You think you really understood digital transformation …

.. but you still have such a weird feeling that your future son-in-law says his job is being a blogger.

… but you still don’t believe anyone can make real money from playing computer games.

… but you don’t understand how digitalization could ever change your customers’ expectations.

… but you wonder why the brand you successfully established twenty years ago suddenly has competitors you didn’t even know last year.

… but you still expect your employees to always do their jobs perfectly.

… but you still feel somehow intellectually superior when you scroll through your printed daily newspaper in the morning.

… but you still want to keep your CD collection.

… but you still think your kids can’t hurt themselves on the internet.

… but you still wonder how the formerly isolated madmen suddenly all come together.

Are we really as digital as we think?

Of course, we all feel like we are at the forefront of the digital transformation: we don’t write letters anymore, we chat on WhatsApp instead of making phone calls, we no longer go to the department store but order online from Amazon, book parking and bus tickets with our smartphone, pay casually with our AppleWatch at the supermarket checkout, and, thanks to Netflix, now hardly need grandparents’ TV programs.

In job and education, Covid 19 has led us to be able to conduct business meetings, lectures and school lessons almost confidently online (even if the latter certainly still have some catching up to do here). And some people are already analyzing their production and sales data with AI tools and thus get new and often surprising insights.

Nevertheless, the question remains: have we really understood what the current digital transformation means? How does it differ from the digitalization of recent decades, what opportunities and risks does it entail? But also: what cultural and social change does it bring? And are we prepared to join these changes, or are we not secretly trying to at least partially maintain the status quo we are so familiar with?

What is so different now?

is the transformation of existing products and processes through digital technologies – across industry, business, politics and society – which can range from their simpler application to the enrichment of content and functions to their complete replacement by radically new solutions.

In retrospect, the creation and editing of texts, tables, images, drawings, music and videos on computers can be seen as the first stage of digitization. The worldwide connection of these computers, first stationary, then also mobile, represents stage two and three of digitization and has led to completely new dimensions in communication and cooperation. As a fourth stage, the landslide-spreading of smartphones has not only led to their users being able to access the internet anytime, anywhere; above all, they have enabled behavioural and location-related offers through their cameras, microphones and position sensors and the mass upload of the data generated by them.

Each of these stages has not only produced new solutions and new players, but has also heralded the end of many long-established products, companies and professions. Victims of the first stage include, for example, the manufacturers of cameras, tapes, typewriters or anything necessary for technical drawing. The second and third stages have severely restricted conventional postal services, faxes or long-distance calls, completely abolished services such as telex and rendered data carriers such as floppy disks, CDs or DVDs superfluous. Stage four has dug the water out of many conventional service providers via Location Based Services, such as the taxi companies through app-based ride-hailing services.

The fifth stage we are currently in (which does not mean at all that the previous stages would be even halfway completed) is technically defined by the ability to collect and structure huge amounts of data continuously provided by the growing number of computers, smartphones, connected vehicles and other things (so-called “big data”) and then analyze it with the help of AI-based analytics tools to come up with valuable information: What conditions really depend on whether a particular product is purchased? Which functions of a vehicle are actually used most often – and which are not? Which content of a website is attractive and leads to online purchase – and which ones are not? On the one hand, customer- and requirement-based offers can be derived from such analyses (such as the well-known “customers who have purchased product X have also purchased products Y and Z”); on the other hand, advanced analytics tools make it possible to predict the behavior of people and technical systems with ever greater accuracy. This applies to the experience-based forecasting of traffic jams, maintenance requirements of networked machines, plants or vehicles, or even of human misconduct. In medicine, data analysis supports the early identification of diseases, in finance the prediction of market or price movements. And some online retailers even claim that they can not only predict their customers’ future needs by analyzing their buying behavior, but also, for example, predict a divorce by comparing behavioral patterns, before the parties have even made the decision.

