Tackle and accelerate digital transformation (finally)

The speed with which Silicon Valley and Shenzhen works can be a model.

The tech centres in Silicon Valley and Shenzhen stand for one thing like no other regions in our business world: speed! This demand is an integral part of every business model. The high-tech companies prove this anew every day. What can we learn from them for the digital transformation?

I first raised awareness of this in one of my articles about digital transformation in traditional industries a good five years ago. As far as Europe and the DACH region in particular are concerned, I would like to do this even more after 2020. Because whether we like it or not: in our digitally shaped world, there is still a risk for many companies to fall further behind. Most of us are certainly familiar with the most prominent examples, e.g. in the automotive industry or (retail) trade, from the daily reports.

Secrets from Silicon Valley

What is the essential secret of the agile and fast-growing tech companies?

Their greatest motivation: to take their own “Big Idea” out into the world. And to change things positively with it. Be it Flatiron Health in the health sector. Or Hive Box, which operates the world’s largest express locker system. The list can be extended effortlessly.

Nevertheless, anyone who has experienced Silicon Valley or Shenzhen notices one thing very quickly: despite the supposed restlessness, the atmosphere in the companies is relatively relaxed. Sounds almost like paradise 😉

So, what is the reason for this? The answers are certainly as varied as Silicon Valley or Shenzhen itself. However, I’m not talking about the great leisure activities on offer in these regions. I’m talking specifically about the numerous ideas, visions, people and cultures – their openness, their exchange with each other and the resulting spirit.

For all those who like it a little more factual: The people are excellently educated or brilliantly self-taught. Self-confident and absolutely results-oriented. And the most important thing: they speak openly with each other.

New challenges, old problems

Sure, Silicon Valley or Shenzhen are centres with their very own framework conditions. Nevertheless, are there lessons that we can derive for digital transformation programmes? Specifically for traditional sectors and industries?

It is worth taking another interesting look at this: Digitalisation is not a challenge of the 21st century. We humans have been grappling with this task for 70 years already. Stefan Fritz, founder and managing director of synaix, comments on the appropriate book “Maschinendämmerung” by Thomas Rid. An article I am always happy to recommend on this topic.

The exciting question remains: Have we evolved over the decades in dealing with digitalisation? I think a clear YES.

Nevertheless, the picture that suggests itself is that the majority of traditionally shaped companies are lagging behind their digital possibilities. Almost that they are moving in a negative infinite loop – at least as far as fast, successful implementation is concerned.

Here are a few figures from the last years:

  • In 2009, Thomas Pelkmann wrote about the Infas survey on IT change processes and transformation projects on behalf of SNP AG. IT directors and top managers from around 60 internationally active companies in Germany were surveyed. One conclusion of the top managers: transformation projects take too long.
  • In 2012, Michael Bloch, Sven Blumberg and Jürgen Laartz from McKinsey & Company wrote about how to implement large IT-driven projects “on time, on budget, and on value”. One of the decisive factors was their finding that projects of this kind are on average 45% over budget and 7% over time. And that with 56% less value added than forecast.
  • In 2015, Mark Raskino and Graham Waller from Gartner published the book “Digital To The Core: Remastering Leadership For Your Industry, Your Enterprise, and Yourself”. The focus is on digital transformation in the telecommunications industry. Here, too, the statement that the need for transformation is clear to everyone. However, implementation takes too long and – get this – is too disruptive.
  • BearingPoint’s CFO 4.0 study will see the light of day in 2020. It makes clear that only 5 percent of German companies will reach the third and highest wave of digitalisation in their CFO area. And only 10 percent of finance professionals use their time for value-added services.

Even though these examples certainly do not claim to be exhaustive, they certainly make you think.

Combining the best of both worlds

Back to Silicon Valley and Shenzhen, and also back to the question of what we can derive for digital transformation programmes from there.

One thing should have become clear to us: We definitely need more agility in our organisations!

And once again, more willingness from EVERYONE to leave already well-trodden paths. In my opinion, many companies are still structured in a too classical (sometimes also rigid) way. This applies equally to hierarchy, decision-making and processes. Quite apart from the fact that in the digital age, a smartphone ban at the workplace or blocked websites are a bit bizarre. In some companies, even COVID-19 has not necessarily led to more flexibility in this respect, unfortunately.

Ideally, the only “rigid” process is one of permanent change. Anything else will no longer meet the rapidly changing requirements – neither on the market and customer side, nor on the company side.

1. Feedback

An agile success method that is deeply anchored in the tech world DNA is called “giving feedback”. And not only internally through superiors or colleagues. But above all also from partners and customers.

2. Iteration

Another method is called “iteration”. Admittedly, this approach has been common practice in software development for years. To increase the speed and success of transformation projects, however, it is new territory for many traditional industries.

Simplified, feedback + iteration means nothing more than “cutting the elephant into slices” – thus implementing sub-projects more agilely and making results visible immediately. This promotes the motivation of all involved. And it also reveals risks, opportunities and success scenarios much more quickly. This is what makes real “quick wins” possible in the first place.

All this may still be a novelty for Europe and especially the DACH region. After all, we are known for developing our products and services to perfection. As quietly as possible, before “it” is allowed to see the light of day.

In the worst case – and this is not uncommon – it completely misses the market and (potential) customers. From a developer’s point of view, this means “frustration”, from an entrepreneur and shareholder’s point of view, “expensive”. I would like to show in one of my upcoming articles that it is finally worth rethinking.

An iterative approach and learning and shaping in feedback systems offer us entrepreneurs, managers and employees one thing above all: to tackle more digitally and implement it more quickly in the sense of our transformation.

Gemeinsam mit talentierten Teams baut Mike Flache digitale Unternehmen auf. Mike unterstützt Hightech-Innovatoren im Silicon Valley, in Europa und in Asien ihre Geschäftsmodelle aufzubauen und zu skalieren. Er ist außerdem Partner von Fortune 500-Unternehmen und Technologieanbietern. Mike hat u. a. mit Führungskräften von Unternehmen wie dem Silicon Valley Innovation Center, Google, Amazon, Huawei und Mercedes-Benz zusammengearbeitet. Die Analysten von Onalytica bezeichneten Mike Flache als einen der zehn weltweit führenden Vordenker für digitale Transformation.

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