In our continuing discussion of how Germany’s Top 500 companies are using digitization, this week we look at some practical steps businesses can take to successfully adapt—and thrive—in the new digital landscape.
Few companies have adopted a comprehensive strategy for digitally enabled corporate renewal, even though this approach is the best path to success. Instead, most German companies in the study (“Courage to think differently: Digitization strategies of Germany’s top 500”) are investing in digital technologies to support administrative tasks and interactions with customers.
While this approach has its benefits, especially as a first step or for companies with limited resources, it should be looked at as a jumping-off point for a more comprehensive digital strategy. These initiatives pave the way for reorganizing business processes later on, as shown in the illustration below.
Based on the results of this survey, Accenture identified the following six steps to successful digitization:
- Recognizing that digitization has the potential to increase the company’s value. While digitization does not generate value on its own, it makes it possible for management to uncover and realize new opportunities for increasing a company’s value by creating high margins, providing access to new customer groups and improving cost structures.
- Streamlining decision-making structures or, if necessary, developing new ones. Digital business models often require completely different corporate structures than those found in traditional businesses. Management must ensure that digital innovations don’t get stuck in existing processes or are perceived as “competitors” to the existing ones.
- Having the courage to create new business models and “think differently.” New business models often require radical changes to existing structures or the creation of new cooperative arrangements, such as alignments with start-ups.
- Developing new skills. Expertise in IT, online sales and marketing, data analysis, customer experience, and digital channel design are critical for digitization success, and are often not available within the company. Setting up laboratories in partner companies with well-trained IT staff could be a way to close the talent gap.
- Setting up rules and involving the workforce. Survey respondents cited employee resistance as a major roadblock to digitization. One solution could be to appoint people in middle management who are specifically responsible for digitization and employee buy-in.
- Securing financial resources. Digitization requires liquidity for investments in new technologies and R&D capacity. Online business models with high margins and new products can contribute additional funding for investment, and data analysis can be used to build more flexible pricing models, which can lead to increased revenue growth and expansion into foreign markets.
At the heart of these recommendations is the fact that successful digitization requires strong leadership. The German Top 500 are well positioned to move into the new digital age through the development of superior products for global consumption. They are now applying the same level of perfection as they create services for the digital world.
For the past few weeks we have looked at how German industry in general is approaching digitization. Next week we’ll shift our focus to the insurance industry by examining how insurers in Switzerland are adapting to the digital revolution.
To view the German study, go to:
For more information, go to: