Digitalization in the management of companies

Digitalization is changing management

Digitalization is an integral part of our everyday lives. New products, services and technologies are evolving at an unprecedented rate. The potential of digitization is not yet clear to everyone, but most have now recognized it. In order to be able to use this potential accordingly, advanced management is required. What this looks like, the challenges and risks faced by digitized management and the benefits of this, we explain here.

What are the advantages of digitalization for management?

Digitized management is also known as Corporate Governance 4.0. Having arrived at this stage of development brings many advantages. It means not only living in an information society and being able to obtain any information at any time as a manager, but also having the skills to use these facts properly. Here, however, management often fails, as a completely new way of thinking and acting has to be created in order to achieve the management of 4.0.

Digitization is often carried out by the automation of routine tasks that otherwise consume a lot of time and energy. This is especially useful for management, as the automatic execution of repetitive tasks can save a lot of time. This frees up capacity for the essentials and the focus can once again be fully focused on the core tasks. This allows management to focus on its actual tasks and thus perform better. People and employees can be brought back into the spotlight by the time that has become available, and the focus is again more on the big picture and not on small things.

But a sense of security with regard to digitalization, which is transmitted to the entire company, is also a great advantage of digitally well-aligned management. This gives confidence that we can compete in an increasingly technology-oriented world, rather than being unsettled by non-digitized management, because one unconsciously realizes that digitalization is overcoming a company. As a result, employees can stand behind the company and see opportunities for the future without fear of the company falling behind competitors.

How does the digitalization of management affect a company?

Digitisation requires a great deal of willingness on the part of companies to learn. Superficial successes are being sidelined and corporate strategies are more focused on long-term agility and competitiveness. In most cases, therefore, companies cannot stick to their status quo, but have to critically question what has led them to their success so far. A regular target-actual comparison for the entire company is promoted by the digitized management and thus achieves progress for all departments. In some cases, this questioning of the old model that has worked so far may even lead to completely new business models. They are then fit for the future and, in contrast to the outdated model, meet the changing demands of customers. However, it may be difficult to acknowledge that the current model is no longer working and to have the courage to implement new and unprecedented models. But if a company wants to be successful in the long term, it is worth experimenting and driving change. Many companies that are regarded as champions of digitalization teach us this time and again and show the way with the willingness to experiment and the willingness to learn.

If management considers digitalization to be important and thinks itself is future-oriented, completely new opportunities for internal cooperation will continue to emerge. Modern communication tools and project management software make the exchange with each other and provide mutual feedback quickly and easily. Departments, different levels of hierarchy, and employees become more connected, and information can be exchanged more easily and quickly. This promotes productivity, as not much time is wasted until all the necessary information is available to accomplish a task. In addition, critical information is no longer lost so quickly and internal communication becomes more transparent. Creativity is also fostered through interdisciplinary networking and new perspectives on one’s own product or service are created. These, in turn, can be used to improve the offer.

By rethinking management and focusing on the future, the company is also able to develop the best offers for the customer and to offer the desired individuality and tailor-made service. Customers are better understood through modern approaches, which makes customer wishes clear to the company. New technologies and communication channels can then be used to meet them accordingly.

Ultimately, digitalization means more success and higher sales for companies in the long term.

What are the advantages of digitizing management for the customer?

Digitalized management also brings many advantages not only for the company itself, but also for customers, as this brings with it customer-centric offerings and innovative developments. Customers are more informed by the achievements of digitalization, can easily and at any time compare prices and services, and can no longer be impressed by appearances, such as sellers in suits or expensive TV commercials. They know what they want and that they can get it through digitalization. These changed conditions in the sales market are aware of a digitized management and it knows how to respond accordingly. The customer is thus placed at the centre of decisions and offers are developed in order to meet the customer’s wishes. This is important for customers, as they get offers that really meet their needs and are therefore willing to buy from the company or even recommend that their wish meets.
In addition, digitized management places more emphasis on better customer service. This is also to the benefit of customers, as pre-built phone scripts or standard emails have rarely solved their problems and new methods in customer service help them better with their individual challenges.

What changes do managers have to expect in the course of digitalization?

A number of new challenges are being brought to managers by digitalisation. In order to successfully master these, new skills are needed. Error and learning from them is an important feature of future managers. This joy of experimentation is rewarded and is reflected over time throughout the company. Companies like Amazon prove that this is the only way to innovate, and that this culture of experimentation and error must be firmly anchored at all levels of management. What will be a major change for many long-established managers is to promote just that and even encourage employees to make mistakes and to expose weaknesses in the company. It is of course important to actively deal with the error in order to optimize accordingly or even to develop new product ideas.

