Business model transformation in the context of digitalization

If you choose a very binary approach to this topic, then there are two kinds of organizations or business models.

  1. Digitalized organizations / business models

    – Highly competitive
    – Able to quickly react to change in demand or competitive situation
    – Agile processes
    – etc.
  2. Barely or non-digitalized organizations / business models

    – Lack in competitiveness through limited access to information
    – Therefore slow reaction to changes in situations
    – Using slow and outdated processes

According to scientists, studies, experts, etc. every business has to digitalize its processes in order not to loose in the market. The above listed characteristics give a glance of why.

Let’s assume an organization wants to quickly adapt to digitalization. What are they to do now? How can they walk the way that is necessary to make all these changes?

I made up my mind a little, and this is a five step list I came up with.

  1. Realizing the need and the core areas / processes, that need to be digitalized

    First of all, the organization has to develop an intrinsic understanding and motivation on why their business model needs to change. Only if that is fulfilled, the next steps of the list can be achieved. It has no use telling somebody to do something if they just do not realize why it is important.
    If the motivation is clear, the core processes for change need to be identified. As you can’t do everything simultaneously, it my be smart to identify e.g. one single plant or factory you want to start with and that can then serve as milestone.
  2. Preparing for organizational change
    Now, everyone involved has to be prepared on what’s to come. Digitalization usually brings a lot of completely new technologies, processes and demand for new competencies with it. Shop Floor workers, team leaders, middle and top managers should be informed about what is going to happen. A strong change management is responsible to handle that.
  3. Choosing the right platforms and technologies

    The megatrend of digitalization and it’s emerging subtrends Industry 4.0 as well as IoT are delivering a gigantic pool of technical and digital solutions. Of course, one can’t choose and implement all at the same time. Some technologies may make absolutely no sense for some companies and their products or services. Virtual reality, for example, is shaking the gaming industry at the moment and fits perfectly there to shift the players experience to a whole new level.Wearing VR Glasses, that completely block out the “real reality” may not be the best solution for someone working on the shop floor though. The smarter idea here could be Augmented Reality glasses, that do not block out reality but enhance the users experience by implementing useful information directly in his or her field of view.
  4. Implementing with due diligence

    That means carefully monitoring the adaption and effects of technological change. Questions like: “How do users adapt / experience the technology?” or “Are we really seeing a rise in core KPI’s linked to the technology deployed?” need to be carefully examined. If a change doesn’t lead to the desired leaning of processes or rise in productivity it has to be abolished and substituted by a better fit.
  5. Continuously identify new areas for improvement

    Change today comes in shorter and shorter time. Just because a process or technology is innovative today doesn’t mean at all, that this is true tomorrow or the day after. If an organization does not carefully monitor changes on the technology and labor market, a favorable market position can be gone in no time – although efforts in terms of digitalization have been made in the past. Continuity is king!

I realize that this list is very basic and still subject to a lot of elaboration, but it’s a first try to visualize the knowledge I gained over the last months in a very compressed way. You can check out my professional profile on LinkedIn, if you wanna learn more about my background. I would love to receive feedback and discuss the topic of business model change in the context of digitalization.

Kind Regards

Luca


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s