What Being a Pilot taught me about product development.

  1. Flight Planning and Business Strategies: Just like in business, flying requires a meticulous plan. While I plotted courses and studied maps, I learned that even if the actual flight journey had different waypoints and detours, the goal was always the same: reaching the destination safely. In business, this translates to crafting an exact plan with all available data. It’s essential to have a clear target and, even if the path changes along the way, keep that endpoint in sight. With flexibility and perseverance, you’ll most often reach your target.
  1. Predicting and Preparing with Weather Forecasts: The unpredictability of weather taught me a lot about market analysis. While technology offers us advanced weather forecasting models, things like thunderstorm cells can be incredibly unpredictable. The key is to always be vigilant and ready to adapt. Similarly, in business, even with the most detailed forecasts and predictions, there will be unforeseen challenges. The trick is in acknowledging this unpredictability and preparing strategies to weather any storm.

  2. Real-time Data & Situational Awareness: When in-flight, my cockpit is filled with a multitude of data: from my location and engine stats to radar readings. This constant flow of real-time data helps in maximizing situational awareness. In the corporate world, businesses must also be attuned to real-time data about market trends, customer feedback, and internal metrics. Being aware and proactive can mean the difference between steering clear of pitfalls and nose-diving into them.

  3. Course Corrections: Just like in flight, where air traffic controllers help make mid-air corrections, businesses too need mentors, advisors, or a strong team to provide real-time feedback and corrections. Adapting to change and being agile in response is key.

  4. Embracing an Error Culture: Up in the sky, there’s no room for ego. I quickly learned that hiding or ignoring an error could have catastrophic consequences. Continuous learning and improvement are crucial. In business, fostering a culture where mistakes are treated as learning opportunities, rather than failures, can spur innovation and growth.

  5. The Power of Checklists: Overconfidence can be a pilot’s downfall. No matter how many times I’ve flown, I always rely on my checklists. They ensure I don’t miss out on any crucial step. In business, whether you’re launching a product or setting up a meeting, having a checklist ensures that you don’t forget the vital components that contribute to success.

In the world of aviation, there’s a saying, “A good pilot is always learning.” The same applies to business. It’s a continuous journey of learning, adapting, and soaring to new heights. Every flight I’ve piloted fortified this belief, teaching me the foundational principles of achieving success, one flight at a time.

Digitalize if you want to survive.

It’s been almost 10 years since Marc Andreesen published his article Software is eating the world. Essentially, this was a warning to all entrepreneurs around the world that computer technology and software would fundamentally disrupt every industry in the future.

And I have this nagging feeling that too many managers of European companies haven’t taken this warning seriously enough. Even engineering-driven conglomerates, like the German automotive companies or machinery manufacturers, struggle with digitalization.

Many companies are now spending more money on software technology than ever before. Many have also introduced modern methods of agile software development like Scrum in their software departments. But that’s not enough to become a digital company.

Digital
Essentially, digital represents 1 and 0, the foundation of all computer software, and therefore embodies everything that can be executed as software on a computer processor. The computing power of these computers has increased exponentially over the past decades (see Moore’s Law), and especially during the COVID-19 era, we realize what this means. However, today we are only making sensible use of a fraction of the computing power developed over the last 2 decades. Inventions capable of harnessing this computational power can thus be termed as digital innovations.

Tesla’s example clearly showcases the disruptive factor of native digital companies (referred to as ‘tech companies’ in the USA). While Tesla still manufactures cars, previously significant components, like the engine, have been overshadowed or commoditized by the use of electric motors with modern battery technology. In essence, Tesla builds a mobile supercomputer, equipped with a powerful central control computer and corresponding sensors. In contrast, nearly all car manufacturers have outsourced a majority of their digital system innovations to suppliers for decades, procuring separate independent components from them. This native digital platform developed by Tesla enables entirely new iterative product innovations based solely on software. Vehicle performance updates via the internet or autopilot features are just the beginning.

For many sectors in this millennium, the focus was on utilizing existing computing capacity through software and the internet. From this, almost magically growing technology empires emerged, threatening to wipe out entire industry sectors with excellent global and hyperscalable products.

It’s no coincidence that the world’s most valuable companies are tech giants like Apple, Google, Alibaba, Tencent, Amazon, etc., representing various generations of the so-called platform economy.

While many traditional companies are still figuring out what this means for them, an even bigger wave of digital innovation is already approaching. Through self-learning algorithms, also known as Machine Learning or broadly Artificial Intelligence, the world’s existing computing power can finally be used meaningfully. It’s as if humans have found a way to harness a large portion of their unused brain, creating superpowers on the mobile interconnected supercomputers we all carry in our pockets.

