Tasten, Dodge

Digitalization: Top 6 Mistakes

Digitalization is present at every corner in many businesses today (see: Digitalization is hot). The number of digitalization evangelists out there is increasing on a daily basis and none of the bigger as well as smaller and medium sized companies would dare to question the general need of digitizing its processes. There is a vast number of services available, all promising to digitize whatever you might put in front of them. It all sounds simple. Yet it is baffling how little understanding is out there for the true meaning of digitalization and the amount of resources lost in due course of half-hearted digitalization projects. Time to list the six major mistakes out there:

  1. Digitalization is an IT responsibility: Leaving digitalization within IT translates into the lost chance to leverage your business model. Digitalization of any business model or process has to be very customer centric and business driven. It has to offer a clear value (e.g. increased profitability) and must be supporting the core of the overall strategy. Just letting the IT people figure it out … is asking for trouble. Therefore make sure ownership over digitizing your business is within your relevant business unit. Your IT department will be happy to provide and support the best available technology for your needs.
  2. Don’t argue, execute! Like any other project (IT or otherwise), the success of a digital transformation is very much rooted within the conceptual work done at the very start (see: IT: The return of the engineer). Starting to digitize anything without planning and conceptualization is leading to chaos at best. Resources will be under- or over-utilized, security measures or backups probably not in the right place and most likely there will be a huge dependency on one specific technology. If you aim for more than just a prototype or proof-of-concept result, make sure you have the big picture in mind and have that picture tightly linked to your strategy.
  3. Digital is totally different: Keep calm, the underlying logic of the economy has not changed. You still have to identify the customer need and cater to it in order to win out in the market. If everything, this might have become more obvious due to digitizing. In a space, where comparing different services and vendors is very easy, truly understanding your customer is crucial for any business. But that is nothing new and by those means we are all digital more often than not.
  4. The digital business belongs to digital natives that do magic with big IT: There is no need to believe, that only digital natives are good in a digitized business world. Think about it: The biggest digitalization companies are (or where) successfully run by digital dinosaurs (Google, Tesla, Apple, Microsoft). And new servers, new apps or something advertisers like to call an online-platform are worthless in itself. You rather need to leverage the information advantage most of your customers already have today (hence: you cannot anymore only earn much on knowing things a bit earlier than they do). Focus on your core offering, on your core values and formulate that into a winning strategy. This includes to explicitly state what not to do – one of my all-time favourite strategy quotes from Michael Porter (see: HBR, Nov-Dec Issue 1996, What is Strategy? By Michael E. Porter).
  5. The Internet is different: Although some journalists, bloggers and digitalization evangelists might think so, there is no other world called internet. The internet is nothing but a tool, designed and developed to help us to better communicate, work, research etc. in our analogue lives. Hence anybody might make use of it or don’t – essentially this is a strategy or maybe marketing question.
  6. You need a digital Organization model: Mostly the misunderstood concept of some sort of a matrix organization where services and offerings can be bundled cross functional entities of a company and offered to potential clients via a single interface. But just because you digitize your business (processes) does not necessarily mean that your complete organizational model has to be renewed. If your existing roles, responsibilities and management systems work fine in supporting your strategy, you probably need only very minor adjustments. There is mostly no need to create digital competence centres or to re-invent your performance-management or decision-making setups.

Look at these six: When it comes to digitalization, keep your strategy at the heart of all things. No digital transformation was ever successful (for long) by doing the same thing as before but with a neat, nice and shiny little app. The most successful digital transformations have been those, that had a very clear understanding of the customer needs and the strategic answer on how to cater to them while capturing (significant) value for the company.

Image source: Kristin Heismeyer, Brookings, USA via Pixabay (User: kcolestudios)

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