Digitalization - 9 practical roadblocks on this must-have journey

1. © Marko Luhtala 2018 Click to edit Master title style Digitalization – 9 practical roadblocks on this must-have journey May 2018 MARKO LUHTALA Ajantasalla.fi

2. © Marko Luhtala 2018 My personal journey in digitalization 2 Early adopter eBusiness director at Nokia, 1999–2002 Solution provider Sales director/Enterprise solutions at Nokia, 2002–2005 User of digital technology widely in commerce Director/ VP of Retail at Nokia, 2006–2010 Solution provider, SaaS-entrepreneur CEO at NearMe Services, 2010–2016 Advisor and implementer Digitalization consultant at Ajantasalla, 2016– MARKO LUHTALA © Marko Luhtala 2018

3. © Marko Luhtala 2018 Digitalization is a difficult concept because… As a term it is: As a global megatrend it is: Overhyped Misunderstood Forced upon all the time Real Present Fundamental 3 by executives, consultants and specialist. for practically every business and industry.

4. © Marko Luhtala 2018 Digitalization can create unique customer value in 4 ways 4 MAKE YOUR PRODUCTS AND SERVICES SMARTER APPLY NEW DIGITAL BUSINESS MODELS 1 2 SCALE YOUR SALES AND OPERATIONS 3 TURN DATA INTO A STRATEGIC ASSET 4

5. © Marko Luhtala 2018 But the path to a digital economy is paved with 9 practical roadblocks 5 Based on the work with a dozen companies in 2017–2018 HOW TO GET STARTED 1 2 3 4 5 6 7 8 9 HOW TO FIND THE RIGHT DIRECTION HOW TO SECURE THE RESULTS

6. © Marko Luhtala 2018 Roadblocks in getting started

7. © Marko Luhtala 2018 1. There is no common agreement in the top management 7 GET STARTED 1 2 3 4 5 6 7 8 9 DIRECTION RESULTS In only 1 out of 9 companies the chairman and CEO had a common strategic view on digitalization Survey question What is the magnitude of change digitalization causes to your company? It is very difficult to steer the ship in multiple directions

8. © Marko Luhtala 2018 GET STARTED 1 2 3 4 5 6 7 8 9 DIRECTION RESULTS 2. Lack of understanding blurs the benefits 8 versus Companies that mentioned lack of digitalization skills as a bottleneck also reported unclear customer benefits as a major digitalization challenge – and visa versa Digitalization understanding exists Positive results, continuous learning Benefits of digitalization are clear Sufficient investments in digitalization Lack of digitalization understanding Benefits of digitalization are unclear Little or no investments in digitalization No results, no learnings

9. © Marko Luhtala 2018 3. Digitalization is considered a separate strategy 9 GET STARTED 1 2 3 4 5 6 7 8 9 DIRECTION RESULTS Digitalization is a modern toolbox for executives to implement more competitive strategies Yet, 40% of executives said they don’t invest in digitalization because they are too busy with implementing other strategies.

10. © Marko Luhtala 2018 Roadblocks in finding the right direction

11. © Marko Luhtala 2018 4. Hunting too high or low for use cases 11 GET STARTED 1 2 3 4 5 6 7 8 9 DIRECTION RESULTS Since digitalization can be anything and everything, it is often hyped or downplayed by companies An eager but digitally uneducated management team can easily invent a bucket-full of ideas that have no customer value or business case ”Our digitalization plan is to upgrade CRM and buy iPads for our salespeople” ”We need a platform strategy and AI solution”

12. © Marko Luhtala 2018 Executives face a big pressure to cut the digitalization budget proposals ”Old business” complains that ”new business” is eating their EBITA Digitalization requires new kind of investments in software, skills and external services that take time to pay back 5. Sufficient investments are difficult to approve 12 GET STARTED 1 2 3 4 5 6 7 8 9 DIRECTION RESULTS

13. © Marko Luhtala 2018 6. Will exceeds the skills 13 GET STARTED 1 2 3 4 5 6 7 8 9 DIRECTION RESULTS Successful transition to the digital economy requires a solid vision and systematic execution Great ideas are of little value without implementation skills and resources Too many digitalization projects end up as expensive pilots

14. © Marko Luhtala 2018 Roadblocks in securing the results

15. © Marko Luhtala 2018 • An internally focused exercise • ”Outsourced” to the IT-department • Viewed as a cost rather than an investment • A project that delivers little customer value and no changes to the leadership practices 7. Digitalization is seen as an IT-project 15 GET STARTED 1 2 3 4 5 6 7 8 9 DIRECTION RESULTS “Digitalization is a fancy name for an IT-project!” THIS EASILY LEADS TO DIGITALIZATION BEING: >40% OF 29 EXECUTIVES STATED THAT:

16. © Marko Luhtala 2018 8. Selling new digital offering proves challenging 16 GET STARTED 1 2 3 4 5 6 7 8 9 DIRECTION RESULTS Packaging new services into an offering that is easy to sell and buy Deciding upon the pricing model and level when there is no clear production cost Getting your sales people out of the comfort zone to sell the new services Many companies aim at creating new services based on digitalization YOU MAY FIND THE FOLLOWING 3 AREAS MORE DIFFICULT THAN EXPECTED: 1 – OFFERING 2 – PRICING MODEL 3 – MOTIVATION

17. © Marko Luhtala 2018 9. Data is stored – not used 17 GET STARTED 1 2 3 4 5 6 7 8 9 DIRECTION RESULTS What is the quality of your data storages? Have you listed the Big Questions you want to answer with data? Does business analytics mean Excel and a rear-view mirror in your company? Yet, data is the cornerstone in VALUE CREATION and DECISION MAKING in the digital economy According to studies, companies ANALYSE ONLY 0,5% OF THE DATA they collect and store

19. © Marko Luhtala 2018 Are you ready for the digital economy? 19 Clear and attractive Realistic roadmap Vision for the digital economy? Company culture? Digital experience Understanding digital tasks and roles Network of digitally savvy partners Availability and quality of data Status of backend systems e.g. ERP, CRM Size of the ICT team and investments Competences? ICT infrastructure? Invests in what’s new Encourages trial and error Agile and fact-based decision making

20. © Marko Luhtala 2018 Final takeaway: What is digitalization in practice? 20 BUILDING GROWTH AND COMPETITIVE EDGE WITH DIGITAL TECHNOLOGY CEO’s modern toolbox for better strategies and more efficient execution Leadership challenge, not a technology problem A transition to the digital economy, not an IT-project Industries are transforming, companies must follow

22. © Marko Luhtala 2018 ADVISOR, CONSULTANT marko.luhtala@ajantasalla.fi +358-50-3879903 www.ajantasalla.fi MARKO LUHTALA I HELP COMPANIES WIN IN THE DIGITAL ECONOMY