Everything changes: the radical shifts the economy is currently undergoing against the backdrop of the coronavirus crisis and the related surge in the use of digital technologies can be puzzling and at times even confounding for companies. Many managers feel overwhelmed and unsure about which steps to take next.
Christof Stögerer, Head of Continuing Education at the WU Executive Academy, and Martin Giesswein, an internationally renowned digital leadership expert, have looked into the six fields executives should have an eye on to ensure their organization will excel throughout the inevitable move into the digital age.
WU Executive Academy organizes in Bucharest, since 2006, an Executive MBA program, attended by nearly 30 managers and entrepreneurs annually.
Google’s search engine produces 45 million results for the query “digital transformation.” No wonder: the way the economy is changing has an impact on every company and all industries. Forecasts and surveys in the field are very promising, yet in some enterprises, a certain sense of disorientation has taken hold. On the one hand, people are wondering what the future holds and how factors such as the coronavirus crisis will eventually transform their organizations – a pandemic is, arguably, a huge challenge.
On the other hand, there are companies that, as of yet, experience little pressure to change and thus assume they will forever be fine without adapting to the times – and daily business is, not least due to the pandemic, demanding enough even without considering one’s potential for a transformation. At the same time, it’s a fact that the coronavirus crisis has forced numerous companies and whole industries to explore digital business models and digital ways of acquiring customers.
Going Digital – But How?
There are six key fields managers in all economic areas and industries must focus on when guiding their company into the digital age because they can make or break an organization’s digital future.
- Do You Really Know Your Customers?
Knowing what customers want now and in the future and which products they will buy counts among the most valuable information a company owns today. As entire markets are comprehensively transformed through digitalization and disruptive inventions, data about customers’ future behavior is becoming even more important. Companies know that. It’s why they employ sophisticated customer behavior analysis tools to understand it even better.
“But even a great analysis can only do so much if I am not willing to go all in when it comes to customer orientation. And that’s often the problem: many companies are inconsistent in this sphere. They don’t rigorously follow through in challenging themselves and their products continuously; they don’t make all their decisions based on how it will benefit users; and they don’t actively involve customers when (further) developing their products,” Stögerer explains.
High priority on the transformation agenda, because companies that are eager to continuously meet their customers’ needs have already taken a considerable step in their transformation process.
- Generating Real Added Value Through Digital Co-Creation
“Customers in today’s digital society love creating new products together with the brands they prefer to buy,” digital leadership expert Martin Giesswein shares. Companies benefit from co-creation projects as well because they minimize risks when new products are launched and secure investments. Giesswein Walkwaren is a good example: the Tyrol-based company (to which, incidentally, our expert Martin Giesswein is not related) was well known for their traditional attire and other goods made from sheep wool. “When the owners passed down the business to the next generation, the sons wanted to take steps to appeal to a younger and more urban target group. So they decided to give sports shoes made from merino wool a try. To do so, they used the instrument of crowdfunding. They introduced a product that only existed as a concept back then to customers on a digital platform (Kickstarter). Customers interested in the product were able to pay a certain amount already in advance. In return, the company promised them that they would be first to receive the new product or, in case the market would reject it, get their money back,” Martin Giesswein shares. The campaign ended up being very successful. Product development costs for the first couple of batches were covered. And today, there’s a whole product range of Giesswein sneakers and runners made from merino wool.
High priority on the transformation agenda, because customers’ participation saves managers the risk involved in solely trusting their guts. Products are designed and produced based on demand and need, which makes the economic outcome by far more predictable. What’s more, digital co-creation and crowdfunding are particularly suitable for times of a (coronavirus) crisis.
