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Digital Transformation, survival in a fast-changing economy!

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In complex systems, if speed of change is faster than learning of your workforce, you face business transformation.

Digital was introduced in the 50’s (computer systems), industrialized in the 80’s (CIM – Computer Integrated Manufacturing) promises with AI and Robots were premature, failed fast with e-Business with the IT Bubble (Nasdaq Crash) in 2000, reinvented IT Systems (Cloud based) in 2010 with Data driven (i.e. Google, Facebook, Apple, Amazon) business models – therefore digital change is not a surprise, it will change business faster (now in < 1 year) than the speed of corporate learning (< 6 month).

Transformation changes Innovation, Culture and Society
Most companies see digital transformation solely as technology and economic improvements. Innovation in the digital economy changes cultures and societies.
Companies continuing to invest in technologies and not in people, improving their processes and not changing their leadership (culture), leveraging assets and concentrating on complicated problems end up in Crisis Management.
In digital economies with internet, everyone is ONline and connected, has access to knowledge, almost free of charge and everywhere. Smart devices allow to interact worldwide, using highly scalable e-Commerce platforms (Amazon, eBay) to provide digital business solutions. Exponential growth opportunities (“Singularity is near”) requires transformation to billion-dollar business models (disruptive), Systems Thinking allows to manage complexity and consumer behaviors with cross industry supply chains (digital ecosystems), approaching unlimited compute power (neural networks), unlimited resources in real time and infinite access to worldwide customers.

Change vs. Agility Management:
Consumers gain more power: Leading companies struggle to adapt to transformation, still using Change Management methodologies to execute their strategies. Governments have failed to adapt their infrastructures to digital opportunities (5G, e-Government): revolutionary mobility solutions with green energy and consumer markets shift rapidly; many workers will lose employability and incomes. This is Transformation not Change, Problem Solving replaced by Systems Thinking becomes the key differentiator in business strategies.

Innovation: Digital is nothing new, it exists for more than 50 years – transformation is nothing new, in the last 1000 years we globalized, mobilized, industrialized and now we digitize. The only difference is the speed of change to adapt with innovation, culture and society. There is no option, there is no choice, face reality and react (innovate).

Culture: If companies had a life time of 50 to 100 years (replacement in Indexes ie DJI, DAX) in a specific market, now the life time is down to 20 – 30 years in classic business systems and more than 80% startups exit in 3-5 years. Change Management is no more appropriate, companies have to reinvent themselves at high speed.

Society: Societies and Cultures were homogeneous, now they become heterogenous mixing values and beliefs. Political systems struggle to set policies and governments, building Trade Zones and leaving companies in uncertainty entering a a share economy.

Digital transformation is not evolutionary or incremental, therefore optimization with Change Management will produce high cost, slow improvements and high competition – transformation is revolutionary and agile, companies have to master the coordination of micro projects (scalable), fast execution (startup mentality), new leadership (engagement) and open-ended solutions (fail fast).

Digital Transformation: The second industrial revolution:
The first industrial revolution was the change from agriculture to industrial. Daniel Ricardo claimed that industrial will replace the workspace and lead to more wealth for workers. With digital transformation, we will not only change the workspace (labour), we change the work content (education). Daniel Ricardo has corrected his economic adaption theory, change in workspace will only produce more wealth if education improves. We move from a doing (get work done) to a learning (learn how to work smarter not harder) industry, where robots do the work and workers train the robots. Digital scenarios predict, a more than 50% replacement of existing workplaces in the next 5 years, with less than 20% new work opportunities, resulting in poverty for lost jobs and wealth for new jobs. The other half of (non digitable) jobs has to fight to protect their income level and move to service jobs.

This industrial revolution will have a huge impact on culture and society, social systems are not prepared for the changes and education is not prepared to improve “speed of learning” and industrial companies are “locked in” with their vertical organizations (supply chain) to change their business model horizontally (cross industry) to address the new competition (Platform economies). Some industrial populations are moving to an aging society, some emerging market populations are growing so fast, that they have to move to places with work, food and housing (migration). The financial systems are collapsing, feeding the wrong industries and supporting inequality (less rich more poor people).

Consumers shift from ownership to share economies, companies move to low tax countries, governments have to protect the environment (global warming) all at the same time.

Digital will move wealth from land, money and resources to data! AI is the new buzzword, to increase power (Machine Learning, Neuro-Networks, Robots, …), wealth (see Google, Amazon, Facebook, UBER, Airbnb) and control (AR/VR, Cyber Security, i.e. Social points in China). With digital, productivity can improve dramatically – only if business transforms!

