Technological understanding redefined

An IT director, who traditionally is responsible for digital processes, is often measured in terms of streamlining, automation and lower costs, while a marketing director is measured in terms of growth and increased revenue. The fact that IT is internally focused, while marketing is externally focused, can be suboptimal and also a source of conflict. In order to create synergies between IT and marketing, both parties should perhaps broaden their horizons, and the term “technological understanding” must be redefined.

We are now witnessing a clear shift in which the distinction between two traditional disciplines, communication and technology, is becoming blurred. Technology and data will become more clearly intertwined with empathy, customer centricity, affinity and creativity. Technology and marketing will be integrated, and new opportunities will emerge for combining people and machine intelligence. And if strategic intelligence is combined with technological depth and human insight, a multidisciplinary, harmonised and overall understanding of the challenges most companies face will be achieved.

A survey by the Norwegian School of Economics (NHH) confirms that the old ideas are no longer valid
The focus on costs that characterises Nordic companies can be explained by the fact that a high cost level is regarded as the most significant threat a company faces. With this as a backdrop, in collaboration with NHH, Knowit has conducted a research project into management and digitalisation.

The NHH paper shows that strategic orientation is crucial to enabling digitalisation to create values when companies wish to differentiate themselves and that market-orientated enterprises are more likely to succeed. Knowit's experience is that you have to succeed with both differentiation and cost management. This is in contrast to older academic research into the field, for example by Michael Porter. It becomes apparent in the study that cost management is no longer a strategic advantage but a prerequisite for being in the market.

Technology blurs the boundaries between different sectors and creates entirely new business models
There is an increasing trend towards sectors overlapping. At the same time, technological innovations are breaking down the boundaries between functional silos internally and forcing companies to start with customer insight and work backwards towards technology. We often describe this as digitalisation. What is typical here is the ability to understand how technological innovation requires completely new value propositions. Enterprises that don’t change in this direction will see their competitive edge weaken rapidly.

Technological understanding redefined
Technological understanding is a core skill that all managers must possess, although this doesn’t mean that all managers in an organisation have to understand technology in the same way and for the same reasons. Responsibility for keeping up to date with new technologies that could threaten or represent new opportunities for your own enterprise should perhaps lie with one person.

The new director of technology
This person must possess certain vital skills as well as a mindset that challenges the status quo – including an in-depth understanding of the customer's situation – preferably coupled with a “design thinking” background. In a B2B context, networks and a sound reputation in the customer’s universe is crucial. As well as being curious about new technologies, the person in question must quickly understand how these impact and enable innovation in their own enterprise. Also, participation in external networks around start-up-communities and risk-willing capital, universities and colleges, is important. Gartner calls this role the “Ninja Warrior” in his bimodal framework for digitalisation.

Senior management's role and responsibility
We also know that only a minority of Norwegian IT heads are members of a senior management group and only meet when they have to deal with the IT budget and new projects. Also, many Norwegian IT heads are unable to communicate with senior management and perceive themselves more as the IT department’s representative in management rather than management's agent in the technology function. A sense of ownership among senior management regarding how digitalisation can reduce costs and increase revenue is crucial. This sense of ownership occurs through an in-depth understanding of collaboration across internal silos and probably with other companies that share the same platforms and technologies.

Nordic managers focus more defensively than their foreign competitors
The results of the MHA survey are also interesting in light of what researchers at MIT in Boston, Stockholm School of Economics and the Norwegian Business School's Centre for Digitalisation have discovered. Some conclusions from these results:

• Nordic companies are far behind American and Asian companies with regard to progress in digitalisation.
• Senior Nordic managers barely discuss digitalisation and leave technology to IT management.
• Norwegian and Swedish firms spend more of their IT budgets on maintaining old systems than on developing new solutions.
• The money spent on innovation is focused on cost savings rather than increasing sales or creating new products or business areas.

The survey concludes that this is attributable to cost focus, management culture and a lack of implementation capacity. The focus on costs demonstrates that Norwegian companies regard the high Norwegian cost levels as the most significant threat to the company. Norwegian (and Swedish) IT managers are singularly concerned with cutting costs, while American and Asian IT managers have a much broader focus that also includes digital competition, new business models and channel integration. In this instance, IT primarily focuses on maintaining the status quo, only faster and cheaper, rather than becoming a source of new services or new business areas.

Every business will sooner or later have to make important strategic decisions. Then it is important to identify areas of improvement that are significant enough to generate speed and momentum, yet manageable enough to be viable. Despite many external consultants being critical of Nordic enterprises’ work on digitalisation, in Knowit's experience there are a lot of enterprises who work thoroughly and properly on how digitalisation could create value.

Read more about the NHH survey here and the BI here.