42.cx, September 9th 2019
Ms Ovtcharova, to what extent has digitalisation changed people so far?
In times of digitization, technology and knowledge generations are changing faster and faster, meanwhile several times within a human life. Computer, Internet and now AI age: These are three radical changes of the past 60 years, which came in increasingly shorter intervals. This has never happened in human history. In this context, there is also a faster generation change of people. A generation is no longer characterized only by its age and its social and economic conditions, but mainly by a similar approach to technology and knowledge. Thus, the generation of the vintages 1965 to 1980, which is called Generation X, grew up largely with television as well as video and computer games and became mainly through the media witness of the technological change. I call them the generation of "offliners". The Generation Y, also called Gen Y or Millennials, grew up with the Internet and is increasingly seeing the world through the Internet glasses. And finally, we're talking about the youngest, Generation Z. It includes creators and gamers whose everyday lives are almost entirely dictated by digital technology. The first humanoid robots like JD, Pepper and Sophia fall into their time.
A good development in the context of digitization in Germany is that the affiliation to the generations is less and less linked to the birth cohorts. Due to the wide availability of digital technologies, we are now experiencing a multi-faceted intrageneration variance that has no limits. But it is bad that we still do not get in the way. This must happen as soon as possible. In order to retain our leading position in the economy, the traditional trademark "German Engineering" is no longer sufficient. John F. Kennedy has said, "Who has a head start in life, who tackles where others first talk." A view that is more relevant today than ever before.
Where on the digitization path are we in Germany?
According to a study by Cisco and Gartner at the end of March 2019, Germany is ranked 6th out of 118 countries in terms of digital maturity - also due to the good economic conditions - but lags behind in many areas.
There is a pent-up demand for digital products and services (rank 18), digital education and skills development (rank 19) and even more conditions for start-ups and investment in politics and business (rank 29). Result of the study: "There are only a few countries that have better conditions to be digitally successful. What the Germans still lack is openness and the desire to try new things. "I fully agree with that.
It is fundamentally important to understand that information technology only provides the necessary but not sufficient conditions for a profound change in society and the economy. Even if IT is becoming smarter, it remains only a tool. Digitization by definition requires profound change processes. On the one hand, these concern the mindset of people and, on the other hand, existing structures that are perceived as business models from the outside.
Traditional business models are determined and controlled by a direct exchange between people, such as the operation of a taxi company or travel agency. And here is the problem in Germany. In every reasonably well-founded conversation about digitization, the term Internet platform appears. Microsoft, Apple, Amazon, Alphabet, Facebook and Tencent - these are the first six of the world's top ten publicly traded companies in 2019. And all of them are based on platform models. Far behind, in 48th place, SAP is the most successful German company, as well as platform-based. The business concept is conceivably simple: platforms create two-sided markets between providers and customers and generate their added value from data. The execution of the algorithms is predominantly autonomous.
In Germany, the implementation on Internet platforms is slow. Only the interest and willingness for digital business models is growing - due to increasing competitive pressure. A long way lies ahead.
What does the increasing shortening of innovation cycles mean for the organization of companies?
Alone being a structured technology provider is not enough today and this trend will intensify. The organization of the future is flat, agile and well networked. Response to new developments will play a critical role in the company's success: is the new development useful to us and our customers? If so, how can we add value to our business as quickly as possible? Personalized customer loyalty will also become more important. These include fast analysis and optimization cycles for the processes. The prerequisite is the transition from local IT infrastructures to cloud- and edge-based architectures.
The biggest challenge for the organization, however, is to provide employees with access to continuous digital training. Further education is a decisive factor in success. For while digitization is still sometimes understood as a project that can be outsourced, it is becoming more and more a part of day-to-day business, affecting every single employee.
You are watching the trend away from the Internet of Things to the "Internet of the senses" - what is behind the term?
First of all, the Internet of Things: the term stands for technologies that connect physical and digital objects with each other and allow them to work together through information and communication technologies. It mainly relates to the industrial and commercial side of Internet usage, such as manufacturing, logistics and commerce.
On the side of the "Internet of the senses", Internet companies like Facebook, Google, Amazon, Alibaba and many more have made the future with tremendous speed and entrepreneurial drive. They profoundly change people's lives in terms of their sensory perceptions. Digital seeing, listening and talking via Skype and Messenger are everyday life today. Also, how smelling and tasting can be digitally translated is an issue. Consumer articles are increasingly advertised and sold over the Internet via an emotional appeal on an unprecedented scale.
In addition, a new dimension of perception arises in connection with stationary or mobile virtual and augmented reality solutions. In a virtual space, people can explore digital products or services better than on screen. It allows a personalized and intuitive interaction similar to the real world. This is a paradigm shift: For a long time, we have adapted to the way computers work. We learned how to use different software menus and how to use mouse and keyboard as fast as possible. We could not really bring in our intuition here. Above all, people learn through interaction and intuitive movement, which both apply to virtual reality. With the control of speech, movement and interaction, we no longer adapt to the computer, but vice versa. In the "Internet of the Senses", we can dream about the reality of tomorrow, explore it and help shape its development. We can also simulate situations that are not really possible or very dangerous - and in this way train our abilities and senses. The possibilities are very diverse and exciting.
Many companies are still hesitant about digitization. What would you advise the manager of such a company?
In recent years, digitization trends on the world market have become so severe that all people need to be aware of their responsibility. Digitalisation is no longer just a matter of wishful thinking, but of survival. Let us take as an example the survey of the German Chamber of Industry and Commerce on the expected effects of digitization on German companies from the year 2017. For example, 72 percent of the 1,806 companies surveyed expect labor flexibility to increase. Opportunities through new business models for their own companies see 67 percent. An increase in sales is expected 44 percent. An increase in the number of employees 18 percent.
Of course, digitization also has its downsides. At 75 percent, these are mainly seen as security risks and 65 percent in legal uncertainties. However, these are not insurmountable problems that should keep companies from investing in digitization. In most cases, security and legal risks lead back to a lack of investment in skills development when dealing with computer security.
The most important thing is to do away with the old stereotypes and look ahead. Digitization offers untold potential for new work and business models. For a modern company, vision, zeitgeist and passion, not just any success story are off the shelf. First, my advice is to have the courage and the will to go your own way. At the front is where nobody knows, and there is no roadmap. The saying "The day before something is a breakthrough, it's a crazy idea" by Peter Diamandis, founder of the X-Prize Foundation, I find particularly appropriate at this point. Second, take investment risk and do not underestimate the cost of change. Google, Apple and Facebook began their triumphal march when there were supposedly overpowering opponents like Yahoo, Nokia or MySpace. And thirdly, follow your own intuition about employees and partners and work together only with the best.
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