G7 Executive Talk Series


Authored by: Carsten Lexa

Challenges of Digitization
and How to Master Them

The changes coming in the next two decades are unstoppable. What will help us navigate and own the future will be our positive attitude in accepting and owning the innovations that will transform every industry that touches our society.

Needless to say, digitization will completely change the way we live. These changes will confront us all—nations, businesses, people—with tremendous challenges. How can we master these challenges? Let’s first have a look at a few areas that will change dramatically and then explore the mindset that is needed to master the challenges.

Owning a car is no longer important
Let’s first look at the area “Mobility/Transport”. For many people, owning a car is extremely important and a car is a very valuable asset. Or at least it has been for so many years. On closer inspection, however, keeping a car permanently is a costly and not very sensible thing—over 80% of the driven routes are under 5km long and most of the time the car is not moved but it is parked somewhere. If you talk to young people in Berlin, for example, you can see that they are no longer interested in their own car. A car is rented on demand (of course, with an app that not only performs the rental process, but also acts as a “key” to the car), used and then left somewhere. Owning a car has become unnecessary for them.

What challenges arise? For example, one can ask the question for whom car manufacturers produce cars if nobody wants them anymore. On the other hand, the question arises, how to get to a vehicle when you need it, when it is no longer in your own garage. And finally, it would be worth considering who is taking care of the vehicles that are scattered all over a city and have to be maintained, supplied with gasoline and oil and repaired if damaged.

All knowledge is available online
Then let’s look at the area “knowledge transfer/education”. It used to be simple: the teacher, professor or instructor was the one who had the knowledge and passed it on to the students. He was the one who set the structure of learning and the process of acquiring knowledge. But this is the past. In fact, teachers are no longer needed for the pure transfer of knowledge. Anyone who wants to know anything can get knowledge via the Internet – whether directly through a simple Google or YouTube search (then of course one should know what he is looking for) or through university’s “Open Education” programs or via platforms such as Khan Academy or Udemy. The knowledge of the world is available free of charge and with the help of software based on artificial intelligence the teaching of knowledge can be adapted to the needs of the learner and structured according to his abilities.

The challenges here are manifold. If knowledge is available everywhere and all the time, why do universities charge high tuition fees? How do educational institutions deal with the problem that students are often better acquainted with technological tools than teachers? And do students still have to be physically present in a teaching facility to absorb knowledge, and if not, how does the transfer of knowledge happen?

The world of money without banks
The last area to be mentioned here is the area of financial transactions. In the past, banks were the linchpin for all transactions to be carried out. In particular, an account with a bank was required as a starting point and transactions required some time. Today, however, money can be sent via an email address or via apps in seconds. And while classic loans used to be the bread and butter business of banks, venture capital firms and crowdfunding platforms are creating entirely new financing opportunities for companies, but also for private needs.

The challenges in this area are immense. For example, who controls the cash flows and what happens when data indicating a specific cash balance is for example deleted? Are providers of payment apps just as trustworthy as banks? And how is it ensured that the bookings of transactions are correctly posted in debit and credit and that, for example, duplicate bookings do not lead to wondrous increases or decreases in money?

How to master the challenges of digitization
Of course, the examples given above are just exactly that—examples to illustrate the changes caused by digitization and the associated challenges. Rather, one could cite a lot more examples of changes—be it “production on demand” using 3D printers, virtual reality or augmented reality, big data (especially in the healthcare sector) or artificial intelligence. The question now is how to deal with and master these changes and challenges.

At this point, it’s not about highlighting specific skills like coding. Rather, it is more exciting to think about which “mindset” one should have or develop to meet the changes and how one should set oneself up to deal positively with the them. Of course a lot could be written about this mindset—but here a few short thoughts must be enough at the moment.

At the top of the recommendation list is the ability to be fundamentally positive about change. Alone for the reason that nothing is as constant as change—changes are inevitable. Fear of change usually comes because of the fear of negative impact of change. In fact, the outcome will depend on how open you are to change.

At the top of the recommendation list is the ability to be fundamentally positive about change.

Next is a certain playful handling of new developments. The author is active in an extremely conservative and strongly “change-resistant” industry—legal consulting. Be it the handling of data, be it marketing, be it communication with clients—for many colleagues, change is “hellish stuff”. However, the attitude “let’s try it” will open a lot of new worlds.

And finally, it is recommended not to be afraid of mistakes. Of course, mistakes are usually uncomfortable and in the worst case can have serious negative consequences. On the other hand, the actual consequences of a mistake are only in rare cases endangering for the the existence of a person or a company—with sufficient preparation the consequences can be well controlled and the positive outlook far outweighs the feared negative consequences.

Big changes are coming – let´s welcome them
The upcoming changes are unstoppable. The author dares to predict that the way we live in 20 years will be seriously different from the way we live today. No option is to bury the head in the sand. A positive attitude, a playful handling of innovations and less fear of mistakes—a mindset that adopts these three aspects will make one look forward to the future with all its changes and the associated challenges.

Carsten Lexa is a German commercial lawyer based in Germany and Berlin. He is the former Chairman of the G20 Young Entrepreneurs´ Alliance (G20 YEA) and was as such the spokesperson for more than 500.000 young entrepreneurs in the G20 countries. In 2017 he was the host of the G20 YEA Summit in Berlin. Since 2015 he is a member of several B20 Task Forces and by invitation of the European Commission a participant in the SME Assembly. Carsten Lexa can be found online: www.kanzlei-lexa.de.