Evidence is emerging that the “big benefits of digitalisation” bubble is deflating.
In a global survey of 2500 top managers, seven out of ten managers said their digital projects had a low return on investment. Four out of ten went a step further, saying they do not expect their “significant digital investments” to bring any clear benefits.
A second, large survey found that only 18% of top managers had implemented digital plans in “multiple areas” of their company. That’s a significant drop from 27% in 2019.
It’s a sign of digital euphoria gone wrong. Too many global managers are reacting jealously to the global companies that benefitted the most from digitalization – the internet giants.
The internet giants were already sitting on mountains of easy to access data. They have the skills in-house – talented programmers and engineers. And they have focused on their “easy to understand, easy to measure” processes, like product recommendations, search results and online adverts.
Successful digitalization uses the Wisdom Chain
Digitalization is great for formal logic but struggles with solving human problems. You know this from customer service helplines – it’s faster to have Artificial Intelligence deal with simple questions and humans deal with complex customer questions.
Copycat strategies fail because global managers confuse two distinct factors on the Wisdom Chain: knowledge and wisdom. One of the best examples is the first use of artificial intelligence in global banks, 20 years ago.
The tech people figured out how to analyse card transactions quickly and cheaply (data analysis), identify abnormal transactions (information), and build a warning system for potential fraud (knowledge). But the banks weren’t interested.
What persuaded the banks to invest? When the user benefits were clear. The tech people explained that bank employees could decide faster whether to block transactions, to give them the green light or to contact customers to double-check (wisdom).
Understanding what the end-user needs speeds up your progress along the data-information-knowledge-wisdom chain. Data scientists and software engineers rarely have the wisdom on their own.
Experts have wisdom. They understand what the data is, know how to interpret it and know why it is important. Novices drown in data. Their only tools are speculation and guesswork.
Put dialog at the centre of digitalization
Growth in global companies comes when data experts work with business experts. To get this, you want to encourage people to have a trustful dialog. You can build around four competencies:
#1 Understand the real business problem, and the benefits to the company of solving it.
#2 Know how to apply data analytics and produce high-quality results.
#3 Understand the main effects of the solutions on people and processes across the value chain.
#4 Be expert partners – have the skills to work with managers and support higher quality decision-making.
Tech people know a lot about data analytics. But the winning companies know to put global teams together that, with their shared wisdom, get to a higher level of understanding and clear articulate the benefits for the end user and the company.