Digitalization – not just product development

Original thought piece by me, originally posted at Alumni Global’s website

Digitalization, Internet of Things, Big Data. All of these hypewords have appeared to the public discussion and used either as conversation starters – or finishers. “What are your thoughts about …?” or “Yes, but Big Data will change it all.”

“Earning models and business models are subjects to drastic change when the true digitalization occurs.”

At least from my perspective here in the Nordics, a lot of the public and published discussion regarding digitalization is revolving around how it allows us to create better products. The Nokias and Volvos, Statoils and Carlsbergs all have now to invent new products that use digitalization to be able to succeed in the future. I am overly surprised why the view is limited to the product development without consideration of the holistic reform of the entire business or even the industry. Earning models and business models are subject to drastic change when the true digitalization occurs.

Most companies are trying to move up the value chain from being a transactional service/product provider into the strategic partnership. Digitalization allows even the most traditional industries to enhance this transition. Industries like welding have changed as a Finnish welding equipment manufacturer Kemppi  implemented their new technical solutions that allow them to charge their customers by the amount of the welding seams created. At the same time, they also provide the client with individual welder quality and production figures that allow the business to train and eventually to require a certain level of quality and production. They even offer welding as a service, with people and the equipment.  All this has been possible through the Internet of Things that has been the cornerstone of the rigorous overhauling of the way the business is perceived.

“But my business is so unique, it won’t be affected.” Very traditional, hands on industries, such as people transportation has faced a player that doesn’t play with the same rules, Über. They have created an application that allows passengers to request transportation from crowd sourced taxis, i.e. private car owners that want extra income while they drive their car from place A to B. Content publishers have been struck by eMagazines, streaming music and video services. Travel agencies have diminished due to direct sales websites and only the ones who have been able to transform their operating models have survived. Even parking meters have started to disappear due to services such as Easy Park.

“No business is isolated in a way that would leave it without exposure to the changes digitalization brings.”

To be truly able to lead companies forward, the leaders of today must understand that even the basic principles of their business might be changing. No business is isolated in a way that would leave it without exposure to the changes digitalization brings. The most senior directors may have difficulties in understanding what the technology is capable of, but they should definitely have the expertise to vision best case scenarios and strategies in how to significantly increase the business. That’s where diversity comes to the picture. By communicating those visions, those “whys,” forwards to the organization with the right attitude and a diverse background, both technical and practical solutions will rise. It’s then just up to the decision maker – will s/he listen or just think that “changes won’t affect me.”

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