For the last twenty years Finland has gained international fame as a technology country. However, the company boards in Finland, as anywhere else in the world, are puzzled by the current power of digitalization and its impact on businesses across industry sectors.
A recent study by Internet Industry Finland clearly points out that while Finland has number one ranking in prerequisites for digitalization, it lags behind in the 17th position in how well digitalization is utilized in businesses. Clearly established companies have much to learn from fast growing digital businesses, which often have a distinctive company culture and a way of managing the business. Boardman organized a group of entrepreneurs and experts to identify the key issues concerning decision-making and management in digitalizing world. The group chaired by Harri Koponen, the former CEO of TeliaSonera and CFO of Rovio, came up with a TOP 10 list described in the following page.
What is it that makes the difference in a digitalizing world? Like in the game of tennis, you need technique, or skills and competence in business terms, tactics i.e. how to play to win the opponent, physical assets such as speed and agility, and mental strength to win the right battles. These will help you to win matches, but to become a top class player you need the right people surrounding you and most importantly an overreaching aspiration, dream and passion. This became very clear when looking at the special characteristics of successful companies in the digital era. You need big dreams, skilled individuals who are motivated not by benefits but by achievement of the common dream, and an organizational culture that fosters experimentation and speed of implementation.
In addition to management talent, the challenge lies in board composition. Do the board members have experience and competence to really discuss the opportunities and threats presented by digitalization? Relying on your nephew’s skills in web development is hardly the answer. Neither is reading consultants’ reports and suppressing the issue to audit committee as a subcategory for technology risks.
Board members beware, times are demanding. There is already pressure to increase time used on quite a few issues such as corporate social responsibility, risk management and compliance among others. Potentially, to an even larger extent, strategy work that is impacted by digitalization requires an increasing effort. Companies need directors who have true insight into digitalization and its impact. This is the only way to convert a perceived threat into a potential opportunity!
TOP 10 ITEMS:
- Big Dream – Create a growth-oriented target, a big dream, worth pursuing. Dreams provide meaning for work and a reason why people want to deal with the company. Creating and pursuing the big dream requires strong vision, courage, persistence and passion.
- Teams and individuals – Create a spirit for collaboration and common goals. Highlight the broad context why we do things. Empower teams and individuals. In a digitalizing world, the productivity differences between teams and individuals are multiplied. Embrace talent and diversity, and get people who provide energy instead of wasting it.
- An encouraging and experimentating culture – Create a culture that emphasizes questioning and change, not just plans but action. Do rapid experiments, but get rid of underperforming projects and people quickly. Learn from your own mistakes and those of others. Information flows quickly to the top when there is no need to scare or to cover up, but actions are driven by the desire to succeed.
- Value creation through interaction – Instead of separate routine-like work tasks, value is created in interaction, together with customers, personnel and well selected partners. Thinking differs largely from traditional hierarchy and process management, which focuses on instructions and phasing activities. Tools that already exist provide the opportunity for collaboration.
- 24/7 – Business in the digital world is independent of time and place. The company must be present to customers 24/7. Time and timing are critical and windows of opportunities short. Decisions must be made rapidly. Electronic business provides huge amounts of information, so make use of it.
- Customer experience – Customer and user experience plays a crucial role in both traditional and digital products and services. The world is visual. Customer orientation is not enough, but companies must create vow-effects and thrills generating buzz and raising emotions, thus, adding to sales.
- Business models – Be clear about what changes the digitalizing world will bring to pricing, distribution, and value chains. Often, it is not only about individual changes, but more widely about the whole business model. Do not defend the old, but think first of all, which model will also make you succeed in the future.
- Technology changes the world – Digital and physical products and services converge. Think about how these are combined in the best way possible. Often offerings are customized for the target markets, while the most scalable products may work globally as such. It’s not about innovation unit’s endeavors, but about a broader understanding that the company needs at the board level.
- Security – Security will be displayed in many ways. Information is a corporate asset that must be both protected and shared. At an individual level, privacy and many other factors set limits. Make sure that safety is appropriately maintained, but do not use it as an excuse for the failure to adopt reforms.
- Transparency – The digital world reveals mistakes. Be fair, impartial and honest. Address the ills fast, not by making excuses, but through open communication. Brand effects spread rapidly.
Dr. Esa Matikainen is a board member in several growth companies and a Partner at Boardman. His experience on digital economy and its impact on businesses ranges from being the Chairman and Director of Strategy at Nedecon Plc., at the time the first publicly listed pure-play Internet company in Finland, to current board positions in digital business companies.
This article appeared on the August 2014 issue of Nordic Business Report. Read the full magazine here »