October 17, 2016

Guest blog: Adopting a digital state of mind

Lauri Paavola

Visiting scholar, Saïd Business School, University of Oxford, PhD candidate, School of Business, Aalto University

Over the last few years, the advent of technology such as big data, cloud computing and machine learning has opened up huge new opportunities for improving how businesses operate, offering new or different ways of working that can completely transform how companies do business.

But digitalization is about far more than just changing how we perform everyday tasks. Our research at the University of Oxford reveals that these initiatives can transform workplace structures, reporting relationships, information sharing, customer interaction, and competition, to name just a few.

A successful digitalization process poses many challenges to managers. They need to determine how the benefits of such projects can be realised without excess costs. This requires them to anticipate changes in skills, adapt new training policies, and most importantly, ensure the firm as a whole has the right mindset. 

With this in mind, there are three steps identified by our research that businesses must take to ensure digitalization initiatives work for them.

1. Understanding your vision

No digitalization process can be successful without a clear understanding of what the business is trying to achieve. Organisations need to answer questions about what their goals are and how digitalization will help with this.

In turn, this will give rise to more difficult questions that must also be addressed. For example, businesses will need to ask which jobs will be crucial to the company in ten years' time, and which will be less vital. Understanding how employees will be affected by digitalization will affect plans such as recruitment and training policies, so they must not be overlooked. 

2. Improving your digital maturity

 While having the right software and infrastructure is obviously essential for a digitalization project, the technology itself is only the start. Often, when such initiatives fail, it is not because of issues with the technology tools themselves, but in how employees interact with them - or don't interact, as the case may be.

Instead of applying different digital tools and implementing them in a top-down approach, managers should seek to utilize and enhance their staff’s digital maturity. For example, Tesco greatly improved its use of customer data after its senior management team changed - despite having the same people in house running the same processes within the organisation.

This suggests that prior to the change, the retailer wasn't fulfilling its potential due to a lack of digital maturity. To tackle this, managers should encourage their staff to suggest and experiment with digital solutions and allow them to adapt these into their work practices – not just to run these expensive processes in the background for the sake of being digital.

3. Fostering digital practices 

Building an organisation that fully embraces digital solutions and puts technology at the heart of everything it does won't be a quick or easy process. In order to achieve this, companies will have to change from traditional, siloed ways of doing business to a more modular environment, with a looser alliance of autonomous and multidisciplinary teams.

 It's important that these modules are kept the right distance apart from each other in order to effectively foster digital ways of working. If they are too closely interlinked, their shared knowledge overlaps too much, reducing the benefit of data sharing. On the other hand, if they are too far apart, they will have difficulty understanding each other and sharing information becomes tricky.

Managers and employees will need to work together to navigate the new digital frontier, and this requires a new set of management skills. Ultimately, success in the digital age lies not in the efficiency of technology, but in the dexterity and adaptability of the people who use it.

 More information about the research: Lauri Paavola, lauri.paavola@aalto.fi

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