Digitisation as a guarantee for success? About mistakes and success factors in the digital transformation.

// Digital Transformation, IT Processes and Organisation, IT-Strategy

The digital transformation is a paradigm shift and not a temporary project. On the road to success there are many pitfalls.

Digital transformation - a guiding principle of today's world, which is considered one of the most important goals of many companies in the studies of various institutions, poses great challenges for all organisations. Not only the success of companies, but to some extent even their very existence depends on the internalisation of a digital way of thinking and the resulting digital acting. This is due to the rapid technological progress and the resulting changing demand situation. Digital transformation - i.e. the reorientation of a company in terms of strategy, business model and the resources and processes used through the use of digital technologies - is therefore relevant for all companies. It must be approached proactively in every case and not just when a company is posting poor figures.

Think digital - act digital: what it's all about

A commercial enterprise is basically successful when it inspires customers with its products or services and thus induces them to buy. To do this, the company needs qualified employees who develop, produce and sell these products and services in a customer-centred manner. Many new products originate in the digital world and the ability of employees to think and work in these digital dimensions is a decisive factor in the success of a company. Employees must therefore be familiar with digital applications and have a basic digital competence. A large proportion of employees - and departmental affiliation is irrelevant - must be able to understand how digital mechanisms work and what influence they have on their own company. Only with an existing digital mindset can digital action take place. This means that adapted or new business opportunities, those demanded or derived by customers, or even latent business opportunities can arise and secure the company's success in the long term.

How does the digital transformation succeed?

Companies with innovative and digital business models are gaining more and more market share and are now the new industry leaders. Why are the new business models so successful? They have not made any of the following mistakes, but have turned them into their success factors.

The following five errors must be avoided at all costs and converted into success factors.

1. Lack of consideration of customer needs

2. Lack of embedding digitisation in the strategy

3. Lack of agility of the entire organisation

4. Lack of qualification of employees

5. Lack of courage

Success factor 1: Taking customer needs into account

Customers have always been and are becoming increasingly demanding. For example, they demand more sustainable solutions and permanent connectivity, i.e. the networking of people, technologies, products and services using digital communication technology. In addition, they expect more individualised satisfaction of their specific needs and demand more convenient and intelligent solutions.

The business model of every organisation must therefore be
strictly oriented towards specific customer needs and exploit the possibilities of digitisation.
For example, the Design Thinking method, which is used to solve problems and develop new ideas,
can help to maintain the necessary customer focus throughout the digital transformation process. Within this method, personas are formed to ensure that customer needs are at the forefront of all business activities. Customers are the drivers of the Digital Transformation, which is why it cannot be successful without the constant consideration of customer needs!

Success factor 2: Embedding digitisation in the strategy

Management often outsources the digital transformation as a project to the IT department and thus implicitly evaluates it as exclusively technical. However, the digital transformation should not be seen as a purely technical project that ends in time. Rather, it presents itself as a process which must be carried out again and again close to the customer's needs and which generally shapes the work process. This fact requires the consideration and control of the Digital Transformation by the top management level and consequently the embedding of digitisation in the strategy.

There are some successful concepts for the digital transformation. It is therefore not sufficient to formulate as an overarching goal that corporate success should be increased through the use of digital technologies. Much more decisive are the individual digitisation targets that apply to the respective company. These can be based, for example, on questions such as "Which new business models can be derived from customer needs?", "Which digital products are required and possible?", "Can existing products be supplemented by a digital service?", "Which processes offer added value if they are digitised?", "At what level of maturity does digitisation have a good cost-benefit ratio?

In order for the digital transformation to be a long-term success, processes and changes initiated by digitisation must be permanently evaluated and adapted.

Success factor 3: Enabling agility of the entire organisation

Due to the fact that digital transformation is not an IT topic but a holistic topic for the organisation, corporate culture in particular plays a decisive role in the success of the transformation. Consequently, for all employees of the company, the conversion to an agile way of working involves a high level of additional effort in addition to their daily business, which is why a high level of acceptance for the process of digital transformation must be achieved among the workforce. All areas and functions of an organisation must work closely together in the process. Cross-functional digitisation projects are required, which is why management must ensure that everyone pulls together, even across departments. Transparent communication and close involvement of employees in the change process are also required, which is why it is very important in the transformation that every employee is aware of the importance of digitisation and takes responsibility for this important process.

The company must provide its employees with space for experimentation and encourage them to use this space, even if there is a risk of misinvestment. In this context, early involvement of the customer is highly relevant in order to be on the right track with the new products and services. For example, a new organisational unit, a transformation management office, whose main task is the planning, coordination and implementation of digitisation measures and the constant checking for adjustments to the measures can be helpful. This office is often taken over or supported by management consultancies.

Success factor 4: Targeted qualification of employees

On the one hand, jobs are being lost or changed due to automated processes, but on the other hand, the digital transformation also creates a large number of new jobs. The digital transformation therefore brings with it new work content and forms and requires new skills from employees. Examples of this are new professions such as online marketing manager, data scientist or cloud architect. Employees whose jobs are lost or change must be appropriately qualified and deployed elsewhere. Unfortunately, companies often lack confidence in their own employees.

Mature ICT skills among employees (information and communication technology) are becoming increasingly important, as they are essential for the promising use of digital technologies. However, only the successful interaction of ICT skills and economic skills leads to entrepreneurial competence which enables the optimal potential of digitisation to be used for new business models and organisation.

Furthermore, as already discussed, employees must adapt their working methods to the new possibilities and requirements. Continuously expanding knowledge, adopting collaborative and agile working methods and having the staying power to cope with far-reaching changes - these are the demands on the mindset of employees in the digital transformation process.

The process demands perseverance and intensive commitment from management, of course, in order to successfully lead employees into the digital age in the long term. Consultants are often used to work out and implement process changes and to inform and train employees sufficiently in their new role and function on the path of change.

Success factor 5: Courage

Fear is inhibiting in the digital transformation, but courage pays off. Long-term success is not achieved by sticking to existing structures, old strategies and routines, but by constantly daring to do something new and daring to break old patterns, and not only when the company is posting poor figures. It is undisputed that digital transformation is costly and complex. However, the opportunities will outweigh the risks if implemented correctly.

Cloud technologies are often seen as a driver of digital transformation. Outsourcing services to the cloud can offer companies numerous advantages. Among other things, cloud solutions are scalable according to demand, companies do not have to purchase expensive hardware themselves but only pay as needed, mobile working is supported because data can be accessed from anywhere, cloud solutions can be flexibly adapted to any changes in the company.

For a noticeable step towards digitisation, some companies and organisations are relying on the support of professionals. Digitisation consultants often accompany their customers as strategic partners over a longer period of time with their experience and know-how.

Conclusion

The reorientation of a company in terms of strategy, business model and the resources and processes used through the use of digital technologies is not a temporary project. In other words, the company must be permanently aligned with changing customer needs. Digital thinking and digital acting of the organisation are essential for the right reorientation.

noventum consulting

Friederike Große Krabbe

Consultant

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