Just coming up with innovative ideas won’t make a company successful. Success only comes from the ability to implement those ideas consistently, profitably and above all quickly. In the new year, it is time for deeds to follow resolutions, accept disruptions and accelerate digitization in the company. For 2019, the motto is Just do it!
Ignoring new developments is usually fatal for companies
As an engineer at Eastman Kodak, Steve Sasson developed the world’s first digital camera in 1975. But the company underestimated the new technology and banished the digital camera to the archive of unused ideas, until the company itself wound up in the archive of business history as a result of that decision – Kodak was steamrollered by digitization. In 2012, the company finally declared bankruptcy, even though today’s digital camera is still based on Sasson’s original patent. Kodak listened to their customers at the time, who wanted consistently better colors, better film and better sharpness. However, the first digital cameras had nowhere near the quality of the analog technology and seemed to be an innovative, though not competitive product for Kodak. But the company didn’t think about one thing: it is a characteristic of new technologies to be inferior to be inferior to established technology – until they gain momentum and leave everything that came before in the dust. Ignoring new technology doesn’t help. Digitization has long been a necessity for companies. Five imperatives have emerged here for the digital transformation: cultural change, customer focus, speed, integration of processes and the willingness to cannibalize your own business model. These five imperatives make clear that digital transformation is, above all, groundwork on the school of thought and methodology in the company. Only then can structured and fully integrated business processes established and visions for sources of value creation be transformed.
1. Permit cultural change
A good strategy for digital transformation is not enough if your employees don’t want to implement it. In the past, the media more or less declared digitization to be a bad thing: “Digitization threatens millions of jobs” titelte etwa Handelsblatt Online. was the headline in Handelsblatt Online, for example. That does not exactly bring your employees to shout “Hooray” when you want to digitize business processes.
Managers cannot force an agenda; they must inspire. Decision-makers can overcome the greatest barriers to the digital transformation by recognizing that it requires new methods and modes of thought. Involve your employees and relieve their anxiety. Digitization in the company is not about eliminating jobs, but rather giving employees more sensible activities and achieving more customer focus. In this way, you create a culture in the company that promotes speed, risk tolerance and a willingness to experiment. Gartner established a simple formula for success in the digital transformation which gets to the heart of the relationship between company culture and technology: (Mindset + Practices) x Technology = Success (Panetta, Kasey: „Gartner Symposium/ ITxpo 2018“).
2. Create customer focus
The market is shifting from a shortage of goods to a shortage of customer attention. After established companies have improved the efficiency of their processes over decades with information technology, they now need a focus on digital platforms to achieve higher customer benefits. However, the pursuit of digitization is all too often not strategic. Decision-makers chase after every technological trend without asking, “What do our customers really want?” With solutions oriented on customer needs, you will achieve faster market acceptance and greater organic growth. The EASY Service app is a successful example of customer-oriented implementation. It was developed in cooperation with our customer Ritter Energie- und Umwelttechnik GmbH & Co. KG, based on the EASY Cloud Platform.
Ritter previously documented the tasks of their customer service – such as installation, maintenance and operation of machines – in analog on paper, which on the one hand led to an increased frequency of errors and administration for the technicians, and on the other was not customer friendly, because the exchange of information took too much time. Information on orders and maintenance sometimes only entered the system after days or weeks. Today with the mobile service app, the mobile recorded data are digitally and thus automatically entered into the service software. Ritter’s service technicians are able to process customer requests faster and more reliably.
The pilot project has since developed into the successful EASY Service App for field and customer service, because it is oriented on the specific needs of the customers. We have extensively described the use case.
3. Start fast and improve
Decision-makers should not hesitate, because digitization won’t wait. However, you don’t have to start a revolution, rather you can implement digitization step by step. With constantly changing customer needs and markets, as well as new technologies, long-planned strategies over several years no longer make sense. It is better to plan for the short term and consistently adapt your goals. “Learning by doing” is the motto in agile and dynamic companies. Digital leaders such as Facebook, Amazon and eBay have demonstrated how to start small, test, revise and always improve.
Quickly implemented innovations which are based on frequent experiments and measurements have proven their value. The technology cannot be an end in itself, but rather must be understood as a tool for being able to better serve customers. Create processes in your company which promote rapid innovation and implement the MVP (minimum viable product), usually 80% is good enough for a start (possible glossary entry?), in product development in order to find truly lean and customer-oriented solutions.
4. Integration: start small, think big
Companies must be able not only to roll out major IT projects, but also to digitize and integrate individual company processes effectively, to create intelligent interfaces and thus to provide agility and save expenses. Only when data, products and applications work together will companies achieve the core competency of the digital transformation. It is important here to break open technology silos in the company, promote an integrated strategy and to think about the right interfaces so that you are able to achieve sensible automation. Beyond the paperless office, the future goal should be to implement a technology which works for us and can make decisions automatically based on data. That could be software which reads complaints and answers them automatically or software which automatically controls material requisitions for production.
In summary, proceed step by step with the digital transformation, but think now about future possibilities and from the start create the conditions for an expansion of your digital processes and business models.
5. Disruption: Question yourself
Tradition is not a business model. Everyone should understand that by now. That is why so many established companies have been surpassed by innovative start-ups. Companies should be prepared to question their own business models and continually reinvent themselves before they are overtaken by others. Leading companies in the digital age differ from those in the past. They promote agile strategies and continually learn from their experiences. After all, the sequencing of the transformation and the development of the right pace of digital innovation is the one major challenge which you can overcome with a clear, strategic orientation combined with the resolve to act rapidly.
With these five imperatives in mind, I hope that this year you will successfully accept disruptions and accelerate digitization in your company!