Are German companies equipped for the digital age? An interview with Karl-Heinz Land, Digital Darwinist and Evangelist.

Feb 25, 2014

Karl Heinz Land
Business magazine WirtschaftsWoche and Karl-Heinz Land, Digital Darwinist and Evangelist, have jointly published a “Digital Readiness Index” for a variety of industries – including automotive engineering, insurance, and pharmaceuticals. Land explains why German businesses must take the opportunity to transform their IT, which technologies are required, and why they should develop a digital vision.

Mr Land, what is the “Digital Readiness Index”?

The “Digital Readiness Index” highlights what a number of international studies have already suggested: digital-ready businesses secure higher sales, higher earnings, and higher market capitalization. The “Digital Readiness Index” a way of documenting these metrics for the German economy, and it makes clear where each industry stands – and who is digitally ready.

Which industries did well, and which did badly?

A number of sectors have performed very well. Take the auto industry, for example, or fashion retail. These industries are acutely aware of lifestyle trends, and communicate actively with their customers. And there are brands that have recognized, and acted upon, their insights, such as Nike and Audi. A cell-phone app in the insurance industry also caught our eye. “Sure Now” was developed by Allianz. It is extremely user-friendly, and at the same time effectively supports sales efforts.
Pharmaceuticals and energy utilities fared less well. These industries clearly suffer from an ongoing lack of customer contact. They used to operate in highly regulated markets, and had little direct interaction with consumers.

What is the core message of your book, “Digital Darwinism”?

Digital Darwinism is linked to the theory of evolution. Similar to nature, where certain things develop, evolve, and die out, there is a process of natural selection in the digital world, too. Our definition of Digital Darwinism is: When technology and society change faster than businesses are able to adapt, then the result is extinction, just as it is in the natural world. Adapt or die. A number of companies have already failed to keep pace and have therefore fallen victim to the process of selection. The losers include Praktiker, Neckermann and Quelle, to name just a few. And more will follow.

How have customer expectations changed?

Today’s customer is mobile, connected and informed and he has corresponding expectations: Put simply, they want everything, everywhere, and right now. That is the basic principle. Businesses that align themselves with this behavior and offer the corresponding services are able to effectively communicate with their customers. Businesses that do not adapt, that have not prepared their organizations for this change, will struggle.

What action do companies have to take?

The priority is to prepare for dialog with customers. An informed, connected customer expects rapid communications. And in this context, the kind of initiative launched by T-Systems is very important. Zero Distance is about bringing customers and businesses closer together. And we welcome that very much. Front-end and back-end systems are being integrated and digitized, enabling Zero Distance – as a response to the need for rapid customer dialog and communications.

What technologies need to be deployed?

Today’s key technologies are social media, big data, the cloud, mobility and security. The cloud enables solutions to be provisioned more quickly. Social media underpins the customer dialog I have described. Big data allows the identification of trends – trends among consumers, among products and sales, etc. Mobility enables companies to keep close to their customers, to communicate with them 24 hours, seven days a week. And security needs no explanation. The NSA has shown us just how important it is to have secure systems that cannot by hacked by third parties. And that applies to IT, services and applications.

Will customers willingly hand over their data?

Customers will provide data to companies that they trust. In other words, privacy and service are two sides of the same coin. And we need to be aware of that. For businesses, this means they must ask for customers’ permission to access their data. Then, they can eventually provide customers with more personal, better, more personalized guidance. It is almost like an old-fashioned mom-and-pop grocery store – where the owners know you, and you know them. Privacy and service were a given, not an issue. Only companies that have the data needed to understand their customers and their preferences – what they like, dislike and want – and to understand the context, will be able to generate positive customer experiences.

What do you advise businesses to do, how should they move forward?

They face major challenges, such as digitization. In this context, it is essential that businesses develop a clear digital vision. And this is a task for C-level management. An end-to-end digital approach and key performance indicators – what are you looking to achieve and how do you measure your success – are vitally important. What is your goal? How can you initiate and execute projects within a tight timeframe? Against this backdrop, bear in mind Mark Zuckerberg’s advice that it is “better done than perfect”. It is important to get things done, to learn from what you do, and to secure sustainable outcomes. That is essential. Time and speed play a pivotal role.