ISPIM member Jens-Uwe Meyer is an expert in Digital Disruption. Check out ISPIM's Digital Disruption & Transformation Special Interest Group.
Just think back to 2010. What was it like back then? The smartphone was on its way to the mass market, the 4G mobile phone standard was only available in test labs and e-commerce was not taken seriously by many established retailers.
At that time, futurologist warned: "Attention! You have to face digitization!" Companies reacted and did what they always do. They formed departments. The Chief Digital Officer was born. Often they were the same responsible persons, who dealt before with the topic business innovation (link to https://innolytics-innovation.com/what-is-business-innovation/ ) and innovation management (tink to https://innolytics-innovation.com/innovation-management/.)
The digitization strategies of that time had a big advantage: You could add the word "digital" to practically everything you did in the company and the company was already trend-setting. The Innovation Lab became the Digital Innovation Lab, and existing analog processes were digitized.
The results at the end of the decade: the retail sector is facing major problems, the automotive industry is just beginning to overcome dinosaur technologies such as diesel, and the first fintechs (start-ups from the financial sector) are now worth more than traditional institutes.
Oh, dear! What was predicted in 2010 has actually happened. Many industries have failed to notice the changes - even though companies have set up their own departments for digitization and have sent through a multitude of consultants.
Why 2019 is the most important year for your innovation strategy
Of course you might say: "The usual will happen at the turn of the year 2020: There will be a loud bang, the new year is here and then things will continue as before." But that would mean missing some important opportunities. We humans, whether employees, politicians, managers or supervisory board members, think in categories. Decades are manageable categories.
Using 2019 to radically change your own company is psychologically clever. Nobody will disagree when you say: "Everything will change in the new decade. We have to get our company in shape for this." The same sentence one year later will trigger the following reaction: "Why haven't you done it already?" So what do you have to do?
1. establish so-called "parallel company structures"!
The decade we're just living in had cute pictures: Automotive executives without ties in the start-up scene. Wow. How cool! The Silicon Valley Tour of the average management board. Recommended for replication, but not the exclusive solution to the problems of the new decade.
In companies, the challenge now is to simultaneously meet the balancing act between the operational business and the requirements of innovation. You need two structures. The traditional hierarchical one, as we all know it: A board of directors, its departments and departments, employees and teams. Beautifully structured in a diagram.
This structure is perfect for managing the operational business. It is unfit for innovation: too slow, too inefficient. Companies also need a network structure. Employees from different specialist areas are assigned to different innovation topics, often supplemented by external experts, customers and sometimes even employees from other companies and competitors.
This parallel structure stands in contrast to the first:
- Hierarchies are partly reversed ("Yesterday you were my boss, today I am yours."),
- A different innovation culture exists in specific business units ("Monday to Wednesday mistakes are punished, Thursday and Friday they are rewarded").
- There are different structures ("Do not follow the process, develop a new one").
These internal innovation networks work autonomously and goal-oriented on new concepts, services and business models.
2. inspire your employees to innovate and digitize!
It was one of those hair-raising moments that triggered a real digitalization phobia in companies: The board of directors of the German Commerzbank Martin Zielke (link to https://youtu.be/MnkcyEnwflc ) appears in front of the public and says: Oops, we have just discovered that digitization requires changes. And that is why we are cutting 9,600 full-time jobs by 2020. Whoa! What a motivational speech!
The word "digitization" was then synonymous with "job cuts" in the minds of employees. Who is surprised when there is digitization phobia instead of digitization euphoria? The German company Gerolsteiner shows how to do better. Last year, the company called on more than 100 sales employees to review existing internal processes and propose new digital processes. Within a few weeks, more than 200 ideas were received. This signal is a completely different one: "We want to shape digitization together with you. It's not a threat, it's an opportunity for all of us."
What Commerzbank did was to apply the hardcore management style of the nineties ("I'm the tough cost-cutter, a whole guy.") to the requirements of digitization. Sure, you can do that, but it's the opposite of what successful start-ups are all about. They rely on collaboration, on employees who think and act independently, on creativity and a spirit of innovation. You have visions. Employees are inspired by visions, but not by job cuts.
3. build an innovation pipeline that hurts!
"Oh, we're very innovative. We have developed two new commercials together with our agency, five improvement projects for internal processes, ten percent more ideas for internal idea management and we are currently working with students from the University of XY on concepts for digitization". That sounds good, but it's stagnation. Daily business. What you do anyway. This innovation strategy (link to https://innolytics-innovation.com/innovation-strategy/) does not hurt. But these projects really hurt:
- Within six months, seventy percent of all existing processes and procedures are radically turned upside down and renewed. Paper disappears completely.
- By the end of 2021, eighty percent of all customer enquiries will be answered digitally, compared with twenty percent today.
- You make sure that your new generation of machines is consistently fit for the Internet of Things - without already knowing any concrete applications. You will develop these later with your customers. Business plans? Can't deliver yet.
- You see that little hangar back there? There you are currently attacking your existing business model. Radical and uncompromising. For what happens in this hall, you invest your entire annual profit.
That hurts. It really hurts. Employees, executives, the management, the supervisory board, shareholders and shareholders. When traditional companies disappear from the market, it is the result of years of pain avoidance. Innovation is like retirement savings and sports for people who don't want to move: it's unpleasant. But the consequences of doing nothing are more severe.
Take advantage of the opportunity that 2019 offers!
No matter whether you want to put yourself under pressure to start a further education, whether you are a manager, managing director or supervisory board member: 2019 is the year in which you can take advantage of every opportunity. And you should. The fact that the year 2020 is approaching is a psychologically important signal. This opportunity comes back in 2024. There are only similar psychological signals when one's own sales decline radically and one's own business model comes under pressure. But then it's usually too late.