Digital transformation: How does your company keep up with the pace of digitalization?

Here we go again! Mankind had barely gotten used to the changes brought about by the division of labor (Taylorism), electrification, computers and the Internet, when the next monster of change comes around the corner in the form of digitization.

And this monster has it all, especially since it calls into question pretty much everything we have learned in the past and which has made us very successful for a long time. “Damn!” many may think, “I had it set up so nicely, and now this…”

But these false thoughts hinder us. We cherish the claim of non-change here. However, we have been striving for constant improvement and new possibilities since the beginning of mankind. Both are deeply rooted in our DNA. We are dealing here with something we want deep in our hearts: Progress and freedom. If only this fear of change didn’t stand in our way – a dilemma.

Actually, we all want to get better

Digitalization is basically a consistent pursuit of those potentials which have resulted from data, collaborations, computers, software solutions and better networking. A necessary step in order to tap further potential and generate added value from data. And an important step towards simply becoming better.

That’s where the key to a successful digital transformation strategy lies: Let’s just focus on the possibilities, the new, the potentials, i.e., what we will achieve – and not on the unwelcome and necessary changes. With this view, digital transformation could even be fun, just imagine:  Fun! In German companies! – But let’s be a bit more analytical and start from the beginning:

New players are often better

Information is much more easily and cheaply available today than it used to be, and prices for infrastructure and transactions have fallen sharply. This is why small and young companies can now offer services and products that previously could only be created through many years of know-how combined with considerable investment. In most cases, these services and products could only be marketed by large corporations.

Through excellent market segmentation and target group knowledge, as well as consistent customer centricity with significantly higher quality, the new players today often succeed better than the players of the “old economy”.

The pace of change is increasing

The consequences for established companies are increasingly new competitors and extremely short innovation cycles due to the creation of services that are ever better tailored and individualized to target groups. In short, markets are changing at an unprecedented speed and the pace of change is increasing.

Established companies are therefore increasingly faced with the challenge of becoming more innovative and faster, while still being able to live so well on their current core products.

Complexity is not complicated

Another factor is increasing complexity, which should not be confused with complicatedness. A watch movement is complicated, I admire the art of building a watch movement – but it is, as we can see every second, manageable and controllable.

Complexity is not controllable and predictable. Weather phenomena, for example, are complex because they are not controllable.

The comparatively low speed of change in past times has led us to believe that we are dealing with complexity. Many companies therefore try to predict changes accurately and have them result in a complicated “corporate formula”. Strategic planning by top management based on this “corporate formula” is supposed to minimize risks and help identify opportunities in good time.

This used to work quite well. But in a time of high speed of change caused by exponential innovation growth and complex market changes, it is a misconception to think that markets and companies can be planned precisely over periods of 5 years and longer and that this alone can minimize risks and develop opportunities.

Adaptable market participants and company characteristics

It is therefore a matter of restructuring companies in such a way that adaptable market participants are quickly created. This means that the organization of a company must above all exhibit the characteristics of agility, speed, high innovative strength and short decision-making paths in order to be able to build up competitive advantages in the future and thus remain marketable. But how do we achieve this?

We have learned that market mechanisms are very effective, efficient and fast in terms of adaptability if they are used in a targeted manner and under suitable conditions.

I believe we should also make use of this experience IN the companies.

Framework conditions conducive to innovation

In my opinion, the first step is to create framework conditions that promote innovation. This includes measures and cultural changes that promote networking and exchange among each other. Likewise, the courage to try something out must be rewarded and possible failure must not be punished. Both are indispensable for a culture of fast learning. Creativity-promoting work environments are also important in this context – and this can also be achieved by means other than ball pools and slides…..

A shared cafeteria or central canteen, for example, can help to promote cross-functional exchange and break down silo thinking and exaggerated function-oriented ways of thinking. Meeting spaces that use benches, stools, or beanbags instead of a central table and chairs are much more appropriate for many tasks.

