Digital transformation in Flanders: We should aspire to be number one, not just one of the top three

Source: SERV (07/05/2019)

This interview is part of a series conducted by the Social and Economic Council of Flanders (SERV) on the subject of digitalisation. Supporting organisational change is one of the key recommendations in SERV’s call for a digital policy agenda.

Digital transformation is a means of survival in the turbulent times that we are currently experiencing and that still lie ahead of us, according to Professor Stijn Viaene. “We have to make this cumbersome tanker change course. We may need to transform it into a fleet of sailing boats - provided that we give everyone the chance to stay on board. Because not only is this our damned duty; it is also the only way that we will be able to pull through.”

For Stijn Viaene, Professor at Vlerick Business School and KU Leuven, digital transformation is not just a buzzword. “Digital transformation is about a holistic corporate change in which digital technology plays a dominant role. This is sorely needed. We need to develop a language for this, research it, work out how we can make the transition from an economic and social point of view, as a company, as a government and as a society.”

Because, explains Professor Viaene, we are living in turbulent times. “The changes driven by new technology are coming thick and fast. And if the speed of change outside an organisation is much higher than inside it, that organisation could soon be finished.”

Can those who grew up in a non-digital world still keep up? “Many organisations are struggling to keep absorbing the speed of the outside world. So what should you do? You do sometimes get the impression that people and work come from a different era.” And so digital transformation attempts to transform an organisation that has become a cumbersome tanker into a more agile vehicle.

“There is so much talent hidden within organisations. People are capable of far more than their current jobs suggest. Alongside their work, you often find so much creativity and intrinsic motivation. Scarcely any attention is paid to this.”

As a reaction to this turbulence, some organisations decide to dump their staff en masse and focus on the younger generation. “That is a limited and discouraging vision”, Stijn Viaene believes. “Moreover, you risk throwing out the baby with the bathwater. There is so much talent hidden within organisations. People are capable of far more than their current jobs suggest. Alongside their work, you often find so much creativity and intrinsic motivation. Scarcely any attention is paid to this. We also need to move away from the contrast between the tanker and the speedboat. A tanker is not a speedboat and does not need to become one. Perhaps it could become a fleet of sailing boats, yes. But in practice, I notice that whenever there is talk of tankers versus speedboats, what established companies primarily do is to miss opportunities, because they are automatically failing to tap into the culture, assets and strengths that have made their businesses thrive. A company with a healthy core must first strengthen that core in order to make room for investment in new digital growth.”

“In any case, you have to adapt the skills and assets available in your organisation to the digitalised world. But we will be able to use everyone in this. I am not just saying that because of economic and practical considerations. It is also our damned duty as a society.”

Viaene also believes that there is no choice. “You cannot simply decide not to join in. As an individual, a company or a government, you have no choice. That’s why I find it such a pity, for example, that early retirement is still on the table. Because then it looks like there is no alternative, and that is not the case.”

Not just for nerds

One of the first aspects of digital transformation to consider is skills. “You need to build the opportunities offered by technology into your own products and services. In a digital world, a certain depth of technological knowledge is no longer the preserve of nerds. So technical skills are certainly necessary”, says Viaene. But these are not enough in themselves. “Equally, there is a need for design thinking skills: a problem-solving mindset that enables us to seek solutions in turbulent situations. What is unique to this recipe is that you need to be able to switch rapidly between thinking and doing. Today the switching speed required is so high that we will not get there with our human capabilities alone. We are going to have to trust in the power of digital technology. With start-ups you notice that this changed relationship between people and machines is more readily accepted than in a context of the fixed routines of established organisations. Today’s start-ups generally have a natural inclination to experiment with digital technology. They are far more likely to seek out the boundaries of what is possible with technology.”

“The skills and strengths from the past are no longer necessarily those with which you are going to win the game in a digitalising world. You will also have to work out what to stop doing. And that is often the most difficult decision of all.”

Due to the fundamental nature of the changes in our external environment, digitalisation also brings about the need to go back to basics with your company’s operations. “Not only will you have to use technology, but you will also have to sit together and think about your strategy in the digital world: what is the point on the horizon that you want to reach? You don’t need to be a rocket scientist to realise there is a lot of uncertainty, but you do need to take steps and know where you want to go. The skills and strengths of the past are no longer necessarily those that are going to win the game for you in a digitalising world. You will also have to work out what to stop doing. And that is often the most difficult decision of all. What it boils down to is that organisations have to strike a balance between what they forget and what they intend to continue building on.”

