12 May 2016Blog

The digital business of the future

Besides the future, digitisation also plays an important role in today’s business. I joined working life at the point at which industrial companies were automating their order-delivery chains and adopting lean thinking. This phase of digitisation enabled, among other things, the automation of production, small batch sizes (agility) and mass customisation.

At the end of this phase, the organisation of production underwent a revolution, and production was outsourced all the way to Asia. The benefits of the digital supply chain were realised when the information systems of sales, logistics and production were integrated and when products were designed to take advantage of the new digital opportunities. Digitisation still has the potential to bring about substantial benefits through, for instance, the automation and optimisation of marketing and sales processes.

The directions of future changes are already visible

The more interesting question, however, relates to the threats and opportunities businesses will face in the future due to digitisation and to when this will happen. The speed of digitisation will accelerate, because the solution enablers exist. The world has a sufficient number of interconnected devices, the penetration of smartphones is high, devices are aware of their location and context, 3D printing is possible, the storage and further processing of data is inexpensive and there is an adequate amount of technological know-how.

The speed of digitisation will accelerate, because the solution enablers exist.

Examples of future changes are also visible. For quite some time now, passenger aircraft have been able to land and take off automatically; it is merely a matter of time when we will automate slower and simpler traffic. Stock market robots engage in automated securities trading – when will we automate the slower-paced B2B trading, with a lower risk level? Nor is the automation of B2C trading that far away, given that stores are already aware of consumer preferences and profiles, already used as automatic suggestions in the complementary orders of consumer items. In healthcare and elder care, the limits of digital solutions cannot even be envisioned yet.

Digitisation also changes humankind

The digital aspects of our lives also have an effect on interaction and emotions. There can be scarcely anyone who hasn’t heard about social media or internet addiction, nor is the strong emotional connection that some people have to their home robots unheard of.  The digital realm will play a central role when proprietary rights start to be replaced with usage rights, when creating the mechanisms of a circular economy, in the redivision of labour among society’s various operators and when people have to re-evaluate their values and purpose.

What, then, is the future of your company in five, ten or twenty years’ time? Why do some companies die away, others survive and still others lead the change? How does a company identify future opportunities, threats and their timing, much less know how to react to them?

In other words, how to prepare for the future?

Since we cannot know the future in any certain terms and since things will continue to change at an increasingly rapid rate, companies must make themselves able to respond to quick changes. From an organisational perspective, a company must create mechanisms in which a certain part of resource targeting, decision-making and processes is agile, while another part of it remains stable – which decision should be delegated and made rapidly, and which decisions demand a more involved decision-making process. A company’s digital solutions involve similar problematics – which systems are stable and harmonious throughout the company, and which systems should be modular, specific to a market area and allow for rapid changes.

When companies have managed to form a picture of their desired state, it needs to be put into practice.

Practical implementation typically requires changes in the organisation’s culture, overall architecture and competence, in terms of modern digital capabilities. These changes cannot be effected overnight; rather, they require systematic and long-term work. It is therefore no coincidence which companies will turn out to be winners in the future.

Mikko Kukkonen works as a Senior Consultant at Solita. He has five years of experience in consulting and 20 years of experience in business development and financial management in the Finnish industrial sector. He is interested in business development in general and particularly about the opportunities and threats posed by the digital realm. In his spare time, Mikko can most often be found on the golf course or at an ice hockey rink.