- Rapid Prototyping Versus Solutions That Are 120% Watertight
“Organizations must cater to a wide variety of needs and give many things a try,” Christof Stögerer says, specifying that companies must be able to swiftly adapt or even discontinue things that don’t work. He compares this approach to speedboats that nimbly navigate new waters, outmaneuvering robust and unwieldy tankers. This, however, requires courage and conviction. He points to Rosenbauer, an Upper Austrian manufacturer of firefighting and disaster protection systems, as an example. Rosenbauer developed the concept of a revolutionary fire truck that is distinguished not only by its looks but also uses an electric engine. “If there is one thing established companies can learn from start-ups, it’s that sometimes you are better off just giving things a try than spending more time perfecting a plan,” Martin Giesswein confirms. Rapid prototyping offers managers the opportunity to test new products and services within their organization or with selected, well-meaning customers. Based on the results, companies can then take the next steps. The so-called minimal viable product (MVP) is a prototype that was developed based on the feedback of a handful of initial testers and made available to a larger group of customers for testing purposes. The product is then continuously further developed. Companies use prototyping to swiftly develop products and services that closely reflect the wishes of the customer base to ensure they are actually bought. This strategy enables organizations to keep up with disruptive competitors.
High priority on the transformation agenda, because due to the increasingly dynamic and complex nature of customers, managers can no longer predict what shoppers will buy. This method lets them test the acceptability on the market for only a small investment.
- Enabling Instead of Managing
Flat hierarchies, giving staff members the opportunity to think like entrepreneurs and take decisions themselves, closely listening to criticism and open communication: organizations that are flexible and capable to change when they encounter obstacles have all of those things. “Companies also have to learn to handle internal contradictions,” Christof Stögerer points out. They need managers who can think strategically and are able to use the digital transformation in a way that generates added value for both customers and business opportunities. Managers who have excelled in the face of the digital transformation share one trait: they do not consider themselves as know-it-all decision-makers. Instead, they know where to get the expertise they need in this digital economy. They keep track of who is the expert for which task in their team and who is able to contribute to shaping the company’s future. This skill is key for helping a company excel throughout the digital transformation.
High priority on the transformation agenda, because knowledge used to be stored in one person’s head in the past, whereas today’s managers must build bridges and aid others to ensure the digital society’s knowledge is used for the benefit of the company’s transformation.
- Using Digital Data Strategically
There are hardly any business processes today that run without digital data. But only companies that understand and know how to interpret the data will be able to use them for their benefit. This requires a clear data strategy that is tailor-made for the needs of the respective company. A top-down approach is not the way to go here: interdisciplinary teams made up of creative and innovative staff from various departments must support management boards and CEOs in an overall experimental environment. Being able to adequately generate, read, and interpret data streams and devise relevant strategies based on the knowledge gleaned from them will become a key skill in the future.
High priority on the transformation agenda, because the effective use of digital data makes a difference when it comes to business success already today. At times, this skill even helps organizations take the lead in a field. Examples include data pioneers such as Amazon and Airbnb, which have disrupted whole industries.
- Acquiring a Good Grasp of the Rules of the Digital Economy
“When we say that companies need to polish their digital skills today, we mean nothing less than that due to the overwhelming success of online business, economics as we have learned and used to experience it has massively grown and thoroughly changed in the past 20 years,” Martin Giesswein explains. Managers and every single staff member must know the ins and outs of the digital economy in order to be able to take the right decisions for the future today: “Simple questions can do the trick here. For instance: what are the ten most successful digital business models that have helped Amazon, Facebook, and Google thrive, and how can we implement these strategies in traditional companies?” the expert suggests. He points to another central question in the current discourse on this topic: “How can we transform from being the supplier of a product to becoming the platform operator serving the whole industry? Wouldn’t it be best to become an industry’s strong player that is capable of directing a whole ecosystem by merging with selected competitors to provide a holistic customer experience to consumers? Particularly in the fields of mobility, energy supply, and municipal administration, this is already happening.” Martin Giesswein regards these considerations as the foundation based on which the business community and society can think about and tackle major challenges such as climate change and the global food shortage.
High priority on the transformation agenda, because it enables managers to avoid mistakes other companies in the digital economy have already made and instead build on the insights and learnings of the winners in the digital game.