Leading steps towards digital transformation
To evolve from today’s economy to a digital economy needs from a grand compromise between strategy and surprise. Trying to develop a methodology it will find itself up against a high degree of uncertainty. During First Industrial Revolution, more efficient and mechanized production meant new factories could meet the growing demand for consumer products. Digital Revolution will not have this effect. It will change the way consumers buy to a more efficient manner trough total customization and use rationalization. Instead supplying one product to millions of consumers we are trying today to supply millions of products to millions of consumers. It’s therefore unreasonable to find a ‘quick guide’ o a ’10 steps to’ formula to do it. What I present here are directly notions about how to start with a key assumption: success is just a little more effort.
1. The future is here
“Today we are closer the company to being the company we want to be than the company we proudly once were”
Jose María Alvárez-Pallete — Chairman and CEO Telefónica
This handy quote embodies a clever vision for any digital strategy intention: don’t think of what you need today, think about what are you going to need tomorrow. You can do it in terms of business model or with a customer-centered vision. ¿Where will my incomes come from?¿How my customers will buy my products? To be successful, you have to start to solve future problems today.
IKEA launched in 2017 its mobile app offering a digital experience to its customers. Early this year IKEA has also entered the smart home market and is offering speakers and smart plugs. Their mission is ‘to create a better everyday life for many people’. This new strategy focuses on what the everyday life will be tomorrow and not any more in the current customer experience buying their products. Positively they can enter more digital tools to improve customer satisfaction today. But it has not significant upside potential. Yet try to imagine its customers future reality is far more efficient in terms of serving them.
2. Find your way
“The art of life is a constant readjustment to our surroundings”
Companies adapt to market by two different mechanisms: evolution and learning. Evolution is an industry level mechanism and learning is an individual organization level mechanism. Maybe your company is not an start up or digital native born. Then you have to choose one of this two mechanisms: evolution, that basically means to look at your industry and benchmark what have already been done. It’s not just copy-paste, however imitation can be your starting point. Learning mechanism is where you have no references and you have to use the trial-error method. This is a more challenging approach but maybe you don’t have more options (or you don’t want to have). Indeed you can adopt both mechanisms but one of them will be the backbone.
Microsoft CEO Satya Nadella did a complete re-working of the company with a learning mechanism (they went to rethink, re energize, renew, and re frame the company upside down). There was not a similar company with the same business model and size so they hadn’t the option of ‘echoing’. Adapting mechanism was not an option as they had been defining industry trends for decades. They needed to learn, with a zoom out vision, witch products or services customers were going to use in the future for then zoom in and rethink their strategy and processes.
3. The Lego mindset
“History enters when the space of the possible is vastly larger than the space of the actual”
Stuart Kauffman — Theoretical biologist
To achieve your business digital transformation you have to look at the picture of what you aspire. When you buy a Lego box to your kids and they look at it for the first time, they see an adventurer’s plane, a space shuttle or a safari vehicle. In short, they see the picture in the box, but when they open the box, the plane is not there, only bricks and special pieces, together with an illustrated manual to guide. Digital journey is achieving a bunch of small steps and successes so that in future, the combination of all them will mean a successful transformation. With more bricks we create a more complex outcome we will get. Digital transformation is building bricks.
When chemicals German company Bayer AG decided to enter in the digital world, they knew that challenge was far-reaching. Bayer started its business when the second industrial revolution started to flourish. The decision of entering the fourth industrial revolution affected them thoroughly: five divisions in ninety countries, more than one hundred thousand employees, a higher number of internal processes, are numbers deterring anyone. They decided to review some of this processes and the platforms they used and introduce alternative digital technologies. They created the first ‘bricks’ that would allow next make more significant changes across the entire organization.
4. Don’t put the cart before the horse
“Madness has no purpose. Or reason. But it may have a goal.”
Mr. Spock — Start Trek
Digital transformation is not about technology. Well, it is because without technology there is no transformation. Fueled by the game-changing use of new connectivity tools and computational intelligence, digital transformation will have a powerful economic, social and cultural impact. All current successful transformation stories has something in common: deciding the best digital tools have been a secondary project. The first effort have been creating a new culture or somewhat changing in the ongoing ideas and values of people. Otherwise it will be putting the cart before the horse, making the strategy ineffective. Digital transformation is essentially a communication issue. Wireless networks, cloud services, algorithms data ingestion rely on better and more sophisticated communication technologies. Internal communication in the organization will change as well so the logic of change says that working before in internal information processes will establish a due change framework. If we say that our customers are changing the way they communicate with the world and with us, and that we have to adapt to this increasing situation, we have to change how we communicate internally too. Our stating point will be explain, convince and empower people build not only a new vision but also a new culture.
Facebook is a very dynamic company that was born digital but where change is part of her DNA. With more that thirty-five thousand employees, culture of change has to be compelling. They put massive focus on Hackathons as innovation tool and have conduced more than fifty official hackathons. The most famous Facebook hackathon was held the night before the social network’s 2012 IPO. Hackathons help to transform collectively a rough idea or vision into a working prototype. FB’s hackathons are a clear example of how preserving the company’s famous values around the ‘hacker way’. But also was useful to strengthen this values in early days when new culture was flourishing. “We want to constantly be learning from each other” says FB VP of platform and marketplace Deb Liu about Hackathons. Any changing project during its fourteen years have been supported by a culture previously and carefully designed for that purpose.
This article was originally published in Linkedin on September 26, 2019