Reinvent your business
– the digital revolution

For many decades, information technology was considered merely a supportive tool in business development. The main objective of IT departments was, accordingly, the automatization of processes and data management. IT was about improving process performance.

Business is taken over by new players

However, today, we find ourselves in a new era, with digitalization disrupting essentially businesses in its traditional form.
Some striking examples are:
• Travel portals which almost have replaced the classic tour operators/travel agencies
• Online shopping which gradually overtakes local retail shops
• Fintech companies which replace traditional banks
• Technology companies which become leaders in the car sector

Ultimately, there is no industry which is not being affected by digital disruption in one way or the other. Even more challenging is the speed with which this is happening.
And yet, most of the companies struggle badly to assess the threat or rather to recognize the tremendous new opportunities of digitalization. Why is that?

Transform yourself or die!

The answer is obvious: for a start, management has to acknowledge that business might become obsolete very soon. They have to operate in a doomsday scenario. Who in his or her right mind is able to do that?

Steve Jobs for example was. You remember that about 15 years ago Apple had, thanks to the iPod, reinvented itself from a struggling computer company to an innovative leader in consumer electronics. Even better, by repositioning, Apple started to be again successful also in its classic computer business. And what happened next? Apple killed the ipod! They cannibalized their main income source and replaced it with the even more successful iPhone! They did this not when iPods were declining in sales, but at the very peak of their success.

Cannibalize yourself

As Steve Jobs said, if they had not done this, most probably a competitor would have.
Nowadays Apple is taking the next step: from chasing sales of devices to increasing revenues through innovative services on devices.
This is the key of Apple’s success: a continuous transformation and innovation, without any hesitation, to question achievements of the past.

Another obstacle to face disruption by digitalization is that companies in order to identify opportunities of new technologies often rely on their in-house IT department.  Though their role and mindset is a completely different one. Exploring new business models by digitalization and managing IT systems are two completely different things.

Understanding new business models

Digital transformation is a field, which requires a completely new approach and new combination of skills. Deep understanding of business modelling and digital tools have to be combined.
Digital companies lack satisfactory knowledge in business modelling. While they clearly know “how to do” things, they would not necessarily know “what to do”.  They heavily rely on worked-out concepts and precise specifications.

What is the next big thing?

Another big threat of digitalization is that companies have difficulties to predict future requirements. They often get stunned by developments they have “not seen coming”.
Think of Tesla: a newcomer has turned the car-industry upside down. The company’s huge advantage is how it approached driving mobility in a completely new way. By underestimating new technologies and new trends, the established car producers gave Tesla enough time to achieve a significant technology lead. Even if the company in terms of produced cars is still small in comparison to the established players, Tesla today is worth more than Mercedes, Volkswagen and Audi combined. Their last hope was that Tesla would fail to enter mass production. High volumes as barriers for newcomers, but, once again, they were proven wrong .

Disruption is by definition radical

Disruption questions everything you were relying on and proud of.
In order to innovate business, companies need external support for two main reasons:

  • input has to come from experts, who are not captured in established corporate culture. You need people who are not limited by internal power balances or entrenched in false pride of the past
  • new skills are asked, especially in terms of new business models

Steve Jobs brought Apple back to success, after a decade of absence. This gave him the resolve to break-up in no time with bad management culture. He stopped a disoriented product philosophy and initiated a radical u-turn in Apple.

Companies have to transform their business in time as long as they are still on the wave of success with their current business. Understand that digitalization will threaten your business much sooner than you think.
Digitalization at the same time can be a big opportunity for reinventing your business and for achieving a new, high dynamic.