By Benjamin Renk
To persist as a business in the times of digital change is a challenge for both management and employees. Although most companies recognize the need of a digitisation strategy and pave the way for it, too often the implementation is limited to new tools and processes. In fact, they alone do not lead to business success. In order to identify the faster changing needs of clients, to develop new digital business models and to create real innovations, companies need two things: suitable employees and a true readiness to realign the entire organisation, its processes as well as its working culture according to the demands of clients and employees.
The German economy, spoilt by its own success during the years of constant growth, could afford to react rather slowly to digitisation trends. Even though businesses have long ago realised that digitisation is a real game changer: in some markets, American and Chinese IT-companies have expanded into new business segments due to their lead in accumulating and exploiting data and turning them into new business models. In other markets small and agile start-ups with innovative ideas take over market shares and clients from former top dogs. Even though 72 percent of German companies have defined a digitisation strategy according to a survey of the business association Bitkom , but only 15 percent indicate that this strategy is actually implemented on the top-level of their management. The problem of this gap between existing strategy and organisational implementation is quite obvious: A digitisation strategy can only be successful if the right targets are set and the right people are available to achieve these goals. But is this really the case?
According to our experience, many companies misjudge the true nature of digitisation as a technological and social process. The lack of focus on employees is why most companies emphasise the wrong aspects in their digitisation strategy. But without the necessary digital competencies this transformation process cannot succeed. And we are not only talking about digital competencies such as programming, cloud computing and designing artificial intelligence, but mainly of the ability to adopt to fast changing situations as well as the willingness to interact frankly and open-minded with interdisciplinary teams. The encouragement of these competencies is way more important than the things companies are focussing on right now: the digitisation of existing processes and the introduction of new tools with which the employees have to work somehow.
Targeted investments in employees will pave the way
Looking at the companies who have shaped their digitisation strategy successfully, we consider the following steps as mandatory:
- Realign the strategy and explain the change
Within the process of digitisation the decisive questions for the top management are: what does the client want and how can their requirements be fulfilled? What does the business model need to look like in order to generate future value within the company? The unconditional focus on the client and the desire to increase the value of a product or service for the client is exactly what turned small start-ups in the Silicon Valley into the most valuable enterprises in the world. This is the goal around which all business processes must be centred. The personal and organisational changes that will follow this realignment need to be thoroughly communicated and explained. Only then employees will be ready to acknowledge the chances that come with the opportunity – and they will participate actively in order to shape this path.
- Agile work and realignment of the leadership culture
Data is the raw material of digitization. No manager is able to take care of his current tasks and also develop new ideas for business models and products from the giant amount of data all by himself. Only interdisciplinary teams of specialists from the various business units of a company can achieve this. One of the main tasks of leadership is the enhancement of innovation in dynamically changing markets by those teams. The open-mindedness towards new working processes as well as an appropriate leadership model are important parts of digital leadership. Leadership needs to rethink and get ready to cede responsibility to employees. Furthermore, managers will have to adapt to the values and attitudes of the new generation of employees that push into the labour market with different expectations than their predecessors. But this may also be an opportunity to enhance the process of change within the company.
- Targeted development of leaders and staff
Digitisation shapes the working environment mainly by its inherent enormous speed of change. In order to keep up with this speed and to realign the own working processes accordingly, people need a distinctive competence for change. Personnel assessment methods are indispensable in order to generate valid profiles of personalities and competencies. They are the premise to enhance the abilities of employees with the help of special trainings and other measures that are tailored to individual needs. The first step to do so is to evaluate the necessary competencies and skills according to the digitisation strategy, as they can be quite different depending on the specific functions and tasks. The comparison between the requirements of a given position and the technological and personal competencies of the incumbent indicates the gaps that need to be addressed. Fundamental things such as open-mindedness and readiness for change can also be improved as can communication skills, capacity for teamwork and collaborative work.
- Selecting the right tools
As a matter of fact, the digitisation is going hand in hand with the use of new tools and processes. Anyway, new tools are only means to an end and not a means by themselves. After all, a fool with a tool is still a fool. Instead of choosing the tools first and then letting employees try to reach the goals with them, companies should examine first whether the tools can really support employees in their goal achievement. The same logic applies to processes, as digitising a bad process only ends up with a bad digitised process. It is way more efficient to realign the processes according to the strategic goals before they are digitised. Both things – the right choice of tools and of processes – rely on digitally competent employees. And, this is where the ends meet: Focus on people first, and then on technology.
Digitisation does only work with the people, not against them
In times of rapid technological change humans with their capacity for innovation, creativity and strong leadership are and remain the most important factor for entrepreneurial success. A digitisation strategy can be implemented successfully and with a reasonable cost-value-ratio by a targeted investment in employees. That is of major importance for businesses against the background of a visible economic slowdown. Even in future the realignment of the business strategy according to the requirements of a digitised economy will proceed top-down, but its implementation must happen on all levels simultaneously. The digitisation strategy can only be successful when all employees know why the new strategy is necessary and when they have all required functional and personal competencies.
If you want to know more about this matter or wish a personal contact, please reach out to Benjamin Renk and Maximilian Junck:
Benjamin Renk | Senior Consultant & Practice Lead Process Technology & Packaging
Mobile: +49 160 98 99 36 99 | Office: +49 211 550 43 0
Maximilian Junck | Consultant
Mobile: +49 160 91 33 82 25 | Office: +49 211 550 43 0