Digitalisation? Of course – what else?
But focus on the people, please!
1. Digitalisation as the driver
Digitalisation is a megatrend that is changing our society and our economy faster than ever before. It is changing the way we live together, communicate and buy things. It’s also changing our approach to working together, as well as how and where we do it. The opportunities from digitalisation arise from the application of new technologies and methods; consequently, these are opportunities for people who realise their own potential as well as the potential of digitalisation.
But what’s old? What’s new?
And why is everything suddenly happening so fast?
2. Understanding digitalisation – we lack a (shared) basis for discussion
Where this is debated in public and discussed in most companies, there are many different points of view on individual aspects of this issue. These range from ‘automation’ (a long-held view – “we’ll all lose our jobs”) right through to ‘disruptive new business models’, the new Holy Grail of entrepreneurial activity.
While Joe Kaeser at Siemens is convinced that the middle classes will disappear, Dieter Zetsche sees a golden future for Daimler as a networked mobility provider focussed on people. How can it be that the opinions of the helmsmen at two iconic German companies of roughly the same age (that is, fairly old) are so far apart?
To provide a foundation for our discussion we need to stay objective and to take several key issues into account.
3. The areas or dimensions of digitalisation
It is generally agreed that three areas or dimensions of digitalisation are apparent.
- Firstly, the dimension of the value chain, that is the service provision in itself. Its automation has given us sustained annual productivity growth of 2 to 3 percent over the last few decades. This has gained pace in combination with digitalisation, which is bringing intelligence to automation. Digitalisation is the catalyst for automation, which will in future bring us double-digit percentage growth in productivity – not linearly, but in bursts. Examples such as the Adidas speed factory show where this journey is taking us.
- The second dimension of digitalisation is the customer interface. Internet access and the Web-based marketing of products and services have changed our purchasing and consumer behaviour enormously; this has triggered fabulous growth rates in online marketing and retail – and has scared the living daylights out of traditional high-street retailers.
- In the third dimension we see new business models developing through the digitalisation of products, the networking of physical products and production units (under the heading of ‘Industry 4.0’), and the integration of digitalised value chains with digitalised customer interfaces. Start-up founders and CEOs both dream of this just as much as each other these days – occasionally even together.
No matter how helpful these three current dimensions may be in describing the results of digitalisation, they are inadequate in explaining how these actually came about. So let’s add a fourth dimension to all of this, a fundamental dimension that makes the digitalisation of the other three dimensions possible: the digitalisation of human achievement. We call this dimension ‘Human Digitalisation’ and use it to embrace all the prerequisites for successfully digitalising an entire organisation and even society as a whole.#
4. Human Digitalisation – it’s the human, stupid!
If we think of digitalisation from the consumer’s point of view, most of us first envisage a piece of technology: a smartphone, an app, or perhaps a Web-based service such as Spotify or Facebook.
If we ask HR executives, for example, whom they see as drivers of digitalisation in their company, the IT department comes out a long way in front (82%). But at least 52% of HR people see themselves as drivers of digitalisation. Apparently even Human Resources managers think of technology first and foremost when they approach this issue, but they suspect or already know that HR needs to make its contribution to ensure the success of the whole enterprise. If we ask corporate leaders where they see the greatest obstacles to digitalisation in their companies, most of them first answer ‘a lack of expertise’, often followed by ‘an inadequate digital culture’.
The starting point for a successful digitalisation process – that is, generating new processes, products and business models – is people. This becomes clear immediately if we think in terms of cause and effect. The same applies (perhaps less obviously) to the end-point, or better, to the focus of digitalisation: again, this can only be people. Technology is not an end in itself; it is always intended to serve people. Perhaps not in the same way for every interest group but, at the end of the day, it always serves what we call progress.
In this sense, we can only agree with Mr Zetsche as long as he puts the people (as customers and employees) at the centre of his digitalisation strategy. This reveals new thinking and behaviour – which will probably be the only successful way out of a profoundly uniform, industrial, product-driven world towards a new digital, people-centred age.
