Are you in a management position with decision power? If so, chances are high that sales forces of this world regularly try to point your attention toward your company’s digital transformation and high hopes of selling you a portion of Internet of Things, artificial intelligence, or machine learning. Sounds familiar?
Let’s be honest: We all use terms like digital transformation or digital disruption without asking our conversation partner if we have the same understanding of such fundamental terms and concepts.
Three Key Takeaways Against Digital Dilemma
Based on our SAP Center for Digital Leadership experiences gathered from more than 150 CxO engagements per year, we have derived three key takeaways to talk more efficiently about digital.
1. Business First, Technology Second
Decisions around digital transformation are often made from a technology-first perspective. This puts the cart in front of the horse. Technology must be an enabler for innovation ultimately allowing new business models to gain or regain the competitive edge. It is much more effective when C-suite decision makers or line of business managers follow a business-first approach. This lets your creativity flow and allows innovation instead of being quickly influenced by the potential – or the lack thereof – given by certain technologies. Whenever faced with an innovation-themed issue think about the business aspects first and afterwards about how technology might play a role.
2. Get Your Facts Straight
It is of the utmost importance to have the same understanding of any topic amongst all people involved before entering a discussion. This also holds true when it comes to the digital age. Here are our definitions of the most fundamental terms that will make your digital-related conversations more effective:
- Digital innovation turns an idea into a solution that is new and is of value to a party. It becomes digital by using digital technologies like big data, cloud or machine learning. Think about commanding your smart home with your voice – Amazon Alexa is a picture-book example for a digital innovation.
- Digital transformation is the process of adaptation to changing market conditions due to new technology possibilities. Take German family business Kaeser Compressors for example, a company manufacturing air compressors. In the past they sold the machines – today they sell the compressed air.
- Digital disruption is the change that occurs when new digital technologies and business models affect how an organization creates and retains value. The way how life-science startup 23andme uses DNA data to create value is putting strong pressures on incumbent pharma players.
3. Start Early/Now?
You might have heard people talking about the fail-fast mantra that startups are embodying. It has even become quite cliché. Nevertheless, it is this mindset of not fearing investments that can be the factor of success. The ability for startups to completely reinvent their business model – to perform a so-called pivot – is what the large incumbents are often missing. So, if you find yourself in a 500+ employee company, it is your chance to become a role-model that starts talking about new ideas and even the brightest vision. Placing a strategic bet is the way to bring innovative ideas to market.
Ultimately, digital has become a teacher’s pet for many and a pet peeve for some others. Make sure to become familiar with the basics and do not get lost in the word jungle that is already out there. You will do yourself a favor and the person you are talking to.
About our SAP Center for Digital Leadership
As a leading digital pioneer, the SAP Center for Digital Leadership helps CxO customers and their organizations to navigate their digital transformation and lead with innovation. Based on SAP’s internal digital transformation learnings, our research agenda and meetings with more than 150 CxO customers per year, we provide leaders with best practices for leading digital transformation.
Our network and partner ecosystem represents today’s and tomorrow’s leaders in digital business. Partners like European Space Agency trust us and jointly we create digital open ecosystems.
For more information, check out www.sap.com/digitalleadership.