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“Digitalization must be viewed from two perspectives. First, to understand that digital tools and concepts carry new opportunities and threats in your industry with increase unpredictability. Secondly, that success is defined by how you view and assess the digital trends and react to it in a structured way ”.

I am overwhelmed by the magnitude of information relating to the digital revolution communicated through different social channels. There is an endless flow of articles about mobile, big data, social media and cloud services (and other digital concepts) stating that these will drive an irreversible and continuous changed of the business environment. The digital revolution is here! There is no doubt that this is the case. But the question is how to view these digital forces? What do they mean for my company and my IT organization? Can we influence our success or not? Each digital tool/concept need to be viewed through the corporate goggles and placed in a context of how the corporation wants to compete in the future. It is the way we view and leverage these digital tools that determines our success in the digital era.

An interesting aspect is that we can view the increasing digitalization from a new perspective. People and organization have something called “Locus of Control” that is the extent to which they think change happens because of them or to them. The more people feel that they are in control or at least part of the decision, the better they feel and the more they work and the higher the motivation. Engagement is key to mastering the digital challenges and this is mainly determined by how leaders see the ongoing change.

Internal “Locus of Control” is that we ourselves can control and influence our own success in the digital market. We can through analysis and understanding invest time and energy to determine our own fate. Building cognitive capabilities to drive right decisions and right investments. These companies that own their own analysis, based on Jim Collins’ research, are generally more successful with revenue growth. External “Locus of Control” is that we are unable to influence our fate. Here we tend to reply on external directives (from top management or external analysts) as we are to stressed or tired to assess the situation ourselves. Digitalization is beyond our reach and we are slave to the changes in the market. The main difference between the two approaches is in time of success or failure. Leadership based on external “Locus of Control” tend to blame everyone or everything else for the failure, while internal “Locus of Control” understand that they must work harder on understanding the dynamics of the market and how to be successful. Why is this important?

In my discussion with numerous CIOs and IT managers, I see a tendency toward external “locus of control” regarding digitalization. Many do not have the time or energy required to analyze and understand (cognitive power) the changing environment – and basically believe that they cannot influence the future success of their company. Digitalization is something that happens outside our control and the digital tools are seen out of context of corporate environment. It is easier to work with things where I am engaged and that are in my reach (internal locus of control) such as software licenses, outsourcing, platform implementation, and project steering group meetings. The problem is that topics hardly support corporate competitiveness in the future.

It is fair to say that digitalization must be viewed from two angles in parallel. First, you need to understand that the digital tools and concepts carry new opportunities and threats to your business landscape. The business landscape will fundamentally change! Secondly, is that your success is determine by how you view the digitalization and react to it. Success is based on high cognitive powers with internal “locus of control” where you determine your own future fate. You are in control of your situation and you are able to influence its outcome. We tend to view digitalization only from the first perspective (digitalization will change the world) but not from the second perspective (how can we influence our success in the digital landscape). The second perspective is closely linked to the strategic planning process and enterprise performance management. This means that the digital tools and concepts (social media, big data, mobility, etc) have little significance without a proper enterprise performance management framework to assess and understand the trends and set an appropriate direction.

My view is that we talk too much about digitalization that we tend to forget about the basics – how to steer and govern the IT organization. To steer and governance the IT organization in a suitable way is probably more important for success than plugging in a new digital tool.

My recommendations:

  1. Take control of the digital evolution in your industry “internal locus of control” and create engagement around digitalization in your IT organization.
  2. Invest time and energy to analyze and understand the impact of digitalization in our industry. Build cognitive capability in your company. Avoid further cost reduction projects that eventually limits the cognitive ability.
  3. The next time a consultant or analyst talks about digitalization, ask how to adjust steering and governance to meet the digital evolution. This is a much more important question!
  4. Contact The Goodwind Company for coaching and advise! We are experts at optimizing business value in digital era with high unpredictability using new agile management models (based on high cognitive ability and internal locus of control).

It is quite easy to describe the digital revolution form a conceptual perspective highlighting all digital trends and tools. Consultants and analysts therefore overflow us with information about the impact of digitalization with quite little information on how to be successful. Success demands high cognitive ability and an internal locus of control through new agile management methods creating outstanding business results. It is how we view the digital trends that make a difference.

– Hans Gillior

Hans Legend 1