“There are no hidden champions left in the transparent market.” —Otto Schell
Otto Schell is a member of the board of directors at DSAG, where he promotes digitization. As Global SAP business architect and head of customer center of expertise, he helps develop General Motors’ future strategy with SAP. In an interview with SAP expert Verena Wiszinski, he explains why companies need a Chief Disruption Officer—and why it is time to start asking radical questions.
Verena Wiszinski: Mr. Schell, rapid digitization is forcing organizations to rethink their strategies on several fronts at the same time. What are the greatest challenges associated with this?
Otto Schell: Two things in particular are causing issues for companies: the greatly accelerated processes and the almost completely transparent market. The transformation is so far-reaching and is progressing so quickly that many feel overwhelmed and are hesitant in their approach to digitization.
Many organizations seem to be asking: Why should I follow the crowd? I’m a “hidden champion” with loyal customers, top-of-the-range products, and a full order book. But soon there won’t be any businesses of this kind left. Not in a transparent market where all the niches and blueprints for success are out in the open.
Having said that, I do feel that awareness has increased over the last few months. Initiatives like Industry 4.0 are playing a significant role in bringing digitization into the spotlight and changing people’s attitudes towards it. At the same time, forerunners are showing the rest of the market exactly how digital-enabled opportunities translate into new business models. The potential benefits are within everyone’s reach.
What role does IT have to play, exactly? How can it support transformation?
The way I see it, it’s up to the IT department to convert their company’s business requirements into technology as flawlessly as possible. They should do this independently and in their own way. By doing so, they will ultimately benefit from a lack of interference from other departments. IT is facing challenges ranging from release and update management to the ultrafast, hybrid Internet-of-Things environment based on SAP HANA. What’s more, non-IT departments increasingly want to get involved and discuss IT—especially new apps for customers. Many IT departments are still not fully accustomed to these ever-changing demands. At the same time, business is accelerating, meaning organizations require new knowledge and have to meet new requirements.
So who takes charge of launching digitization projects?
Some enterprises are introducing the role of “chief digital officer” to bridge IT and business. But it should be clear that no individual—or even department—can lead a successful transformation alone. The whole organization has to take part.
“We should all be asking ourselves whether our skills are still needed in the digital world and how we can actively and consciously shape the future.”
Perhaps it calls for a “chief disruption officer” instead of a “chief digital officer.” Someone who understands the company’s broader situation, poses radical questions, and leads the right discussions; who motivates people and whose creative energy sparks innovation. With support right from the top, there’s no doubt that this kind of team would be able achieve many things.
Understanding the bigger picture is key. Let’s take, for example, highly personalized products, including those that are exact interpretations of the customer’s desires. Providing these requires seamless data flow. Without it, the supply chain lags behind sales and marketing or goods end up in the wrong place. And those are just two of the many difficulties that can arise as a result of a silo mentality.
Companies should approach digitization strategically and as an enterprise-wide project. The first step is to unite IT with other departments in centers of excellence. They can then collaborate to conceive new ideas for how the future of those departments will look in the context of the organization’s overall strategy.
What are the biggest obstacles on the path to enterprise-wide digitization?
It is important for decision makers to change their perspectives. They need to be open to reinventing existing roles and company structure, as well as serving different kinds of customers. This way, they will be able to answer the questions that digitization brings up on a daily basis: “Am I still relevant? Will I still have top-quality products and skilled employees tomorrow? Can I retain my current customers and intellectual property?”
These are uncomfortable questions, but ones we all have to ask ourselves. Otherwise we run the risk of losing our place in the market to a new player with an innovative business model—practically overnight.
“Perhaps chief disruption ffficers are the solution. They could bring existing business models into question and lead discussions.”
The worst mistake would be to avoid the subject and to reject new ideas due to a fear of change.
What advice do you have for enterprises planning to begin their digitization project?
First, management has to highlight the relevance of the company’s present business model and then lead the way towards transformation. Decision makers also have to ask themselves the all-important questions to be able to visualize all aspects of a future strategy. And it’s crucial to bring together the right people to create a transformation team—as a project of such scale requires collaboration throughout the company. This involves establishing degrees of freedom that allow the team to drive wholesale change. Finally, every employee has to be involved. Open communication is key to easing people’s fears and making sure that everyone is pulling in the same direction.
Our goal at DSAG is to provide our members with the best possible support in their digital transformation. This means building on our strengths to highlight opportunities for change and the business value they will bring. We then apply them to the relevant process and system architecture and use adaptable models to make the transition as smooth as possible.