In addition to all these technical possibilities, however, digitalization also brings with it a significant social change, especially at this current stage: the growth of a “digital culture”, the work and lifestyle of a generation that has grown up with digitization (as well as some older people who have adopted this style) and which differs significantly from the usual – as the following examples are to illustrate . :

  • Low product and brand loyalty. Those who buy quickly with “one click in” are also gone with “one click out” just as quickly. Loyalty is not expected to be rewarded. New entrants to the market are viewed with interest and enthusiasm rather than with scepticism and doubts about quality and reliability. This also applies to loyalty to their employer.
  • Broad level of information: Customers are not only fully informed about the products and services they are interested in, but also about their suppliers. Often no purchase advice is required, because the customer has informed himself so well in advance that he knows more about the product in question than the seller. Digitals are value-oriented, bright, and sensitive: those who are associated with the exploitation of local workers or the cause of environmental damage in internet forums are quickly out of the running despite having attractive offers.
  • Feedback culture: Digitals are used to getting and giving feedback quickly and easily. A like here, three out of five stars there. The fact that the experiences of a dissatisfied customer are published in internet forums and networks around the world just minutes later, and how best to govern such cases, is still new territory for many established companies.
  • Transparency: Those who want to use digital data should not hope for their quick approval, but should clearly highlight the added value they gain from the transfer of their data. In the same way, if you want to lead digitals as their manager, you should express your expectations clearly and stick to agreements.
  • Benefits instead of owning: Those who have grown up with streaming services instead of their own CD or DVD collection also have less need to own things like tools, cars or bicycles. Digitals are much more receptive to all types of “X as a Service”.

Why is this so relevant for companies: because they are confronted with these digitals in four different ways today: as enlightened customers of their products and services, as sophisticated and not unrestrictedly loyal employees and executives, as factual politicians and legislators who set the legal framework for digital products and processes, and last but not least as critical and rather thematic than partisan voters of these politicians. Dealing intensively with the content and impact of digital culture is therefore a strategic must for companies.

What are the opportunities, risks and changes?

The ability to predict the behaviour of people and systems obviously offers a variety of entrepreneurial opportunities: those who know exactly what the market wants, how their products are actually used and what condition they are in, and thus can offer their customers individual service and product offerings, are not only clearly at an advantage of competition, but can also be able to improve their entire value creation process from development to production and distribution to service and recycling, and thus plan and deploy their capacities in a much more effective and efficient manner:

  • Targeted product management including individual product and service offerings
  • Design to factual requirements (no over- or under-dimensioning)
  • Early detection of design and production defects
  • Individual forecasting of maintenance requirements
  • Detection of repair needs
  • Managed return / recycling procedures at the end of life

Precisely because this increases the attractiveness of the offers for customers so enormously, competitors who fail to enter these technologies and exploit their potential will lose touch relatively quickly. One aspect often overlooked in the euphoria about the obvious opportunities, which can not only slow down the desired digital transformation in the company, but in fact stop it, is the corporate and management culture. While digital change is already relatively broadly anchored in society, executives and employees of established companies often still struggle with it. The use of big data and AI and the associated digital transformation are seen in part as a massive threat to their often laboriously worked-out role and importance in the company, with three aspects of fear in the foreground:

  1. Devaluation of personal success: Many executives and specialists see the established – and indeed successful – products, processes and procedures of the past as a one of the main reasons for their personal success, and possible changes as an attempt to devalue them, as well as a betrayal of their own values.
  2. Loss of “dominance knowledge”: The basis for the use of big data and analytics in the enterprise is the merging of all available data into a data lake or digital twin accessible to all parties. But it is precisely this disclosure that is seen as a danger. “Only my department and I determine the exact sales figures. If you want to know how many of which products were sold in which markets, you have to come to me and ask me to do so. I will certainly not make that data available to everyone now. In addition, our mistakes would be immediately transparent to everyone.”
  3. Rationalization of one’s own workplace: As in manufacturing through automation, the use of big data and analytics also eliminates the need for jobs in other areas – but here those of specialists and executives. The assessment and forecasting of sales or usage data, for example, has long been the responsibility of highly specialized and highly regarded departments in the companies, whose expertise can now be increasingly replaced by powerful analytics tools – which also generate the required forecasts at the touch of a button, at any time and in a comprehensible manner.

What to do?

If the digital transformation is to be successful in the long term, it must never be limited to the introduction of advanced IT technologies, but must also drive forward the necessary change of internal processes and corporate culture in the sense of a change program prescribed and demonstrated by the companies upper management. This includes creating understanding and perspectives, and supporting the personal change of each person concerned individually through qualification. However, this also includes consistently dealing with those managers who are closing themselves off from change for personal reasons and thus ultimately fail to take the decisions necessary for change and the long-term maintenance of competitiveness.

Happy New Year!

2020 has demanded a lot from us (from some even more than from others). Looking back, I will remember this last year most for how quickly changes were suddenly possible. Some of them – such as wearing masks, keeping the distance and reducing contact – will be reversed as soon as possible after Covid 19, others – such as permitting bars and restaurants to serve food and drinks outdoors  – are certainly an option to hold on once it gets nice and warm again, and others – such as working from home or video conferencing – will surely stay with us as a “New Normal”.

