Digital transformation – why the dawn of the digital world is unavoidable
21. January 2016
Digital transformation in businesses – a compass to help navigate the journey into the digital world. In the coming weeks, this will be the place where various guest authors from etventure’s different business units, along with other experts, will express their opinions about this topic. Dr. Birte Gall, Founder and Managing Director of the Berlin School of Digital Business explains why the dawn of the digital world cannot be avoided.
Digitization is one of the megatrends of the current era. It is a topic that fills the headlines of the financial press and is becoming increasingly important at the Management Board and Supervisory Board meetings held by many companies and SMEs. With this in mind, it is hardly surprising that some people are asking the question: Is it all just a passing craze? Our answer is loud and clear: no. What we are looking at is a fundamental development.
The megatrend of digitization
The ‘Zukunftsinstitut’ (Future Institute) has identified four criteria that make a trend a megatrend: longevity, ubiquity, globality and complexity. This means that a trend only becomes a megatrend when it globally affects a variety of areas of life for a prolonged period of time. “Megatrends are multilayered and multidimensional. They are evolutionary forces that permeate our society, our economy and our entire culture.”
A good way of understanding the scope of this megatrend is to compare it with globalization. Even as early as the 1970s and 80s, the economy was being increasingly influenced by globalization, but it was only in the 1990s that the topic made it to the top levels of management. Companies and their Boards of Directors started to understand that the globalized economy would have a substantial influence on their core operations. This led to a wave of strategic and operational realignments to ensure long-term sustainability and to make the most out of new market opportunities. The same is true of digitization.
The wave of digitization
Digitization has already been through a long initial period as well. Digitization reached customers thanks to the widespread availability of desktop PCs and the advent of the Internet. For consumers, the digital world continued to develop at breakneck speed during the 2000s, resulting in highly interactive, personalized products and services. The dawn of the age of digital smartphones means that now nearly everyone is constantly digitally networked, individually identifiable, and contactable.
This has resulted in the emergence of totally new market opportunities. While new startups were able to react quickly to these opportunities, traditional businesses have been and continue to be completely overwhelmed by them. In the last decade, the media industry has already endured the pain of seeing digital businesses such as Amazon, Google and Apple utilize new consumer areas to take over traditional value creation chains in no time at all. Many companies are now seeing their core business being eroded by digital players from a large variety of sectors. Every day, the pressure is mounting for businesses to adapt to this development and to position themselves accordingly.
The challenge – a journey into the unknown
An ever-increasing number of businesses have identified the fact that digitization is no longer simply a specialized area that is the responsibility of the CTO or the CIO. Instead, they have realized that it concerns the core business and that the CEO must take a lead and take responsibility for it. Nevertheless, German firms are faltering when it comes to digitization. So what is the problem? Even though the importance of the issue is clear to see, for most businesses, the actual execution represents a huge challenge. Which strategy should be pursued? Which specific steps should be taken? What will the implications be for the products and services we offer and the business models that underpin them? What will the HR requirements be?
For many, answering these questions feels like a journey into the unknown. But a ‘wait and see’ approach is not an option. Companies must brave the dawn of digitization as a matter of necessity – the wave of digitization will wash them away if they do not.
About the author:
Dr. Birte Gall is the Founder and Managing Director of the Berlin School of Digital Business. She develops training programs for businesses with the aim of equipping managers and employees to shape and support digital transformation in their company. The Berlin School of Digital Business is a subsidiary of etventure, a digital consultancy and company builder.