On Monday, my new German book, “Digital Transformation”, will be officially launched at a press event in Munich. I have been asked to give a talk about it at a big Lufthansa IT event in Frankfurt next week, and in the run-up they interviewed me about the book and the key topics of my speech. This is what came out.
IT will play a central role in the ongoing process of Digital Transformation. What strategy should IT departments pursue?
IT needs to become the conduit through which information flows to all parts of the enterprise. In the past, systems have too often been designed as self-sustaining “digital islands”. This was not always IT’s fault. Nobody told them to make sure every single bit of information can be accessed and used everywhere both inside and outside of the company. And besides, since individual departments were paying the development costs, nobody was willing to fund the extra effort needed to overcome barriers such as compatibility issues or different formats. This should be the obligation of top management – who has often been sadly neglectful in the past. In every enterprise, treasure troves of data lie hidden. “If Siemens only ´knew what Siemens knows, then our numbers would be better”, Siemens CEO Heinrich von Pierer famously sighed at a press conference more than a decade ago. They still don’t, and neither does Lufthansa or any other major company. And IBM promise its customers “the right information ate the right place and time”, until they dropped the slogan a few years back, presumably because it had become an embarrassment.
Many people worry about “Big Data” and total surveillance. Are they right?
Information is the crude oil of the 21st century. Companies need to know as much as possible about their customers, not in order to control them but to provide better service. What does the customer really want, when does he want it and how can I improve my services to make him more happy? Transparency helps enhance customer experience, and therefore it is a GOOD THING! Besides, companies will always seek to treat their customers’ data in an ethical and responsible way, because if they don’t, the customer will punish them in the cruelest possible way – by going elsewhere! In this way, markets are the best form of privacy protection imaginable. The problem of state agencies spying on their own citizens is a completely different issue, and it is the reverse of what is known popularly as “digital transparency”: Nobody know why, how and when they are watching us, but we all feel instinctively that it will not be in our best interests. Besides, this kind of state-sponsored surveillance is completely illegal! In Europe, the “right of informational self-determination” in enshrined in the European Bill of Rights and in the German Constitution. And it would be very easy to stop: All we have to do is elect a government whose officials are willing to chain in the watchdogs. If we don’t, then we have no one to blame but ourselves.
Which branches of the economy will be hit most heavily by Digital Transformation?
Every business needs to keep looking over their collective shoulders to see if some unknown start-up, possibly from a completely different sector, is getting set to eat their lunch. Think of Uber, which is simultaneously attacking both the taxi and the parcel delivery businesses. Disruptive technologies can change the business world almost overnight. If I were a manager, I would lie awake nights worrying about who my next competitor will be.
The war for talent is in full swing. How should companies react?
Tomorrow’s autonomous employees will be experts in their fields. In the digital economy, there is no room for mediocrity. Young people who fail to make the most of their abilities will end up as supermarket cashiers or on the dole. And it will be their own fault! This is not so much a problem of choosing the right profession but of developing one’s ability to adapt to change in the job market. People can no longer expect to spend all of their lives at the same desk or the same drilling machine.
Will computers steal our jobs?
Germany is heading for a major employment crises caused by changing demographics. The so-called “population pyramid” doesn’t look like a pyramid at all; it looks more like an overweight middle-aged baby boomer, complete with bulging hips. This is because Germans collectively decided about 40 years ago to stop having babies. The head of HR at Volkswagen recently complained that he will be unable to replace all the qualified engineers and managers who are heading for retirement in the next five years. His answer is qualification and automation: Train the people you can get and replace every unqualified employee with robots! In a few years, we will be begging in the streets for talented young people to come and join us. They will be able to pick and choose in ways never seen before. Companies will have to groom themselves in order to appear attractive as employers.
How does Digital Transformation impact customer loyalty?
Customers will remain loyal only as long as it suits their own best interests. If I recognize that a company is doing a good job servicing me because they know who I am and what I want, then I would be crazy to switch to another company. This is the opposite of traditional customer retention schemes; call it “customer-self-retention”, if you will. I will be loyal if there’s something in it for me. If not, I’m gone!
The effects of Digital Transformation have been compared to the invention of the steam engine. Is this true?
Digitalization and networking have had similarly profound effects for at least two decades, now – and we are still at the very beginning! My worry it that German businesses will fail to prepare themselves adequately for what is yet to come. Many efforts by corporations large and small are too half-hearted; other less developed countries are making much faster progress and could one day overtake Germany as economic superpowers. Germany is next-to-last in OECD’s list of high-speed fibreoptic connections per capita. Former “emerging” nations such as South Korea are way ahead. We need to massively update our infrastructures and create leading digital strategies, or else we will quickly fall behind. And above all: We need managers with the courage to address the challenges of the Digital Future.
Everybody seems to be online all the time these days. We all carry smartphones around. Are people in the Digital World losing the ability to switch off and relax?
Why should they? The Digital World is the world they will be living in for the rest of their lives. Switching off is like watching an old silent movie. Sure, I may be able to take a certain esthetical pleasure from the experience, but let’s be honest: We are all glad when the sound comes back on. And let’s not forget that lots of people were critical of the “talkies” at first and wanted to have them banned…