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Large corporate Europe ranks not a single internet born or digital technology business. With digital disruptors

entering their markets, large corporates have to leap or risk being marginalised. However, for traditional

businesses, there is no straightforward derivation of digital implementation programmes as becoming digital is

a pervasive, not a technological change. I think for large traditional companies to digitise existing operating

models and innovate adjacent digital business requires a comprehensive digital change management that

builds digital versatility.

Large corporates in Europe lacking digital versatility

The European Top 100 companies by market capitalisation include not a single company whose business

originated on the internet, and not a single digital technology business. All companies listed amongst the

European Top 100 operate core businesses with one of the characteristics listed below:

- Core businesses that have a history of decades or centuries and they still supply physical goods or

people based services;

- Core businesses that supply their value proposition through an integrated vertical value chain;

- Core businesses that operate in oligopolistic or highly regulated markets.

These are characteristics of traditional companies. If you are one of these, then your industry is vulnerable to

disruption by an upstart digital business.

Some might argue that software or telecommunication service providers are digital businesses. However,

unless the software or telecom services are provided fully automatically over the internet, the core business

heavily depends on people-based services, and is not digital.

Creating digital businesses, as a management concept, is a new and essential skill, for every traditional

business. The basic idea is for traditional companies to embrace digital concepts such as digital customer

experience, digital operating models, developing digitally enabled products and innovating new digital

business models which grasp opportunities to serve customers in new ways and prevent digital disruptors from

capturing market share.

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Corporate Europe has experienced digital disruption for quite some time. Affected markets include the

technology industry where the industry is constantly reinventing itself, e.g. with disruptive innovations such as

USB flash drives and digital cameras. Other examples are:

- The music industry, disrupted by streaming platforms;

- The advertising industry, disrupted by the growing market for online advertising on new platforms;

- The retail industry disrupted by e-commerce offerings.

Your company has not seen any digital disruptors yet and therefore you think you will not be affected? That

can be the quiet before the storm! Even in industries where physical goods and people based services remain

core, digital disruptors are muscling in. Think about the hospitality industry where the global online reservation

system Booking.com has established market dominance and charges premium prices for their reservation

services. Airbnb.com grew to the largest global hospitality business without owning or leasing a single real

estate. The creation of digital businesses will intensify competition amongst existing players and with new

entrants.

In short, all major European companies are those who have enjoyed a successful and sustainable business

over a long period of time, with core physical and geographical capabilities that have supported their evolution

so far. The emergence of new digital businesses is taking place in all industries. Traditional companies do not

have the capability to capture digital opportunities and neutralise potential digital disruptors and are lacking

digital versatility. The small pool of digital management talent in Europe and the high valuation of successful

digital businesses limit the prospects of quick fixes like broad recruitment campaigns or reverse acquisition

initiatives.

Yet even when they have a digital strategy the traditional companies tend to see it as a matter for

technologists and engineers. This is a mistake.

For Traditional Companies, becoming digital is a pervasive, not a technological change

A few traditional companies have started to create digital strategies for their businesses. They are applying

digital concepts to their existing business models, identify digital disruptors and analyse future sources of

value through digital opportunities. At the implementation stage, traditional companies are applying digital

laboratories to run implementation initiatives. Many traditional businesses conducting substantial digital

initiatives, for example, by hiring large teams from professional service/ system integration providers.

However, the path from digital strategy to digital business needs more than technologists. For a traditional

business, becoming digital is a pervasive, not a technological, change. It comprises change of many business

elements. Leaders and employees of traditional large companies are not yet versatile digital practitioners.

External professionals alone will not accomplish pervasive change. Becoming digitally sustainable requires

traditional companies to adopt digital leadership and management practices and to grow capabilities.

Comprehensive digital change management is needed. This new practice links the creation of digital strategies

with the desired end state of running digital businesses. After all it is people that build algorithms and lead

digital businesses, not machines.

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Digital Change Management builds Digital Versatility

Gaining digital versatility is of essence for the intended digital change of traditional companies. Digital

versatility comprises many core constructs that drive progress towards effectively running digital businesses.

Your digital programmes must be accomplished by a change management practice that builds digital

versatility. Affected stakeholders in your digital ecosystem must have specialised support that enables them to

run digital businesses. Digital change management offers an effective way forward to start building your digital

versatility now, learn from experiences along the way and gain speed by applying learning over time. Here are

the principles for creating a digital business using digital change management:

1. Create company-wide awareness for digital business;

2. Incorporate leadership and mobilize employees to embrace digital change;

3. Seek to find in the heritage and history of the company alignment and passion for innovation and apply

this passion in digital programme;

4. Link the adjacent digital business areas to todays core business and analyse development paths;

5. Start with enhancing todays business and gradually extend programme in line with identified

challenges;

6. Establish a save programme environment and foster innovation and learning;

7. Build digital capabilities and skill through partnerships, diverse types of people and trainings;

8. Adapt dynamic strategic plan and organization;

9. Adjust management systems to support fluidity and feedback and establish digital practice.

Summary

Large traditional companies in Europe lack digital versatility. They are required to embrace digital concepts

and grasp opportunities to serve customers in new ways and prevent digital disruptors from capturing market

share. However, for traditional businesses, there is no straightforward path for digital implementation

programmes. Becoming digital is a pervasive, not a technological change. Comprehensive digital change

management that builds digital versatility is required. After all it is people that build algorithms and lead digital

businesses, not machines.

Let me know what you think via email. Should you want to leave your comments you can also use the

comment function. For more information on digital strategy, digital versatility and digital change management

please contact me on anselm@magel.biz.

Best regards,

Anselm C Magel