Strategy & Leadership

Why digitization does not pay off yet

October 30, 2017

Digitization is presented as today's most important economic megatrend. Books, opinion articles and blogs scramble to emphasize how unimaginably big are the changes and the new demands imposed by this trend upon organizations. But unfortunately, one hears less about what kind of change is exactly needed.

Increasingly, one hears the sigh that the “digital revolution” does not materialize because many organizations make insufficient use of the possibilities. A survey by McKinsey (Goran, LaBerge and Srinivasan, 2016) suggests that the most important self-reported obstacle against “digital effectiveness” lies in “cultural and behavioral factors”. So this is more important than understanding, talent, financing or IT infrastructure. Apparently, the key to successful digitization in organizations is therefore not in the technology or offering ever smarter and more extensive applications, but in the behavior and the culture regarding dealing with the technology. That demands a change in behavior approach instead of a technocratic approach. A whole different ballgame.

For that other approach, we have to return to basics. In essence, “digitization” means nothing more or less than that the data is no longer saved in analog form (forms, archives), but in digital form: that means computer files. But the “revolution” is not so much in the digital data itself, as in the possibilities offered by those other new technologies for the very rapid dissemination of that digital data on a global scale (Internet), to combining and analyzing it (“Big Data”) and to allowing various different types of hardware to communicate with each other (“the Internet of Things”). As a consequence, a Tesla not only learns to adjust its suspension in good time to that awkward speed bump around the corner, but also shares it in no time with all other Teslas. Useful! As a Tesla user, one hardly has to do something new or different to cash in on this digital advantage. That is often a different matter with digitization processes in organizations.

To really cash in on digital opportunities in organizations – so more than just ‘technically’ installing them – employees often have to show a whole series of other behavior patterns towards customers and towards each other. Old behavior has to be done away with and new behavior has to be learned. These ‘turnarounds’ can be very difficult. That is because sustainable changes in behavior only occur if they are supported by other convictions, values and role perceptions. In short: effective digitization demands a real ‘cultural’ revolution, a different attitude or mentality with regard to customers and with regard to mutual collaboration. Only that will make sure that the new technology will really pay off.

For this, the members of the organization must first enter into a serious dialog, starting with the question: what does the effective engagement of digital technology in our organization exactly look like? What do we DO about it? And: what should we NOT DO at all? At a behavioral level. This seldom happens and is the reason for so much misery and the suboptimal implementation of technology: everyone is talking about something else and so everyone appears to be satisfied. Only once you have clarified the turnarounds together, are you able to wonder how you will learn to make it together. And what helps in the process. So start with the right questions and first try to set up a “switchboard” together (Van Olffen, Maas en Visser, 2016) for the required change. Then comes the question: what should we be able to do, want to do and be allowed to do together to make this “turn”? You can map that out together too.

For most organizations, successful digitization is a profound learning process. And no less than an exciting adventure – through trial and error. 

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