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Digitizing can only be done under the leadership of managers who truly understand the value of software
Customer interface property
Digitization is changing the nature of markets. Traditionally, markets were conquered by cutting costs and increasing volume. Many European industries have now lost that battle to Chinese competitors. Digitalization, however, is not so much about cutting costs as it is aboutdigital access to the customer. Those who possess the interface to the customer can build a close relationship, adapt quickly to their changing needs, and design business models based on maximizing value rather than on reducing costs.
The most successful digital companies, for example Uber, Airbnb and Alibaba, started with a software-centric strategy. There are far fewer examples of established companies that have made a successful transformation to the digital world. Ina 2018study, McKinsey reportedthat only 16 percent of established companies succeeded in a sustainable digital transformation. The researchers also concluded that "digital-savvy" leaders were a key success factor for the companies that did succeed.
Software becomes the engine of innovation
Over the past thirty years, innovation in the high-tech industry has been driven largely by innovation in physical technologies. The engineers behind them today occupy senior management positions in the industry. They often understand much less about software. To them, software is simply one of the necessary disciplines, the "glue" that makes the hardware work. However, this viewpoint is incompatible with a successful digitization strategy.
Digitization is the utilization of new software technology. Software makes a product or process intelligent and enables it to communicate. Everything that is called "smart" or "autonomous" is so thanks to software. Smart industry is all about integrating machines and linking production systems together, equipped with machine learning and artificial intelligence, flexible in all respects and capable of delivering higher throughput at lower cost. In this context, hardware is increasingly becoming a commodity.
Understanding the ability of software to generate added value is critical to successful digitization. To quote Michel van Genuchten, "Only when the ceo of a company knows how much revenue his organization generates with software, has that company truly embraced digitization.
Lakana
Lakana Consulting helps industrial companies develop and implement a smart digitization strategy, using software to drive innovation in their business.