In terms of the mobility of the future, I see two experiences from 2020 as especially helpful: Firstly, we were able to even change things that have been considered more or less inalterable for a long time. We proved not only that working from home is possible but also that it significantly reduces traffic, we reduced overall CO2 emissions and improved air quality visibly, we boosted the share of  electrified vehicles, temporarily installed and tested structural alternatives such as pop-up bicycle lanes, and even converted long term urban vision into concrete concepts like the 15-Minute City. Secondly but not less important, we learned that for the general reflection on whether changes are meaningful and possible and thus an elevated willingness to change, we should not always need a pandemic.

With this in mind, I wish you all the best for the New Year 2021.

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Culture eats Strategy for Breakfast. The true reason why change fails …

We all know this – of course only from friends and acquaintances, not from own experience: The New Year’s resolutions, which are off course fixed and irrevocable, such as eating healthier or doing more sport, are torpedoed by the inexorably breaking power of habit at the beginning of February and then die a quiet and pitiful death. What remains is persistent frustration and the monthly debits of the gym’s annual contract.

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The resolutions of companies, called strategies in technical jargon, all too often suffer a similar fate. These, too, do not usually fail because they lack sense, consistency or necessity, but – quite the contrary – because they are so reasonable, coherent and necessary from the point of view of those responsible that their comprehensive implementation is seen as granted and any further intervention as an unnecessary effort and thus as superfluous. And just as on the cold Sunday morning in February, when a sudden feeling of mild pain in the back is reason enough not to run in the park as planned, habits strike mercilessly here too, this time in the form of the corporate culture, which has often grown over years and decades.

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“We have now derived everything cleanly, agreed and communicated to everyone. Everyone said they understood what to do and why. Why on earth it is not happening now?”. In the current situation days, this can be life-threatening. A company that, in times of change (such as current in the areas of digitalization, mobility or sustainability) is prevented by consciously or unconsciously retarding forces from adapting quickly enough to the constantly changing framework conditions and rules of the game, inevitably loses its connection and is then suddenly “out of the game”.

The ability to really know the culture of one’s company on the one hand and, on the other hand, to be able to influence it in a targeted manner if necessary, is therefore an essential prerequisite for the sustainable implementation of strategic goals. What sounds simpler than it is, because corporate culture does not mean how enthusiastic the employees of a company are about its brands and products, but the sum of their individual attitudes, desires and feelings as well as the common norms, values and behaviors arising from group dynamic interaction. And this makes it a critical factor for the desired sustainable implementation of change needs: Are these communicated comprehensibly and well-founded down to the lowest level and their implementation maintained, or is this prevented by a middle management level acting as an impermeable clay layer? Are the employees responsible for the implementation really behind the strategies, or is there rather the view that “those up there” have again come up with something new, but as with the last times, this time again it won’t be eaten as hot as it was cooked?

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A positive corporate culture in this sense connects all levels of the hierarchy and creates a fundamental openness to change through trust. An important detail here is that “together” includes all partners involved in value creation, not only employees in the legal sense. Culture does not stop at organizational boundaries. And: Corporate culture cannot be captured by one-time online employee surveys and certainly not changed by executive decisions overnight – not even with the help of specially appointed and in the end even externally recruited cultural specialists. A long-term, bi-directional and honest interaction between management, executives and employees is a prerequisite for successful and lasting change in corporate culture. And not so much – as is often misinterpreted – out of pure philanthropy (although a decent and respectful treatment of employees and executives, which is a side effect, is certainly welcome), but primarily simply for the benefit of the company.

 

Talkin’ Bout a Transformation …

#emobility

Whether eagerly yearned for or grudgingly conceded: By now, you have probably accepted that electric cars are inexorably on the rise. And even though you are sure that at least in some places there will still be cars with combustion engines on the road by 2050, it surely looks like EVs and Plug-in Hybrids will prevail in the cities. However, what you still find far less clear – even though you witness more and more public chargers around – is how EV drivers will be able to cope with the limited range of their vehicles in connection with the perceived scarcity of charging stations. And while at the same time some nerdish engineers reiteratively broadcast that fuel cells and hydrogen will solve this problem for ever, you still cannot get rid of this uneasy mental image of a huge crater stretching over a highway after a car crash with a poorly maintained hydrogen vehicle involved.

