Buzzwords like "Retail 4.0", "Industry 4.0" and "Digitization" are on everyone's lips. This is a sign that the potential offered by existing and new technologies is being used too hesitantly or not fully. It is worth questioning the approach.

We need a strategy

The methods used to find out where digitalization is taking place and which fields of action result from it are those commonly used in strategic management. An environment analysis to examine current political, economic, socio-cultural, technological, ecological-geographical and legal factors influencing the company reveals in which areas of value creation digitalization creates obligations, but also opportunities. Increased efficiency and profit maximization in existing business models, as well as increased turnover through new services, are among these opportunities.

According to Michael Porter's Five Forces Model, one would ask how new competitors or suppliers are currently behaving, what customers want or which substitutes on the market are putting pressure on one's own company.

A fair face on the outside, poo on the inside - this proverb sums up many of the attempts at digitalization that still exist today. To the front one presents oneself as a company with a website or a quickly knitted together online shop. In the background, however, this leads to additional costs and extra work due to the constant waving of the "digital flag". If the customer can talk to a company in real-time via a contact form, he also demands an equally immediate delivery of an answer. And the store employee now has to quickly send a few parcels from the store in the evening.

It's the other way around, too: The latest technologies, software and other gadgets are implemented and integrated in companies in a time-consuming and cost-intensive way without using their potential or really changing anything in the relevant processes, actions and activities. "I was much faster with the old system," you hear more often. The marketing initiatives of the software industry, in particular, give the impression that their products, through pure integration into the infrastructure, are also digitalizing.

However, digitization is neither the exclusive task of IT nor a pure marketing matter. Of course it requires technical support. However, this alone does not lead to more efficiency, lower costs or more turnover. The focus on the right elements within the value chain and their digitalization is crucial.

Digitization in all dimensions

The opportunities of digitalization must, therefore, be considered from all dimensions. The strategy and culture of a company, its employees, processes and structures, technologies, data, partners in the value chain, sales channels and, of course, products and services are the focus of attention.

First and foremost, however, it must be ensured that the management agrees to a digitalization strategy to be developed initially and also supports it accordingly. Digitization is a fully-fledged part of the corporate strategy! Likewise, a company must be willing to launch and consistently pursue the programs resulting from digitization projects such as data governance, continuous improvement of processes and changes in the organization from silo to cross-departmental process thinking. It is precisely these aspects that economic research uses to measure a company's degree of digitalization maturity.

In order to determine the potential of digitalization for a company, several key questions have to be answered:

• Which business processes have the potential for increasing efficiency through digitization? A simple example is the creation of a customer file with all historical transactions.
• Which supplementary services can be offered for selected products on the basis of digitalization? For example, the additional option for hotel bookings on the Internet.
• Could selected services and products perhaps even be completely digitalized, such as the dispatch of a printed trade magazine?
• How can workplaces be optimized by digital elements to increase efficiency?
• Which processes and partners within the value chain must be more closely networked?

It is necessary to find out which elements remain completely analog, can be made more efficient with digitized processes, can be extended by digital parts or can be completely digitized. If the potential analysis is oriented towards the value-creating elements and the possibilities for increasing efficiency, reducing costs or increasing turnover, the focus is also on the relevant fields of action, creating value and reducing implementation time and costs.

Technology relevance

In order to identify the potentials of digitalization, a technology relevance analysis may be useful as an alternative. With it, new technologies can be examined for possible applications within a company. For example: What can the cloud bring us? How can we use marketing automation? What significance do data science, analytics and big data have for us? How can we use artificial intelligence? Can we belong to the Internet of Things with 5G? Are blockchains or smart contracts relevant for us? Are 3-D printers an issue for us? Or: How can we use augmented reality for our offer? Here, too, all dimensions of the company and its business models must be considered in order to identify fields of action within a digitization strategy.

Change Management

Acceptance hurdles must be overcome during the implementation of the digitization strategy. This requires accompanying change management to change the mindset of the employees but also of the customers and partners involved in the value creation.

The life of a fault tolerance allows failures. Not to the greatest extent that can be assumed, but by implementing so-called MVPs (Minimum Viable Products), i.e. the smallest possible, benefit-creating version of a digitalized element within the value chain. Such wholesome projects with a measurable impact on business models help to validate ideas and create enthusiasm and acceptance for further steps in digitization, thus also promoting the creative collaboration of all those involved in the value chain in the creation of something new.

This article was uploaded on netzwoche.ch