More willingness to take risks in the digital transformation, please!
I see it time and again: the need for action is recognized, the data speaks for it. But implementation is hesitant. Companies would do well to take care of their digital transformation with more vigor.
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Hesitant today means dangerous
What is considered risky or risk-free is usually reversed in the digital transformation. In the “pre-digital transformation era”, for example, investments in new initiatives and products often represented a high risk.
Today, however, it is more the case that waiting to make investments represents the greater danger. This is because existing, traditional offerings are increasingly being replaced on the market by digital or digital-supported offerings. I often hear from decision-makers that this development will not happen so quickly and that they have time. I generally agree with that. But all too often people forget that other influencing factors can also play a role.
If a market suddenly tightens rapidly due to external factors, for example, it is always better to have the more competitive offer on the market. What previously appeared to be a long-term development in such situations can quickly turn into high market pressure.
I wouldn’t advise any undue haste. I also think that as entrepreneurs we have enough time to further develop our business models. However, when I say “enough time”, I don’t mean the “enough time” of the 1980s, but that of today.
The 5-year plan
When people talk about time frames in the context of corporate development, I always shudder a little when I hear about 5-year plans. Traditionally, I see these as almost an anachronism today.
Because it seems crystal clear to me that this plan will have to be fundamentally adjusted at some point. Five years has become a long time in which a lot can – and will – happen.
Don’t lose sight of the long-term horizon
On the other hand, and this is what makes it so complicated, more strategic attention must be paid to the long term.
“Long-term short-sightedness” must be replaced by “short-term long-sightedness”.”
I am also of the opinion that most companies today make the mistake of planning too long operationally, but lack the foresight for technological and social changes. As a result, the major underlying trends are overlooked and long-term planning is undertaken with almost no strategic basis. A classic example is the definition of a desired market position as a strategic goal. A la: “We want to be the market leader in area xy in five years’ time”. You can set yourself a lot of goals. And yes, you should. But I also believe that you should base your decisions on fundamental changes in the environment. Like riding a wave.
Short-term farsightedness
In this context, I consider it more expedient to demonstrate “short-term foresight”. This should mean recognizing the underlying, mostly technologically driven trends and using them strategically for the company. In operational planning, however, you should remain agile and opportunistic. I am convinced that this approach is better suited to the demands placed on companies today.
Risk appetite
So once you have identified the strategic developments and built a strategy on them, I think you should take much more risk. Not senselessly, but in such a way that you have a chance to make rapid progress with new initiatives and products on the market.
Conversely, this means that you don’t have to be one of the first to get involved in a changing market with digital products. On the contrary: it is usually helpful to start after the “early adopters” of a technology or a new business model. However, this wait-and-see approach should not be confused with the “late harvest concept” which, in my opinion, almost always goes wrong.
In any case, it makes sense to act courageously and with appropriate commitment. This usually promises the most success. And success does not come without risk.
This article originally appeared on the AOE blog.
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