Leading companies are struggling!
Looking at some former participants in the Global Forum and comparing with the 2019 attendees, we see the transformation:

GE was considered “too Big to Fail”, now GE is in the biggest transformation in history – GE was the highest valued company in 1990, now it fights to survive. GE was one of the fastest learning companies, highly innovative, financially profitable and fast growing – with the digital transformation GE is cutting business lines, laying off their workers, changing to become a software company and in the last 5 years facing the biggest financial losses in GE’s history.

Boeing another Global Forum supporter is facing a dramatic failure with the new 737 Max line, due to Software system failures impacting the whole business – partners change orders (Airlines), consumers cancel flights for security reasons, airports are stopping landings and the regulators stop production.

Another Industry is Automotive. Daimler, BMW, VW is challenged by environmental issues (reduce CO2, Diesel), innovation (electrical cars, TESLA) and consumer preferences (Car sharing, UBER) and mobility issues (autonomous driving). None of the mentioned companies send their leaders to learn about new business opportunities and challenges.

Banks or IBM, HP. Even IT industry is driving the change, high competition, new players, workplaces shifting to digital Unicorns. Are they in action learning mode?

New attendees are from Business Schools, NGOs, Political Parties, Logistics, Asian-participants, showing the shift to new economies.

Digital Wakeup call
Only 2 out of 10 companies are truly digitally transformed, most of them are startups (Unicorns). Markets shift faster: >40% of commerce is internet based, >80% products and services are digitally driven. That leaves 80% of companies still living in their classic business structures and processes.
If they fail to transform or transform to late, to slow or not at all, will lock them out from new business opportunities. The time window for digital transformation is closing fast!

Improve leadership (engagement), involve clients (business model), build new partnerships (co-create), educate (work 4.0), innovate (startup) use platforms (scaling), safe energy (sustainable) and transform your organization (processes and culture).

Business Driven Action Learning:

Outside-In not Inside-Out: Be it new ideas, or new competitors, future trends, etc., everything that matters starts outside of your organization.

Arenas not Industries: If you are a hostage to a legacy view of industry, you are making yourself vulnerable to disruptive surprise.

Together not Alone: Because the world is too complicated for any one organization to have sufficient range of expertise domains, co-creating with others is no longer an option, it is a necessity.

 

 

Action learning on the shores of coma…

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Here is a joyful greeting to all of you wonderful people that I have met in connection with the Global Forums on Action Learning during 20 years. As you may know, I fell seriously ill two years ago – overnight and due to an allergic reaction to a blood pressure medicine that I had used without problems for 8 years. Following 6 months in hospital, one of which in coma, 3 in intensive care, I have not been able to participate in GFs since then. Alas.

However, your concern and good wishes from those days are often remembered. Today life is good again – so even though some permanent damages have impacted my health, I feel happier and more content than ever. The photo shows me recovered – together with my fabulous wife, Annette. Although I am not able to join you in Paris, I hope that you will have a great Forum and will be faced with a lot of interesting learning and intellectual challenges.

Pardon me now, but as a dedicated believer in action learning, I cannot help reflecting on some of the things that I experienced when being hospitalized ‘on the shores of coma’. Luckily coma/intensive care is not a learning environment normally experienced by most of us. But nevertheless very interesting, I realised. Allow me to share a few action learnings from that:

Well, as a paralyzed patient in intensive care it was for me not at all very action-oriented at the start. All the action was happening with me, around me, but not by me. An unusual situation to be in – far from previous hectic workdays and high activity level. But in a strange way also calming and comforting – being totally free of liability and fully in the hands of good family and professionals. Imagine that – totally free of liability.

However, as I gradually got out of the coma, and became less ‘delir’, a lot of learning began to build. ‘Delir’ describes the situation where you - heavily medicated - have really severe difficulties in distinguishing what is fantasy and what is reality around you. In my ‘delir’, for instance, I often insisted on speaking German to certain nurses – God knows why. As weeks went by, the less ‘delir’ I was and the more “relevant” I apparently became. “Relevant” is nurse-lingo for being able to communicate in a rational way.

All the health care professionals, I happened to meet during my hospitalization, were in general friendly, professional and supportive. So the flaws, we experienced, turned out to be more linked to the system than to the persons. In that respect my fabulous wife actually turned out to be life-saving for me. Without her I would have departed a couple of times, simply because it takes some bold stamina to help the health system connecting its own synapses across silos. A classical situation was when a doctor on the night-shift once said to my wife: “I think we should do A with Geert in order to avoid the worst”. My wife had to raise her voice and concern loud and clear: “But doctor xx from the day-shift said that B would be the solution – please confer with him before you decide anything at all”. It then turned out that actually not A or B but C was the agreed and proper solution. It is of course comforting that good doctors are able to change opinions – on the other hand also scary that it takes a persistent relative to have them do so. I really pity patients in the system who do not have strong family or friends to defend their case or who is, for whatever reason, alone and short on consciousness and vocabulary.

