DIGITAL TRANSFORMATION

The Covid-19 pandemic will cause severe damage to societies, states, and markets. We also know that companies and public bodies will increase the reasons to be more agile and careful of the experiences of their clients and beneficiaries, while reducing economic, financial, reputation and talent leaks.

Then many will want to re-drive the agenda of their digital transformation project.

Since it is not easy to successfully complete these initiatives, here we share distinctions that allow us to think about the phenomenon in its different dimensions, constituting a guiding map that it is convenient for the people who initiate these tasks to have on hand; the design and preparation stage is crucial to ensure overall exercise results.

Introduction

For several years now, events associated with the fourth industrial revolution in society and in the world economy can be observed, highlighting among them the creation, transformation and extinction of business models in countless markets. Among the paradigmatic examples of the technological tsunami, the digitization of production and service operations is repeatedly mentioned, seeking results such as the following:

Provide satisfactory responses to clients’ expectations of experience, resonating with their concerns and standards and tuning in with the orientation of dominant and emerging social practices.

Increase productivity, efficiency and competitiveness.

Give support and traceability to action flows, communications and coordination of work teams.

Simplify and facilitate the repetitive work of collaborators.

Support the analysis work of the teams by providing data for the continuous improvement of operations with surgical precision.

Make relevant processes, events and results visible to management, providing them with valuable information for decision-making in a timely manner.

Carrying out a digital transformation is not an easy matter. Those who have participated in these tasks know that long before the start-up, already at the stage of building consensus and internal approval, there are obstacles at all hierarchical levels, with those of an ethical, cultural and social nature being the least understood and valued, although they end up being the most important for making a correct diagnosis, modeling, planning and subsequent adoption of the “innovation”.

To start a digital transformation project in a good way, we recommend you keep in mind the points that we will present below, emphasizing the less widespread but ultimately significant aspects.

1 Return of investment

Digital transformation projects must impact the profitability and sustainability of a business to motivate shareholders to continue investing, however the results that can be obtained from this human action are not limited to economic and financial numbers and can be extended, especially in the context from the social and health crisis we are experiencing, to enhance the company’s mission around the world and the responsibilities assumed with its environment. This gives meaning and motivation to people, as well as value to all the activities that take place in the company (if they are well designed and then participate in creating value for customers, collaborators and stakeholders), also generating an effect on public identity, insofar as what has been accomplished is perceived from the social sphere as a genuine and coherent ethical commitment in all its dimensions, relationships and actions.

From the Return on Investment (ROI) point of view, it is important to be clear that not everything should be digitized. As other experts recommend through the World Economic Forum (WEF), not too much of the same should be done, nor too much of the new either, which leads to the necessity to reflect to distinguish straw from wheat, which should be transformed into the business of what is not imperative to approach in the present. Then, in order to articulate an attractive project and execute it correctly, it will be necessary to initially identify and estimate the contribution it will make in the different lines of the income statement and financial flows, considering the investment it represents, and its social and ethical contributions. The lesson learned through the years is “focus first on the large numbers, business possibilities and pain of your customers and work teams”, and articulate a feasible digital progression plan, in where investment and return are harmoniously accompanied in their different dimensions, because otherwise ROI will hardly give the green light to the project, or worse, it will start but will not accomplish its contribution promises.

2 Customer and user experience

Many directors and executives think the digital transformation by limiting it to an issue of disintermediation and cost reduction. Although these issues are important, the greatest potential of a digital transformation does not lie in that, and focusing on them can be a serious mistake, as for instance in an industry whose business model is running out and begins to be displaced by many attractive value propositions for customers. In a globalized world with open markets, it is very difficult to compete to have the best product or service, or to be a cost leader, unless you have a unique competitive advantage in the world. Are you in that situation?

Saying this, we are not encouraging the wastage, we are only drawing attention to the fact that a digital transformation can be better exploited if it helps to sustain a blue ocean strategy (creation of an industry) and / or at least allows strengthen confidence-building with a client to from there enrich the combined capabilities, establishing a unique link. In both cases the difference is made in the relationship that is built with the client, creating memorable experiences consistently over time, and relying on technologies that support services and processes that take charge of expectations, concerns, requirements and customer standards.

In the same way, it is necessary that technology facilitates the work of collaborators, making it more friendly and creating opportunities for people to focus on human affairs irreplaceable by machines, but fundamental to the success of a company, such as thinking for create new possibilities and solve root problems, coordinate issues that require sensibility and wisdom to adjust to contingency, act with emotional intelligence, cultivating intuition, creativity, courage and prudence, especially when uncertainty and the volatility of the world becomes so evident.

