The 10 Commandments of Digitalization
Digitalization is an absolute MUST to stay current in busines. It helps in building new products, creating new sales channels, entering new customer segments, improving customer experience or increase internal collaboration. In a survey conducted by Ernst and Young in 2019, 66% companies in Germany considered it as an opportunity, while 34% considered it insignificant.
However it is very confusing, what concrete activities an organization should undertake when it comes to digitalization. A jungle of buzzwords, marketing hype, social media noise, as well as limited internal capabilities result in considerable disorientation within an organization. This leads to digitalization initiatives without clear direction, leading to tremendous wastage of financial resources, time, as well potentiall opportunities for the organization. According to report from handelsblatt.com, four out of five digitalization projects fail.
But digitalization does not need to be so elusive for organizations. In this post, I try to reiterate the simple common sense rules that will massively increase your chances of success, when it comes to digitalization.
Rule 1: Keep it simple
As easy as it may sound, this is one of the most neglected rules in many organizations that I have encountered. Any initiative under the name of digitalization should either impact revenue or costs. PERIOD. Unless the company is a non-profit organization, there is no other purpose. Pay attention - I have not used the word “increase” but “impact”. Although digitalization initiatives often lead to increased improved top and bottom lines, many a times, they help just hold the revenue or profit stable or to remain to remain at competitive parity with other players in the market. Lets stay away from creating additional bells and whistles that bring us only aesthetic value.
Rule 2: Focus on your unique situation
The digitalization initiatives for your company depends on four factors: the size of your company, the sector where it is operating, the function you are representing and most importantly the individual challenges and opportunities of your company. Regard these factors very carefully when defining your digitalization initiatives. For example, while Internet of Things is one of the promising digitalization trends, its application in the banking industry would be completely different than in the automotive industry. Similarly Big Data will be more interesting for larger companies than for small companies. (more about this topic in a different post)
Rule 3: Define and Communicate what your organization wants to achieve
As mentioned earlier, many organizations and departments start initiatives without thinking about what they want to achieve as a result. In the pursuit of doing something cool, we lose track of the “WHY”. This can lead to very complex discussions and long alignment needs.
To avoid this situation, think carefully for EACH INITIATIVE, do you want to:
Improve your revenues (top line)
Improve your customer base
Increase and enrich product offering
Increase and improve sales channels
Improve your profits (bottom line)
Reduce operational workload
Reduce manual labour
Reduce large capital investments
Rule 4: Start small, think big
Run an iterative MVP based approach and prioritize topics with short term benefits to begin with. Focus on only a handful of low hanging-fruits with highest success probability and turn them into success stories. The outcome of these actually will decide how much appetite is generated within the organization towards further investing in digitalization initiatives. The MVPs should be achievable within a couple of months, at the maximum to keep the appetite high within the organization.
Rule 5: Foster a fast-fail and resilient thinking
As I mentioned in Rule 2, your situation is unique. Your teams are exploring uncharted territories. To support your team here, set up a fast-failure culture. Plan for failure. Communicate that failure is acceptable and is an integral part of the success. Failing sooner should be even more appreciated. This can be done easily by setting up an autonomous team for a short period, pooling from various departments. This team will be fully responsible for bringing an initiative to its completion. Take a cue from the Amazon’s two pizza teams. The team will have all the powers to take decisions regarding that initiative. There should be no explicit need to align with the bosses, except when there is a request for more resources or a critical change in direction of the initiative.
Rule 6: Don't reinvent the wheel
The Cloud industry is innovating at a very high speed. There are ready to use services, either SaaS, PaaS and IaaS, that can be directly consumed by organizations with minimum lead time. For example, Amazon has more than 1000 Engineers working only on Alexa, or Microsoft have more than 200 services that can be accessed via their O365 and Azure cloud catalogue, just with a swipe of a credit card. Leverage these innovations to speed up your digitalization journey. Focus on customizing and integrating these services with your business. However, please dont fix the cart in front of the horse. Don't let technology or vendor and product discussion take precedence over the use case discussions. Identifying digitalization use cases for your organization are paramount and should dictate what technologies/ products/ vendors should be selected.
Rule 7:Leverage strategically outsourcing.
Almost 95% of the SMEs in USA outsource to India. As a result of such outsourcing activities, resources in India have rich expertise in Digitalization. There are more than 3 million experts n the area of IT. Exclusively in Digitalization, India has more than 500K experts. In addition, NASSCOM, India’s IT association plans to train more than 2 million people In Digitalization until 2025. Open your mind to leverage these skills. This is especially necessary, considering the following reasons. Firstly, in Germany, there is a shortage in Digitalization skills. Secondly, smaller firms especially, have severe challenges attractive talent to their organization. Thirdly and lastly, the temporary labour markets (contractors or external consultants) is very expensive. Seek expert support and leverage global competence.
Rule 8: Keep reporting and alignments lean
It is commonly seen that the digitalization teams are spending a significant amount of time reporting progress or aligning results within departments. In additional, it is further seen that several general management consultants are actually working on Digitalization Projects. This actually leads to two major issues: Firstly, Digitalization becomes a powerpoint exercise. Secondly, they come at an expensive price point, leading to quick drainage of financial resources. When it comes to Digitalization, please let the work do the talking. Engage with hands-on experts and consultants with core competencies in envisioning and implementing digitalization initiatives successfully within organizations.
Rule 9: Engage your employees with authenticity
Do not make digitalization exercise a PR exercise. But, speak with authenticity, about the goal and benefits. Discuss openly about how employees could contribute. If there are job losses or restructuring on the cards, be open and fair. Dont let your good staff leave. There is always more than enough that a smart engaged employee can contribute towards digitalization. Some of the staff might need upskilling. Make such opportunities available to build further the competences of the employee. According to a study from Accenture, most of the existing employees show great interest when it comes to digitalization and are highly motivated to contribute. Leveraging these employees is key to succeeding in digitalization.
Rule 10: Balance Security and Agility
As more cloud services are being used, the network perimeter of an organization gets more and more blurry. This necessitates a totally different way of securing your data and systems than in the traditional data center environment. This combined with new regulations such as GDPR makes the impact of potential breaches significantly high. We should avoid situation that British Airways found itself in. However, the Information Security community within an organization need to forego its legal and formal language and really set simple understandable and implementable rules for managing the systems and data in or outside its premises, without losing agility.
These simple rules will help you focus on the important aspects when it comes to initiating or accelerating your digital journey.
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