I read in a study by the German digital association Bitkom the other day that the COVID-19 pandemic should have led to a surge in digitization across German industries. To be more specific, digitization has become more important for 95 percent of companies over the past 13 months. Unfortunately, this quote doesn’t necessarily mean that the interviewees have acted. After all, only 61 percent want to “promote digitization in the long run as a result of the pandemic.”
These findings make me wonder: What is holding entrepreneurs in 2021 back from developing a digital business model or transforming their businesses? What doubts do they have? Why is digitization still considered an unnecessary step in some isolated cases?
“Buying shoes online? That won’t work!”
I remember an encounter I had in India a few years ago. I had already recounted it in the podcast Speak like a CEO: In 2006, we at diconium had set up our business in Bangalore. Four years later, I stayed there for a few months to get to know the market better and to attract new customers. One day, I had a conversation with a shoe retailer. Using examples, such as Zappos from the US and Zalando in Germany, I suggested he shouldn’t just focus on his brick-and-mortar store but also invest in an online shop. He confidently waved the idea away, saying:
“I understand that certain things, like books, can be sold online easily. But shoes? That won’t work here; people prefer to go to a local store.”
And the fascinating thing is that, in 2001, I almost had the exact conversation with one of Germany’s largest shoe retailers, and they had given me the same answer.
Both should be wrong: We know how Germany is developing. And by 2014, shoes sold online in India already accounted for 25 percent of total sales in the footwear industry. Fortunately, my contact from back then eventually shed his doubts, and now, he is India’s largest online shoe retailer.
“That’s a throwback to the Middle Ages.”
It’s just one of many anecdotes of how decision-makers resist change even though it’s already underway. A known example in Germany is the eyeglass manufacturer Fielmann: In 2012, the CEO, Günther Fielmann, was still refusing to do business online, arguing that selling eyeglasses was part of the optician’s trade. Only the optician can determine the correct prescription and fit glasses for customers. The founder shared his thought on the possibilities of an online shop by saying: “That’s a throwback to the Middle Ages.” By this, he meant that there would only be ready-made glasses for purchase and no individually fitted ones. So when Fielmann happily continued to open more branches, competitors, like Mister Spex and Brille 24, sprouted out of the digital ground.
In the meantime, Fielmann has opened an online shop. Junior partner Marc Fielmann may not have introduced the online sale of glasses but at least the company is selling contact lenses online. And it seems as if Mister Spex has taken a step backward, investing in brick-and-mortar stores. Last year — in the middle of the global pandemic — the Handelsblatt newspaper printed headlines like this one about the optician giant: “Fielmann saves on many things — except the technological future.” Marc Fielmann interpreted this as a new flagship store in Hamburg, equipped extensively with high tech, like antennas and RFID chips, that can locate each frame down to the drawer.
On top of this, an app is being discussed that customers will be able to use to conduct online eye exams as well as try on and fit glasses using AR. Marc Fielmann is using his business model to try to maintain the tempo set by new technologies without abandoning the traditional core business. A step toward the future.
The doubters need a storyline
Circling back to the questions I posed at the beginning: What is holding entrepreneurs back from digitizing their business today? And how can we dispel the doubts they still have? In my experience, we need to take reluctant entrepreneurs by the hand and lead them into the digital future, show them examples of failures and successes — in other words, the entire storyline. And we should encourage them because it’s clear that things will change. It won’t be companies that’ll be dictating business in the future — it’ll be customers.
In his column Message from Silicon Valley, Pascale Finette summed it up quite aptly under the headline “Power of Weak Signals”:
“The task for our leaders is to discover today what will matter tomorrow, and then help our organizations and societies develop in the rhythm of a rapidly unfolding future.”
The signals are there — some hear them loud and clear, others are barely picking up on them. What’s true for all of us though is that the future will be faster and more intense than before — even if we won’t all be affected immediately or equally. The global pandemic has stressed the need to rethink and made it clear that a digital business model is also a suitable means of crisis prevention. But even more so, it is a means to shape one’s future.