Digitization and digital transformation – an overview of the most important topics from the month of May
03. June 2016
As we do every month, we will provide you with an overview of the main topics in the media that relate to digital business and digital transformation in our “digitization and digital transformation” posts. This month: the digitization debate between skeptics and visionaries, digital transformation at the focus of the German government’s cabinet meeting at Schloss Meseberg, the demands made on a “digital CEO”, and how new technology has now reached the skilled labor sector
Digital transformation: skeptics vs. visionaries (Süddeutsche Zeitung)
Where is digitization taking us? What are the advantages and disadvantages of new technologies? It is virtually impossible to provide concrete answers or reliable forecasts about the digital revolution in a dynamic economy. Despite this, or perhaps precisely for this reason, there is often a fierce debate about the pros and cons of digitization. Johannes Kuhn, a journalist at the Süddeutsche Zeitung newspaper, has written an article that explores the current debate. He criticizes the fact that in Germany, there “has been a lack analytical depth and open-mindedness towards other points of view for more than a decade.” This is because social and economic concepts and contexts have previously been omitted when discussing innovation. Instead, he argues, digitization is seen as a “force of nature” in the 21st century – a force that seems to be responsible for all changes. Kuhn calls for a non-ideological debate about digitization, in which broader sections of the population can and should participate. To do this would require initiatives in the areas of education, research and information, so as to increase understanding of the topic and, as a result, to provide a completely new perspective on digitization.
This is because we often tend – and prefer – to ask the wrong questions. Kuhn writes that this debate is not about the question: “Do you think the Internet is good or bad? Instead, the question is: What should our society look like if we accept digitization is irreversible?”
Digitization was also right at the top of the agenda for the German government’s two-day closed meeting at Schloss Meseberg last week. There, too, ethical issues and the risks of new technologies were debated. German Interior Minister Thomas de Maiziére emphasized: “When it comes to digitization, the primary focus should not always be on the risks but instead on the opportunities. […] Digital services, security and consumer benefit must be given equal weighting from the outset.”
The Estonian Prime Minister Taavi Rõivas also attended the two-day cabinet meeting. Estonia is a pioneer of digital administration and has a reputation for being a particularly startup-friendly country. The EU Commissioner for Digital Economy & Society Günther Oettinger also reported about the digital challenges in Europe compared to the rest of the world. The chief focus of the discussions was on how politics should address the digital transformation of the world of work. In relation to this, Federal Minister of Labor Andrea Nahles plans to present recommendations for “Arbeitswelt 4.0” (world of work 4.0) in autumn. Other topics discussed included the expansion of the internet network and the impact of digitization on important sectors, especially on the automobile industry. “In terms of digital politics, we need to speed things up,” urged Bernhard Rohleder, CEO of Bitkom (Germany’s Association for Information Technology) in the run-up to the closed meeting. According to Rohleder, the most important areas to focus on are the leading sectors such as the automobile, engineering, chemical and pharmaceutical industries.
They say you never stop learning. And this saying should also apply to CEOs because if there’s anything that calls for strong leadership and vision, it is the digitization process. According to a recent article in the business publication manager magazin, the task of a CEO is to transport the company “into a new existence, by way of digital transformation.” To do this, however, CEOs need to tap into new areas that are not part of their field of expertise. “In many cases, the fear of losing face or tripping on unknown terrain spawns opposition rather than transformation.” This is also verified by a recent survey of Germany that was undertaken by etventure with the assistance of the market research institute GfK. Forty percent of managerial staff shy away from making necessary radical decisions. Furthermore, it is only the case at less than fifty percent of companies that the digital transformation process is headed up by the directors or managers themselves.
In view of the digital revolution, it is high time that managerial staff seek a new mindset, break up hierarchies and initiate a cultural shift. According to the article, learning and occasional failure should be rewarded, while maintaining the status quo and rebelling against new approaches should be penalized. The article also says that a general understanding of digitization is necessary. This could even mean that the CEO spends time observing startups or digital companies. This approach was taken by Gisbert Rühl, CEO of the steel trader Klöckner & Co, for example. “By dismantling status symbols, breaking with traditions and opening up communication across all levels, transformation becomes possible and change is effected.”
But a tablet is no good at tiling! (Die Welt)
Computer-operated machines in place of saws, planes and chisels. Digital delivery notes, bills, cancellation forms and time sheets in place of full filing cabinets. Digitization has now reached the skilled labor sector. Yet many businesses in the sector are not yet aware of its arrival. “Indeed, many tilers, bakers and carpenters still think: ‘Digitization – it might have consequences for newspapers, record labels and German industry. But a tablet is no good at tiling, a milling machine can’t bake bread rolls and a 3-D printer can’t hang wallpaper.’” And yet large companies from outside the sector have already discovered that digitization can help them to cash in on the skilled labor sector. Large service providers such as Amazon or startups are now providing a consumer interface.
According to Walter Pirk from the Heinz-Piest Institut, an institute for craftsmanship, the main problem is that the businesses are not large enough. The article explains: “With an average of 5.3 employees, many businesses do not have the time for developing strategies, or for abstract terms like digitization.” To date, specialist advice has also been rare in this field. For this reason, Hans Jörg Hennecke from the Westdeutscher Handwerkskammertag (West German association of chambers of trades) recommends that partnerships of convenience can be a solution: co-operatives, franchise models and collaborations. This allows the issue of digitization to be passed on to experts while the companies continue to look after their core business.