Covid-19 has exposed the weaknesses in obsolete business models. I now see organizations digitizing their processes at lightning speed. But are these processes still relevant? Digital transformation is not just about the implementation of digital technologies, it requires a clear vision and strategy. I would like to explain this further by reflecting on the webinar ‘Digital disruption: Develop your strategy now!’, which I recently gave together with my colleague Robert de Vries, Senior Consultant Digital Solutions at T-Systems Netherlands.
Shift in thinking
Most organizations across different industries never thought about their digital strategy before Covid-19 hit. They operate in the bubble of everyday life and are unable to look at their company from a distance: At the actual customer demand; the relevance of their products and services; the possibilities of internal and external data; applications of smart algorithms from other industries; and the threats to their business model. That shift in thinking is the most important aspect of developing a digital strategy. The required technology is secondary and actually only comes into play after the digital strategy has been clearly outlined.
Focus on people
According to research by management consultancy firm Berenschot from January 2020, digital transformation is at the top of the agenda in most boardrooms in the Netherlands. But many people and organizations are stuck in linear thinking, while technology is evolving exponentially. It is, therefore, crucial to involve your employees from the very first step in the digitization process, thereby ensuring the integration of data and systems. This is still a major challenge in most organizations.
Some of the questions asked during our webinar also addressed this issue. Let’s take a closer look at them.
Do most companies understand the concept of a single source of truth?
No, I don’t think so, and it often seems like they don’t want to understand it. Large organizations are complex, do not have a standardized way of working and have multiple departments working with different systems. As a result, a lot of knowledge is lost. When you record this knowledge and integrate the data into all systems, you create a single source of truth. As an organisation, you can use this to manage and create responsibility. If things go wrong in the current situation, the board can easily hide behind diffuse information.
How do you make sure Artificial Intelligence (AI) creates value and is not just a gimmick?
The danger is that organizations are too often seduced by hyped technology. Artificial Intelligence is too far-fetched for most organizations and is not the Holy Grail. The algorithms are programmed by people and are therefore prone to errors. During the corona crisis, Amazon’s algorithms went haywire because suddenly we all deviated massively from our normal buying behaviour and started hoarding toilet paper. That undermined AI’s alleged reliability. As an organization, you should not start with AI but start by looking at your business challenges and develop what you actually need from there. The conclusion could very well be that you do not need AI at all.
How long does it take to reach the AI point starting from zero?
That depends, among other things, on the size of the organization, the complexity of the systems and on the customers. It can take anywhere from three months to two to three years. It also depends entirely on where you stand as an organization. Our conclusion, based on Berenschot’s research, is that most companies in the primary Dutch industries are still in the development stage of digital transformation. However, none of the participating companies in our webinar poll saw themselves as digital primitive; 80% saw themselves as average and 20% as a digital frontrunner. But how realistic is this self-evaluation?