If your company is already implementing ideas in cross-departmental teams in an agile way and small, incremental results without 100% fixed ROI in an implemented proof-of-concept are already part of your daily business, you have already taken important steps on the path of your digital transformation and the following is self-evident for you.
But even if you haven't quite reached the aforementioned milestones yet, you may already have come across the statements in this article. But maybe there is something new in it and it will inspire you to continue on your path to success in the digital sector.
Hardly any term is used more in the media than "digital transformation". Regardless of whether one approaches the topic from an economic perspective - in the case of Germany in the Index für die digitale Wirtschaft und Gesellschaft (DESI) 2021 ranks eleventh among the 27 member states with 54.1 - or you ask the question: "Why change something if you are doing well?"
No business decision maker can afford not to think about the question "What does digital transformation mean for my business?" anymore. In the following article we would like to look at different questions and survival strategies on the way to individual digital transformation.
Why now of all times?
The dynamism of technical innovation is a major driver of digitalisation, as these exponential leaps make it possible to realise technical solutions today that would have been unimaginable just 10 years ago. Modern people are constantly online and well connected or informed. Added to this is the social change towards the share economy. Taking these aspects into account, new and diverse combinations of known and already used technologies and processes are so successful. The example of airbnb shows that although flats were already sublet privately in the past, it was only through the combination with already existing reservation systems that a digital community platform emerged, which as a "digital notice board" enables private individuals to find or rent out accommodation at short notice. The two factors "exponential growth" and "combination of applications/processes" are thus essential drivers for digital transformation and will increase customer expectations and, as a result, competitive pressure in the coming years.
The idea of "Digital Darwinism"R. Kreutzer and K. Land
show in their book of the same name, which is still topical, very concretely and vividly what happens when companies do not adapt to the (ever faster) changes: they may disappear from the market or become irrelevant. The former mail order company Quelle, the mobile phone manufacturer Nokia or pretty much all video stores can be mentioned here as examples. The relevance and importance of acting NOW is derived from the aforementioned (ever) faster changes in the framework conditions. This also refers to changes within society, which are reflected in rising customer expectations.
How do companies behave in this situation?
In conversations with e-business managers, marketing or IT directors in companies from every sector, we find that the understanding of the need to act in the digital environment is very much present. Just like goals, concrete ideas and the will to put them into practice.
Workshops are held to try to get other departments excited about these ideas and possible processes are discussed. In most cases, an attempt is made - analogous to the existing business model - to transfer tasks, roles and responsibilities 1:1. In the best case, a decision proposal for a budget is finally presented to the board. Here, the initiative is then often stopped and once this has happened, it takes a long time for the issue to be brought up again. Valuable time is then lost while the environment, competition and technical requirements evolve.
Limited resources/skills, focus on traditional core business, unclear risks, unclear responsibilities and ROI that is difficult to define are often cited as obstacles. Of course, as mentioned at the beginning, there are other examples in which companies and their decision-makers let their employees try out ideas in an agile manner according to the principle of "learning-by-doing" and thus successively build up knowledge in the digital context (path of enlightenment). However, a large proportion of (small and medium-sized) companies - especially in the B2B sector - are only at the beginning of their journey with high expectations, while the plateau of productivity to be reached is rising due to exponential technological development and learning curves are becoming steeper.
What mistakes should companies avoid during their digital business transformation?
Lull yourself into safety
The fact that sufficient profit is still being made with traditional business today does not mean that it will still be so in 5 years. The dynamics described are more likely to lead to your company being practically overrun by change and new competitors becoming serious rivals sooner than you think. Either through disruption or simply by getting ahead of the game.
Not afraid of change
With all due caution, you should not blindly follow every technical trend. Digital changes should fit into the structure and core competencies of your company. Smaller innovations also fit into existing business areas. A clear positioning of your company in an innovation/competition matrix can also give you more transparency of the status quo.
Applying German engineering skills to digital projects
Structure, efficiency and perfectionism are attributes with which German companies are often associated. This knowledge may have been built up and refined over several decades. However, the successful implementation of digital projects requires a trial-and-error principle that allows for mistakes. In short, iterative cycles, what has already been experienced should be tested and adapted.
Nipping ideas in the bud
Many of your younger employees know the digital world better than you do. They bring ideas that may be different from your way of thinking. It may be difficult to imagine success and how new ideas should replace existing business.
What should companies promote?
Watch competition closely
Observe your environment very closely. Due to the exponential dynamics, changes are not always noticed or neglected at first. If the competitor then picks up speed, it may already be too late to react in a structured way. In pilot projects, ideas can be tested for success quickly and economically. Changes in the business case are not unusual.
Overcoming departmental boundaries
Collaborative working has been indispensable not only since the beginning of the digital transformation. In your supply chain, this practice should have been lived for a long time (which nevertheless has to reinvent itself again and again). Even with expected and stable results, "throwing work packages over the wall" is no longer relevant. In agile projects with rapidly changing requirements and short cycles, it is simply a blocker.
Sponsorship in top management
The necessary management support must go beyond New Year's speeches or an occasional "yes, that should be done". In addition to vision, other mechanisms for accountability and decision-making will come into play and ultimately budgets and resources will need to be allocated.
Changing your corporate culture
Digital transformation is an evolutionary process that is constantly progressing: Only an agile company with a transparent competence culture can cope with the dynamic nature of digitalisation in the long term. A new way of thinking must be demanded and promoted throughout the company and also lived by you. Training, reorganisation and the use of external consulting are supporting measures.
How should entrepreneurs proceed and where should they start?
Understand digital business transformation as an opportunity to redesign working environments and improve your offering. Focus on your customers and their needs and open up meaningful communication channels/touchpoints. Based on this, develop models for processes and their organisation. Fast is the new big: with agile working methods, you can confidently face the dynamic nature of digital markets and constantly drive your individual transformation forward.