A prime example of what happens when a company ignores this is Boeing. Although Boeing can be considered a traditional technology company, they failed to prioritize digital technology and software products. As if it weren’t bad enough that, due to cost-cutting on sensors and a software glitch, two 737 MAX aircrafts crashed, almost every week new software issues surface, currently even a bug in the approach software of their modern 777/787 aircraft series. The root cause being that the 737’s control computers haven’t been updated for decades and vital digital software development was outsourced would certainly be unthinkable for a company like Tesla.

So why would anyone claim today that not every company must become a digital company to survive? Even companies that understand this find it extremely challenging to truly digitalize.

Understanding what distinguishes the best tech product companies from the rest of the world and what characterizes the latest generation of platform economies is crucial.

In my over 20 years of leadership roles in startups, scaled internet platforms, tech giants, and traditional companies, I’ve learned what sets digital companies apart from the rest.

From this, I can derive the following 3 success factors as crucial for the digital transformation of a company of any size:

Understanding the role of digital technology and properly anchoring it in the company.

  1. A digital leadership and management culture characterized by empowerment, autonomous teams, and OKRs.
  2. The ability to build digital software products.
  3. The most important first step is for a company’s leadership to recognize that digital technology is not just a cost factor, and merely spending more on technology won’t help. Instead, the essential role of technology must be understood, placed at the core of the company, and actively managed with an adapted leadership culture and new competencies.

But then, every company can be successfully digitalized.

Success Factors for Digital Transformation

1. Understanding Digital Transformation

  • How is the value chain of the core business changing and what are the implications for one’s business model?
  • What distinguishes modern hyper-global scalable tech platform models in the respective areas from the rest of the companies? (Business, Organization, Approach)
  • Technology is not just a necessary cost factor; simply investing more in technology is not enough for a successful transformation
  • The competence to build technological products and platforms must become central to a company Good example Pixar: Technology is utilized far better than all traditional film productions, technology teams are valued just as much as the creative teams.

2. The Role of Digital Technology in the Company

  • Do not treat digital technology products like traditional IT systems (Outsourcing, etc.)
  • Isolated satellites like accelerators, incubators, labs often fail to transform the core of a company
  • CDOs are often doomed to fail, individuals who have never written a line of code themselves and then operate outside the core business
  • Cross-functional digital product teams: Product, Engineering, Design / User Experience, and Digital Marketing are closely linked and should be viewed as an autonomous unit
  • Choosing the right transformation strategy, dual transformation is often the more appropriate and faster approach, but unfortunately, it is often not implemented consistently enough
  • Adjust organization

3. Digital Product Development Competence

“Agility doesn’t necessarily mean that I’m capable of building the best digital product.”

  • Prioritization / Focus on a few important problems is crucial, Active Investment Portfolio Management, the Won’t-do list is often more important, otherwise too “thinly spreaded”, enforce radically. Focusing on a few topics is essential for complex digital tech product projects
  • Inspiring product vision (3-5 years)
  • Decision on central platform components for reusable modules (TV Apps on one basis, 2nd Screen Participation products, etc.)
  • Clear product strategy based on insights: Market, customer usage data, new business and monetization models (Advertising vs. Subscription)
  • The right composition of product teams is more important than the size, software is complex and with the number of team members, performance often decreases disproportionately. Acceleration and performance improvement can rather be achieved with a smaller number of the right employees.
  • Apply the right iterative product development processes at the right time: Design Thinking vs. Product Discovery vs. Delivery Teams, general Lean approaches with early MVP launch

4. Digital Leadership and Management Culture

The traditional leadership/management culture often doesn’t fit technology product organizations.

  • Understand motivational factors (“Purpose, Autonomy, Mastery”)
  • Give Empowered Teams / Units the necessary space to solve problems. The purpose should by no means be to serve the business or to satisfy stakeholders as with traditional IT
  • OKRs: Set objectives and measure results - the team should figure out how to achieve them - make teams responsible for the results - no micro-management, no rigid processes, no roadmaps in the traditional sense. OKRs are also very suitable for establishing a direct link to the business.
  • Master technology: Testing, speed through cloud technology and modern stacks, the right tool for the right job, no technical debts, establish tech principles (Values & Beliefs) like Product Speed, Excellence in User Experience, etc.

The 10 biggest mistakes in digital transformation.

  1. Not understanding that digital technology needs to move to the core of the company.
  2. Lacking understanding of how tech platforms operate.
  3. Believing that agile development is enough to create the best digital product.

  4. Applying traditional leadership principles and management culture to the technology area.
  5. Treating digital technology products the same as traditional IT.
  6. Business or sales driving the tech sector.
  7. Merely spending more on technology and software or adding more software developers, hoping that this will accelerate progress and improve the digital product.
  8. Hiring a CDO who has never seen a line of code, let alone successfully built a complex software product.
  9. Hoping that accelerators, incubators, and labs, which operate isolated and far away from the business core, will advance digital transformation.
  10. A misguided transformation approach (dual transformation vs. other models) that is much harder to implement.”

This post demonstrates post content styles

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