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Jul 06 2016

Digitizing companies – the consequences for management

What are the challenges for management vis-à-vis employees?

In the future, many management tasks will be taken over by algorithms; the organization of enterprises and also the profile of the executives will be strongly influenced by digitization. Regardless of whether it’s banks, media companies, food manufacturers or car makers: companies across all industries and all around the world are affected by digitization. The respective opportunities and risks are, however, heavily dependent on the industry-specific business models. A financial institution has different needs than a mechanical engineering company or even a retailer.

High rate of change and new business models

The digital transition is characterized by a high rate of change as well as the emergence of new business models.

In the future, executives will have to operate in an environment in which the unforeseen changes of a hyper-networked digital world represent the new normality. The typical management environment is similar to a body of water that is exposed to constant light (or even stronger) waves. The surface of the water is practically never still. This is when you need leaders who can deal with uncertainty and are adaptable in unknown terrain.

Anyone who feels comfortable here is also ready to come up with innovations that might be met by disbelief on first hearing.

Digitization makes new demands on the skills of employees

Digitization is continuing its inexorable advance and leading to structural change – even in traditional industries. Change is possible, but only if companies can ensure that their operation is flexible and agile. This also implies changed requirements when selecting employees. The employees of tomorrow need to exhibit qualities such as entrepreneurship, creativity, speed and a maximum adaptability, coupled with an affinity for digital technologies.

Companies that do not have the right management and the right employees in the right jobs will find it difficult to keep up with these processes. It is not only important to attract the right talent, but also to bind the employees to the company and to prepare them to meet the new challenges and develop professionally. 

All competencies on board?

To push ahead with digitization in the company, it is necessary to ensure that the corresponding skills are on board. HR recruitment and personnel development are confronted with new requirements within the company.

Project managers should bring not only IT expertise, but also innovation leadership skills such as enthusiasm for digital concepts and a basic willingness to change. Change management will become vitally important for many organizations in order to successfully implement changes in a goal-oriented manner.

The digital competence cannot be concentrated in a single person at the top. If companies want to be competitive, all employees in leadership positions must realize the potential of digitization and support the process.

Differentiation via innovative solutions

Successful digitization strategies should not be designed exclusively to achieve efficiency gains. New strategies are also useful when it comes to differentiation via innovative solutions. Digital differentiation strategies can be, for example, omnichannel-compatible process designs in the services sector. Here, service companies are encouraged to align their business processes to the needs of customers, who increasingly expect location- and time-independent access to services through various media – at home on their PCs or on the road via their mobile phones. Companies that align themselves too late, as digital late bloomers in the highly competitive market, will end up losing out.

“Generally speaking, companies should focus on what Albert Einstein said: Not everything that can be counted counts, and not everything that counts can be counted!

Corporate leadership should start by steering a clear course when it comes to digitization. Not everything can or must be digitized. Having the right strategy for the company and a comprehensive corporate communications structure is essential. The entire workforce should be involved, even those who are not directly affected. It is also very important to have the right people with the right skills in the right position. This is where it is extremely helpful to take stock from an external point of view – through professional change management.” Says Andreas Wartenberg, Managing Director of Hager Unternehmensberatung GmbH.

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