In this Episode of the WUEconomics Outside the Box Podcast, I talked to Prof. Dr. Christof Flath, holder of the chair for business informatics and information management at the University of Wuerzburg about the following topics:
- How to put data to action?
- Opportunities and challenges of digital transformation for small and medium-sized companies
- Opportunities of small-scale innovation seed Projects
- Digital Retail Lab – Innovation and industry-academia collaboration in the context of retail and fashion
Putting data to action
There is a gigantic amount of data which is created every second, for instance by mobile IP devices in cars, factories, transportation systems or even surveillance cameras. So, the question is, what are we going to do with this data? Do we use this data for filling up hard drives or is there really a chance of making our lives better and businesses more competitive? Putting data to action has the potential to improve the process of decision making. Therefore, the question is, how can certain data sets be predicted into the future? And in the next step, how can it be translated into actionable decisions?
Prof. Flath`s focus in research and education is set on solving problems by programming toolkits and data processing skills and creating solutions which are tangible, applicable and can potentially be rolled out in a short period of time at relatively low cost. Therefore, there is extensive need to educate the next generation of data scientists, people who are willing and happy to get their hands on (big) data and make the (business) world a better place.
Need for digital mindset
Concerning the development of digital transformation in organizations, one of the biggest challenges and obstacles is the general mindset – very often, companies – that are still highly profitable – are complacent and run the risk of going the “Kodak way”. A problem lies in our brains. We are wired in a linear mode – but digital disruption, artificial intelligence, Internet of Things do not happen in the linear but exponential pace. Therefore, it is highly dangerous to think that innovation and disruption is just for the googles’, amazons’ and Teslas’. Instead, small scale innovation and seed projects can be fruitful approaches!
Digital seed projects
The seed project approach is closely related to the general question, why companies fail in developing sensible digitization projects? If we take a closer look at what is happening in practice, digitization is driven by a strict top-down mentality. The top-management makes a general announcement with defined steps, the installation of a CDO, huge investment in technical infrastructure with the goal to duplicate the processes digitally. But this approach is highly vulnerable to fail. Seed project approaches follow a different strategy. First, they follow a bottom-up priciple. Practitioners have to identify a concrete need for digital support, for instance in a business unit or division. It is then necessary to develop an integrated analysis pipeline, with interfaces to other databases like customer data, contract data etc. But oftentimes, those things are not available, because organizations and traditional companies tend to have fix silo structures. A big challenge is to bring all the information together and make it accessible. Small-scaled seed project don’t need big budgets and resources. It is the goal to solve one small problem and afterwards there is a chance for a positive domino effect. And this fosters the idea of seeding digital movement in a company and then growing through the organization.
Digital retail lab – fostering small scale Innovation
Prof. Flath is participating in a local research project, where local retail companies and several chairs are collaborating in a “Digital Retail Lab”.
What is the main intent of the project? The retail market has seen rapid change in the past years. Especially Amazon has disrupted the market. Smaller companies are looking for their spot in the market and a long-term strategy. Therefore, will everybody in the future be a supplier for Amazon or are there other strategies? First, retailers can learn from Amazon and its hunger for innovation as well as changing and rethinking business models. Especially small and medium-sized companies have to realize, that innovation is not just predicated for Amazon, Google and Facebook. Small scale innovation is possible if you are teaming up with the right partners and following the right strategy. The Digital Retail Lab project focuses on the retail fashion market. Several chairs from the University of Wuerzburg in the field of business information management and two local fashion retailer (s.Oliver and Drykorn) are collaborating in small projects on the back of three major pillars – research, education and HR. One goal is to predict design, style and other important facts in the field of fashion by using quantitative methods. (Link: http://digital-retail-lab.de/en/welcome-to-the-digital-retail-lab/ )
For an individual firm, it might be too expensive and risky to invest into such technological prototypes – but in the collaboration it is possible to reduce the risk and illustrate that these prototype projects bring precious insights and benefits that can lead to further projects and actions.