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Leadership in digitalization

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Why majority of businesses fail in the digital transformation? Presentation at Aalto University's Internet Forum in October 2019

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Leadership in digitalization

  1. 1. © Marko Luhtala 2019 Click to edit Master title style Leadership in digitalization - Why majority of businesses fail in the digital transformation ? - October 2019 MARKO LUHTALA Ajantasalla.fi
  2. 2. © Marko Luhtala 2019 My 20-year personal journey in digitalization 2 Early adopter eBusiness director at Nokia, 1999–2002 Solution provider Sales director/Enterprise solutions at Nokia, 2002–2005 User of digital technology widely in business Director/ VP of Retail at Nokia, 2006–2010 Solution provider, SaaS-entrepreneur CEO at NearMe Services, 2010–2016 Advisor and implementer Digitalization consultant at Ajantasalla, 2016- MARKO LUHTALA © Marko Luhtala 2017
  3. 3. © Marko Luhtala 2019 Only 16% of businesses have succeeded in the digital transformation and achieved sustainable results Source: McKinsey 2018 3 When the hype fades and it's back to reality
  4. 4. © Marko Luhtala 2019 First, what is digitalization in my mind 4 BUILDING GROWTH AND COMPETITIVE EDGE WITH DIGITAL TECHNOLOGY CEO’s modern toolbox for better strategies and more efficient execution Leadership challenge, not a technology problem A transition to the digital economy, not an IT-project Industries are transforming, companies must follow
  5. 5. © Marko Luhtala 2019 5 Many drivers of the digital economy challenge your “Secret Sauce”
  6. 6. © Marko Luhtala 2019 Can you survive success? 6 ” Recognizing the need for change may be OK, but actual acceptance is missing.” Impulse to Digitalization Under compulsion Visionary management Born to challenge Fits the culture
  7. 7. © Marko Luhtala 2019 Many companies either underestimate or overhype digitalization 7 “Digitalization is a fancy word for an IT-project!” >40% OF 29 EXECUTIVES: “Enthusiastic board will develop ten ideas in an hour, of which at least nine solve problems that the customer does not actually have” DO NOT LEAD THE CUSTOMER ASTRAY!
  8. 8. © Marko Luhtala 2019 Only in 11% of companies CEO and Chairman agreed upon the impact and direction of digitalization Source: Ajantasalla 2017-2018 8 Do you have an agreement on where you want to go?
  9. 9. © Marko Luhtala 2019 Executives face a big pressure to cut the digitalization budget proposals ”Old business” complains that ”new business” is eating their EBITA Digitalization requires new kind of investments in software, skills and external services that take time to pay back Will the “heroes of the EBITA mine” fall behind? 9 “We had a vision of a smart product and data-driven business already five years ago. Back then, we lacked the money and the courage to act on it. Now, there are other competitors vying for the same market, and we’ve lost our advantage.”
  10. 10. © Marko Luhtala 2019 Why is this so difficult? 10 New business tools that people don’t know yet how to use Changes are non-linear The strategy has a lot more uncertainty The company culture is challenged Do you know how the company will look like in 3-5 years? What digital skills and processes are needed?
  11. 11. © Marko Luhtala 2019 A company’s readiness for digitalization depends on four areas 11 Clear and attractive Realistic roadmap Vision for the digital economy? Company culture? Digital experience Understanding digital tasks and roles Network of digitally savvy partners Availability and quality of data Status of backend systems e.g. ERP, CRM Size of the ICT team and investments Competences? ICT infrastructure? Invests in what’s new Encourages trial and error Agile and fact-based decision making
  12. 12. © Marko Luhtala 2019 What is your ambition level in the digital economy? 12 NEW BUSINESS FROM DIGI AND DATA New business models, commercial digital services, smart products, disruption IMPROVING CUSTOMER EXPERIENCE Buyer personas, customer journey, omnichannel, 360°, CLV, personalize INTERNAL EFFICIENCY Focus on process and IT-development, automation and data
  13. 13. © Marko Luhtala 2019 Digitalization can create unique customer value in four ways 13 MAKE YOUR PRODUCTS AND SERVICES SMARTER APPLY NEW DIGITAL BUSINESS MODELS 1 2 SCALE YOUR SALES AND OPERATIONS 3 TURN DATA INTO A STRATEGIC ASSET 4
  14. 14. © Marko Luhtala 2019 Go on an excursion into the future 14 ” The management needs a quick tour to digitalization that consists of indisputable examples and ambitious goals.”
  15. 15. © Marko Luhtala 2019 CEO and board must share a common vision for the digital economy 15 ” As a business executive, I used to feel in control of the market and the business. Now you can’t be so sure anymore. ”
  16. 16. © Marko Luhtala 2019 Make sure that the leadership team is awake 16 ” Business executives often claim that they are seeking growth from digitalization, artificial intelligence, or some other trending word. To me, that says that the management does not yet have a clue as to what they plan to do.” • What is the understanding of the team about digitalization and its significance? • Does the team have an appropriate sense of urgency? • Does the senior management “stick its neck out”?
  17. 17. © Marko Luhtala 2019 A good acid test for the leadership 17 are you ready to cannibalize your existing business to build a new one? When the time comes
  18. 18. © Marko Luhtala 2019 Where are you in digitalization 18
  19. 19. © Marko Luhtala 2019 Are you ready for your journey to the digital economy? 19 1 2 3 4 5 Does the leadership team have an appealing vision and a shared view on digitalization? Does your culture support the transition to the digital economy? Do you know how the company will look like in 3-5 years? What digital skills and processes are needed? Have your customers accepted and sales people adopted the new digital services and business models? Have you engaged data and AI widely in the decision making?
  20. 20. © Marko Luhtala 2019 You can download my presentations at www.ajantasalla.fi 20