The Finnish economy is at a dead end. It not just about the financial crisis and aging population: our engineering driven paper and electronics industries have shrunk to a fraction of what they used to be. With the loss of Nokia’s consumer business, we tend to blame ourselves for our strong engineering roots and lack of sales and marketing skills. We pine for the Swede’s marketing driven success with global consumer brands and we see our industrial success as a thing of past.
Now as we pin our hopes on digitalization, which is seen as paradigm shift comparable to the industrial revolution, we have seen the cautious warnings about not repeating the mistake of the past by approaching digitalization as driven by technology. Important remark; it is not about the technology, but it is certainly also about the technology. It doesn’t matter if you keep beating around the bush by, for example, outsourcing your technology know-how. Digitalization is a renaissance, an all-encompassing change, and technology is definitely part of it.
Look at Uber. Yes, they have a revolutionary business model and excellent marketing. But many say that their greatest asset and most significant innovation is the algorithm they use to balance supply and demand. Look at Amazon, which started as a book store. Many see AWS cloud infrastructure as potentially the most valuable part of Amazon. And look at Netflix and how their development has come up with dozens of revolutionary open source projects.
It is not a question about whether the digitalization is driven by technology, economics or a cultural change: capitalizing it requires a balanced understanding of it all. That’s why it is no coincidence that many digital disruption success stories have been written by start-ups. It is not easy to enable the renaissance in an established, fragmented, organization. Small groups are better at a complex task. Just compare the Apple team responsible for the first iPhone with the size of Nokia’s mobile phone organization.
This does not mean the change can’t be led by an established organization. Look at what Tieto is doing with the IoT startup inside the company. The best practice is to split the organization into two distinct groups: one taking care of the traditional operations — running today’s enterprise — and the other in charge of exploring and developing the next generation. This applies whether you are moving to dev-ops, experimenting with its counterpart growth hacking, looking into internet of things or wondering how to approach digitalization
My suggestion is that we do not forget our strong technical roots, but instead refresh them and use them as a base to build on. The change is all-encompassing. The Swedes have the same struggle with a strong marketing driven culture and trying to integrate technology into the picture.
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