Digital disruption in Finland – a need for “vision”?

Digital Disruption

Digital disruption in Finland – a need for “vision”?

by Published August 26 2015 Kari Kaario

Businesses in Finland believe they are largely ready for digital disruption. But they’re not backing that optimism with the same emphasis on organisational changes and strategic planning as their counterparts across the Nordics. Most companies in Finland see digitalisation as an opportunity. Far fewer see it as a threat.

So what could explain their attitudes? The first thing is what might be called a lack of vision. When they consider the impacts of digitalisation, most companies struggle with visualising or even describing the way that their industry is changing in front of them. That inability to see what's taking place—and how it will shape the future—inhibits action. Companies aren’t able to organise their people around a coherent digital vision and engage them in developing digital capabilities.

Finnish companies perceive their markets as relatively small and domestically focused. They believe them to be to some extent protected from commercial attacks that might come from elsewhere and which have so visibly changed other, larger markets. Competition in Finland has admittedly not yet been as fierce as we’ve seen in other larger economies. One or two players have tended to dominate in each segment. That can lead companies in many sectors to be content—even complacent—about their performance. But contentment can be dangerous. It can lead to companies falling behind, failing to invest in digital capabilities and gradually losing competitiveness. And an explanation for that lack of investment links back to the lack of vision.

Investing in physical assets, such as a new plant or store, offers a straightforward business case. The plant or store shows (or fails to show) an easily measured return on its investment. Digital investments won’t generate the same kind of returns quite so quickly or quite so obviously. The difficulty in measuring the returns on digital investment explains why most Finnish companies have focused on discrete projects with specific and narrowly focused goals. Most are happy to work on small, standalone digital projects that enhance only one aspect of their operations. They’re not trying to transform their business, for example by changing the total customer experience, pushing whole areas of cost out of the system or even cannibalizing their own core business.

So how can Finnish companies start to make progress? There’s clearly no lack of innovation in Finland. Finnish start-ups, along with their peers in Sweden, have been very successful in attracting investment, punching well above their weight on the global scene. There’s a real opportunity for established larger businesses to tap into that innovation, leapfrog their own digital development and buy rather than build the digital capabilities that will be key for their future growth.

Some companies may also need to learn directly from the start up world and build their own internal venturing capability. They need to learn to fail fast, with a continuous flow of initiatives that, at some point may lead to a major opportunity. That approach is, of course, in stark contrast to standard approaches to development characterised by painstaking research, careful planning and the desire to avoid failure at all costs. But digitalisation requires something different. And there’s little time to lose.