Digitalization and automation have been on the agenda for many global companies for years. The expectations for productivity gains and cost reductions are high. But the big gains have often not (yet) been realized and the ROI is not yet where it could be.
This clearly shows: The days of simple automation and digitalization are long gone. To leverage the full potential of technology, companies must transform their business.
Simply introducing new tools, establishing digital channels, or launching apps is not what digital transformation is about. These actions might generate local value, but they rarely result in improved or entirely new ways of value creation.
A true digital transformation leverages technology as a tool to develop new business models and revenue streams. It involves a strategic alignment of market access, offerings, continuous service delivery, and technologies to create new forms of value through software, data, and AI.
When executed correctly, these digital initiatives will become visible on the balance sheet. While digitalization is part of this process, it is not sufficient to fully leverage the potential of digital transformation.
Most organizations fall on fundamental topics. As with all strategic initiatives, it is essential to create a solid foundation to ensure your digital efforts achieve the intended impact. To prevent common pitfalls, companies must do the groundwork and fix the basics first, before embarking on their transformation journey.
Analyze your starting point: Start by conducting a comprehensive assessment of your existing processes, technologies, and capabilities. Understand what works well and what needs improvement and decide which role you want to play in which ecosystem in the future. This analysis will help identify gaps and areas for potential optimization. It creates the foundation for everything that comes next.
Define your vision and goals: It is crucial to define a vision and set clear goals right from the start to know the direction of the journey. Have a North Star that guides all efforts and ensures alignment across the organization. This vision should provide a clear picture of what success looks like and how it will be measured.
Plan strategically: The next step involves thorough and realistic strategic planning. It should outline the steps needed to achieve the vision and goals. The impact reflected in this planning on the company's profitability secures buy-in from the leadership team, which is not just about providing the necessary resources but also about fostering a willingness to change at all levels of the organization.
Implement the right organizational structure: While stable, more linear value creation models primarily rely on good structural organization for long-term success, value creation from software, data, and AI requires a highly adaptable process organization with clear roles and accountabilities. An adaptive approach is needed to respond effectively to changing circumstances and stay ahead in today’s economy.
Ensure continuous learning: Your organization must continuously learn and adapt to changing circumstances and technological advancements. Foster a culture of "Done is better than perfect" to test and refine your approaches fast. Regularly revisit and revise strategies based on evidence, performance metrics, and market conditions to maintain a competitive edge.
Companies don’t fail because they do the wrong things. They fail, because they continue to do what was right in the past for too long. So, a new mindset is required to succeed in the digital age.
In my view, blind activism and digitalizing for the sake of it are the wrong approaches. Those who believe they can make their business smarter by purchasing a digital solution or digitalizing a single department are completely mistaken.
So, here is my call to action: Dare to innovate and think big! Digitalization can yield a lot of positive outcomes, but it is not something that can simply be managed or even delegated. So, be brave enough to try out new things.
Instead of aimlessly running towards random digitalization and automation, companies should invest in developing a solid foundation involving their vision, culture, operations, stakeholders, and technology. Only then can they leverage the full potential of digital technologies, achieving measurable business impact and enhancing competitiveness.