5. ‘Human Digitalisation’ in detail – four clearly-defined levers
So far, so good (in human terms)! But can we also be more specific about the prerequisites for people-centred digitalisation? Yes we can. We see four levers on the path towards people-centredness.
- Digital competencies
We meet the first demand from corporate leaders with digital competencies. What is decisive here is the distinction between ‘competencies’ and ‘skills’. Digitalisation is not primarily about acquired knowledge (skills), such as a special programming language. Experience-based knowledge in the application of modern technologies and in dealing with the increasing flood of information counts much more. Personal flexibility and the ability to network ourselves are universal qualities which that cannot be emphasized enough in personnel selection and development. There is an opportunity here for every employee to self-determine their own market value and confront their own fears of rationalisation. Qualifications for shaping the new digital world are required only at a secondary level; recruiters currently hunting online marketers for their organisation, for example, or user-interface designers, are perhaps well-placed to judge how urgent these requirements are in this area.
- Digital culture
Having addressed the aspect of ‘capability’ with digital competencies, ‘willingness’ is also required to be able to take advantage of the opportunities provided by digitalisation. The prerequisite for this is an ‘agile culture’ to shape the changes that go hand-in-hand with digital transformation. In the age of digitalisation, organisations are characterised by curiosity, openness and willingness to change. They are happy to ask themselves whether their company needs to become a start-up or, if possible, something like Google (the answer of course is: “No, we don’t need to – it’s not possible anyway”). But we can easily take off our ties and roll up our sleeves while we find our own way out of a hierarchical command-and-control culture and move towards a community of cooperation based on trust and levels of freedom.
In such an agile culture, the understanding of leadership changes. We could also say that the company culture reinvents itself in the interaction with a new type of leadership. A willingness to change requires a departure from the zero-error culture particularly endemic in Germany. Digitalisation as a meta-trend has its roots in software development. If we have learnt something (often painfully as users) from this, it is the principle of going to market with prototypes, i.e. with unfinished products, and eliminating errors as we gain operational experience. This cannot be transferred to every product and every service, but it is a completely different innovation philosophy from the one we know. It is consequently also completely different from the leadership style widespread in engineer-dominated companies.
- Digital leadership
Passing on responsibility, delegation and trust are fundamental prerequisites if employees are to take on responsibility and embrace self-determination. The levels of freedom associated with this enable the creation of new solutions that inspire the digitalisation of the company. Allowing mistakes, granting trust and providing levels of freedom are what matter in digital leadership. With this we are describing a form of management that has developed and grown out of transformational leadership. This type of leader-manager is first and foremost a coach and mentor. They guide, encourage and lend a hand if necessary. They both give and request feedback (which many traditional managers see as highly suspicious). They gain allies by convincing people, but without collectivising responsibility. They do not need to be permanent leaders, but can fulfil a leadership role temporarily. Neither need they be conformist, and in particular they need not be masculine. Digital leadership needs to be atypical and diverse to enable its power to develop.
- New work
The same applies to the way we will work together in future, and with whom. There is no longer any typical configuration for collaboration. This ‘New Work Order’ will play a decisive role in our future business activities: the digital workplace can be anywhere, and the way we work and cooperate with each other is already changing radically. This is driven by both new technologies (such as collaboration platforms) and new working methods (such as Scrum or Design Thinking). Dedicated workplaces (in service industries, for example) are also significantly affected by these changes. Digitalisation is thus enabling a new form of work, which in turn further inspires the digital transformation.
Through Human Digitalisation people and the new reality of work can harmonise with each other, and this represents an opportunity for both individuals and organisations. The apparent contradiction of ‘human digitalisation’ will resolve itself when we succeed in meeting the requirements for successful digital transformation in each and every organisation, all the way to our whole society. The levers to help us achieve this are clearly visible; their configuration and application is the responsibility of each company – and every organisation will always need to find its own, highly individual path to this goal. Depending on the economic sector and competitive situation, there is not much time left to achieve this. However, if we approach this issue consistently and with determination, the opportunities from digitalisation will far outweigh the risks.