It is believed that 50% of the traditional companies on the Fortune 500 have disappeared since 2000 due to digitalisation. They failed to remain relevant and competitive in a fast-changing business environment and were easily phased out. It is one evidence of the brutality of digital transformation and a scenario that has never been seen in the history of economics and business.
Never before have the rules and pre-requisites of business changed so quickly – and the rate of change is continuing to increase. The question I ask myself is why some companies survive the digital transition better than others and retain their competitiveness in this new business reality? One could imagine that it is about luck, access to the right competences and resources, and market influence. But deep diving into digitalisation and innovation tells another story of why some companies are more successful than others. The key to success is having the right approach and attitude – starting from your meaning and purpose.
A couple of months ago, I had the opportunity to listen to a great presentation (Politecnico de Milano) on the secrets of innovation. It is one of these fantastic topics that plays a pivotal role in digital transformation and in building sustainable competitive advantage in the market. But experience tells me that the topic of innovation is difficult to understand and to find the right approach. It is often entangled in corporate governance and culture. What I learned from the presentation was a bit surprising and provided a new insight into innovation. Companies do not need more ideas for what to do, but rather a purpose and meaning of how to create competitiveness. The problem is how to select and execute the great ideas that have been collected. We are not looking for a light bulb in the darkness, but rather trying to navigate when blinded by overwhelming light. It all starts with purpose and meaning!
Many CXOs are not searching in the darkness for a light to follow but are rather blinded and paralyzed by an overwhelmingly bright light when it comes to digitalisation.
What I find interesting is that the same behaviour and theory is valid when studying digital transformation. Today we see endless articles about the need for automation, robotics, and Internet of Things. These articles address the question “what to do” (ideas) but do not address “why digitalisation is important”, “what does digitalisation mean for us” or “how has the market/industry changed due to digitalisation?”. To find meaning and purpose in digitalisation is key to finding the right approach and base for the digital transformation. These two concepts (why and how) are also the starting point for change management and for motivating employees to join the digital transformation journey. If the leaders cannot communicate and express the meaning and purpose of the digital transformation to the employees, then the journey will never take off.
Digitalisation is a tricky topic to discuss and I must say that the more I dig into the topic, the more confused I get. As humans, we try to simplify complex things and quickly come to a logical and rational explanation for things that are hard to understand. How we simplify and understand is based on our previous experience and knowledge. Digitalisation is yet another topic where this approach applies. Viewing digitalisation from a “traditional business” perspective will give you a simple, but often wrong perspective that will hinder you in fully grasping the potential of digitalisation.
In this case, digitalization becomes a matter of technology, process and data (what to do) and not enhancing the long-term digital competitiveness. An ambition to drive true change and show concrete steps toward digital competitiveness requires a profound understanding of the DNA of digitalisation and how it affects corporations and organisation on multiple levels and areas. This will provide the “meaning” and “purpose” of the digital transformation, not just more ideas of what to do.
Digitalisation is not constrained to IT, marketing or business models but rather captures the pure essence of business and competitiveness; how to compete in a market and how to get customers to select our products or services. Market conditions set the rules, not the other way around! It is the political directives, economic progression, customer behaviour, technical evolution and social development that sets the scene and dictates how companies compete in the market. It is these forces that we need to understand and master to align our business, operating, and governance models to the new reality. If the characteristics of the market did not change, there would be no need for any digital transformation.
Digitalisation is challenging the essence of business and competitiveness – why are we relevant? How do you compete in the market?
My point is that we need a new approach to master digital transformation. We need to understand the core of digitalisation (how it affects the company’s position in the market) and address the “purpose” and “meaning”. There is obviously a great risk of temporarily reducing the shareholder value but over time, there is no doubt that a correct approach to digital transformation will outperform any other approach. Maybe it is time to address Corporate Value and how relevant the company is in the market over time. Only then can we design a “digital-proof” corporate structure to boost digital competitiveness. Without the right understanding, we will run change without the right goal or destination (is there a destination?). It becomes yet another costly transformation project without purpose, just because an advisor or consultant told you it was necessary.
- Do your homework. Make your own analysis and conclusions. Find the right prerequisites and purpose in your digital transformation. Do not follow others!
- Work with consultants and advisor who can show a profound knowledge of the true effects of digitalisation. It takes many years to research and analysis to master the true effects of digitalisation.
- Learn more about true innovation, digital governance and agile management. These ideas will help you to find direction in the blinding light.
When studying the evolution of society, we see several innovations or thoughts that have paved the way for the society over time. Great minds and companies that have challenged the traditional and created products, services and movements to drive society forward. One common denominator for these minds and companies is that they have all address the question “why” to find meaning and purpose in what they do. They often had the same resources, consultants and support as all the rest (often less financial support), but they address their situation in a different way, starting with purpose and meaning.
The rest will follow by addressing “what” they do. It is not about having the most ideas that will win the game but having the right idea in the right context. It is about inspiring to greatness and customer experience. This is the key to digital transformation. It is time to turn away from all the articles and “ideas” and ask what you believe in? The one who dares will be the one how succeeds. It takes attitude to reach altitude!