Digitalization - just buy!
The digitalization of German SMEs cannot happen organically. This pithy statement was made at a conference a few months ago. In principle, this would mean building up the necessary skills internally and developing the organization towards digitalization on the proverbial greenfield site.
Theoretically, this is certainly possible. You start by hiring two or three really good people. But here lies the first major hurdle: Where do you find them? Which top talents would choose to join an organization that still has to be trained and educated? Even if you overcome all these hurdles, it will be a very long road.
What alternatives are there? If the organic route doesn't work - or would simply take too long - the anorganic solution remains. This was exactly the approach promoted at the conference. So we simply buy the digital expertise - a kind of white knight who turns everything around. Search, buy, done.
So that would be the solution for the digitalization of German SMEs. Of course, this approach can also be applied to generative artificial intelligence - as well as to many other more or less necessary transformations.
That's right: the digitalization of an organization is a genuine transformation. The organization should then be (more) digital, think (more) digitally, and act (more) digitally. This is far more than just a few new processes. It is about new perspectives, new ways of thinking, different logic, and different beliefs.
Signing done - and now?
Is the acquisition complete then? Does the desired change happen all by itself? That would be easy. This is probably why it is so often attempted - not only for digitalization but also for many other acquisition targets. Once the ink is dry, the contract is filed away and archived. And that's it. Too good to be true.
Let's take our German medium-sized company as an example, which by the way manufactures drills for special applications. They are really good at it. Now they have bought a digital company that programs very cool apps. If not much else happens after the signing - or even after the closing - apart from a short speech and a few new pens with new logos, not much will change.
Then everything stays the same. One part of the organization will continue to produce excellent specialty drills, and the other will remain the hip digital team. No exchange, no cooperation, no change. After all, as long as both can simply carry on as before, at least nothing will break.
It could be worse...
Yes, unfortunately. For example, if the buyer - the one with the drills - tries to impose its processes on the digital team. If suddenly the same purchasing conditions apply to everyone: Who needs special hardware or digital flipcharts? Standard notebooks and old flipchart pads will do - there are still enough of them in the warehouse anyway. Or if the same core working hours (08:30-16:00) and attendance requirements suddenly apply to everyone. Who needs regular video conferences with Silicon Valley or China? It goes without saying that the digital team will suffer in this scenario.
So it takes more than just a well-intentioned post-acquisition approach. A rethink is needed - both for the team with the drills and for the hip digitals. They need to understand each other and learn from each other.
Going back in time - Industry 4.0
Why is digitalization such a comprehensive change? Many years ago, we supported an automotive supplier during a major restructuring process. Towards the end of all the organizational restructuring measures, the desire arose to introduce a Manufacturing Execution System (shortly MES) in production to move towards Industry 4.0. However, after such a far-reaching change, an organization first needs time to consolidate. The new setup has to settle and become part of the routine. The timing was therefore rather unfavorable.
Industry 4.0 means that information is exchanged in real time between customers, in-house production, and suppliers along the entire value chain. To achieve this, the company's organization must be data-driven and digital. Although installing hardware and software in production is very cash-intensive, it is a comparatively minor technical requirement.
In this organization, digital was almost a foreign word at that time. Everyday management life was characterized by heavy signature folders transported back and forth between several locations. Travel expense reports were still prepared by hand on specially made envelopes into which the receipts were inserted.
This was the real transformational step: turning an organization that works with physical receipts and documents into one that thinks and acts digitally and data-driven. Otherwise, for example, a change to the delivery schedule would come from the customer in real time, which would first be printed out on site and then distributed internally. Only then could production, logistics, and purchasing react - and HR might still not know that more staff would be needed in production next week.
Digitalization cannot be imposed top-down
What makes digitalization so different from other change programs? Why can't you simply set the goal, chart the path, and give the go-ahead? The digital mindset is not yet in place. The organization is still blind in this area. So no digital solution can be specified. Often, the problem for which this digital solution is needed is not even clearly identified. For this, the organization must first be upgraded - or rather transformed.
Top-down specifications do not work. How does it work then? This transformation can only succeed from within. The organization must be introduced to “digital” step by step - for some, these steps are bigger; for others, smaller. People need to practice and make experiences so that the digital mindset can develop.
The employees in the digital team help to make these experiences possible and to convey the new way of thinking. In this way, some learn to think more digitally, and others learn to act like a manufacturer of special drills. The result is an organization that thinks and acts digitally, identifies problems, develops digital solutions, and is able to implement them.
Post-merger integration – The catalyst
Digitalization cannot simply be prescribed, planned, and controlled top-down. However, there are many things that can be done to make it a success. Above all, the right framework for the transformation is needed, along with organized shared experiences and initiatives.
Classic post-merger integration with its mission of growing together by coming together is ideal for this. Collaborating on manageable tasks - and there are many after an acquisition - creates a shared sense of achievement. Old organizational boundaries are overcome, people interact, and they learn from each other.
A clearly formulated vision is needed for this particular acquisition. A vision that describes digitalization, beyond a specific new product or solution - because it is about much more than that. This vision inspires the first pioneers in both organizations to seek contact, work together, and overcome resistance. It provides orientation on the path to transformation.
The acquisition of the digital team is the turbo on the road to digitalization. However, there is no shortcut for the essential steps - the transformation of the organization. Post-merger integration is the catalyst that keeps the process going.
