Has Covid 19 opened into a new business era or are the majority of executives still waiting for the old “normal”?
At the beginning, many companies thought: we’ll sit this one out. At some point it became obvious what to expect. The pandemic continues. There is this image of “a decade in a year”. If you look at how credit card rates have gone up, although Germany was not really a big credit card country. It’s different now. Customers who were “forced” to shop online last year will not fall back into their old behaviour patterns either. The changes at all levels are fundamental.
What is to be done now?
As a company, you can’t just wait and see. And according to my observations, there is no major fashion company left that is not managing an e-commerce project in these times. So you could say: that’s a crisis result! But in reality, they are just catching up on something they should have done anyway. Merkel put it right: The crisis has ruthlessly exposed our weaknesses. I believe that this is now also happening in the fashion and luxury segment.
What is the reason that many companies in this country are lagging so far behind with the digital transformation?
For a long time, it was a kind of fleeing complexity. As long as you can choose, many don’t dare. It’s a big step and an enormous investment for a stationary fashion company to say we’re going to change things now and extent our reach. Before the crisis, many companies simply didn’t feel the pressure to initiate a change. There was no priority or focus on this issue.
Is it too late for these companies now?
Yes, I think it’s just too late for many. Why? Because it is too expensive to win customers online. Because addressing customers digitally is becoming more and more complex. At best, these companies end up on marketplaces like Amazon and Otto. Strategically, of course, it is not necessarily satisfactory if you have to go to the marketplaces of others in order to sell your own products. But the vision of an in-house shopping world will simply no longer work for many.
Can digital transformation really be successfully implemented? Or will the old be replaced by the new?
There will be a renewal process. The future of city centres is currently a big topic in this context. Some businesses that were already not doing well will not make it and will disappear. Those who have now been hit hard, already had a problem before. And then there are others that manage this moment of change and translate themselves into something else. Then the brand remains. The way in which transformation is shaped varies: either the change permeates the entire company or only something digitally new is built up alongside the old business. And then there are the successful start-ups that are already equipped with the necessary requirements. In the end, there will be a mix of all this. Some are pure, some are hybrid and some are simply no longer there.
What will the DAX look like in 10 years?
For a start, 40 stock corporations will be represented. We will see a mixture of classic German companies, such as Volkswagen, and successful start-ups like Delivery Hero. Start-ups are the new mid-market and will eventually become DAX companies. Germany has long lacked success stories through start-ups. So it would be absolutely desirable if the same number of significantly large digital champions come together with the 100-year-old companies.
How does a company have to be built to survive in the digital environment?
We will see that successful companies tend to consist of different value creations and have flatter hierarchies. The generation of leadership will also change. We will no longer see leadership that does not also have IT and software competence. Teams will work agilely.
The separation of business and IT will no longer exist. The basic assumption of a traditional, German company will therefore be called into question. Since the big companies have largely been winners of industrialisation, all the assumptions of industrialisation are also deeply rooted in these companies. But now the world has changed, modernised. So the outdated assumptions no longer fit. They are no longer conducive to success in a software-driven world. Therefore, the big industrial champions will either have to change or they will be replaced.
What does this mean for management?
In America, the Chief Experience Officer or Chief Customer Officer (CCO) has been around for years. This person is responsible for all customer experiences and customer relationships. How does a company feel, how does it interact with its customers? In the US, people were much quicker not to treat digital as a special topic, as we so often do here.
In Germany, there was this strange trend of a Chief Digital Officer (CDO). I think that’s terrible, because then you act as if there’s an analogue and a digital world. But every channel of a company has digital aspects. There is no Chief Telephone Officer. In America, many companies are simply ahead of us in this respect because they presuppose digital competence. This permeates the company as a whole and is not just assigned to a board department as it is here in Germany.
Can Otto just become like Amazon? Or at least like Zalando?
It’s not completely impossible. If you look at the development and figures that have just been published, you can see that Otto is on a good path.
In the task of transforming a classic, the legacy and the basic premises must always change as well. And that takes time. It takes a lot more effort than building a company from scratch.
But it can be done, and you can see that quite well at Otto. The family has done it smartly because they have bet on different parts of the change and value creation. They have a stake in About You and invest heavily in venture capital firms. They co-invested in e.ventures and Project A extremely early on.
Which skills and qualifications in business will become more important in the future? Which ones do we no longer need?
It is always all about interface competence. It’s about the questions: Can you link the expertise in your department, such as purchasing management, with another department, ideally with IT, technology or even new leadership? Can you move out of your knowledge silo?
What we probably don’t need any more are narrow-minded specialists and nerds in leadership. The more specialised you are, the lower you will find yourself in the organisational structure.
Are you more of a fireman or messiah for clients at the moment?
As a rule, companies with vision come to us that want to develop strategically and think in the long term. Many new clients are now those who have uncovered major deficiencies in the past through Corona and now see an entrepreneurial opportunity in the crisis. They are willing to question the basic premises and invest strategically.
How do you take away the fear of change and transformation from companies?
We play more on the rational side than on the emotional side of change. There is this big rational side to transformation processes: I’ll prove to you that there’s something to gain. We are good at showing how successfully value creation can work, how much better, for example, the development of a collection works when you use technology.
When you start working on the fear of change or transformation, it means you take it seriously. I avoid that. That is not entrepreneurial. Dealing with fears also means confirming that there is a reason for it. But there isn’t. And we prove that to our clients by showing them that they can have more output with less effort. For individual reanimation and change of mindsets, trainers and coaches take up their work.
Christoph Bornschein is co-founder of the Berlin agency Torben, Lucie and the Yellow Peril (TLGG), which specializes in digital business. Bornschein advises international companies, brands and government institutions on the strategic use of digital technologies. He is the author of numerous professional articles, a columnist in Manager magazine and a sought-after speaker at conferences and congresses.