What are the most common mistakes when dealing with digitalisation?
My feeling is, when you look at how organisations handle digitisation efforts that will have a profound impact, they don't see the extent of the impact and jump on initial ideas rather than trying to develop a profound understanding. I’m not sure whether you should expect organisations to first have that profound understanding, because it will take away their reaction speed. It’s probably a good thing that organisations become a bit like groups of agile teams who just try out new things and get accustomed to scrapping initiatives that don’t work, developing a kind of trial-and-error approach where it is not bad to be making errors. In many large organisations that I’ve worked with in the past, there is a stigma to making mistakes, and that is probably truer in Europe than in other parts of the world. So people are afraid of making mistakes and of this kind of agile approach where you can try and fail and then try again. It’s something that needs to become part of the DNA of a company.
Which companies are most successful in riding the digital wave?
Companies that have been most successful in dealing with digital transformation are often companies that have a history of transformation per se. There are companies that started out as a mining company that became a chemical company that became an IT company, and these companies have this idea implanted in their DNA that “we can reinvent ourselves”. And I think that is important. And you also see younger start-ups without a history that can do the same thing. But sometimes if they are really strong disruptors, they have to fight so hard against the existing status quo that they almost become like a cult and are no longer flexible, because they are trying so hard to prove their point just by being the way they are. And then you sometimes see companies that leapfrog and then say, “Oh, we missed it the first time, but the next time we will jump over them and become more agile again”.
How well are banks coping with the digital challenge?
I think the FinTechs are posing a real challenge to the banks. They're coming up in all sorts of areas and they allow the unbundling of certain offerings, and not all service banks can compete on all fronts. And as there is an unbundling, these digital start-ups in small areas can do really well. There are banks who are saying “We can buy up these unbundlers”. Some buy them up just to kill them, others buy them up to really integrate them and use them as a kind of accelerator to boost their own change processes. And I think that is by far the smarter approach, because you can buy up one company, but twenty others will also jump up.
In what sectors do you foresee the biggest disruptions?
Well, we’ve seen major disruptions in the travel industry. We're going to see major disruptions in logistics and the manufacturing area as well. I also expect large disruptions in the healthcare industry. This hasn’t happened yet, but I expect that will be big as well.
Will big data boost or reduce the complexity of companies?
I think it will do both. It will solve problems in the sense that it will create some transparency between departments and will force organisations to eliminate and try to integrate silos. It will increase problems or complexity in the sense that business models will also potentially change as data becomes an important part of the competitive differentiation. And that requires a different kind of thinking. It also requires departments to work together in ways that are different to what they are used to. And that, I think, adds to the mix.
Have managers learned to deal with information overload?
I think they have to some extent. When I originally did my research on how managers cope with different amounts of data, I studied managers both in the US and in Europe. And although I could see that in the US they were probably more accustomed to this at the time, around twenty years ago, and there was already more information available to them, they were not actually doing better. They were just able to cope with more information. So I think as people become more aware of the need to deal with more information, they don't necessarily get better at doing so. A large amount of information will lead people to believe whatever hypothesis they have in their heads, which is known as confirmation bias. If you think the world looks like this, you will always find data that seems to suggest that yes indeed, the world does look like this. If that is part of a bigger picture, you may no longer look at that bigger picture, because the amount of information may overwhelm you.
Will robo-advisors take over the role of humans?
We’re trying to do some studies on human acceptance of such advisors. On the one side you have the quality of the advice, and on the other side you have trust. And what we see is that the rate of technological innovation is always faster than expected. And the rate of change as to how people perceive these things is often slower than expected, and definitely much slower than the pace at which the technology is developing. I think the jury is still out on this. I see that people are beginning to develop some degree of acceptance of simple robo-advisory for things like travel websites, for example. But I think if your money and your family values are on the line and you have to rely on a relationship of trust that has been built up over a long time, this acceptance will only come much further down the line. I’m not saying it will never happen and I think that there will be some supplemental things that will help, but I believe that the value of personal interaction will stay with us for a very long time.