Enrique Dans
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Enrique Dans

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Moving the discussion on digital transformation forward

Digital transformation is deeply strategic and has much more to do with leadership than with tools, and those who do not understand that will waste resources and time, time that, given today’s competitive dynamics, can be critical for the future of a company.

The technology industry lives by inventing terms, popularizing them through consultants of various types, and marketing them as magical solutions. Until a few years ago, the oracle that invented these terms and who I imagine wearing a tunic and funny hat, lived atop a mountain and probably had very little bandwidth for his crystal ball, meaning all he could see were acronyms: BPR, ERP, CRM… each more urgent than the previous one, with endless articles about how this or that competitor already had it and we were going to be left behind. All managers are fed up with seeing an infinity of “not important, but urgent” questions from the technology field involving large projects that everyone in their industry is adopting as if there were no tomorrow … and which, in general, resulted in calling in a consultant to install a particular tool.

There is no doubt that many of these ambitious projects have played a key role in modernizing companies at all levels. A company without a centralized system that allows it to manage its flows of information, with departmental silos that prevent a global vision of the business, with systems that do not operate in real time but in batches, or where it is impossible to obtain an immediate and 360º portrait of a client is stuck in prehistory… or not. Unfortunately, there are still many companies of all sizes out there that have not taken these steps that allow a business to be run properly, and there are even companies — I swear it — still using 3.5" floppy disks.

Archeology apart, the problem arises when we see digital transformation as just another fad, and call in the consultant to install the nth tool in a long, expensive and painful process. Not this time. Digital transformation is not a magic suit you put on and that turns you into something else. Digital transformation is that, trans-for-ma-tion, with all that entails. Digital transformation begins by transforming oneself, because if you do not, you will not fit into the company that has been transformed.

Digital transformation requires a high degree of support from top management and the full commitment of the organization. Transforming yourself is not easy. To transform is to stop working in a number of ways and adopt others, to leave your comfort zone. If you do not see that transformation in those who lead your organization, you will not believe it, and it will not work. A leader who takes notes with a pen and paper and asks for e-mails to be printed out will not be able to lead a digital transformation process, however much authority they have.

So just what is digital transformation? Quite simply, adapting a company to its environment. Companies are surrounded by external entities, starting with their clients, who insist on being in a relationship with them in other ways, through other channels of communication, through other mechanisms: digital. If what I use to relate to the world is not even email, but social networks and instant messaging, I will want to relate to companies that sell me products or that provide services through that channel … and not to bother me incessantly with offers and proposals, but to be there when I need them.

This opens the way to WhatsApp-managed call centers and similar tools, the development of increasingly intelligent chatbots, and interaction processes in which automation and the absence of dialogue with a person become advantages.

To accommodate these new channels of communication, which generate a torrent of data in digital format, companies have to be transformed internally. This means moving to fully digital processes, ending the use of paper and streamlining operations. It requires redefining the concept of work so that it involves working from where one wants and providing a measurable output that defines its value: less hierarchical, less bureaucratic, flatter, more agile and more distributed companies that redesign their workspaces to turn them into pleasant places to facilitate interaction with open areas, shared infrastructure for meetings, private conversations, places to concentrate, to take a rest. It means redesigning spaces to maximize screen space, the electronic desktop, and reducing the size of the physical desktop.

Finally, digital transformation involves rethinking the business model to try to extract the fundamental benefit of the internet: the reduction in transaction costs and coordination. That usually implies turning everything into platform that can be, which means, within limits, being able to establish the rules of that platform. Not all companies will be able to become platforms and the vast majority will have to participate in the platforms created by others who understood it before: the transformation will redefine many industries in the future.

Misunderstanding the nature of digital transformation, waiting for somebody to recommend a tool or procrastinating because you believe things are going well and you do not need it is something that, in the future, will have a high cost, and may even mean the disappearance of your company. Many companies that we know today and have as a reference in their industries will disappear precisely because they will not be able to carry out their digital transformation, and many of these cases will be very painful, with loss of numerous jobs and large economic losses.

The discussion on digital transformation at the corporate, non-academic level has to go much further. At the moment, companies are divided into those that have already carried out their digital transformation — or because they were born as digital — and those who do not understand it, those who remain skeptical, waiting to be sold the latest tool and who seemingly prefer to remain in the dark ages. As the saying goes, you can lead a horse to water, but you can’t make it drink.

(En español, aquí)

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On the effects of technology and innovation on people, companies and society (writing in Spanish at enriquedans.com since 2003)

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Enrique Dans

Enrique Dans

Professor of Innovation at IE Business School and blogger at enriquedans.com

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