What are the biggest bottlenecks in the digitalization of companies?
Own leaders. In general, companies are as successful as their leaders. It also applies to digitalization. A leader who does not decide to integrate technology into the company's growth model, because he knows better, is the leader who holds still the company. For this type of leader, often not allocating a budget and not supporting or not promoting pilot initiatives or projects is a power display.
Another blockage is employee inertia. Accustomed to thinking and acting according to patterns, they show resistance to new technology-driven processes/workflows. Although their training is essential, many of them do not want it.
Another important bottleneck is the integration with existing technology. The operation of new platforms and technologies with existing channels is considered an undertaking too difficult and could lead to short-term damage to service line profits as the customer experience is disrupted.
Data security is also a bottleneck. While the deployment of newer technologies would be manageable, compliance with security standards and regulations makes companies vulnerable to cyber-attacks and makes their path to digitalization more difficult.
The price of digitalization projects is also a blocking factor. Most companies "want it cheap." Most choose the cheapest to pay more for the patching of decision-making results through a new allocation of funds afterward. This is because many of the Romanian companies do not value the expertise of some consultants to guide them through the process, from the selection and acquisition of relevant technology to the implementation and measurement of results. Invalidity and sometimes contempt for expertise end up costing them even more.
What factors make the difference for companies that make digitalization a success?
Clarity of vision is also understood by middle-management and front-line employees. Leadership does not have to understand the technical aspects of all digital transformation initiatives but must keep in mind the ultimate goal and encourage colleagues to accept change, establishing a vision that employees can believe, follow and achieve.
While companies may need the latest digital technologies, such as artificial intelligence, for an in-depth perspective, technology solutions are just tools. Without the right operating instructions and trained people, technology either create blockages or buries money.
The human factor is very important the key is not so much in technology as in people. To increase a company's productivity, people and technology are in a relationship of mutual dependence. The key is the right mix of human expertise and technology that works in a coherent and flexible operating model with the customer at the center of the initiatives.
The companies that make digitalization a success are those that have enlightened leadership, vision, a mix of expertise and technology, and know-how to select technologies that are privately designed, offering built infrastructures that dynamically comply with legal framework changes on data management.
What types of state support can help SMEs digitize?
Among the potential types of state support for SMEs to digitize at the national level are the following:
- Creating an online catalog with digitalization service providers
- Creation of an online catalog with incubators (Digital Innovation Hubs) at the national level
- It is appropriate to create a database available with service providers to audit the implementation of SME digitalization
- Creating a calendar for communicating events with topics relevant to the digitalization of companies
- Providing a free Website Builder to build a minimal website
- Create an appropriate legislative framework to meet the current needs of SMEs in the fields of smart specialization
What are the main limiting beliefs about digitalization?
Some more conservative business leaders believe that digitalization only means social media. That is a toy in the hands of young people who don't know what it means to work. Others believe that digitalization does not refer to their industry. There is sometimes a sufficiency of large companies that, being bureaucratically glued, say that digitalization is successful only in small companies. Sometimes that digitalization is an artifice of the commodification of IT solutions that would have appeared anyway, only now the process of their integration in companies is called digitalization.
In any case, when this rhetoric is not downright erroneous, it is at most conservative. Supporters, often decision-makers, understand the need for a strong unifying vision, robust governance, and corporate culture, to ensure that investment management is well done.
The top managers of this type of company are skeptical about the value of new digital trends, and the prudent concern for spending leads to the loss of opportunities to the advantage of the competition. Studies have shown that considering the 2 indicators (EBIT and net profit margin), the profitability for digital conservative companies is only 9% compared to 26% for companies with management focused on digital transformation.
What big mistakes do managers make / can make in connection with digitalization?
We find that a phenomenon characterized by impersonal impact, such as the pandemic, forces even the most reluctant to accept change. They have no excuses and no one to blame. The wave sweeps them if they do not have the operational buoyancy that at least the adoption of some digital solutions ensures.
Companies are made up of people. So, before you dive into the ocean of digital technologies, as a manager, it's good to make sure that the people you coordinate can swim. The success of the whole transformation depends on the involvement of employees in digitalization and unfortunately, this is one of the mistakes that managers make in connection with digitalization.
If you have a leadership role or at least a coordination role, you need more than just signing documents and passively supporting digitalization. For people to adhere, managers need to promote the idea of digitalization, then motivate and inspire employees at all levels to get involved.
Decreasing the autonomy of internal processes is another common mistake. In this regard, the adoption of a CRM system that records all internal processes develop logical networks and deduces customer-related information is indicated. If done correctly, introducing a CRM system can help automate many essential and routine tasks.
Many companies do not fully capitalize on the technical characteristics and adopt tools only based on the recommendations of the salespeople of the suppliers of these types of solutions.
Invoking profitability as a strong argument for adopting change is another mistake. It is almost like brute force and does not generate involvement: “I am right, you are wrong. I give you data on profitability to prove to you that this is the right thing to do. "
The inevitable result of this tactic is passive-aggressive behaviors. Most individuals will feel lost, but deep down they still think they are right. Or, worse, they will think that their company does not consider their point of view and then non-involvement occurs.
Digitalization is not easy, and not because the main cause would be technology, but people. We identified leaders and the absence of digitalization in their company development plans, as one of the causes, the passivity of managers or the non-acceptance of employee change, other causes. People are the problem and people are the solution. They are the creators of technology and they are the ones who put it to work. Those who do not believe in the potential of technology to grow their company suffer from Kodak syndrome. That is, the refusal to accept the reality they live. Continuing education of people, creating a culture of learning, piloting projects to improve processes, contracting expertise to adopt relevant technological solutions are just some of the measures that any company can take to give its chance to grow.
About Constantin Magdalina
Constantin Magdalina has 10 years of working experience, while he performed in multinationals both in Romania and abroad. Constantin has a master’s degree in Marketing and Business Communication from the Academy of Economic Studies Bucharest. He is certified in Lean Six Sigma and ITIL which provide him a good understanding of processes and transformations within organizations. The Chartered Institute of Marketing certification furthered complemented his expertise and knowledge in business. In those over 4 years of working activity in a Big4 company, he initiated and conducted studies that analyzed different aspects related to the business environment in Romania such as the economic growth predictions of companies in 2013-2016, knowledge management, the buying experience in the age of digital consumers, social media 2013-2015, the utilization of mobile devices in Romania. He is the author of numerous articles on topics related to innovation, the efficiency of business processes, social media, the consumers’ buying experience in the age of digital, trends, and emergent technologies. He is invited as a speaker at numerous events and business conferences.