Here we make an exhaustive call: “the design of a platform for digital practices of interaction and work what it must do is support business processes, and this in turn supports the experience of clients and collaborators. The architecture of this platform must be able to mutate following the dynamics of the market and the company strategy. ”

3 Future model

When a transformation is guided by a technological solution, there is a risk of putting “the cart in front of the ox”, generating a forced foot that ends up being an insurmountable impediment. What seems so obvious is a frequent mistake. Many times the desire to generate transformation and accelerated results leads to anxiety to implement, and with little analysis and insufficient preparation, projects go forward toward error and cost overruns leading to the failure of most of these initiatives as is shown by digital transformation statistics. It takes time to think and decant.

On the other hand, the identification of what is central and critical to transform digitally is not a task that can be accomplished by applying a calculation technique and then another implementation technique of a pre-manufactured solution, however successful it has been for another company. Sketching the situation, if someone were to think of delegating that task to a bigdata system, sufficient sensitivity and correct social, cultural and business reading ability are required before (or at least after) to generate dashboards with relevant information for the decision making. Then, it is not only necessary to think and decant, it also requires sensitivity and a structure to articulate a robust project, a future model, which in order to see the light must be nourished by an adequate reflection and intuition. From this business model the processes that give meaning to the technologies that support them emerge.

Don’t skip this step! Of course, many times the business areas hand over their “supermarket list” and then go on with their certainly important matters, so the possibility of co-building the consensus for the structural definitions of the project is diluted, while the management begins to fidget and ask about the results. The business areas say: “But if you are the ones who know about technology, don’t ask me, I have already raised my needs.” The root cause of numerous “white elephants” is articulated in this relational dynamic. With this, something fundamental is evident: a digital transformation understood as a project in the TI area is doomed to failure because, strictly speaking, if it is going to produce a significant transformation for the organization, it is a corporate project. This conceptual error occurs when technology is associated with “hardware and software”, which is the standard situation, and it is out of sight that technology is part of the network of work practices that constitute business processes and relationships with clients, which in turn — in a good case — respond to business models and corporate strategy.

4 Innovation and Kaizen

It happens that many people think that innovation is about producing or doing something that they were not doing before. This from an etymological point of view is true, but it is quite limited when you think of paradigmatic examples such as Amazon, Facebook, Uber or Booking. Why do we cite these cases as notable examples? Because when you want to make innovation, for all the costs that come with creating the right framework, what you expect is to “kick the board”, “change the rules of the game”, etc. We call the other options continuous improvement, which is not bad at all, in fact they are necessary, but it may be insufficient for a company that needs to relaunch its business with power. For this reason it is necessary to distinguish Innovation from Kaizen.

Innovation is a phenomenon repeated in the world, it is seen everywhere, but the truth is that it is seldom recreated from the same company. Among those who excel in this regard, from our point of view, are Apple Computers and Toyota. We understand innovation as the ability to take charge of historical anomalies, that is, problems and / or dissatisfactions that lasted over time, until a team of people manages to produce the “antidote” and distribute it happily.

Moreover, today many people believe that innovation is a matter associated with technology, and without a doubt that there are especially in all the examples cited, but it turns out that innovation is first of all a mental-psychic phenomenon (and who denies, doubts, or believes something else, just confirms it … think about it!), articulated in the capacities to see and understand, and to resolve to find the answers that nest in the deepest questions and intuitions, without being daunted by obstacles and failures that will necessarily be found along the way. This is why we recommend that those who lead a digital transformation project contrast their ideas with ideas that are outside the organization’s main thinking, not in order to thoughtlessly adhere to other visions of the people, but above all to be able to make contact with one’s own and blind spots in the background. From squeezing lemons, lemon juice comes out.

Something similar happens with the continuous improvement promoted in lean methods, while many confuse it with techniques, however if you do not cultivate an attitude of openness and genuine respect for the other, lean techniques are seeds that fall on stones.

Innovation and continuous improvement is not in the products or services and are based on the possibilities that open up. This distinction is important because if the new does not summon or make enough sense with the target audience, it will be difficult to generate the critical mass of pioneers and followers that is needed to consolidate the proposal. People are often familiar with their routines, and breaking their indifference with very attractive and achievable offerings is required for them to be willing to explore and start tasting new possibilities. The central question to think about here is how technology will help you in your affairs.