A company that works in an area like photography is not necessarily lost, Professor Viaene believes. “Look at Smartphoto, which has reinvented itself digitally and has fundamentally rethought its products for a digital world. Or ING, which went back to its roots as a bank in its quest for a digital identity and ambition. ING really did return to its tradition to stimulate disruption. And the strategic ambition was quite deliberately linked to that, in order to do the same again in a digital context. They have not deviated at all from their ambition, despite the difficult process of implementing it in operational terms.”

Furthermore, digital transformation also needs people who want to help change the fabric of a company. “The danger is that everyone will stay stuck in their own silo, saying: that isn’t my job. And you can sympathise with that, because if you feel as though you are drowning, it is not easy to see the full picture. And there are quite a lot of people who are drowning at the moment.” That’s why Stijn Viaene emphasises the need for coaching leadership. “My starting hypothesis for digital change is that leadership must start out from an open invitation to everyone to play a role in the digital transformation. It is up to leaders to offer people the context in which they can truly take on this role and to support them with advice and assistance. Of course, individuals still have a great responsibility to grasp the opportunities offered to them with both hands.”

He sees KBC as an excellent example of a company that is ‘evolving radically’, in comparison to ING, which instead opted for a gigantic change of course. “Their recipe? The understanding that it is going to get difficult for everyone. Plus an open invitation to everyone to join in. And their own staff are also coaching other staff. However, the company will not tolerate any resistance. Anyone who doesn’t want to be part of it, in spite of all the opportunities they have been offered, is shown the door.”

The government cannot escape from the digital transformation either, and needs to radically re-evaluate its role and service provision, Viaene believes. “In this case, slimming down means transforming services from service provider to director, such as the Flemish employment agency VDAB, for example, has already been trying to do for a number of years now. This means giving more opportunities to the broader ecosystem of players and not automatically wanting to do everything yourself as an institution. It’s an ongoing struggle, though. But you have to get into a director’s mindset and continuously ask yourself what the merits of offering the service yourself are, in comparison to facilitating an ecosystem functionality with external partners who can often change tack much more rapidly. This implies a reorganisation of the service provision: what should we do ourselves, and what should we no longer do?”

A single language as the foundations for success

The digital transformation needs different employee profiles. “A technician, a lawyer, a factory worker: if they talk about digital transformation, the key thing is for them to understand one another”, Viaene explains. That’s why you need to ensure that everyone is speaking the same language. Viaene describes this as the creation of a ‘minimum viable language’ around digital transformation. Organisations that are successfully turning their tanker around are populated by staff who speak the same language, and who share a common frame of reference.

“A common language is a first step towards success. This is far more important than offering an in-depth course on artificial intelligence.”

This framework needs to be put in place from the top down. “The strength of a common language is that you are offering a kind of stability in a turbulent context. That’s why it is a first step towards success. That is far more important than getting everyone to go on an in-depth course on artificial intelligence. This language is not concerned with technology per se, but with the changing social and economic realities in a digitalising world. The backdrop against which you have to make fundamental choices, taking a problem-solving approach.”

From a competitive, strategic point of view, Viaene envisages four pillars in this common context.

  • reality 1: ‘customer experience is value’
  • reality 2: ‘customers are moving targets’
  • reality 3: ‘ecosystems co-create new value’
  • reality 4: ‘platforms boost value co-creation’

“Firstly, it is essential that we understand more than ever that customer experience represents value. A common focus on the customer is a strongly aligning model around effective value creation with digital technology. Secondly: you must realise that the customer is constantly moving. Digital technology allows customers to change context and perspective instantly. A swipe on a screen, a suggestion from Alexa, a pop-up message: customers are constantly being invited to take virtual journeys. So the question for any company will be whether they can follow this customer in order to be able to play a role in their travels. Because before you know it, you have lost them. Thirdly, in the rapidly evolving digital world, you can no longer do everything yourself. In any case you are dependent on searching for partners in the wider ecosystem around your customer to see how both of you can reach the speed required to follow this moving, demanding customer. How do you open the doors of your organisation to collaboration and open innovation? Last but not least, the connection between companies and players needs to be supported by physical and digital infrastructure and architecture. The choices that you make on a technological level, about data and information architecture, are crucial in order to be able to continue innovating digitally together. For example, if you need a year to link data from party 1 to that of party 2, you can forget it.”

