Exponential Growth Times
Internet and internet-based technologies are rising eataster than ever. An estimated 40 percent of the world’s population has an Internet connection. This amounts to over 3 billion users worldwide with that number growing exponentially every year. Nowadays a single person could simply open a web shop and instantly have direct access to millions of customers in the $1.3 trillion market that is e-commerce.
The vastness and widespread of Internet users has led to the complete transformation of the business landscape. Consumers now have access to such immense amount of information that a decade ago was considered unthinkable. This has forced them to evolve into a new kind of customer that is more demanding and less loyal than ever before. The nature of competition has undergone a metamorphosis as well. Now a single person could simply open a web shop and instantly have direct access to millions of customers in the $1.3 trillion market that is e-commerce. There is no doubt that the rules of the game have changed and companies must be quick to react and adapt to those alterations or otherwise risk their market position and jeopardize the future of the organization.
Nowadays a single person could simply open a web shop and instantly have direct access to millions of customers in the $1.3 trillion market that is e-commerce.
The process of achieving this transformation in order to fit and be successful in the modern business world is known as digitalization. By successfully implementing digitalization in their operations companies could ensure that they are well prepared to handle the new wave of customers and competitors in an environment characterized by extreme dynamism and turbulence. The process of digital transformation however, is by no account an easy one and managers must be prepared to face many challenges and pitfalls on the way of achieving it. In order to successfully tackle those managers must be able to exercise their leadership powers and make use of entrepreneurial way of thinking.
Digitalization – a Hercules Task?
The first significant challenge managers will be put up against in the digital transformation process is to get all the members in the organization on board with the changes that come with digitalization. Since the process will most likely affect all business units and hierarchy levels the scale of this challenge could be significant. Overcoming it however is non-optional and crucial to the success of the entire transformation project. A strategy for the managers in this situation could be to clearly communicate the benefits digitalization will have on the different organizational areas and to ensure that it is well understood that the cost of learning is dwarfed by the magnitude of improvements and enhancements to organizational processes. Implementing cloud computing for example will enable employees to access their work files from anywhere as long as they have Internet connection and will provide security as data can no longer be lost due to hardware malfunctions or other related problems.
Another issue that comes with the process of digitalization is to recognize the need for a change in the way reporting to management is done and performance is measured. Some old world KPIs might become obsolete and no longer needed or the focus might need to be shifted towards a new set of performance indicators that help gauge customer satisfaction and track the company’s activities in the online virtual space. Modern digitalized companies need to be able to measure the extend to which they engage with customers, how satisfied they are with the customer service, and how effective the company is in creating new and superior value for the consumers.
A final challenge to be discussed here that comes with the transformation process is concerned with answering the question of how to sustain digitalization. Unlike other transformational processes digitalization is characterized by a very high degree of dynamism. Internet technologies will not stop advancing after the organization implements a digitalized business model and thus it must be prepared to deal with those possibly often-occurring changes. Sustainability, outdated ways to measure performance, and a pan-organizational mind shift are the main challanges digital leaders will face.
But how can a large organization adapt new adjustments to its components at such a fast rate? The answer comes from the field of entrepreneurship. A manager with an entrepreneurial mindset realizes the importance of employee autonomy and structural decentralization. This is the only way to achieve the flexibility required to survive in the turbulent business landscape. In order for autonomy and decentralization to be successful however, the company’s leadership must first ensure that all organizational members are well versed in the principles of digitalization.
Sustainability, outdated ways to measure performance, and a pan-organizational mind shift are the main challanges digital leaders will face.
As shown above the digital transformation process could prove to be a difficult one and might force managers to face several key challenges and pitfalls. None of those however is unsolvable if the leaders of the company are willing to see the transformation process through and are in possession of a strong entrepreneurial mindset.