5 Technological strategy

Think about becoming a global technology leader could be a too pretentious first step for most companies in a country that does not have a tradition of innovation neither private or public structures that can give it adequate support. Initially, it will be good and sufficient to design a more profitable and sustainable business model that allows moving towards unique relationships with customers, leveraging it on technologies. In this regard, good news is that there is a wide range of technological offerings in the world that can be very useful for local businesses, which constitutes an interesting horizon of possibilities to explore in technology areas, from the spirit of establishing and positioning in the organization as business partners, that is, permanent generators of attractive proposals for other managements. With few exceptions, these areas are playing less preponderant roles “waiting for business requests.” We think that a more convenient attitude for them and the organization results from expand understanding of their role, acquiring the responsibility of refreshing business models, value propositions, processes agility, customer experiences and efficiencies, based on the adoption of new technologies, for which important functions to incorporate or deepen are those of keeping updated the global map of appropriate technologies to the company or institution, monitoring the best technological practicing in the industry, anticipating the next movements of customers and generating offers opportunely.

Once the value proposition of the technology area for the organization has been defined, explaining a future model which is fully in charge of the strategic guidelines of the company, and the bases of an operational-technological model have been agreed, we begin to build the “lego”, the plan and its strategy, with pieces like the following:

• Definition of critical processes and assurance of Information Technology (IT) operational continuity.
• Application architecture model and initiative roadmap.
• Tactical prioritization map, for value creation and organizational emergencies.
• Demand profile, competence, availability for production matrices.
• Internal teams definition, partners and management mode ensuring costs, time and quality.
• Feasible projects definition for the use of agile modalities.
• Project governance structure, with roles and dedications of the organization for the co-construction of solutions.
• Change management in political, contractual, climate, behavioral dimensions, etc.

And the most important:

• Senior management commitment and permanent communication to establish priorities.

6 Excellence Master in Project Management

To properly manage a digital transformation project, organizational, operational, technical and training issues must be clarified as the first conversations to shape it are developed. From a theoretical -and rigid- approach, the “design in action” method is perceived as the least recommended, but it turns out to be the most viable and therefore also the most widely used. The ideal would be to have a year or two before to evaluate and prepare all the issues and details concerning the project, but the facts say that the immediate never gives up so much ground to what is important, less now that we are in a global health crisis. So most likely, is that it should be continuing to “walk and chew gum at the same time”, that is, keep the organizational models and operations working in optimal conditions while you begin your structural transformation. Most likely, it will also go against time, as the project will generally not receive the go-ahead until somehow it is too late, because in Chile they are not usually carried out as an anticipatory measure to the signals that the industry throws and that are usually expressed in internal complaints and customer dissatisfactions, but rather are corrections that are made to get in tune with the new standards that the competition in the market are setting or give a new boost to profitability and business sustainability when “the ocean is already all red”.

However design in action should not be synonym of absolute improvisation. Leaderships based on previous experience are required, and a sufficient understanding of the technical dimensions, but also of the ethical, cultural, social, educational and transformational dimensions. These capabilities today must also be able to frame and productively manage teleworking.

All this that sounds complex is greatly simplified from a know-how that has been developed in the execution of numerous cases in different industries and cultural contexts, and which has been polished allowing to deploy a transformation method that brings together good practices and at the same time adapts to the local reality of the company that will carry it out. From this experience, it is possible to embody principles that allow structuring the frameworks that govern these processes correctly, and give sufficient intelligibility so that the plans and proposals are correctly adopted by the organization. This is not achieved by the implementation of a technique, that is why we do not speak of excellence in project management, this implies a lot of sensitivity, listening, wisdom, understanding, resolution, openness, boldness, prudence, resilience, patience, ability to build trust and agreements, strength … and of course technical capacity, which together we call master in project management.

Closing

In these notes we have tried to show some important distinctions to keep in mind among those who are starting their digital transformation projects. The topics covered seem trivial, and it is so much that they are often taken for granted. Some statements by top management are taken for granted or believed to be sufficient “align the chakras”. The truth is that this alignment never comes, and if it arrives on time, it is not enough. The reason?, the nature of the problem is another, and it was incubated in the same gestation of the project.

After many exercises, we know that these distinctions are extremely useful, especially when you are designing them. When the designs are ready, it is not so easy to take a step back, and very high costs of all kinds are paid.

Synthesizing the message that we wanted to convey in one sentence:

“Partner, it is not an IT Management project, it is a corporate project.”

Cristian Gomez & Alejandra Bobadilla