Our ambition? To be number 1

Stijn Viaene sees the ultimate challenge as ‘agility’: manoeuvrability, flexibility and speed. “Not simply more technology, but technology based on ‘organisational agility’, the capacity of your organisation to detect opportunities and market them faster than your competitors.” And this is only happening on a very small scale in Flanders. “You have to ask yourself why there are so few organisations in Flanders whose ambition is to get to the absolute top.”

And what is the role of the government in all this? “At a government level, we also need to harbour the ambition to be number 1. In the Netherlands that kind of drive is normal, but Flemings typically aspire to a place in the top three. But that achieves very little. And then you also have to convert the stated ambition into the allocation of resources.”

“I think that a disproportionate amount of attention goes to starters in the digital agenda. But in Flanders, the fabric is made up of SMEs, isn’t it?”

Achieving that number 1 spot means making choices, and also providing the resources to back them. “So the next government will have to decide what it no longer wants to do, Because you can’t be number 1 for everything. I think that a disproportionate amount of attention goes to starters in the digital agenda. But in Flanders, the fabric is made up of SMEs, isn’t it? These companies still need a great deal of help and support to make that transition to the digital world.”

And yet Viaene expresses great admiration for homegrown digital start-ups and scale-ups. “Isn’t it fantastic that we can boast a company like Collibra, a pioneer in data governance? Our very first digital ‘unicorn’, a digital scale-up valued at more than a billion dollars. But we need to keep our eye on the ball. At present the money is already coming largely from the US. And the management is already based there too. Fortunately Collibra’s R&D nucleus is still firmly anchored in Belgium. It is absolutely essential for us not to lose this umbilical cord. There’s certainly a job there for the government to ensure that the circumstances are such that these kinds of company do not develop an automatic reflex to leave Belgium.”

That’s why priorities are so essential in Flanders, Professor Viaene believes. “Choose what you do and ensure that in that field, your ambition is to become number 1 and to stay there. But I fear that our political system is not currently capable of this. We keep on tackling new circumstances and problems with old recipes. And everything is so unbelievably fragmented here. Just as speed and flexibility are essential for companies to survive, that is also the case for our governments. This requires policy, a coherent policy but also a fundamentally different one.”

Another tip for the next government: ensure that the resources are spread more effectively. “We don’t we all decide together, for example, to make the Port of Antwerp into the most advanced digital hub in the world. We can then tie that in with the entire logistical framework and peripheral economy of Belgium. These are choices that need to be made. And you cannot develop digital initiatives just like that; instead you have to have a proper policy with clear result targets that is based on a coherent future vision.”

“Wouldn’t it be great if we could shout out loud and clear today that we want to be number 1 in digital solutions for the climate? There are already a number of promising initiatives, such as Energyville, but there is too little policy.”

Flanders is a fantastic region to live in, Professor Viaene concludes. “Wouldn’t it be great if we could shout out loud and clear today that we want to be number 1 in digital solutions for the climate? There are already a number of promising initiatives, such as Energyville, but there is too little policy. The same is true for areas such as mobility, labour market operations, government, etc. We are in danger of missing the boat – or the boats – entirely if we don’t adopt a fundamentally different and coherent policy. And yet it could be such a great and valuable ambition to be able to achieve excellence with digitalisation in some of these areas. What you need for that, besides goodwill, is a certain willingness. ‘Wir schaffen das’ and ‘Yes, we can’: I still strongly believe in that.”

“In a rapidly changing world, cumbersome systems will not see us through. I am preaching simplicity, but nothing simplistic. That is the only way to get the speed of outside world inside our businesses. But I fear that we will need a genuinely systemic crisis or a serious blow to get things moving. And that could cause an immense amount of pain. I wish it wasn’t like that, but ‘most people don’t change because they see the light, but because they feel the heat’.”

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