“Technical issues are usually easy to solve. If we run into human issues, however... they are usually what will make or break the entire initiative.”
This is more or less the experience of any seasoned professional thinking back on the digitalization efforts they’ve seen throughout their career. Developing digital capabilities is about so much more than just deploying new digital product design or using new technology. It is also about how work is organized and executed, and adapting to results in fast-changing environments.
I have summarized our experience in five points:
1. People will adapt to new technologies more quickly than companies
Unlike twenty years ago, nowadays people get accustomed to using new technologies faster than companies. At the same time, if there are easier ways to work and do business, both employees and customers expect them to be adopted. With digitalization, the digital transformation of customer experience and employee are even more important than before. For many companies, this is nothing short of an existential threat: customers and employees may desert them for firms offering smoother experiences that are more in line with their expectations. For this reason, digitalization initiatives should never be made in isolation but, rather, with the input of employees and customers.
2. Ideas and innovations are co-created
New innovations are always born in interaction—either internally within the company or together with external partners. Internally, it is key to recognize what innovation model works best for a company’s specific needs: should all innovation work be centralized or should a company-wide initiative aim to engage the entire work community? Perhaps a virtual organization should be established, an innovation hub that stakeholders from different parts of the company belong to. Each model has its upsides and downsides, especially when it comes to innovation leadership, prioritization, time management and deployment of new ideas.
New ideas are often also co-created in industry-specific ecosystems or in collaboration with small startup companies. Co-creation within an industry ecosystem is often fruitful; however, there’s always a risk that disruptions or threats from outside the industry will be ignored. That's why cross-industry innovation is a very interesting and growing trend. An interesting example of innovation collaboration among different industries to advance digitalization is the Fenno-Swedish Combient community. The idea is to share lessons learned and solutions that work without worrying about competition.
Companies are also becoming increasingly data driven. They collect data with an increasing variety and interpret it in relevant ways. As the volume of data grows and is competently analyzed, the emergence of new innovation is almost inevitable.
3. Change happens through learning
Big changes often take place as a series of smaller changes. What matters most is to experiment in a consistent and planned way, to ensure these experiments are learned from and, above all, to implement what is learned in practice. A genuine desire to do something with the ideas is key, instead of just churning out experiments because it is expected. In addition to exploring, you need to capitalize on what you learn. It is equally important to strike a balance between trying new things and focusing on current core business.
4. “What got you here won’t take you there”—you can’t do new things in old ways
Many well-established companies get caught on the back foot in the so-called competence trap: successful past practices and capabilities past keep the company stuck in the past. There’s always a risk involved in doing things in a new way, and earlier success may cause arrogance that hinders renewal. This is why it is important to recognize organizational barriers to evolving and find ways around them.
Any move in a digital direction requires a clear change in the ways work is organized and executed. According to research, one factor that distinguishes digitally native companies from traditional ones is that the former organize the work in multidisciplinary teams, each of which has autonomous decision-making power. Teams organized this way are faster, they react to changes more flexibly and they create environments where people can think in more unique ways.
5. Can you teach an old dog new tricks?
Doing things in a different way requires employees to continually upgrade their capabilities and learn new things. Of course, there are limits to efficiency. Improving productivity further is primarily possible through continuous learning. It is said that we are moving from scalable efficiency to scalable learning.
Continuous learning is also important because experts don’t want to work for companies that are not taking advantage of the opportunities created by digitalization. Many are frustrated, feeling they’ve gone back in time when they start working for a company that’s lagging in its digitalization. Businesses should do everything they can to make their top experts feel they are learning, progressing and succeeding together with the company, as part of its organizational change.