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Term Paper, 2017
9 Pages, Grade: 2
Why To Transform?
How To Transform?
How To Lead Though Digitalisation?
How To Ensure Creativity In Innovation?
Social Media, Big data, Cloud Computing and the Internet of Things – all these are buzzwords when it comes to digitalization. These days the word “digital” can be found everywhere. It has an impact on society and economy. All these digital innovations came up in the 21st century and they are not only challenging companies, they are changing whole industries. Companies have to be innovative to adapt to change that comes with new technologies. Leaders must know how to transform their organizations the most effective and efficient way and lead a company through this phase of transition.
First you have to understand how digital transformations can affect your company (Bonnet, 2016, p. 3). Think about how digitalization can change customer experience or productivity or what impact digitalization has on the company´s value chain. Digital transformation changes your customer value proposition and the way of how you make money (Iansiti & Lakhani, 2014).
There are some “Megatrends” (Pieler, 2003) on which companies are almost forced to react with digital transformation – these are triggers from external:
- customer needs transforming from mass products to individualized products
- new business models break through
- change of society values
- increasing global competition
“Digital” is not seen as simply IT anymore. Furthermore, companies turn more and more to digital technologies to remain competitive in the market. In this case digital technologies should be implemented to support products, business models and customer experiences (Harvard Business Review Analytic Services, 2016). Due to the growth of the IOT, GE, for example, was able to switch from analog tasks and processes to digital sensors for more connectivity. It had an impact on prices and forced the industry to compete in new ways (Iansiti & Lakhani, 2014).
When business leaders want to go digital, they are uncertain about what this actually means. „Real“ digital leaders know exactly where the company’s´ touchpoints of digitalization are and how they can use it (Gandhi, Khanna, & Ramaswamy, 2016).
It is important to understand that in our increasingly digital world, companies do not start their digital transformation from point zero. They already have existing ways to use digital information (Berman, 2012, p. 18).
According to Kotter (1995) there is a 8-step model to transform an organization:
The first phase is all about creating a climate for change.
1) Create urgency
2) Form a powerful coalition
3) Create a vision for change
4) Communicate the vision
In the second phase, you should engage and enable the organization to change.
5) Empower action
6) Create quick wins
7) Build on the change
The last phase deals with the implementation and sustain for change.
8) Make it stick
Finally, keep tracking the progress of your organizational transformation. Make sure you have appropriate and digitalized key performance indicators. Standard measurements like revenue and profitability are still important, but it will take time to show the progress by them (Libert, Beck, & Wind, 2016a).
But all in all you can say, that there is no uniform strategy to perform a digital transformation. Every transformation is unique when you look at the different innovation technologies you can use (Kane, Palmer, Phillips, Kiron, & Buckley, 2016).
“Organizational transformation is to alter the organization’s fundamental characteristics and transform it into a radically different form, this kind of transformation can succeed if cultural changes are brought in” (Gupta, 2003). In general, creating a culture is key, that digital transformation can work. A successfully implemented transformation depend on people that share information among each other and are open to educate themselves. This can just happen, if the company implements a collective, transparent, and deeply shared culture (Bersin, 2016).
In general, organizational change can be welcomed, but can also bring resistance with it. People want to stick on their habits – it is a common believe that everything that worked in the past does not need to be changed in the future. In an organization they are unwilling to accept a shift in the power – no need to learn new skills or even work within a new team (Garvin & Roberto, 2005). Leaders have to provide opportunities to find new ways of work, also coach and support them. It is important that leaders aim to change their behavior and not just the way of thinking (Garvin & Roberto, 2005).
Companies that adapt digital technologies or business models do not just “go” digital – they “act” digital with a completely new model of management. And this change has to lead by digital leaders (Bersin, 2016). Digital transformation is a change at a deeper level. Employees need to transform their core beliefs (Libert, Beck, & Wind, 2016b).
“Digital leaders approach complexity with an open mind.” Digital leaders are visionary, engaging, fusing and collaborating. First they have to transform themselves before they can transform employees and the whole organization. It is a common problem, that companies try to transform lead by peoples that are stuck in old mindsets. This brings limitations with it (Fisk, 2002).
In addition to strategic leadership of digitalization, it is important to make sure that employees and their potential are taken into consideration and are used in this process. Leadership with empowerment and involvement is needed, for example servant leadership. Studies have shown that a servant leadership during a phase of organizational transformation provide more positive experience for employees. (Larjovuori, Bordi, Mäkiniem, & Heikkilä-Tammi, 2016). Means, that in times of digital transformation, especially in times of uncertainty, work engagement and involvement of a leader is very important.
As we heard before, a culture is very important for digital leadership. Digital leaders always try to strengthen this culture and values of communication. They have to align people around this culture (Bersin, 2016). To make cultures more open to create useful innovation, first people have to understand the reason to change. Give employees the opportunity to participate in this process of digital transition (Erwin & Garman, 2010).
Without creative ideas from individuals, there will be no innovation in an organization. Before you can develop and implement ideas, an organization needs ideas, that came from people (Amabile, 1988). Organizational creativity can be defined as a new creation by individuals, that work together. The level of the organization`s creativity is directly linked to the attributes of individuals and the interaction within groups – this implies either a positive or a negative outcome of creativity. (Ellen Mathisen, Einarsen, & Mykletun, 2012, p. 368). This means that the organization can only be creative, if the individuals within the company are creative.
There are aspects that can influence creativity in a positive way, to achieve new ideas. These aspects are separated into individuals qualities and environment qualities. Qualities of individuals that encourage creativity in a positive way are self-motivation, doing things differently and positive personality traits, like persistence, curiosity, energy an honesty. Qualities of organizational environment, like freedom, good project management, sufficient recourses and recognition, can also give a benefit to creativity (Amabile, 1988). There is also a direct relation between the supporting level of creativity of a leader and employees creativity (Zhang & Bartol, 2010).
According to the Four-Factor Theory (Anderson & West, 1998; West, 1990), there are four factors of team climate to support innovation: vision, participative safety, task orientation and support for innovation. Meaning, that innovation is increased, if the following is given:
- vision is comprehensible, valued and approved by team members
- the team members are perceived and not judged or criticized
- inspiring discussion of possible solutions that are carefully investigate
- the team receive support for innovation
To sum this up, if individuals are motivated and the organizational environment gives the freedom to think about new ideas, organizations will have employees that are more likely to be creative. Before individuals can be creative, leaders must be open to creativity. Some theories can be adapted, to enhance creativity within organizational teams.
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