The attitude “Start before you’re ready” is also becoming more and more important in order to be able to keep up with the competition. It’s not about perfection, it’s about continuous improvement. In times of digitalization, it is easier to obtain information, but it is still impossible to have all the information before a decision has to be made. Especially with regard to the use of new technologies, all information can never be available before any decision should be taken on their use. When managers wait for all the facts before they act, it’s usually too late. If, after a while, it turns out that the decision was not the right one, it is important to be able to stand by it and look for solutions instead of looking for culprits. This, too, is a challenge for many managers, who have so far gladly taken their time with decisions and have first gathered all the facts and contingencies.

For managers, this now means putting even more value and trust in employees in the course of digitalization and also leaving them room for decision-making and mistakes. Regular questioning of one’s own attitude, the willingness to admit oneself and other mistakes and, if necessary, change course, will also be a difficult but rewarding change for many management staff.

Other qualities that will become increasingly important for managers in the future are intercultural competences and media literacy. Both are important in order to be able to communicate appropriately with business partners as well as with customers in a globally networked world. Without these two competencies, it will also be difficult for management to understand the scope of digitalization and to align the company accordingly.

Methodological competence in innovation methods will also be even more in demand for managers in the future. As automation creates more time for the interpersonal and the further development of the company, managers should deal with it regularly. These methods promote, correctly applied, learning processes and innovations, two important elements for successful companies in digital transformation.

What risks are to be considered if a company wants to digitize its management?

Digitisation should not stop at management. Companies should not focus their digitalization efforts on just one area of the company, because digitalization can only be implemented comprehensively successfully. This can lead to a change in the entire business model. Everything becomes faster and more connected as a possible way through digital transformation. This is how we have to think and act within the company.

The entire workforce must pull together in order to be able to successfully implement digitalisation. This hides a great risk, is initially only digitized the management and the rest of the company does not understand the meaning of it.

Furthermore, digitalization should be implemented not only for the sake of digitization, but also for the customer and for people or employees. It is not just a modern-sounding software that should be installed and then the word digitized company should be written on the flag. Rather, it is about rethinking all areas of the company.

What steps do you need for successful digitalization in management?

First of all, we should build on what already exists. What is already working well in the company? What values are central to management? To what extent is management already geared to the future and what skills does it combine? Based on this, the well-functioning should first be expanded and made fit for the future. After that, higher goals can be set for digitalization and these can be driven forward boldly and innovatively.

An important step in the transformation process is also to first determine the starting position of the management. Are digital skills already available? How do the individual members of the management compare to digitalization? What technologies are already in use and how successfully are they used? What does management want from digitalization? Based on these answers, a digitalization strategy for management can be created. This should, of course, be reviewed regularly to ensure a successful implementation.

What are the challenges of digitalizing management?

A major challenge, especially at the beginning of digitization,is the different understanding of theirs. A vision should be agreed, which can be challenging.

It is also difficult, but important, to create awareness. Just because management is digitized and managers are aware of the importance of this, that does not mean that the meaning of digitalization has reached every employee.

Another challenge is to see digitization not as a completed project, but as an ongoing process. Because digital transformation is still in full swing and different areas of society are changing at different speeds. For example, it is regularly necessary to question self-critically where the company stands and how to focus a little further on the future. The answers to these questions will always look a little different in the course of digital progress, so it is important to stay on the ball and not just launch a one-off, self-contained digitization offensive. While this can be a successful start for further steps, it is essential that digitalisation continues afterwards and should be integrated into the corporate strategy as an integral part.

The fear of many employees to be replaced by robots and artificial intelligence is also one of the hurdles that must be overcome in the course of the digitalization of management. This can be counteracted through open and transparent communication. An appreciative corporate culture, which was to emerge in the course of successful digitalization, also reduces this fear of the employees. The attitude that the technology is used primarily for the benefit of man and not to replace it should be demonstrated by management. It should be regularly informed about progress, projects or setbacks in terms of digitisation and should also be prepared for critical issues. All these challenges can make companies reluctant to digitize management. However, it is worth accepting and overcoming them, because the chances are much greater. There is no way around digitalization if management wants to be successful in the long term!