What is behind the megatrend digitisation and digital transformation?
The megatrend digital transformation and digitalisation are changing the world from scratch. The production of goods and services is changing dramatically. On the one hand, it is the extent to which automated processes, intelligent algorithms or self-learning systems are spreading. On the other hand, it is the breathtaking speed in which this change takes place. Moreover, digital transformation causes an unprecedented scope of interferences in the economy. The megatrend digitisation transforms business models, working systems as well as our social coexistence.
According to the rules of the digital economy, data wealth and direct customer access are more than just a perfect product. Especially data are the raw material of the 21st century. As a result, new intermediaries are created to digitally organise supply and demand in the markets. With billions invested, they put innovative, highly scalable business models into operation. Such Internet platforms are the drivers of digitisation. In the first step they focus on market power and informational advantage, instead of a solid profit situation.
Which specific effects does digital change have on business models?
The digital transformation changes the competitive strategies of companies. Because digital technologies, such as Cloud-based software or smartphone apps, allow us to create a completely new customer benefit. At the same time, the expectations of customers are growing and social values are changing. This has consequences for the value chains in the companies. For example, the production of a mass-customized running shoe with the lot size one has arrived. Another example is banking service, which is produced cost-effectivly by Internet-based intelligent software.
In addition, the design of the customer relationship and access to customers is changing. This digital turning point is felt most strongly in B2C markets (business-to-consumer markets). Thus, fee-driven Internet platforms combine the fragmented supply with the fragmented demand in atomistic markets. This bundles both access to the customer and access to the providers. As a result, a digital form of distribution is launched. The Berlin-based investment company Rocket Internet was incubator for a number of such B2C platforms. To name a few: Zalando (fashion), Home24 (furnishing), Delivery Hero (food).
The B2B markets (business-to-business markets) are still on the rise. Wherever supply oligopolies determine the market structure, the digital transformation is slowly taking place. Nevertheless, network effects are just as attractive to these markets. The more providers and buyers an internet platform connects, the more attractive their services becomes for users. Because it creates a special system from which additional value creation is possible:
- Innovative technologies,
- Fresh customer interfaces,
- New partners,
- Renewed services.
Which concrete effects does digital transformation have on the world of work in the digital economy?
A well-known phenomenon of digital transformation is the increasing automation, i.e. the exchange of human labor through programmed machines.
What’s new is that it now covers knowledge workers. Thus, today Artificial Intelligence (AI) is basically capable to replace e.g. the legal assessment of a case by a lawyer or the statistical analysis of a controller. More than ever these repetitive processes are based on routines. In contrast, occupations based on knowledge and originality have better future prospects: Thinking creates added value. Thus ist appears that creative action in companies remains in the hands of humans.
On the other hand, the digital economy creates a power gap. Due to their market power, the Internet platforms shape working conditions to their advantage. Instead of permanent employment with social protection, they define alternative ways of working. To name a few:
- Temporary or temporary employment,
- Self-employed (Freelancer),
- Local short-term assignments (Gigwork),
- Location-independent short-term assignments (Cloudwork).
This digital economy exposes these workers, who offer their labour, to a partially destructive, global competition. In contrast, Internet platforms always win: contractors discharge between 10% and 20% of their fees to platforms. In addition, platforms not only integrate the labour of contractors into their value chain, but also their capital. After all, the investments in operating and office equipment, workrooms or further education are to be shouldered by contractors alone. Moreover, platforms shift a good deal of entrepreneurial risk on contractors, i.e. they carry the liability and business risk.
What influence does digitalisation have on the working world in traditional companies?
But even in traditional companies with permanent employees, the digital transformation requires great effort. The dynamic environment leads to a higher density of work, i.e. employees handle only complex assignments. In addition, the requirements are increasing due to new forms of cooperation. In agile structures, flexible, interdisciplinary teams work in virtual spaces.
Against this background, it seems extremely important to find a conscious approach to the demands of the new world of work. The sooner companies make the necessary adjustments in work systems, the more effective will the advantages associated with the megatrend of digitization be. From the history we know: With the technical progress our prosperity grew. So let’s get into the mood for change.
In bureaucratic systems, individuals have little room for maneuver or decision-making power. Everyone plays their role without being involved as an individual human with all their affects. It is the organised irresponsibility of the individual. In contrast, the entrepreneurial perspective is an invitation to individuals to act with their entire personality on their own responsibility. Especially, in knowledge-driven industries, ones own area of responsibility is indispensable. The megatrend of digitisation will make creative activities more important in many industries. Therefore, creativity tools are already en vogue. The goal of Design Thinking e.g. is the development of individual creativity.
Which corporate culture supports innovation and good digital work?
If we take the consequences out of reality, it is important to rethink good digital work in an attractive corporate culture. How does one manage to shape a corporate culture in which people use their minds? Because, thinking creates added value; knowledge creates added value!
The corporate culture informally affects the behavior of each individual in the system through social norms. Such social norms are mutually supportive assumptions of group members, about the socially desirable behavior in this group. To ensure that social norms promote stability and development of the work system, clarifying assumptions is a first step. What do you think your colleague thinks about your behavior? What do you think your colleague thinks when you show your human side in the workplace?
In addition, an atmosphere in which employees feel comfortable is appreciated. This includes the design of workplaces. First of all, you are providing your workers with a job that is within their body’s capabilities and limitations. Secondly, it may also need their favorite colors or music to encourage creativity. Thirdly, you shape a work space which follows the way people work.
Whoever does what he really, really wants, does a meaningful job – for himself and for others. In our opinion, this succeeds through self-responsibility and self-organisation. At the same time, working in self-directed groups leads to a stable evolving system.