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The Digital Revolution starts in the head!
Digitalization in business means much more than just the introduction of new technologies or business models. In the meantime, many companies have come to the conclusion that digitization not only means the implementation of new processes and the use of state-of-the-art technologies but also requires strategic thinking models.
The success of digitization poses many challenges for many companies. The digital transformation of individual processes and areas in order to survive and compete in a digital competition with other companies is often the digital alternative to inactivity and postponing. One thing should be clear to everyone: inactivity and be postponing is not an option. However, the mistake should not be made to regard digitization as just a new technological approach. It is more promising to understand digitization as a cultural change and to transport it to all employees in order to enable a holistic implementation.
According to a recent study by McKinsey, the services of digital transformation have yet to become fully mainstream. On average, industries are less than 40% digitized, despite the deep penetration of these technologies in media, retail, and high tech, healthcare. Results show that some companies have now drawn their conclusions from their first digital failures. The biggest mistake that has emerged is the lack of cultural change in companies. Added to this are the frequently existing silo structures and inadequate digital strategies or even a lack of understanding by employees for digital trends. At the beginning of their digitization strategy, many companies ask the questions: ‘What does digitization mean for our business?’, ‘How digital is our company already?’, ‘What potential exists for our industry?’, ‘What will the ROI of these digital revolution’?
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Businesses need to define what digital maturity they already have and how much existing staff can handle and implement the challenges they’ll face. The best employees to successfully realize a digital transformation are not necessarily the most technically skilled IT people. It is important that those involved in strategic planning, in addition to a mature digital competence, also have the will and a corresponding perseverance to identify with the relevant issues, to drive them forward and persist even on dry spells and not give up immediately. Also, we must not ignore the outstanding role of CEO in driving the digital-transformation process. The process needs to start from the top. Companies need to change structures. The only one who can do it is the CEO. He/She needs to embrace the topic and make it a priority. He/She needs to consistently communicate to the organization, act decisively, empower people who help drive the transformation and also sideline people who are in the way. Very important point is that there is no return ticket, and this is what a CEO needs to radiate.
If appropriate, companies should designate a strategic digital team from different areas. The appointment of such a team should also involve neutral, non-industry ‘digital talents’. These bring an extraordinary and new – mostly external – perspective for the company and can significantly contribute to the success of digitization.
The most successful teams see the transformation that digitization requires as an opportunity and a challenge. They enjoy developing new things for internal and external customers and are driven by their affinity to new and especially digital topics. It’s clear the impact of these revolutions will bring profound changes in many areas, including the localization of production, impacts on global trade, the nature of the workforce of the future, and the distribution of wealth. While the good news is that these changes will play out over years and decades, the bad news is that they require deep and fundamental changes in companies. While some of the projects are certainly overestimated in the short term, the long-term impact has most certainly been underestimated.
For a successful digital implementation in companies is not necessary to assign these tasks from the very top level and to put themselves on hold. Rather, it is necessary to ‘digitize’ the corporate culture, so that the implementation can be supported by the entire workforce. Digitization should not be transferred purely to specialist areas but should be thought through from the very top, planned and, above all, exemplified. Also, to successfully navigate a path through the array of strategic challenges and options, companies must separate hype from reality and come to grips with how technological change affects companies. Only then can they consider what must be done and how to go about it.