Anyone who researches studies on the topic of digitization in medium-sized companies will find a multitude of different findings: From “German medium-sized companies are digital pioneers” to “The digitization deficit of German medium-sized companies is growing,” everything is included. This is not surprising. After all, there are different degrees of digital maturity of companies – and the pressure to digitize varies from industry to industry, from market to market.
These different findings irritate some medium-sized companies: “With all the buzzwords and trends, where should we start?” Traditionally cautious medium-sized companies are also aware that the digitization of individual areas or even entire organizations offers added value. Often the basis is simply missing, starting with the question: What steps should we take to be successful in an increasingly digital world? And the answer is not necessarily: network your machine parks.
Before those responsible can devote themselves to possible digital tools and technologies, they should create a solid foundation on which all other digitization decisions can be made. This homework consists of a cycle:
The cycle can be worked on in an agile or iterative approach. Often those responsible in medium-sized companies think that technology is the solution. Digitization cannot succeed without good leadership and corporate culture. A study by the Boston Consulting Group concludes that companies that focus on culture are five times more likely to achieve a breakthrough than companies that neglect culture. The contents of the cycle are highlighted below:
Vision
The first step towards digitization is developing a clear vision: Where should the company be in 5 years? What contribution does it want to make for employees, customers, the market, the environment, and society? What’s the point? Outlining a vision in a sentence or two will help everyone derive goals and focus on better results. Those responsible should involve their employees because the idea and the objectives can only be achieved if everyone is involved in the development and believes in it. Developing an idea alone is not enough: it should be communicated regularly. Milestones on the way there should be made visible again and again. The purpose and image of the company should be reviewed from time to time
Guide
We live in a fast-paced business world where a lot is changing. Leadership also means realizing what is not changed: Values, morals, and trust remain the cornerstones of human relationships and cooperation. The role of leadership in a digitized world is to provide support and orientation. Employees should be able to act as independently as possible within the framework generously defined by the management. The managers are companions, mentors, and pioneers for their employees. They arouse curiosity, create emotions for learning and encourage interdisciplinary cooperation. They no longer make decisions alone. The entire team should be involved in crucial decision-making. The greater the diversity in the group, the more versatile a problem can be. Then:
Error Culture
Dealing with mistakes is part of the essential corporate culture. With “Command and Control,” it will be challenging to create a digital basis. Those who allow mistakes and encourage employees to make one more mistake than leave an idea unspoken – encourage creativity among employees. Mistakes are opportunities to learn. A positive error culture enables employees to determine the reasons and causes of the errors and derive new decision-making paths that bring about improvement. It’s not just about making mistakes. It’s about analyzing, learning, and improving through mistakes. Early mistakes save time and money. They encourage good, quick results.
Clear Roles
Companies that know where they are headed need appropriate roles. The vision and the goals derived from it should be clear to everyone – and everyone should know what role and responsibility they have on the way there. Those responsible should define together with the employees who take which function and which parts may have to be taken over by an external partner. So there is clarity. Everyone knows their area of responsibility and the responsibilities of others. Impending bottlenecks should be communicated promptly so that team members can provide support quickly.
System Integration
Business intelligence and big data make it easier to process the growing amount of information and use it profitably. Today no company can avoid data-supported systems. Anyone who uses several solutions, such as ERP and CRM software, should interlink them. In this way, companies keep track of all customer-relevant information. From sales to service to finance and accounting, all critical data can be mapped through the system integration: purchasing habits, order history, customer requirements, inventory, trends, material flow, and other supply chain information. System integration is the basis for seamless customer processes and a positive customer experience. And: A positive customer experience is a key to success. Without this system integration, companies cannot keep up in the fast-moving market. It is the basis for further digitization steps.
Adjust
Since markets are continuously developing with high dynamics and a lot is learned in one’s own company, digital projects and progress are ongoing. Interim managers often help with their experience and perspective from the outside. Managers should define KPIs that they can measure and evaluate. This helps to keep an eye on the course and to be able to take countermeasures – also to communicate milestones to stakeholders.
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These six steps are not yet the way to the intelligent factory but form the foundation for further steps towards digitization, regardless of the next digitization goal. The down-to-earth medium-sized companies should start with the above homework to keep up with the market in the future. At least this starting point must be in place in 2021. The end is now. Anyone who has implemented these steps will feel many potentials here for further necessary digitization measures that can be implemented at high speed. The managers have the right mindset, the employees work independently on their projects, the culture is more flexible, and the systems support the necessary data and seamless processes.