Digitization – the hype word on everybody’s lips. Everyone is talking about it but many people find it hard to understand what it is really about. The hype has been fuelled by the fact that the good old marketing people have caught on and realised the potential offered by this technology, while IT people are simply bemused thinking that there is nothing new here, really!
What is new about digitization is that it is more and more strongly cutting through all industries, requiring an ability to combine skills and knowledge from different fields of activity. It makes it quite challenging to comprehend the big picture and identify the application areas and potential uses.
While tech-heads, coders and data scientists understand and are fully aware of what could be done, inadequate skills to communicate this potential to managers from a perspective offering the greatest business value may lead to a situation where this potential will never be realised. By contrast, the business side seems to have got the hang of what could be accomplished, but the actual exploitation of the opportunities may look like a black hole in the absence of really understanding what it takes.
Digitization enables a huge amount of things: physical customer services are replaced by digital services and physical products by electronic ones. It provides new ways of linking things to the net and collecting data on the condition of machinery, disruptions to production or customer preferences. Opportunities are created for utilising and mining these data, and finding a completely new competitive edge; for analyzing variables related to complex problems; and for preparing predictive mathematical models based on the data. For a business manager, sensors, machine learning, algorithms and Beacons may sound like science fiction, but for the ‘men and women of the trade’ they are commonplace.
Consequently, the perspectives offered by digitization are enormous: it may even be possible to create blue ocean strategies, meaning completely new products, services and business models in areas where there is no competition…yet! Digitization allows companies to improve production efficiency and serve customers as never before, and develop new or disrupt old earnings logics.
It provides new ways of linking things to the net and collecting data on the condition of machinery, disruptions to production or customer preferences.
But creating anything new calls for risk appetite. The risk lies in that there is no certainty as to the final outcome when we do something that has never been tried before. A further risk arises from the fact that the developments are not fully controlled by anyone alone – partners and joint efforts are required. Yet the risks are worth taking when the prospects are so immense.
A couple of basic approaches help lower the risk and get started:
- Prototyping: Start small! What could create the greatest added value for business at low initial cost? Try and learn – and if the results are good, expand! Grow the competitive edge at low risk but high potential.
- Co-creation: Internalise the new way of working together. Identifying solutions that generate new value calls for a new type of collaboration: combining skills and competencies (e.g. said tech-heads and business management), co-experimentation, learning from experiments and shared successes.
There is no full certainty as to the final outcome when we do something that has never been tried before.
For example, the efforts to create something new can be started with an informal innovation session to evaluate the potential offered by digitization and to determine business needs. This helps reach an understanding and find a tangible business case, which can then be advanced subject to jointly determined criteria for success.
Let’s get down to it – let’s combine skills and competences, innovate, build prototypes and get the business off the ground!
The text has also been published at the wau.fi portal on 14 August 2015.