“Digital transformation” – this slogan arouses hopes and incites fear. Some sense bright prospects of profits and unprecedented opportunities, while others fear doom scenarios for the real economy and abandonment of human labour.
So this is a notion that provokes conflicting emotions, viewpoints and different attempts at explanation. Digital transformation is about unstoppable and intensive development that turns many things upside down both in the business and the social aspect. Suddenly there is an elephant in the room, which slipped in quietly and almost unnoticed and which can no longer be simply ignored.
Digital transformation as a challenge
In the online poll “Digital Switzerland 2015” (HWZ, 2015) 74 per cent of the nearly 500 respondents stated that digital transformation will seriously impact their sector in the coming five years. More than half of them believed that it would be crucial for success already by 2017. Interestingly, 33 per cent of the surveyed companies still had no digital strategy in place. The forecasts of the “Digital Economic Value Index 2016” by Accenture, which predict an increase in the global digital economy to a remarkable 25 per cent by 2020, also show that it is hardly possible to evade the questions and challenges of the digital transformation.
The technological progress requires a lot from companies that wish to remain competitive. Apart from substantial investments in infrastructure, licences and services, it is the large expansion of personnel and knowledge that counts as a major challenge. Organisations that consistently drive the digitisation and get a good grip of important pillars of such development have a good starting point. Nevertheless, they are standing only on the start line of a comprehensive transition. Digital transformation requires much more than merely effective and efficient provision of technology. Its progress is based on the triad “human, technology and organisation” in all major areas of the company and far beyond it in the person’s everyday life.
Focus on people
Understanding people’s needs and expectations is at the centre of attention of economic entities, public institutions as well as NGOs equally. Those needs have significantly changed. Previously, employees were happy if they had the privilege to receive a laptop from the company, now they are disappointed if the model is not the one they prefer, or they want to use their own equipment anyway. A few years ago it was enough to please the customers if the service was available on the Internet at all, while today it is taken for granted that the offer can be used everywhere on mobile devices. People expect everything to be cleverly designed, user-friendly, versatile and, moreover, fun to use. After all, a competitor’s offer is just one click away.
Digital transformation focuses on this change in human behaviour and the evolving human needs and expectations. On the one hand, the point is to be able to provide customers with the right offer at the right time and in the right place. On the other hand, employees have to be able to use their information and communication independently of place and time in order to work efficiently and above all effectively. The classical value proposition for the customer, or the technology offer for employees, evolves in both cases towards a dynamic relation aiming at maximised use, positive experience, and simplicity.
People value autonomy and control. And they get precisely that thanks to the transparency offered by digital services. The success of such large players as Uber, Airbnb or Booking.com does not originate solely from an attractive price model. They offer services that provide customers with transparency and enable interaction with the company. At the same time it is possible to share information with other users whose opinions and reviews may inspire trust and safety. The combination of knowledge of individuals (The Wisdom of Crowds, James Surowiecki, 2004) is a major component of new digital models and makes mature and demanding customers, who interact with the company on equal terms and who must be treated seriously as partners.
Technology as the basis
Customer- or employee-oriented offers can be developed only when the person’s expectations, wishes and needs are known. Since it is impossible to ask each customer directly, digital data constitute a basis for drawing conclusions regarding general expectations and specific requirements of individuals. Extracting useful and accurate patterns from large data sets in order to translate them into innovative and improved offers remains a great challenge.
This brings us to intensive and smart automation, thanks to which information can be processed without manual activity and necessary measures can be taken. Apart from specialists who can deliver and operate the sophisticated technology, experts are necessary to develop scalable systems and services, taking into account clear goals and in line with the strategy, which could serve as a basis for dynamic development also in the medium term.
Organisation as the breeding ground
In line with the growing capabilities of connectivity the degree of complexity is also increasing. Reducing complexity where necessary and implementing targeted measures both require good and simple ideas. Only in this way can a company launch new, interesting and economically attractive offers in a short period. This is attainable in a highly dynamic environment by establishing an organisation that supports innovation and creativity and is able to attract and retain motivated and skilled employees.
Many existing structures in the organisational framework and in the processes are too rigid and too slow to keep pace with the rapid transition. In this situation, bold steps towards more agile, self-organising structures should be taken in order to remain successful on the market. Collaboration and teamwork are largely supported by an open business culture, flat hierarchies and short paths. Only thus can knowledge be openly shared and new innovative ideas developed together. If a company succeeds in becoming this kind of a learning organisation (P. M. Senge: The Fifth Discipline, 1990), it is set to count as one of the best in the future.
Comprehensive change as a task
Therefore, thorough digitisation is the crucial driver of digital transformation, but not its core. What needs to be transformed is the organisation and processes, business models and finally also the culture and behaviour of various stakeholders. The question about the direction in which your organisation should evolve cannot be answered in a generalised and simple manner. Focusing on people – customers, employees, partners – makes it is possible to formulate the right goals and determine the appropriate measures for the transformation of the organisation and the development of technology in order to achieve sustainable successes.
In this sense, the comprehensive changes underlying the digital transformation require a company to rethink what is known and to launch a profound transition. Organisations which set themselves this challenge in a bold and self-critical way will become tomorrow’s winners.
Published in “Digital Transformation” special supplement of “Netzwoche,” 22 June 2016