An interview with Professor Dr.-Ing. Markus Weinberger, Steinbeis Entrepreneur at the Steinbeis Transfer Center for Digital Expertise and an expert in digital transformation
Upheaval has become the new normal and this is also affecting the processes of business transformation for German Mittelstand companies. It’s time to question the tried and tested and weigh up new ideas. An essential role in this is played by digital transformation, raising a plethora of questions for the many small and medium-sized enterprises. In our search for answers, TRANSFER magazine met with Steinbeis expert Professor Dr.-Ing. Markus Weinberger to discuss the challenges transformation poses for the New Mittelstand.
Hello Professor Weinberger. The New Mittelstand is also about sustainable, digital, and future-oriented transformation. What do you think is the best way for medium-sized companies to tackle this enormous challenge?
It’s precisely those three adjectives – sustainable, digital, and future-oriented – that play such a crucial role in shaping transformation into the New Mittelstand, and thus the approaches adopted by companies. The goal of any transformation is to shift from the previous situation to a new, future situation. If we’re talking digital factors, which is my area of expertise, this also offers a major opportunity to drive a process of change toward sustainability.
So what can companies do to address these challenges, in concrete terms? I think the first step is to accept that this is no longer a question of whether transformation will happen. It’s already underway and it’s impacting all companies. There are only two ways to approach this. Either companies become active themselves, or they simply tag along. I always appeal for firms to be in the former group and actively shape transformation within the company. In doing so, it’s important to see transformation not as a threat but as an opportunity. Even in challenging times, it’s important to start with transformation early, because that’s what secures your long-term survival as a company.
Once that first step has been taken, I recommend that companies break projects down into smaller tasks so they have a better overview and can do things more effectively. So, for example, one course of action is to ask what a company can do to change its products or services in response to digital transformation. Another revolves around what can be changed within the company. That can be something like management processes or value chains. This makes the process of digital transformation, which appeared daunting at first, more realizable.
But regardless of whether a business actually wants to change its offering, or its internal processes, this change offers tremendous opportunities, but it can also take companies into completely new territory. In the meantime, for many of the problems posed by the market there are already proven solutions to fall back on. It pays to have an experienced consultant on board to accompany you with the transformation, especially when it comes to topics that are new to the company. Of course, there are also risks associated with transformation processes, such that investments won’t pay off – but it’s a far greater risk to do nothing.
It’s important not to forget human aspects of the transformation process. This is particularly important when it comes to the second course of action, the aim of which is to make processes leaner and more efficient. It’s this part that might make employees fear for their jobs. But I think for the vast majority of people you can alleviate those fears. I say that because we face a different problem right now – the shortage of skilled workers. So it’s more important to ask how you can offer more and better services, or make more and better products with the existing workforce. Despite this, it’s really important to involve staff early and be open about any fears they may have. This aspect is crucial if you want changes to be accepted and supported by employees. I strongly believe that everyone can find a meaningful job – one that satisfies them and secures a livelihood.
What role do innovations play in this transformation process?
We’re talking change here that’s already underway, and of course innovation is an essential part of that. But what’s important to me is that, similar to the challenge mentioned a moment ago, we also “whittle down” innovation. Innovation can involve technologies that enter into new products or enable new services. But it can also be an innovation to a process or a business model. It’s the latter type of innovation that’s particularly interesting when it comes to the New Mittelstand, because at the moment, it’s no longer a question of whether you can innovate, but having to innovate.
Every company should keep those three types of innovation in mind. It’s entirely possible that a technology isn’t novel, but with a shrewd business model it can be used to make a big impact. There are already tools and methods out there that help you search specifically for innovative business models for a company. It’s the same with technologies; there are good solutions for many of the issues faced by companies. Also, it helps to have professional advice, especially for medium-sized companies.
Talking of professional advice, you use a holistic approach at your Steinbeis Enterprise, which covers technical factors, digital business models, customer perspectives, and user perspectives. What’s special about your approach?
I’ve been using this approach for more than ten years now, ever since I first worked on the topic of digital transformation. I was working for a big corporation in the south of Germany at the time, where I headed up a lab looking at the internet of things. Even then, my colleagues and I were convinced that the only way to go about digital transformation is to adopt a holistic approach. The reason I say this is if you only consider an individual aspect – in isolation – you get an incomplete picture, and then the solution that emerges only addresses a certain part of the challenges.
Ideally, you should start with the user perspective and, for example, develop a technical solution or service offering based on that. For the next step, you try to work out if that could lead you to a business model. At this point it’s about the skills, partners, and suppliers the company needs. Of course, it’s also important how the solution can be used to generate revenue and which costs that incurs. It’s an iterative process because in practice, at one point or another you’re bound to realize that the solution that’s there right now isn’t ideal when it comes to serving the needs of the user; you need to make improvements. One challenge is to determine what those customer needs actually are. The task then is to put yourself in the shoes of customers and observe them so you can work out what they need.
You already mentioned how important it is to involve employees in the transformation process. What role does staff training play in this?
Continuing education is a core element of this transformation. We’ve already touched on one aspect: fear. We know that people are particularly fearful when they’re not familiar with the actual issue they’re afraid of, and don’t understand the background. This is when it can help to offer training. It’s important to think carefully about timings, scope, and content. For example, there’s little sense training employees on the topic of digital transformation if a company hasn’t yet defined a clear strategy for itself.
Another important part of this is lifelong learning, especially with the constant developments we’re experiencing at the moment when it comes to digital transformation – just think about AI. It’s crucial to offer ongoing staff training in this area to allow people – but also companies – to keep pace with developments.