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Although digitization has been on the agenda of business and politics for a long time now, SMEs in particular still have implementation problems in practice. This roadmap offers assistance in eight steps.
Source: Industry of Things by *: Both politics and the German economy seem to have recognized the importance of digitization. Time and again, new strategies are being developed to advance Germany as a digital location. Nevertheless, numerous companies, especially medium-sized companies, are still struggling with digitization. According to the monitoring report Wirtschaft Digital 2018, which measures the degree of digitization of companies and industries, a quarter of German companies are digital beginners or laggards. Nearly 7 percent of companies reach a digitization level between 81 and 100 points and are therefore digital pioneers, 32 percent are digitally advanced and 34 percent belong to the digital midfield (Weber et al., 2018, p. 12). Germany also ranks 13th out of 28 in terms of the use of digital technologies in the economy compared to other European countries (EU Commission 2019).
Nevertheless, the economy perceives digitization as highly relevant. In 2017, 36 percent of those companies that considered digitization as ‘very important’ or even ‘extremely important’ increased their share in 2018 to 46 percent (Weber et al., 2018, p. 16). Inadequate bandwidth, lack of time and lack of know-how of employees are often cited as obstacles to digitization. With the emergence of new technologies, such as artificial intelligence, there is often a lack of ideas about how to use them in one’s own company.
Typical examples of digitization are: The ordering process can be performed electronically by the customer from the tablet, without having to consult with sales staff (digital customer experience); through software, interfaces in the company can be overcome or standard processes can be automated (digital practice leadership); Artificial intelligence can be used to develop new products or services (digital thought leadership).
In this article, we want to highlight a way to initiate and systematically drive the digitization of a business. In doing so, we focus on digitization in the SME sector and take the change model of the American John Kotter (1996) as a basis, which we are changing on the basis of our experience and applying it to digitization in SMEs. Digitization can only succeed if the employees are involved in digitization. For this we have developed an 8-step model.
In the following, the 8 steps to digital change are presented.
Step 1: Create a coalition of people interested in digitizing and preparing people in the company
“Who is there?”
In his 1996 book, John Kotter said in an analogous fashion about change in organizations: do not even think about trying on your own. As someone who wants to advance digitization in the enterprise, one must have a group of people who support one, argumentatively, with technical ideas as well as socially, that is against possible resistance. Of course, the top management should be part of this team, or support this team at least clearly and visibly for all.
Step 2: Clarify the urgency of digitization
“Why do we have to do this?”
Even though everyone has been talking about digitization for three or four years, no, this has not yet arrived at many employees of medium-sized companies. Alternatively, employees are still in the “phase of denial,” where digitization is considered a kind of management mode that one can sit in wait. From our experience, there are two main ways to make the urgency clear to all employees: Firstly, you can refer to companies in which the planned step has already been implemented, on the other hand, you can use Youtube to show a number of examples of which technologies are relevant to the company.
(Kotter, 1996, considers this incidentally as Step 1, while we are convinced that you should first put together a group of people willing to digitize.)
Step 3: Develop a vision of the future
“What’s the digital version of our company?”
In English, this is called “vision”, but we think this term is overused. However, it is clear: employees want to know where the journey is going. Although it is utopian to predict exactly how the company looks in a digitized version in 5 years, employees want to get an image that includes two or three basic ideas of digitization. From our experience, it has proved useful to use the term “Digital Practice Leadership” and to apply it both to existing products and services as well as to the value chain.
Step 4: Communicate the picture of the future
“Where is the journey going?”
Communicating the vision of the future is the critical process to gain the support of employees. Here it has proven useful to communicate according to the 3-B principle (save – finish – start). In other words, it should first be communicated what will endure in the company and will not change. This list may be long to provide security. It then communicates which products or processes will expire. Finally, it communicates which products or processes are started. In this way, the negative or perhaps anxiety-causing part (ending) is embedded in positive messages (saving – starting).
Step 5: Create wide support
“Who cares about which aspect?”
After communicating the company’s digital vision of the future, it is about ensuring the support of employees. This is best done by dividing the digitization process into different project groups or task forces and entrusting a reasonable number of people with these task forces. From our experience, it has proved useful to give task forces a specific time limit, for example three or four weeks, and to commission them to develop two or three specific options for one aspect of digitization. The broader the participation in the task forces, the broader the social support of the digitization process.
Step 6: Ensure short-term success
“What can we achieve in the short term?”
Ensuring short-term, small achievements is necessary to keep the process going and to point to aspects that are already ahead. These short-term achievements should be based on the proposals of the Task Forces of Step 5, be a clear success (even if they are small) and clearly linked to the digitization process. These three qualities ensure that short-term success can be invested in the motivation of employees and support can be gained further.
Step 7: Consolidation of successes and derivation of further changes
“What’s next?”
In the case of change processes, it happens again and again that the process silted up after a few short-term partial successes; the company is resting on the first laurels. In order to prevent this, it has proved useful, after a first generation of task forces (step 5), to set up a second generation of task forces to further develop the short-term partial successes (step 6). In this way, the momentum produced by visible results from step 6 is obtained. The Task Forces of step 7 should have a different composition from the ones in step 5.
Step 8: Anchoring gradual successes in culture
“How do we work together now?”
Based on new proposals from step 7, new ways of working in the company are gradually being initiated, KPIs (target agreement systems and assessment systems) adapted, new skills models for new hires put in place, and staff recruited to embody the new ways of working. In this way, the development of options for concrete problems (steps 5 and 7) and the achievement of partial successes becomes an enterprise-wide cultural change.
Conclusion
From our point of view, it has been proven that those individuals or groups in the company who initiate such a process should be familiar with the model presented here as a whole from the outset, ie, be able to think of the individual steps from the end. This includes, for example, that the composition of task forces (step 5) should already be based on the anticipation of possible short-term successes (step 6). With this proposal we hope to have provided an appropriate roadmap for the digital transformation to all interested persons.
Source : * By | Author / Editor: Prof. Dr. med. Thomas Armbrüster; Prof. Dr. Gerrit Sames; Prof. Dr. Irene Bertschek * / Sebastian Human
Literature:
Kotter, J.P. (1996). Leading change. Harvard Business School Press.
Weber, T., I. Bertschek, J. Ohnemus & M. Ebert (2018a). Monitoring Report Economy DIGITAL 2018, Federal Ministry for Economic Affairs and Energy, Berlin.
EU Commission (2019). The Digital Economy and Society Index (DESI).
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