swedish industrial firms - digital laggards? - …...stockholm school of economics topic...

Stockholm School of Economics

Swedish Industrial Firms - Digital Laggards?

Karl Wennberg

Professor, Stockholm School of Economics (SSE)

Karl.wennberg@hhs.se

&

Linköping University

Joint work with

Robert Demir (Lancaster Uni. & Ratio) & Magnus Mähring (SSE)

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Agenda

• Current discussions on digitalization in Sweden

• Company examples

• Results from an international benchmark survey

• Current work with Aalto

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Current discussions on digitalization in Sweden

Stockholm School of Economics Heavy industry – leading the path?

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Transportation – early adapters - struggling to

find viable digital business models

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Tieto study: ”Swedish pulp and paper companies invest less in customer-focused digital solutions than Finish competitors – but believe they are still ahead of industry standards”

Pulp and paper industry – overly optimistic?

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The Challenge of Capturing Value from Digitalization:

Everything is about technology, except technology.

Technology is about people.

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1. Assign and distribute responsibility

• Assign responsibility to create focus

– Chief Information Officer / Chief Digital Officer

• Distribute responsibility to create linkages

– Operative <> strategic

– Line manager responsibility for business development

• Connect managers across hierarchies and competencies

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2. Create an ongoing dialogue

Dialogue necessary to identify and exploit digital value creation opportunities

• Combination of competencies necessary

• Solutions need iterations to take shape

• Customer insights and strategy need to connect

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3. Experiment to Understand and

Build Capabilities

Worst case scenario – big risk:

Create a virtuous circle to build capabilities

We are behind and don’t have the skills

Let’s make a big leap!

LEARN DO

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• Joint Survey (2015) with MIT and BI Norwegian School of Business

• Survey of digitalization indicators, perceptions, and strategies with CIO:s in large (500MSEK+) firms

• 480 responding firms in:

– North-America

– Asia-Pacific

– Europe (outside) Scandinavia

– Sweden

– Norway

Reference: Sannes & Wennberg “Scandinavian Firms as Digital Laggards”. Mimeo.

International benchmark

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Digital disruption no big threat beyond North-America?

Different (perceptions) of reality?

n=177 n=74 n=49 n=33 n=39

38,2

21,7 18,3

17,0 19,3

NorthAmerica

AsiaPac Europe Sweden Norway

% Revenues threatened by digital disruption in 5 years

Reference: Sannes & Wennberg “Scandinavian Firms as Digital Laggards”. Mimeo.

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Innovation rate: Percentage sales from products and services introduced last three years

34,4 32,2

26,5

18,5

24,0

NorthAmerica

AsiaPac Europe Sweden Norway

Reference: Sannes & Wennberg “Scandinavian Firms as Digital Laggards”. Mimeo.

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Digitalization unimportant for future success?

• Traditional view on

competition

• We can become more digital!

• Don’t see threats from other industries…

• Sweden and Norway quite similar

• Asia-Pac and North-America: 4,0-4,5

• Europe in between

Margin Pressure Regulation Competition Multichannel biz. Products Connected Digital Offererings New business models

3,9

3,6

3,6

3,7

4,0

3,1

3,3

4,4

3,6

3,5

4,0

4,1

3,3

3,2

0,0 1,0 2,0 3,0 4,0 5,0

Sweden and Norway

Reference: Sannes & Wennberg “Scandinavian Firms as Digital Laggards”. Mimeo.

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Products and processes connected?

0,0

10,0

20,0

30,0

40,0

50,0

60,0

% Assets with IP address

I dag Om 5 år

0,0

5,0

10,0

15,0

20,0

25,0

30,0

35,0

40,0

45,0

APIs internally and externally

Internt EksterntReference: Sannes & Wennberg “Scandinavian Firms as Digital Laggards”. Mimeo.

Stockholm School of Economics Innovation and new technology for CIOs

3,8

4,3

3,5 3,3 3,3

3,9 4,2

3,5

1,8

2,2

4,0 4,1

3,5

1,9 1,8

4,1 4,3

3,8

2,1 2,3

0,0

0,5

1,0

1,5

2,0

2,5

3,0

3,5

4,0

4,5

NorthAmerica

AsiaPac Europe Sweden Norway

Anskaffe ny teknologi Oppkjøp av teknologi

Investeringsportefølje Oppkjøp av talent

0 20 40 60

North America

AsiaPac

Europe

Sweden

Norway

Acquiring new technology

Developing technology Investment portfolio Acquiring new talent

Percentage of CIO time spent on digitalization?

% %

Reference: Sannes & Wennberg “Scandinavian Firms as Digital Laggards”. Mimeo.

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Topic North-America

Asia-Pacific

Europe Sweden Norway

Proposing new projects 4,1 4,4 3,9 4,2 4,2

Data capabilities (e.g., Big Data, analytics) 4,3 4,4 4,0 3,4 3,2

Implementing an Omni-channel strategy 3,9 4,2 3,5 3,1 3,4

IT risks and cyber security 4,3 4,7 4,3 3,5 3,6

Data privacy 4,3 4,7 4,1 3,0 3,4

Internet of Things 4,0 4,4 3,7 2,9 2,6

Digitally-enabled threats or opportunities 4,2 4,4 3,6 3,3 3,5

Social media 3,9 3,9 3,4 2,6 3,0

Disruptive technologies 4,0 4,2 3,6 3,1 3,4

Talent development 4,1 4,5 3,8 3,3 3,5

Digital workplace 4,2 4,4 3,9 3,7 3,7

Reporting on project(s) status 4,3 4,5 4,1 3,9 3,9

Impact of IT spending on performance 4,1 4,3 3,7 4,0 3,9

CIO-TMT communication – importance of topics

Reference: Sannes & Wennberg “Scandinavian Firms as Digital Laggards”. Mimeo.

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Current work with Aalto

• Survey to 204 Swedish CIO/CTOs in industrial firms

• How managers identify and exploit value creation opportunities

• Combination of competencies

• Customer insights and strategy

• Connections across hierarchies and competencies

• Etc.

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Summary and conclusions (speculations)

• Swedish firms slow moving regarding digitalization

– Revenues under threat

– Time, priorities and success criteria

– Until recently not a TMT topics

– Until recently, lacking competencies among CEOs/boards

• Catch-up phase

– Digital consumers and society

– In search of business models

– Delegated authority not ideal for transformation

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Questions / contact

Karl Wennberg

Karl.wennberg@hhs.se