Successfully mastering digitalization through organic growth | SEI - Swiss Engineering Institute
Successfully mastering digitalization through organic growth
July 25, 2018
By SEI Redaktion

Innovation

Successfully mastering digitalization through organic growth

Employees must learn to master modern innovations in order to make the leap into a World 4.0. This includes both "digital natives" and "digital immigrants".

But first, a historical flashback: On 7 December 1835, the first steam locomotive in Germany, the "Adler", made its inaugural run on the Fürth-Nuremberg railway line, reaching a top speed with wagons of around 30km/h. Many years went by, before on 02 June 1991 Germany's first high-speed train, the ICE, completed its first journey from Hamburg to Munich at speeds of up to 300km/h. In the age of steel therefore, innovation seemingly takes almost 156 years!

"Google's" triumphal march around the globe

And in the age of digitalization? In the world of work, one innovation appears to follow the next! Take the rapid rise of "Google", for example. In 1998, Larry Page and Sergey Brinn built a search engine that delivered much better results than the competition. In 2000, the founders made a loss for the final time, while in 2015, their company made a profit of 16.4 billion dollars from a turnover of 75.0 billion dollars. Today, around 95 percent of all German search requests are made via Google. An incredible success story in just 17 years!

Extremely accelerated processes

What do these extremely accelerated processes mean for the digitalization of companies? Prof. Dr. Dr. h.c. Manfred Broy describes two other phenomena that characterize the rapid digitalization of the working world:1

"Moore's Law" describes how the performance of ICT systems has been exploding exponentially for about 40 years:

"Computing power [is increasing], with no change in price, by around 100 percent every one and a half years, i.e. it is doubling. In ten years, the performance-increase factor will therefore be around 100, in other words the performance will have increased a hundredfold while the price will have remained the same. In 20 years, the figure will be 10,000."

Moreover, luxury cars today have on-board computers running software with up to 100 million lines of code. This corresponds to the programming effort "that not so long ago was reserved for high-tech systems such as the Space Shuttle", writes Broy. All these are growth rates "which have not even been remotely achieved in any other technology."

Digitalization is beyond imagination

Thus, the digitalization of society is taking on a dimension that quickly exceeds human imagination. This applies in particular to the digitalization of companies – as we move towards a World 4.0. In order to reach its shores safely, above all else new forms of cooperation are necessary – otherwise the digitalization of the working world will lead exclusively to waves of rationalization, at the expense of employees. It is not for nothing that the term 'change management' has a negative connotation for many, regardless of whether they are "digital natives" or "digital immigrants".

Therefore, Broy also notes the following in relation to the World 4.0: "Innovation needs new types of organizations and management structures", especially when software systems need to be developed. The IT expert continues: "Hierarchical and silo structures have to be dissolved and more cooperative management structures adopted", which is the only way to create "scope for innovation". This cannot be prescribed top-down, and can only be achieved through organic growth. Management's "commitment" requires a bottom-up process that involves all employees with their special expertise. In this way, change management can succeed if it is based on the organic growth of digital skills – and has a participative corporate culture in mind.

"Scope for innovation"

Those who wish to create such "freedom of innovation" need motivated employees who develop a high degree of creativity and independence. A "work to rule" or non-cooperative attitude is poison for all forms of change management – and thus also for the digitalization of companies.

"Companies are among the last areas in our society where democracy and sovereignty have yet to make inroads – into head-offices and factories", says Thomas Sattelberger, "but even today I don't have to put up with everyone and everything."

Between 2007 and 2012, Sattelberger was Human Resources and Labour Director at Deutsche Telekom, and has helped shape the digitalization of the working world. According to the HR specialist, the management processes of clever companies today are "increasingly much flatter, more horizontal and more temporary". This is an opportunity for democracy, because managers have to prove themselves much more in order to secure the "daily acceptance of their employees". Sattelberger on the World 4.0: "Networkers accept people in a temporary leadership role as long as they make a real contribution to networks." This applies to "digital natives" and "digital immigrants" alike. "Digital natives" in particular however are increasingly looking for a deeper meaning in their work, and often question purely formal authority.

Organic growth in digital skills

The task of change management must be to give high priority to securing an organic growth in digital skills that is in step with the development of ever more complex software and hardware, as is taking place with the increasing digitalization of companies. Broy calls it a "colossal misjudgement" to delegate the topic to a "Chief Information Officer" (CIO) alone, who in some cases isn't even a board member.

Software is a "cross-cutting issue that permeates all departments, all tasks and all areas of responsibility – and decides the future of a company." This is why a "software strategy" is urgently needed, so that all people actively shape the digitalization of society.

1 Broy, Manfred (2015): "Software Eats the World – Zehn Thesen zur strategischen Bedeutung von Software für Wirtschaftsunternehmen", Swiss Engineering Institute Press, Munich

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