Back To Digital Basics

Daniel Renkel

Do you hold a management position with decision power? If so, chances are the sales forces of this world regularly try to point your attention toward your company’s digital transformation, with high hopes of selling you a portion of Internet of Things, artificial intelligence, or machine learning. Sound familiar?

Let’s be honest: We all use terms like “digital transformation” or “digital disruption” without asking our conversation partner if we have the same understanding of such fundamental terms and concepts.

Three key takeaways against the digital dilemma

Based on SAP Center for Digital Leadership experiences gathered from more than 150 CxO engagements per year, we have derived three key takeaways to talk more efficiently about digital:

1. Business first, technology second
Decisions around digital transformation are often made from a technology-first perspective. This puts the cart in front of the horse. Technology must be an enabler for innovation, ultimately allowing new business models to gain or regain the competitive edge. It is much more effective when C-suite decision makers or line-of-business managers follow a business-first approach. This lets your creativity flow and allows innovation instead of being quickly influenced by the potential—or the lack thereof—given by certain technologies. Whenever faced with an innovation-themed issue, think about the business aspects first, and then about how technology might play a role.

2. Get your facts straight
It is critical that all people involved have the same understanding of any topic before entering a discussion. This also holds true when it comes to the digital age. Here are our definitions of the most fundamental terms that will make your digital-related conversations more effective:

  • Digital innovation turns an idea into a solution that is new and has value. It becomes digital by using digital technologies like Big Data, cloud, or machine learning. Think about commanding your smart home with your voice—Amazon Alexa is a picture-book example of digital innovation.
  • Digital transformation is the process of adaptation to changing market conditions due to new technology possibilities. Consider the German family business Kaeser Compressors, which manufactures air compressors. In the past, they sold the machines—today they sell the compressed air.
  • Digital disruption is the change that occurs when new digital technologies and business models affect how an organization creates and retains value. Life-science startup 23andme uses DNA data to create value, for example, which puts strong pressure on incumbent pharma players.

3. Start early/now?
You might have heard people talking about the “fail-fast” concept, which many startups embody. It has become quite cliché. Nevertheless, the mindset of not fearing investments can be a factor of success. The ability for startups to completely reinvent their business model, or pivot, is what  large incumbents often miss. So, if you work in a 500+ employee company, here is an opportunity to become a role model who starts talking about new ideas and the brightest vision. Placing a strategic bet is the way to bring innovative ideas to market.

Ultimately, digital has become a teacher’s pet for many, and a pet peeve for others. Become familiar with the basics, and do not get lost in the word jungle that is already out there. You will do yourself—and people you talk to—a favor.

About SAP Center for Digital Leadership

As a leading digital pioneer, the SAP Center for Digital Leadership helps CxO customers and their organizations to navigate their digital transformation and lead with innovation. Based on SAP’s internal digital transformation learnings, our research agenda, and meetings with more than 150 CxO customers per year, we provide leaders with best practices for leading digital transformation.

Our network and partner ecosystem represents today’s and tomorrow’s leaders in digital business. Partners like the European Space Agency trust us, and jointly we create digital open ecosystems.

For more information, check out SAP Center for Digital Leadership

Daniel Renkel

About Daniel Renkel

Daniel Renkel is an IT business consultant for the Center of Digital Leadership at SAP.