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Large corporate Europe ranks not a single internet born or digital technology business.

With digital disruptors


entering their markets, large corporates have to leap or risk being marginalised. However, for traditional
businesses, there is no straightforward derivation of digital implementation programmes as becoming digital is
a pervasive, not a technological change. I think for large traditional companies to digitise existing operating
models and innovate adjacent digital business requires a comprehensive digital change management that
builds digital versatility.

Large corporates in Europe lacking digital versatility


The European Top 100 companies by market capitalisation include not a single company whose business
originated on the internet, and not a single digital technology business. All companies listed amongst the
European Top 100 operate core businesses with one of the characteristics listed below:
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Core businesses that have a history of decades or centuries and they still supply physical goods or
people based services;
Core businesses that supply their value proposition through an integrated vertical value chain;
Core businesses that operate in oligopolistic or highly regulated markets.

These are characteristics of traditional companies. If you are one of these, then your industry is vulnerable to
disruption by an upstart digital business.
Some might argue that software or telecommunication service providers are digital businesses. However,
unless the software or telecom services are provided fully automatically over the internet, the core business
heavily depends on people-based services, and is not digital.
Creating digital businesses, as a management concept, is a new and essential skill, for every traditional
business. The basic idea is for traditional companies to embrace digital concepts such as digital customer
experience, digital operating models, developing digitally enabled products and innovating new digital
business models which grasp opportunities to serve customers in new ways and prevent digital disruptors from
capturing market share.

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Corporate Europe has experienced digital disruption for quite some time. Affected markets include the
technology industry where the industry is constantly reinventing itself, e.g. with disruptive innovations such as
USB flash drives and digital cameras. Other examples are:
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The music industry, disrupted by streaming platforms;


The advertising industry, disrupted by the growing market for online advertising on new platforms;
The retail industry disrupted by e-commerce offerings.

Your company has not seen any digital disruptors yet and therefore you think you will not be affected? That
can be the quiet before the storm! Even in industries where physical goods and people based services remain
core, digital disruptors are muscling in. Think about the hospitality industry where the global online reservation
system Booking.com has established market dominance and charges premium prices for their reservation
services. Airbnb.com grew to the largest global hospitality business without owning or leasing a single real
estate. The creation of digital businesses will intensify competition amongst existing players and with new
entrants.
In short, all major European companies are those who have enjoyed a successful and sustainable business
over a long period of time, with core physical and geographical capabilities that have supported their evolution
so far. The emergence of new digital businesses is taking place in all industries. Traditional companies do not
have the capability to capture digital opportunities and neutralise potential digital disruptors and are lacking
digital versatility. The small pool of digital management talent in Europe and the high valuation of successful
digital businesses limit the prospects of quick fixes like broad recruitment campaigns or reverse acquisition
initiatives.
Yet even when they have a digital strategy the traditional companies tend to see it as a matter for
technologists and engineers. This is a mistake.

For Traditional Companies, becoming digital is a pervasive, not a technological change


A few traditional companies have started to create digital strategies for their businesses. They are applying
digital concepts to their existing business models, identify digital disruptors and analyse future sources of
value through digital opportunities. At the implementation stage, traditional companies are applying digital
laboratories to run implementation initiatives. Many traditional businesses conducting substantial digital
initiatives, for example, by hiring large teams from professional service/ system integration providers.
However, the path from digital strategy to digital business needs more than technologists. For a traditional
business, becoming digital is a pervasive, not a technological, change. It comprises change of many business
elements. Leaders and employees of traditional large companies are not yet versatile digital practitioners.
External professionals alone will not accomplish pervasive change. Becoming digitally sustainable requires
traditional companies to adopt digital leadership and management practices and to grow capabilities.
Comprehensive digital change management is needed. This new practice links the creation of digital strategies
with the desired end state of running digital businesses. After all it is people that build algorithms and lead
digital businesses, not machines.

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Digital Change Management builds Digital Versatility


Gaining digital versatility is of essence for the intended digital change of traditional companies. Digital
versatility comprises many core constructs that drive progress towards effectively running digital businesses.
Your digital programmes must be accomplished by a change management practice that builds digital
versatility. Affected stakeholders in your digital ecosystem must have specialised support that enables them to
run digital businesses. Digital change management offers an effective way forward to start building your digital
versatility now, learn from experiences along the way and gain speed by applying learning over time. Here are
the principles for creating a digital business using digital change management:
1. Create company-wide awareness for digital business;
2. Incorporate leadership and mobilize employees to embrace digital change;
3. Seek to find in the heritage and history of the company alignment and passion for innovation and apply
this passion in digital programme;
4. Link the adjacent digital business areas to todays core business and analyse development paths;
5. Start with enhancing todays business and gradually extend programme in line with identified
challenges;
6. Establish a save programme environment and foster innovation and learning;
7. Build digital capabilities and skill through partnerships, diverse types of people and trainings;
8. Adapt dynamic strategic plan and organization;
9. Adjust management systems to support fluidity and feedback and establish digital practice.

Summary
Large traditional companies in Europe lack digital versatility. They are required to embrace digital concepts
and grasp opportunities to serve customers in new ways and prevent digital disruptors from capturing market
share. However, for traditional businesses, there is no straightforward path for digital implementation
programmes. Becoming digital is a pervasive, not a technological change. Comprehensive digital change
management that builds digital versatility is required. After all it is people that build algorithms and lead digital
businesses, not machines.
Let me know what you think via email. Should you want to leave your comments you can also use the
comment function. For more information on digital strategy, digital versatility and digital change management
please contact me on anselm@magel.biz.
Best regards,
Anselm C Magel

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