Blog // Digitalisation

Digitalisatoin at a Crossroads

If the reports are correct, the managers from business, politics and interest groups at the World Economic Forum in Davos were never as worried as they were in 2015 and 2016.

And it's true that digitalisation really will dramatically change society and business in the next few years. But as with all major changes, the question is what is relevant and what is not. A lot of consultants swiftly turn out to be copycats. So it's worth taking a look at the classical literature.

The genius and economist Joseph Schumpeter studied the adaptability of market economies in detail in the first half of the 20th century (Schumpeter 2006). The crucial question he asked was: how does capitalism generate the energy for its ceaseless changing of society and culture?

He understood economic development as being changes in the market brought about by innovation. Entrepreneurs rudely awaken businesses from their sleep - by means of new goods, new production methods, new organisational forms, the exploitation of new markets and sources of raw materials, etc. so that the economy becomes more productive and accumulates more capital as a result of the "creative destruction" of old business models, processes and organisational forms. Entrepreneurs want to earn money.

If one looks at current studies of the digital transformation, new forms of management and cooperation hardly seem to play any role at all in business. In a 2015 study carried out jointly by Cisco and the International Institute for Management Development (Global Center for Digital Business Transformation 2015), over 1,000 decision-makers from twelve industries and in 13 countries were interviewed. The survey was centred on costs, platforms, business model risks and IT processes in the Net. For these managers and their colleagues, who were also surveyed about the consequences of digitalisation on behalf of Ernst and Young (Ernst & Young 2015), digital transformation appears initially to be a technical and cost-driven change. People in these organisations clearly only play a subordinate role, if any. The only thing is, in that case who is going to create the new products and innovations? That would still be the bright sparks in business, then. Nonetheless, in many organisations and in the current consultancy scene, the maxim seems to be "carry on as before" - perpetuating the management and consultancy of the 20th century as a solution to the challenges of the 21st.

Our prophecy is: It won't work! Managers and consultants will have to make more of an effort and think deeply about organisational forms, in other words management, decision-making and co-operation.  


References:

Schumpeter, Joseph A. (2006): The theory of economic development. Reprint of the 1st edition of 1912. Published by Jochen Röpke and Olaf Stiller. Duncker & Humblot, Berlin  [1911]

Geschwill, Roland & Nieswandt, Martina, Laterales Management, Das Erfolgsprinzip für Unternehmen im digitalen Zeitalter, [The principle for success in business in the digital era] Springer 2016