they often give up after a while, especially when resistance comes from multiple sides. Because implementing it brings short-term chaos, non-cooperation, and disharmony—these are "losses"—while the imagined "gains" are uncertain and their value unknown. Leaders often compromise. This is why driving change within an organization is so difficult. Why do many companies talk about digitalization but take no action, or only do superficial symbolic gestures? Many say it's because leaders or management lack the right mindset or awareness, but that might just be the surface reason. In reality, they are trapped in status quo bias—maintaining the status quo is still acceptable. That's my first key concept: status quo bias. 02 The second key concept is collective inertia. Most of the time, we are pushed along by inertia. Making phone calls, replying to emails, attending meetings, visiting clients—you think you have a plan, but it's all inertia. Recently, I chatted with a business owner who said her days are packed: mornings meeting with brand managers to discuss partnerships, afternoons talking business with downstream clients. So many trivial matters that she has no time or energy to think about what's truly important. She loves learning and is willing to go out and exchange ideas, but often, the inspiration and motivation she gains from learning or interacting with others fade away within a few days of returning to the office because she is swept up by inertia. In an organization, collective inertia is extremely powerful. Why do many companies' digitalization departments fail to drive digitalization? Each region and department has its own performance indicators and work methods accumulated over years. For example, sales reps visit stores just to tidy up and reconcile accounts. What? Now you want digitalization? You want terminal stores to register in a system and use it for expense reimbursement? That's too troublesome. Executors fall back into inertia, and eventually, the initiators, leaders, and managers also fall back into inertia. Image source: Panoramic Vision We always say that digitalization is not a transformation but a revolution. It is not a change in business direction; on the surface, it's a set of tools and systems, but in reality, it's about business processes, organizational functions, and the company's own transformation. Any digitalization inevitably means new processes and new ways of working, but under the powerful momentum of collective inertia, organizations tend to slip back into old habits. The first obstacle to change is "status quo bias," and the second is "collective inertia." So, you'll notice an interesting phenomenon: many companies have leaders who announce digitalization at meetings, assign dedicated departments, and spend a lot on tools and systems, but these measures are actually just to alleviate their own anxiety. 03 Why do I say that? Digital transformation is a challenge for any company. Challenges imply risks and opportunities. Anything that can be called a challenge must contain two dimensions: complexity and difficulty. Are complexity and difficulty the same thing? Well, they look similar, but they are actually two different concepts. Understanding the difference can help clarify our thinking. Complexity is about sorting out and breaking down processes; it's more about solving problems at the tool and operational level. Difficulty is about unifying thoughts, determining and sticking to the direction; it's more about solving problems at the cognitive and organizational level. Digital transformation has both a complex side and a hard side. Starting with complexity is about doing things right, which is a tactical issue; solving the hard problems is about doing the right things, which is a strategic issue. Why is digitalization said to be a "top leader" project? Not only because the top leader can coordinate interests and mobilize resources, but mainly because only the top leader can grasp the strategic direction and unify thoughts. However, the problem is that even the top leader finds it hard to break "status quo bias" and is easily swept up by "collective inertia." In such cases, companies buy various digital tools, but if the tools aren't used well, they blame the tools and either abandon them or buy another set. They learn from other brands' digital marketing, find suppliers, create a plan, run a promotional campaign, and then it's over—"Digitalization is the future, and we're doing it too!" What is this? Using actions to alleviate one's own anxiety. Image source: Panoramic Vision The problem is that this is starting from "complexity," making random moves at the tactical level. If you don't confront the "hard" issues and plan from the cognitive, strategic, and organizational levels, digitalization will only be superficial, and all efforts may be in vain. 04 Today, we've mainly discussed three points. First, the "status quo" is the biggest enemy of enterprise development; the first obstacle to change is "status quo bias." Second, the power of "collective inertia" is enormous; under its strong force, all changes may revert to old paths; it is the second obstacle to change. Third, between "complexity" and "difficulty," we tend to start with "complexity," using specific, superficial actions to alleviate our anxiety, but only by doing hard and correct things and advancing at the cognitive, strategic, and organizational levels can we ensure qualitative change. Finally, this applies not only to digitalization but also to enterprise development and continuous breakthroughs, regardless of size or stage. You can use these concepts to examine your current state. I hope this article provides some inspiration. -END-