#mobilityservices

Then, as you read through your business strategy journals, you are told over and over that car ownership, the century old mobility pattern number one, is in rapid retreat. Urban teenagers, whose fathers were dreaming of fancy sports cars when they were their age, don’t even go for a driver’s license anymore. If train, bus or bicycle is not an option, people would not buy or lease cars but rather share a car or call a ride hailing service like Uber, the affordable and app-steered successor of what has long time been known as a taxi. But what is worrying you even more is that new digital service providers are said to take over the complete mobility business soon, with automakers being downgraded to basic hardware providers and public transport companies begging for contracts.

#autonomous

On top of that, automakers claim they will soon bring autonomous vehicles on the road. Not just something like an extra-advanced driver assistance system, but cars with neither steering wheel nor pedals but lots of extremely expensive sensors and software that must be extensively tested and meet standards initially developed for military aircraft. And while in spite of all confidence in engineering you still wonder how these cars would ever make it safely through unsecured road works or snowstorms and – even more significant – who apart from ride hailing providers would actually want to buy them, you witness the heralded date from which on these robocars should populate our cities’ streets being postponed year by year.

#digitalization

And as if all this wasn’t bad enough, some of the young guys around you, the ones wearing sneakers, a full beard and watching e-sports, tell you that data is the new gold, that big data means even more gold, and that your company should work agile, fail fast, provide something you would call completely unacceptable but they call minimum viable product, scale and ultimately indulge yourself in a so called digital transformation. All that of course independently from whether you are in automotive, mobility services, energy, public transport, insurance, law, or whatever. After thinking it over, you are left with the feeling that this is not all new but still kind of frightening. If only you would understand all these fancy IT buzzwords.

#change

If your work was related to mobility for the last couple of years, all of the above probably sounds familiar. The battle-hardened manager, now somewhat disoriented and undetermined in this overgrown jungle called mobility of the future. How do all these bits and pieces fit together? The good news is: No one has ever been brought from one place to another by software alone. But the fact that vehicles and smartphones send and receive an exponentially increasing amount of data, that they are connected to back-end servers and with each other, and that artificial intelligence can create astonishing and valuable information from this data, will not only improve vehicle and service functionalities but dramatically change the way they are developed, produced or rendered, marketed and sold – and especially how vehicles and their private or corporate customers are served after sales.

The key for survival and success is embracing change. At the end of the day, the question is neither if you should proactively engage in a digital transformation nor when you should do it (the answers are yes and now). The sole question is how – and can usually not be answered sufficiently by the people who brought your company to where it is today …

 

First published on LinkedIn on 5. August 2020

Surrounded by Idiots – or Can the Mobility Change not be Looked at in a More Differentiated Way?

Mobility moves emotions too

A look at the comments on corresponding posts on LinkedIn or elsewhere proves: The change in mobility affects each individual very directly – and is accordingly emotionally documented. Comparable to issues such as nuclear energy or migration applies: anyone who takes a different opinion from myself and that opinion – whether actually or only assumed – threatens my own circumstances, attacks me personally, and I shoot back accordingly quickly and sharply. A factual debate often falls by the wayside.

It is obvious that the right solution for everyone does not exist, indeed cannot exist. In terms of mobility, it not only has everyone’s own individual preferences and priorities, but also everyone has to cope with their own framework of individual and general constraints – be it the personal life situation including the available financial resources, the local availability of certain mobility offers, including the necessary infrastructure or the applicable legal situation.

So anyone who asks the family man, who on the daily commute from his home with garage in a quiet community to his workplace in the nearby business park never had to stand in a traffic jam let alone worrying about a parking space, to think about giving up his car, will hardly find any understanding. Conversely, if you live in the city centre, where the monthly parking space rental in an underground car park is in the range of the leasing rate of a mid-size car, and you come to the office from your apartment in less than 15 minutes by subway, you are probably glad not to have your own car and to be able to use alternatives such as car sharing or ride hailing if necessary.

Change, yes, of course. But where to where? 

It is undisputed that driving your own car has been the standard in mobility for decades, and accordingly all other forms of transport have been referred to as mobility alternatives – despite the fact that some of these alternatives have been available for much longer and are also used by far more people than owned cars, especially in the big cities. The fact is, however, that the traffic situation resulting from this standard in the cities is perceived by the people living there – both by motorists and by other road users – more and more as a massive, multidimensional problem: on the one hand, due to traffic jams and parking shortages, on the other hand, by deterioration of air quality, increasing emissions of greenhouse gases and noise, deterioration of road safety and occupancy of the scarcer public space. The fact that more and more people want to move to the suburbs and want to be mobile there with their own car is constantly exacerbating the situation.