Another learning – scaring, but also very comforting in a way – was to realize that the world actually moved on, even though I was not actively on board. Surroundings continued to develop and unfold despite my absence. Imagine that - the world seemed to be able to continue without me being there. Lesson learned.

When slowly getting back to a new set-up in my life, I was offered a lot of lifelines in the mental recovery process. An experienced and empathetic nurse from the very start encouraged my wife to keep a brief diary of what happened with and around me during my “blurry months”. And the nurses themselves presented me later on at a meeting with a detailed diary where they, page by page, day by day, detail by detail, had described for me what each day contained for me personally while in coma, e.g. massage, lift, more oxygen, who won the Paris-Roubaix cycle race, visits and so on. I was very touched being presented with that. Today, at intervals, I still consult both of these dear, written sources and they function as a kind of anchor and balm in my ongoing re-ignition.

The very best part of my story is that during my hospital stay I gradually moved from being treated as “hot” to being treated as “not”. For 3-4 months the doctors struggled with what was my diagnosis? Nobody knew, but everybody desperately wanted to. It goes without saying that the one doctor who could establish the correct diagnosis, also had a fair chance of having an article published in The Lancet. So I was really “hot” in the hospital system in those heydays – loads of clinical tests conducted and loads of doctors buzzing around me. As months went by - without a solid diagnosis – it turned out that I became more and more “not” – probably because I remained there as an embarrassing reminder of the boundaries of doctors’ almighty competence.

When I was finally moved to physical rehabilitation for 3 months outside the hospital, the prevailing diagnostic theory was that I suffered from an allergic autoimmune multiorgan/lung fibrosis - where the prognosis was that half of the patients would die within two years. The rest within five.

By beginning of 2019 it was concluded that I more likely suffered from a different disease - where half of the patients would die within 2-3 months, while the rest would find their way in life going forward, one way or the other. Since I - by far - had survived the first 2-3 months of my illness it was evident that I belonged to the ‘survivor category’ of that disease.

The result is that no article in The Lancet was ever written about me and my case. I can live with that - and I most certainly intend to do so with great gratitude.

Have a wonderful Global Forum in Paris :)

Kindest regards
Geert Egger

New Books By Global Forum Community Members - Congratulations!

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Drew Boyd
So You Want to Be a Professor: How to Land Your Dream Job in Academia (Amazon)

 

Paolo Gallo
The Compass and the Radar: The Art of Building a Rewarding Career While Remaining True to Yourself (Amazon)

 

Karen Hanna and Tammie Plouffe
Talent Troubleâ: How Leaders Can Harness Trouble and Unleash Talent to Deliver Results (Amazon)

 

Fernando Lanzer
Organizational Culture and Climate: Understanding, Maintaining and Changing (Amazon)

 

 Mike Rosenberg
Strategy and Geopolitics: Understanding Global Complexity in a Turbulent World (Amazon)

Action Learning: Research and Practice Journal

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Congratulations to Global Forum Community Member Dr. Lotte Svalgaard, Roskilde University, Denmark who has joined the Editorial Board of the leading academic journal on Action Learning. She joins other Global Forum members, Christine Abbott, Yonjoo Cho, Bernhard Hauser, and Mike Pedler on the Editorial Board. On the Editorial Advisory Board are community members, Hyeon-Cheol Bong, Otmar Donnenberg, Peter Mann, and Yury Boshyk.

Global Forum Meet-Ups in 2018: Many Thanks

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Several meet-ups were organized between the 23rd and 24th Global Forums in Stockholm, Berlin and Cologne.
Thanks to Ingeborg Molster, Michael Diebold, Chantal Fleuret, Gunnar George, Karl-Georg Degenhardt and Wolfgang Braun. Special thanks to Jan Schwochow, CEO of Infographics, Tomas Carlsson, CEO of NCC (then of SWECO), Michael Hagemann of DPDHL, and to Hays Steilberg from Bertelsmann for hosting. Representatives from several start-ups and from large companies such as Daimler, DeLaval, DPDHL, GE, Husqvarna, IESE, Infographics, Nordea, SAP, Scandia, Seco Tools, Siemens Healthineers, Sweco, Toyota, and Vattenfall attended.

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