The Human Factor – Shaping digitalisation in companies
Feeding the hungers
Block chain, robotics, big data, AI or crypto-currency… All these new-ish technologies have been the subject of debate since day 1 in all areas of society. Instead of letting them drive you crazy or paralyse you, the answer to how to deal with them is as simple as it is challenging: You have to mould it, shape it and design it!
Experience VUCA and design it for our needs
Digitalisation is a trending topic; a real benefit and a worry at the same time. You don’t have to just look at the big four anymore – Amazon, Google, Facebook and Apple – it is now everywhere, spreading through all industries and sectors. New possibilities, opportunities and potentials are emerging, as are risks and problems – and it is happening at lightning speed, often unforeseen and with the underlying complex levers and limits going unrecognised. In addition, we must ask ourselves again and again whether this or that development is good or bad. In other words, digitalisation is a prime example of what happens in a VUCA world, as well as what causes it.
Instead of being paralysed by it, the answer to the question of how to deal with digitalisation is as simple as it is challenging: to shape it. Two major solutions are often mentioned as ways forward for this: Business model design and cultural change.
Digitalisation of your business model
On the one hand, dealing with digitalisation involves repeatedly clarifying how your own business model could use the opportunities offered by digitalisation – and could be developed in an evolutionary or even revolutionary way. Given the complexity of technical and social developments, decision-makers repeatedly have to think actively about further development, sound out developmental directions, prototype constantly; staying ahead of the game means being ruthless and adapt or die is the mantra. To a certain extent, companies must be in a permanent test mode.
Digitalisation means cultural change
On the other hand, digitalisation also heralds an opportunity for culture change. In order to keep up with the digitally accelerated VUCA world, organisations need to be highly sensitive to, and capable of, picking up market requirements, competitor’s developments and the opportunities offered by technological innovations. Ensuring this often means distributing responsibility among many co-creating and entrepreneurial employees and teams acting with creative freedom, flat hierarchies and an open, appreciative error culture – to name just a few aspects. Daimler’s Leadership 2020 or Otto’s Kulturwandel 4.0 are good examples of such company-wide initiatives.
Change your patterns
Business model and culture demonstrate what is at the crux of the design of digitalisation: not only is our world constantly changing due to digitalisation and many other drivers but companies should also be prepared for constant change. Planning strategies, continuous improvement processes or innovations regarding existing core competencies often fall short. What is needed, is a learning organisation that is always ready to learn and open to change: It is then able to discard deeply embedded patterns and learn new ones.
Dimensions in the design of digitalisation
In a workshop carried out by our CONTRACT German team, we checked this viewpoint. In doing so, we established the framework for 7 dimensions, which, from our experience in accompanying digital change, are relevant again and again.
Business model Redesign
Some organisations need to completely reinvent themselves and others need to evolve their business model portfolio to unlock new opportunities. Classical methods, such as business model innovation or vision and strategy development etc., help to achieve it. Organisations often practice a radical customer re-orientation according to the slogan “Outside in”. Using creative techniques or prototyping in combination with good testing can bring some initial insights. Naturally, some employees become afraid of losing their own job in such processes. This can be managed by involving employees in the redesign process at an early stage. During this inclusive phase they develop new perspectives and additional skills. This ensures that trust can be strengthened whilst sharing responsibility.
The digitalisation of companies usually produces an immense variety of data. This often results in more transparency – what is not noticeable in analogue form should become visible in digital form. However, there is also a risk that decisions can become over-burdened with more data. The infamous “information jungle” is often created, which in turn increases the challenge of actually making a decision. You ask yourself: “Have I really looked at all the information I need to make a decision, or perhaps I have missed something?” As a result, this can lead to excessive self-inflicted demands on individuals. Technically, these “side effects” can be countered with special systems for data handling and cultural rules, as well as apps to promote close cooperation and better information sharing eg Slack, MS Teams etc.
Communication and relationships
More and more additional channels are being used, which increases the access to people and the speed of information distribution. The organisational social network is made more open and so information on skills, experience and field of work is readily and easily shared. Team spaces in messaging or chat services can be set up for any combination of groups needed. At the same time, some communication channels may disappear or drop off the radar and direct communication between individuals may suffer. It is therefore important, to not only make communication platforms available but to also ensure that team and social events take place, to keep a common feedback culture maintained and to agree upon rules for communication.
Digitalisation gives individuals new possibilities to shape their everyday life. For years many have been feeling that the possibilities of digital communication are changing the expectations that are placed on individuals in companies. Home office and work outside office hours are possible but permanent availability is also desired or even necessary. It is not uncommon for employees to be online all the time to not miss anything. In some cases, they also experience constant availability as a control or a pressure causing overwhelm or anxiety. Depending on the initial situation, a joint agreement or a team contract, is necessary as well as the introduction of a dynamic feedback culture and mutual support in questions of time management etc.
Digitalisation is changing demands placed on managers; a variety of digital tools facilitate remote leadership. The feedback possibilities alone are much more extensive than before. Many employees are now taking advantage of the opportunity of digitalisation to work flexibly in terms of location or time. Likewise, teams spread across different locations is no longer a rarity. A high degree of internal transparency is also needed; for managers and their employees, this means more communication and mutual trust. This requires clear clarification of roles and expectations.
For agile work structures, which are used in more and more areas today, a clear roles are essential. Overall, the degree of regulation is much higher in this still relatively new form of work than in more traditional formats. Especially as responsibility has been transferred to teams; it is critical to precisely clarify actions and decision making as well as build skills in these areas. After all, not everyone wants to take on responsibility immediately or work so closely together in a team. Whether or not people see the advantages, such as greater flexibility or the pursuit of common goals. Clear methodology and digital tools counteract a partial lack of orientation. This requires room to try out, experience and experiment. In order to constantly improve approaches and cooperation, it is equally important to carry out regular reflection loops.
The principle of two-handed leadership
For the design of the digitalisation, the image of a two-handed leadership has proven to be a good choice (Rosing, Frese and Bausch, 2011). One hand tackles new topics and gives room for autonomy, for innovation and an open culture of failure. The other focuses on routines, clear procedures, compliance with rules and risk avoidance. Frequently, this symbolises the dynamic development of companies that make room for experimentation (be it an agile team in a co-working space or a young start-up) and at the same time diligently continue to pursue the learned and established daily business. They are two hands that belong to the same (corporate) body. The trick is to bring the topics from both areas into contact with each other, often juggling them, while preserving the good. It is important to provide an appropriate degree of security and clarity in both parts and at the same time quickly and dynamically take on board what is valuable and new in the overall organization.
On the way to a learning organization
Basically, many formulas for shaping digitalisation are already 30 years old: in order to be open to change and willing to change patterns again and again, it is necessary to develop a learning organisation. Peter Senge, who coined the concept, has identified 5 dimensions, all of which are in one way or another reflected in the success stories of digitalisation. The quintessential take out is simply this: we can make digitalisation work really well if we develop our organisations and the people in them.