Digitalisation is top of mind among many business and organisational leaders in both public and private sectors today. And while it seems to be all the rage, what does it actually involve?
In short, it commonly refers to the strategic adoption of a wide range of technological tools and solutions in order to improve internal processes, productivity, and customer and employee experiences. But Henrik Blomgren, an associate professor in industrial management at Stockholm’s Royal Institute of Technology (KTH), goes further than that and says that digital transformation is essential for any type of business wanting to survive in the long run.
Power of digitalisation
Adapting to digitalisation is “a way of making sure that one’s business or organisation does not get ‘disrupted’”, Blomgren says, or fall behind. He suggests that beyond tapping into a set of tools, businesses looking to harness the power of digitalisation need to develop “a method of understanding about what is happening in the industrial business landscape due to its ‘arrival’.”
“Digital transformation ensures survival in the face of powerful changes in all sorts of fields. Take the home movie and video game rental chain Blockbuster. It went bust in 2010, due in large part to competition from Netflix. Had Blockbuster gone through a thorough and powerful digital transformation, it may have been able to compete in the new business landscape and avoid bankruptcy,” Blomgren asserts.
Analysing the future
The methodology that Blomgren refers to involves analysing the future of one’s own business field, deciding your company’s aims and then utilising a “repertoire of tools” to achieve them. In that way, a company can set out a realistic digital transformation roadmap, which involves integrating digital technology into all areas of its business.
Since each company is of course different, and since some have advanced further than others in this area, there is huge variety - across businesses, sectors as well as continents – in the ways the digital transformation process plays out.
According to the European Commission, “the digital transformation of EU business and society presents enormous growth potential for Europe”. Technologies such as the Internet of Things, big data, advanced manufacturing, robotics, 3D printing, blockchain technologies and artificial intelligence offer “a range of opportunities” to traditional sectors, the Commission goes on to say on its website.
For his part, Blomgren believes that Europe still has some way to go before making full use of digitalisation. “But it’s hard to generalise. Take social media use. Overall, Swedish companies are quite advanced when it comes to using Facebook, and pretty bad at other platforms, like Twitter. In Korea, it’s the opposite. And so, as with all forms of change, you can find both great cases and big failures in Europe as well as elsewhere,” he points out.
Find a new position
Regardless of where in the world a company or organisation is based, if it has ambitions within the area of digitalisation and wants to learn methods and tools to increase its impact, it needs to figure out how to “find a new position within the transforming business landscape, a landscape that is gradually evolving,” says Blomgren. “That way, the business can end up in a great place, a place where a company can prosper.”
However, if a business ignores digital transformation or fails to achieve it, it is likely to go under in the long run, Blomgren warns. He brings up the auto industry as an example.
“Self-driving vehicles will be widely available in the future. The question is not if that will happen but rather when. In the future, we won’t own our own cars. Instead, we will share cars or rent them or use them for single rides like taxis. That means that the number of cars on the roads will be significantly lower than now and a vast majority of car manufacturers will go out of business. If you want to stay in business, however, you can either try to become the very best manufacturer of self-driving vehicles, but that sector will be narrow and fiercely competitive. Another option, then, is to transform into a different type of company. In other words, you have to change your business model in order to stay relevant and profitable, and that is what the digital transformation methodology helps you do,” says Blomberg.
Identify digital transformation
So, how can a company identify what kind of digital transformation it needs to achieve, and how does one go about drawing up that roadmap? How do you even get started?
“At the outset, it’s about analysing what the new business landscape will look like in the future,” says Blomgren, “and that is actually possible. One shouldn’t pay too much attention to the naysayers who claim that ‘the only thing we know about future is that we don’t know anything about future’. On the contrary, we can know a lot about future, the question is just how to go about finding it.”
Blomgren is one of the main teachers of the EIT Digital Professional School Master class course on digital transformation for business leader, which will focus on just that. “We teach a methodology, and it varies depending on what type of company we’re dealing with, so that it is adjusted to their particular needs. After the course, the companies will be able to apply this methodology on their own and get the answers they’re after. We also equip them with some hands-on technological tools.”
Increase business impacts
There are plenty such tools and methods that one can learn in order to help increase business impacts, and make the move towards digitalisation effective, but without some sort of analysis about what the future might hold, businesses will fumble in the dark, Blomgren asserts. And that goes for all kinds of organisations, whether it’s manufacturing, utilities, banking or government.
As regards the future, Blomgren also ventures to make some predictions about the effects digitalisation will have on the economy ten years from now. “It will have a tremendous impact,” he says. “We will see totally new, big companies rising at the same time as others go bankrupt. But we will also see old companies that have managed to stay afloat and even prosper because they have been good at adapting - and hopefully those will include companies whose employees have enrolled in the upcoming EIT Digital Professional School/ KTH course in Stockholm!”
Henrik Blomgren is an Associate Professor in Industrial Management at the Royal Institute of Technology in Stockholm. He holds a PhD in Industrial Marketing and a MSc in Engineering, and has around 20 years of analytical and industrial experience working in strategy and marketing. His current research focuses on digital transformation, mobile marketing and the future of education with regards to the impact of digital media, prime movers, market change and globalization.