Meeting forms in which short and crisp outstanding things are presented, e.g. a new function, a smart campaign or a milestone achieved, in the form of entertaining pitches, are another example. Innovation-related cross-company events, such as MeetUps, can also be helpful in sharpening the view outside the box.  And so there are many small examples that can foster change – and be a lot of fun along the way. And work has to be fun if a company wants to remain attractive to young people in the future.

Contemporary means of communication

Furthermore, the communication habits of digital natives must be taken into account, because entrenched processes and restrictive communication channels deter digital natives and prevent the potential of simpler and more effective networking with the help of modern communication technologies from unfolding.

Self-responsible teams

In my opinion, however, the linchpin of an organization that successfully faces up to the digital transformation is semi-autonomous, autonomous and self-effective teams. Teams that have to assert themselves internally in market-like mechanisms. Such teams are given tasks that they solve on their own responsibility. Ideally, these tasks are tailored to support a promising market segmentation. If this is the case, a pronounced customer centricity will always emerge. Knowledge of customer needs then becomes the maxim for action and helps prioritize (sub-)tasks and make market-oriented decisions directly at the operational level. Long decision-making paths through the various hierarchy levels will then be a thing of the past.

The customer is at the center of thought and action. This is how startups work, and this is what makes them successful – and this can also succeed (again) in established companies.

The important thing with this approach is that agility and speed are regained.

At the same time, agility must not be confused with rushing. On the contrary – shifting decision-making to the responsibility of experts working directly with customers leads to a very planned way of working. There is no constant, completely unexpected re-prioritization “from above”, but rather only the subtleties of changing target group requirements are picked up and implemented in iterations.

If these teams are now arranged by a suitable organizational design, as close to the market as possible, in such a way that they coordinate effectively with other, adjacent teams, as well as work in compliance with corporate strategies, systemic support of the necessary fast and agile decentralized decisions is possible and successful.

Ultimately, an entrepreneurial way of thinking and acting is established in the company, which, in contrast to divisional thinking – and despite the very narrowly cut market segments – frees up the view of the bigger picture and thus supports overall success.

The customer is at the center

What at first glance looks like utopia is nevertheless possible in small steps with the participation of employees and has already been implemented in many successful companies. If we want our successes to last, we need to break away from purely process-oriented working methods. In other words, those working methods that are expressed in many established companies in the form of strong hierarchies.

The customer is the focus – in the final analysis, this can, indeed must, mean that the hierarchy must play a subordinate role and its systemic influence must be minimized. This effect, in turn, also corresponds to the attitude of Generation Y and Z, who “don’t want to be told anything” but want to understand what they are doing and why, and want to have real influence. The enrichment of work content can also be observed, because in teams that represent an entire company, so to speak, it will be observed that division of labor will be scaled back and overarching, generalist action will be rewarded.

Ask Kodak….

What’s stopping them from doing this? I don’t know what is stopping you. We at d.velop have implemented this for ourselves and we would be happy to show you over a coffee that it can be done and that it can be done successfully.

And what will happen if you don’t do all this, you ask yourself? Ask Nokia, Kodak or others – or to quote a recent event: the Italian national soccer team, which is obviously not capable of change either…

Mario Dönnebrink

Mario Dönnebrink ist Vorstand (COO) der d.velop AG in Gescher, einem führenden Anbieter von Software und Managed Services zur Digitalisierung von Geschäftsprozessen. Er verantwortet das operative Geschäft, die Go-to-Market-, Portfolio- und Service-Strategie der d.velop Gruppe. Dönnebrink forciert in seiner Arbeit die Bereitstellung von mobilen Mehrwertdiensten zwischen Unternehmen und Kunden, sowie zwischen Organisationen und ihren Mitgliedern ebenso wie die intelligente Erfassung, Klassifizierung und digitale Verarbeitung von Dokumenten aller Art. Dönnebrink kam 2003 zur d.velop und bekleidete in der Folge verschiedene nationale und internationale Management-, Geschäftsführungs- und Aufsichtsrat-Positionen. Im Jahr 2012 wurde er in den Vorstand der d.velop AG berufen.