All those affected agree that the traffic situation needs to change. However, opinions differ clearly on how the problems could actually be solved and how a corresponding change should look like: those who want to continue driving hope for more roads and parking facilities, whether by expanding the existing transport infrastructure or by switching to mobility alternatives as possible. If you care about reducing emissions, you want the continuous replacement of internal combustion engines by electric drives. And if you want to have more green spaces and space for alternative mobility in your area, you might want inner cities without private cars.

Extreme positions of individual mobility

In the end, the real mobility situation is always the result of the sum of individual decisions made within a framework of personal possibilities and preferences, market-side offers, available infrastructure and last but not least regulatory/political conditions. The individual not only decides on his or her personal mobility mode, but also regulates the supply of mobility products and services via demand and also influences the promotion or rejection of different solutions by means of regulatory requirements through the election of a party or a delegate. The change in mobility is thus supported, at least in democratic conditions, directly and indirectly by the will of the majority – and is therefore often difficult for the individual to understand and endure.

In this situation, on the one hand, many people today have the impression that politics and society are interfering in more and more things that used to be a purely private matter. Of course, everyone is allowed to smoke – but not everywhere for a long time. Of course, everyone is allowed to wear whatever they want – but they are also confronted with the conditions under which their garments were made at the other end of the world. In principle, everyone is allowed to eat what they want – but they have to accept questions about fair trade, environmental protection and animal welfare. The same feeling now arises in terms of mobility: Can I not even drive a car now?

On the other hand, there are people with different personal values and priorities who, for example, attach great importance to ecologically and socially sustainable life and action, cope wonderfully without a car of their own and feel affected by the mobility behaviour of others in their quality of life. From such a point of view, it is often incomprehensible why someone wants to hold on to their own car around everything in the world.

How do we get to sensible and majority-capable solutions here as citizens with mobility needs, as mobility providers or even as politicians, despite all differences of opinion? An indispensable prerequisite for this is the fundamental assumption that people with an opinion other than their own do not generally represent them out of stupidity or malice, and the willingness to deal with conflicting points of view in a factual and differentiated way in a consideration of the overall system. A look at the motives from which extreme positions are represented helps. In this sense, figures 1 and 2 show different reasons, for which the positions “I drive with my own car and want to continue doing so!” and “I don’t own my own car and don’t want one!” are taken – each descendingly ordered by how easy alternative can be found.

In addition to the understanding of the “opposite side”‘s reasoning, this analytical analysis also reveals the shortcomings of one’s own reasoning or supply: those who want to sell cars would do well to understand why some people do not or no longer address this offer, and with which vehicles or services customers could be held or recovered. Those who offer alternatives to owned cars, on the other hand, should look very carefully at what drives people to continue to drive their own cars in spite of everything.

Let us not be under any illusions: in the end, this approach will not lead to a result that everyone is happy with. But it makes the debates on mobility change noticeably more constructive and thus leads it clearly towards an overall optimum.

Business Travel in the Post-Coroniticum

Another new experience: Last month, I attended my yearly performance review meeting – the first time over Skype. And while reflecting that not too long-ago people in many companies would have flown in for something like that from wherever they are located in the world, I watch also recruiters doing job interviews online, agencies giving pitches via video conference, buyers negotiating and closing over the air, and even consultants interacting with their clients using web-based collaboration platforms.

After we all have got more or less used to attending team meetings or regular one-on-ones from our makeshift home office by now, this certainly is a next level of tele-working. While for this kind of personal encounters, meeting face-to-face has at least in the overwhelming majority of cases always been considered indispensable, our involuntary real-life experience imposed by the coronavirus situation now proves to us that all this is possible in a reasonable manner without meeting in person.

So, what does this mean for the hopefully near future when coronavirus will have eased its grip on us? Will anyone want to turn back time and spend hours in a car, train or plane only to meet someone in person for one hour? Rather not. But this then obviously leads to pressing strategic questions regarding the future of business travel. As an airline or railway company: Will passenger numbers fully recover, or will they rather follow an L than a U or V? And as a car manufacturer: Will range as the unceasingly uttered main advantage of combustion engines over electric drivetrains still be so decisive for the purchasing decision? I am convinced that a good deal of the changes we are now forced to implement in our routines are here to stay …

 

First published on LinkedIn on 8. April 2020