Digital Transformation

In 2017 and 2018 the term digital transformation has brought up and will bring up even more disturbance in the landscape of big brands and companies. Brands are forced to undertake some challenges that they have ignored for far too long. Startups are pushing to the market with a fast pace, new organizational structures emerge, new technologies are introduced and the most important thing - underdogs have no fear to mess with big brands that established a culture of long decision paths, silo mentality, and political influence.

So, all of us know that work within the field of digital transformation will lead to a lot of money that will be spend on partners, consulting firms, all kind of agencies that mostly claim to understand the digital landscape. Even old management consultancies with a former business focus that had its specialization on the process and employee optimization are starting their digital venture companies to bring the success that big brands should deserve. Of course, they still use mostly a man-day model and of course, they tend to promote risk and failure minimization. Here is the mindset problem - if big brands would really want to found a new business, a so-called startup, first they have to be sure that they are working to solve a problem where the solution is not obvious and success is not guaranteed. Risk minimization will always create copycats. Too much orientation on best practices makes blind and the new religion - design thinking, should be better used as an on-going tool to optimize your product which is already on the market instead of using it as a short-term tool that decelerates the process of bringing a product to the market.

For instance, Airbnb is a great example of how design thinking was used by founders with a hands-on approach and not by a bunch of theoretical consultants. In the beginning, Airbnb had a huge lack of Bookings in NY. So, what did the following:

  1. Observe: Analyze data and find similarities → they found the similarity that all photos of the listings sucked.
  2. Ideate: Think about solutions → scalable and non-scalable. They decided to try out the non-scalable solution.
  3. Prototype: The prototype was a thing that already exists → a camera and the founder team
  4. Test: The test was to fly to NY to rent a camera and to replace the amateur photography with high-resolution pictures - they just went and did it.

A week later, the results were in: improving the pictures doubled the weekly revenue to $400 per week. So, enough about giving examples, but did you get the deeper meaning of it? Using design thinking to improve your business is much more important than to start a business? No! This summary of a success story showed us that sole design thinking is not the recipe to find the fountain of youth - following ingredients are:

  1. Focus: The founders had total focus on Airbnb and spend 100% on the project - that’s why all of them flew to NY.
  2. Hands-on mentality: The founders had the ambition just to do it (not overthinking it and therefore losing important time) and therefore...
  3. Speed: They didn’t waste time by sitting in the comfort zone while most big brands do - no, they acted fast because time is the most scarce commodity.
  4. Start small, think big: Have you seen the result of this optimization, described above? They doubled the weekly revenue to $400 - would a big brand or a big consultancy just even think about such dimensions? Of course not - everything has to start big and has to end up even bigger.

Now let me come to my initial question: do I think the traditional model of consultancies, innovation agencies and labs will help companies to accelerate their business? Do I think that big brands will foster intrapreneurship with concepts I have seen in the past? The answer is no, I don't think they will. If you read on, I'll share some thoughts on how big brands and agencies could improve their concept of developing new businesses and business models.

Find focus

Agencies and brands have to hire people that can spend 100% of their time just pushing this one idea. If big brands want to build programmes where people can work on their idea just for one day in a week, I promise you this idea will never succeed on the market.

Empower hands-on mentality

New businesses are driven by people that do not just think of theoretical options. The best Design Thinker will not be the best entre-/ intrapreneur. Do not spend too much time on thinking - start creating and testing instead. Minimal feedback from the market will have more impact on your learning curve than spending hours of producing powerpoint presentations which just show how the strategy could work. Do not get me wrong - market and user research are important but a strategy process that takes 2 months is definitely too long - after 1-2 month you should definitely have a working prototype ready to be tested in a beta environment.

Gain speed

Picking up the pace is most closely connected to hands-on mentality. A good sense of pragmatism and risk-taking attitude is needed to act fast and to move forward. An MVP for a business model that is based on software should never take more than 6 months to test out.

Start small, think big

If big brands and agencies really want to start building new businesses or new business models, they apparently have to think about the market size and scalability. But, they should always start small - start with a clear target group to focus on. You learn more from 1000 active users than from 100.000 downloads. Again, the MVP principle will help you to focus on the most important things first.

Hire Pirates and Navy Seals

Employ entrepreneurs and self-starters that have the ambition to create something meaningful and see their work as a mission rather than a job. Pirates will bring new ideas and push boundaries - navy seals, on the other hand, will move your company further and faster trough perfect communication, teamwork and the belief in creating something great.

Understand Tech and Design

In many companies, a lot of people think that they understand the digital landscape by reading books and articles and knowing some buzzwords - sorry, that will not bring your company any step further. To understand the usage of new technologies you have to know at least the basics of how they work and how they can impact. If you do not have the right skillset in-house, partner with experts and startups at the concept stage. If you can do that, you automatically ensure that your product or service provides users with a better, seamless, overall experience across mediums.

Make experiments and understand failure

One of the most important reasons why big companies are having trouble create something completely new is the fact that their culture of experimentation is on a low level. Companies have to try out new things and embrace the fact that they have a great chance to fail. If there was a formula to reduce risk and to foster innovation, Airbnb could have also been created by the hotel industry.

In the end, there's no real rulebook to follow. Learning from feedback and iterating fast is what makes the huge difference. Make sure to do prototypes often, test them out and decide whether they're 'up or not.' New things will not happen while sitting in your comfort zone.

“When the wind of change blows, some people build walls, others build windmills.”

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