Digital transformation: Waiting is the wrong strategy

By Martin Recke

22/12/2016 | Why do many companies still wait for their products to be devalued by digital transformation? It was a long time to foresee, and lost time can never be recovered.

Recently I had once again "Being Digital" by Nicholas Negroponte in my hand. In this book, which appeared in 1995, there is basically everything that has to be known about digital transformation. Okay, I admit, this is a little exaggerated. Nevertheless, many companies would be better off today if their bosses had taken "Being Digital" into their hands and thought about what digitalisation could mean for their industry and their business.

Where this is supposed to lead, was already known 20 years ago

That bits, compared to atoms, have incredibly many advantages, isn't plausible only since yesterday. The fact that everything which can only be digitised in some way will be digital in the medium and long term, people could have predicted more than 20 years ago: Nicholas Negroponte even wrote in detail about the events and consequences of digitalisation. He often kept right – so you could have known.

"Why Software Is Eating the World", declared Marc Andreessen 2011 in the Wall Street Journal - also already five years ago. Nevertheless, this still seemed to be a novelty for many people at the time. Why has so little happened in many industries? Why do many people still wait calmly, as their existing products become commodified through digitisation, thus becoming replaceable and thereby losing value? Why was the magnitude of the challenge recognised so late and in some cases apparently is still not recognised correctly?

Keyword(s): Computer science

Now it is certain that the seemingly obvious is not equally obvious to everyone. Rather, knowledge is linked to certain prerequisites. First of all, what's needed is a basic understanding of digital information technology. This is still far less widespread than I think it should be. It is certainly the schools where computer science today still lives in a shadow. My own schooling has been past so long since the next generation has already left school. Sometimes, however, I get the impression that the teaching of computer science has become rather worse than better as it was in those days.

But I still feel a sort of collective suppressive mechanism. Such mechanisms also work in other areas of life. For example, you can hardly claim that the refugee crisis of 2015 almost came out of the blue. Whoever wanted to, could already know in the early 90s what would come to us. The number of asylum applications had already risen since the 1980s; in 1992, the topic dominated the headlines. At that time, as now again, a provisional solution was found to get the topic off the table. No one dared and dares to approach the principle problem. The consequences would simply be too dramatic.

As long as the conventional business works, the pressure of change is low. And once the conventional business does not work so well any more, it is usually too late.

The same is the case in many companies. Everywhere, there are clever people who know or at least guess what is coming to them. But they are often heard - rather, if at all - too late. As long as the conventional business works, the pressure of change is low. And once the conventional business does not work so well any more, it is usually too late. Then there are no longer enough funds available to support large investments in innovation. Besides, the necessary time is missing. When the first internet bubble burst in 2000/2001, many companies in Germany went to sleep. The subject of internet was delegated downward from the CEO until it arrived at the trainee. It took correspondingly long until it had climbed back from there onto the executive floor again.

Lost time?

In the meantime, countless startups continued to diligently create facts. Some of these, including names like Google, Facebook, or Amazon, are among the big players today. The lost time can never be caught up again. This is because the speed of innovation in the digital world is so high that conventional means have little to do. It takes a ten-fold increase in customer value to be able to compete. However, this is actually the great opportunity. After all, not everything is digital yet which can in principle be digitised. New, digital products that are ten times as good as what consumers are offered today are possible.

They just have to be invented.

First published in German at t3n.de.