Digitisation should be a management skill – it isn’t yet

Written by on April 13, 2016 in Guest Blog with 0 Comments

digitisationA person who contributes to a national digitisation work group in his home country told me “most people in the management groups of corporations have no idea what digitisation means.” The only exception, he said, was the CEO of a local telco. This was because “he used to be a coder, when he was young, so he understands the value of software and IPR.” Is it true that the management layer of many corporates do not yet really understand digitisation and whether it requires some degree of technology competence?

Some time ago I spoke to a group of industry executives. A couple of days later I met younger people of the same industry in an accelerator. I would claim those young people knew what’s going on globally in their industry better than the executives. Of course, younger people often know new things better, but this was not only about certain technologies and new models, but I felt they had a better ‘big picture’ grasp of their industry, since they followed technology, the latest articles and new innovations globally.

It is often said that development must not be too technology driven; it must be based on customer needs, business targets, and company strategy. But it seems that to understand technology opportunities, and how to use them in business and what they enable to customers, it is fundamental to understand business and new technology. And sometimes the technology competence is crucial to fit a technology into a business context.

Let’s take blockchain that is making big waves in the finance industry and fintech. I wrote about it in the last year (read here). It has made a really fast breakthrough into the finance business arena.  But how many really know what it means, and how to use it? The executives say their companies have workgroups for blockchain and participate in industry workgroups. Big consulting firms talk (with dollar signs in their eyes) about huge opportunities to replace old databases. And when you talk with people who have really worked with blockchain, you can get very different comments, such as “blockchain philosophy is more important than the technical details, it is to decentralise control and authority” and “blockchain will disrupt the industry in order to take power from the banks.”

There have been also comments and data, how digitisation hasn’t increased efficiency and productivity (see, for example, productivity and national digitisation). This is an area that probably needs much more research. But it is good to remember some important points: 1) digitisation is not only to start to use a certain technology, it is as much or even more about finding totally new business models, like sharing and the API economy, 2) digitisation destroys some companies, industries and a lot of jobs, and the value is gained by creating new opportunities based on more effective ‘platforms’, and 3) digitisation will also re-distribute wealth between individuals, companies and nations.

I’m not saying the winners and the competent in digitisation are all tech nerds, and the losers old business executives. But I am saying technology has such an impact on business that to understand the real opportunities of new technology, not over-estimate or under-estimate, is an important competence requirement for executives. With many technologies it takes some work to really understand their meaning, philosophy and how they can also change the business models, indeed the whole industry. It is easy to focus on incremental efficiency improvements from new solutions, but it is much harder for executives to seriously evaluate disruptive solutions that can kill their own businesses. And it is exactly the difference between executives who just make industry average numbers and leaders who create new things and change the world.

This article was first published at TelecomAsia.net

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About the Author

About the Author: Jouko Ahvenainen is a serial-entrepreneur and Co-Founder of Grow VC Group, a holding entity including over 10 companies, a pioneer in digital finance, fintech and data analytics solutions. Jouko started his work with digital finance and fintech models in 2008 and listed world-class influencer. He participated in changing US finance regulation, getting the Senate and President to allow JOBS Act and has worked with EU and Asian finance regulation. .

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