Digitalization has become an indispensable part of our everyday life. It is becoming increasingly important for consumers and companies alike and is equally driving the demands of all to the extreme.
In addition to the gigantic opportunities and market potential that digitization offers, it also presents companies with perhaps the greatest challenge since its inception. Be it with regards to services or products: innovation is required! But so are fast adaptation and intuitive operability.
What do our digitalization experts observe at enomyc? What are the three biggest pitfalls that are encountered during the digitalization process? How can companies recognize them in time, and how can they avoid them?
From Amazon to Netflix, Tesla to Zalando: It is undisputed that digitalization is promising at all levels, but that it also makes sense and is absolutely necessary. There is hardly a company today that is not dealing with its digital transformation. Nevertheless, it is noticeable: Very few are pursuing a specific plan.
1. No Digital Agenda
In companies, we often observe the detached processing of individual digitalization projects - without placing them on a holistic agenda. That is fatal. It seems as if the dimensions of digital transformation remain unrecognized, yet they are all-encompassing: they affect the company as a whole. It is about anchoring innovation in products, structures, processes and in the qualifications of the workforce.
If companies do not recognize these dimensions or are not sufficiently aware of them, the status quo and target image of their digital transformation are inadequately captured and distorted from the outset. If individual projects are not assigned according to plan and docked to the overall strategic context of the company, companies often have the deceptive feeling that they are on the right track with their digital transformation. In reality, however, singular projects do not develop the desired effects - especially not sustainably and to the full extent.
That becomes apparent at some point. On the one hand, through excessive costs, because singular projects often burn up the intended budget. On the other hand, conflicts of objectives: If there is no agenda, no classification of individual projects into a holistic strategy, inconsistencies are inevitable. Often the topic "digital transformation" and the decision makers involved are then questioned. As a result, planned budgets are cut or projects are put on hold. At a later point in time, a lack of liquidity forces the decision makers to deal with the digital transformation of the company again. How can companies avoid these aberrations in the first place?
Conscientious and Planned on the Way Forward with a Digital Roadmap
At the beginning of the digital transformation process is the awareness and realization that there is much more at stake than just the digitization of an internal process. From our own experience, we advise companies to create a digital agenda that defines the start and end points of the digital transformation. It should be preceded by a comprehensive review of their own digital maturity level. The qualifications of the workforce, the corporate culture and attitude towards digitization are just as important as the dynamics on the customer and competitive side.
Possible guiding questions are: Does our corporate culture pave the way for digitalization? Is our workforce qualified and ready? Will the needs that our customers have right now endure throughout the coming years? Will our product or service portfolio comprehensively meet these and also the new “changed” needs?
In order to create a digital roadmap and to avoid working on singular projects, we recommend companies to put together an internal team from different divisions and hierarchies. The involvement of external, functional experts has also proven its worth many times. Let the insights you gain lead to a holistic digital agenda and set a realistic time frame for the success of the project in addition to clear budgeting.
2. Lack of Sharp Vision and Sensitivity
It is understandable that many companies are reluctant to tackle the measures for their digital transformation. Some rely on proven processes, pointing out that previous successes were achieved even without digitalization measures. While everything is proceeding as usual, negative tendencies are emerging subliminally and are only noticeable in isolated areas of the company. This insidious development explains why companies rarely recognize such changes as early warning signals for a change in demand and do not use them as indications for the further development of the company and its portfolio.
Added to this is the prioritization of day-to-day business: Those responsible focus on current events and are often not sensitive to recognize minimal threatening changes, evaluate them and react to them with new types of measures. Negative developments are noticed too late and companies often rely on methods that have been tried and tested so far - for example, by increasing advertising expenditure or training sales staff. As a result, capital is increasingly being used inefficiently: in fact, these classic measures only achieve minor effects in a clearly innovation-driven environment.
With Attention and Sensitivity into a Digital Future
How will the target groups of the future tick? How are the markets changing? What developments affect your market? Which internal processes can withstand these developments? Which ones need to be changed and supported through digital measures?
We recommend that companies take a comprehensive look at the dynamics in their own and foreign markets. Companies can also gain groundbreaking impetus from direct dialog with their customers. Rely on Voice of the Customer (VOC): Deal attentively with new, adapted needs and record trends and tendencies of your target group, for example, directly via customer surveys.
In addition, review your business and work model critically and with a clear view to the future: Which processes are inhibiting your planned growth as a consequence of external developments? Do not be afraid to deal with a medium-term out of market scenario: It provides valuable impulses and insights for the digital transformation of your company.
3. Fear of Failure
Digital transformation can sometimes mean disruptive change in the company, which is often met with fear: Fear of artificial intelligence, which may replace jobs, fear of dealing with innovative digital technologies that first have to be learned, fear of losing touch with the global market if the company does not embrace the transformation. Even if fear is known to be a bad advisor, we encounter it very often in our everyday work:
The personal failure
Executives generally fear the disclosure of deficits in the company - sometimes also that they will be held responsible for not having pushed the digital transformation earlier. The thought of alleged personal failure further delays a determined, creative and extensive transformation process.
Complexity of digital transformation
With a very complex digital roadmap, the transformation process can be quite complex: After all, the digital transformation raises questions about market developments with changing consumer needs, as well as about internal organizational structures, the qualifications of the workforce, and one's own corporate culture. Many companies are so terrified of the complexity of their digital transformation that the development process is stagnating.
The risk of the innovation leader
If the decision is ultimately made to take a new strategic path, the risk that innovation leaders take should not be underestimated. Although innovation gains attract many decision-makers, the risk of failure is high. The future is generally difficult to assess, and people work with hypotheses. Decisions are made under uncertainty and therefore often hesitantly. Exactly this fear of failure slows down the necessary, determined and creative approach.
Determined and creative into a digital future
According to a recent representative survey by Bitkom Research and TCS, German companies have been investing more in digitalization since the onset of COVID-19. The pandemic has led to a real "digital push", it is said. A total of 955 companies with 100 or more employees were surveyed: "75 percent of [...] companies [...] have increased their investments in digital equipment, technologies and applications," according to the survey results.
The digital transformation and anchoring of innovation undoubtedly requires an intensive conceptual examination of one's own company, but also courage and joy in change. Use the crisis to put your company under review. Put together internal teams to identify the needs. Don’t hesitate to consult with external digital experts to examine proven processes and innovative technologies.
Keep in mind at, whenever the knowledge and opportunities that are gained will remain worthless without implementation and that mistakes are made when implementing complex digital transformation processes. Smooth transitions are rare. An appropriate willingness to take risks and a culture of error release the necessary creativity and speed to drive your digital transformation forward in a goal-oriented manner.
This article only highlights the process of digital transformation. What topics are you dealing with in the digital transformation of your company? Let us think them through together. We look forward to hearing from you!