Digital transformation is not a problem, but the solution to problems.
The world today is not the same as it was ten years ago. Gone is the era where big oil companies dominated the world ranking of the most valuable companies. Power has gone from the “magnates” of oil to the “geeks” of Silicon Valley, where the top 4 positions are occupied by technology companies such as Apple, Alphabet (with its best known brand Google), Microsoft and Amazon, as established the Fortune 500 Magazine.
Outside the Stock Exchange, there is more evidence of this economic transformation. Airbnb (US $ 30 billion), the online accommodation marketplace, is worth US $ 5 billion more than the Hilton hotel chain (US $ 25 billion). This is despite the fact that 1,600 people work on Airbnb, while 169,000 work at Hilton. That is, with less than 1% of people, Airbnb generates an additional US $ 5 billion of value. It is not that the world is changing and that we are in the midst of a “digital revolution” – the world has already been transformed!
This change of environment represents a particularly important challenge for large traditional companies. Companies that have had a successful track record, including, reaching market leadership, but whose business models and work philosophies have remained practically unchanged during the last decades. The fact of having triumphed in the analogue era does not guarantee the triumph in the digital age.
The importance of the Director of Change in companies
In these times, in the United States and Europe there are many companies that contemplate and have in their organizational structures the position of Director of Change or CTO (chief transformation officer.). But why do many large organizations incorporate this role or this important function into their organization?
First, because the vast majority of companies are immersed in a process of transformation. And, currently, around 85% of all companies worldwide are generating changes related to digital technology.
The second reason is because most transformation processes fail because managers or managers do not take into account the basic principles that govern the processes of change. In this case, the digitalization of the company, the new organizational design, the new information system or the new manufacturing processes, for example, are only the means, but the goal is to do different things.
The third reason is that change management requires the knowledge, capacity and methodology of a leader experienced in innovation and development of this type of project, as can be done by the so-called CTO. This is a charge that must be built internally in organizations.
In the last times; demand has grown exponentially in the same way that new disruptive businesses do. And in this way, in all sectors, the scenarios that once seemed improbable are becoming too real, which has led the Board of Directors and Management of companies to accept the word “transformation” as something natural. And this term is used almost for everything, because there are many types of transformation: organizational, strategic and, of course, digital.
The shift towards digital transformation
Do not confuse digitization with transformation. This last word is the most misused in companies today. So much so that, often, companies use it to refer to the introduction of any technology without implying a major change in the way of operating. Therefore, before I would like to differentiate both concepts.
Digitization consists in the application of new technologies to an activity to improve part of the things that are already being done: sell, give better service to the client, etc.
Digital transformation, on the other hand, is something that goes much further, and would imply a new business model or a profound change compared to the current one. It is also based on technology, but it is only facilitating change. Conceptually, there are organizational (also known as organic) and strategic transformations, which imply a change in the business model.
The great convergence
The great convergence, which is occurring through the confluence of data (data engineering, especially through Big Data or Analytics), people (in social networks), devices that increase mobility (devices or wearables), Internet of Things ( IoT) and systems (cloud), is driving digital business. Which is the use of digital technologies to create new products, services and experiences of smarter customers through new models of operation in organizations.
For this reason, digital transformation threatens traditional ways of doing business. In this sense, most companies have embarked on major projects of change, and are making significant investments to achieve the long-awaited digital transformation, acquiring greater importance than before the role of the leader of change or the new CTO: chief transformation officer.
One of the most difficult tasks of the CTO (chief transformation officer) is to help people to unlearn the things they have been doing regularly before starting to make new ones, being aware that unlearning is much more difficult than learning.
Also, the leader must be empowered by the highest executive or CEO of the company. But the CTO must not only be empowered by the top executive, but its performance must be closely linked to the success of the project, for which a scorecard must be available to monitor and control the degree of progress of the change. And as I have written in other articles: “There is only what can be measured”
Why do the changes in the companies fail?
There are several reasons why the transformations are frustrated, but the main ones are:
- The lack of commitment of the manager or Board of Directors with the process.
- The resistance of people to change.
- The culture of the company.
The role of the managers or presidents of the company is critical for the success of the transformation projects. In the same way, it is very important to know about the commitment of the top executive of the company in the transformation, for that reason, it is worthwhile, before beginning a project of this scope, to always ask the CEO how much time and effort are you willing to devote to this process? If the answer is lukewarm and has to do with a “depends” or a “not a lot”, you should be advised that it is best not done. But if you answer “this is a priority issue”, there are many possibilities to succeed. Therefore, the manager or general manager must be totally convinced that the project is not a good idea, but an imperative business.
Culture as a challenge of digital transformation
On numerous occasions, companies and their CEOs tend to forget, perhaps because of obvious, what is really important: the culture of the company. We should be convinced that the main challenge that organizations have is not the digitization of their businesses (that is the medium), but the end is the transformation of their culture; that is, that people do other things and in a different way.
Statistics show that the problems that fail changes always have the same etiology: the culture or behavior of people. Change management experts point out that “nothing changes if people’s behaviors do not change” And is that the change is a door that opens from within each of us, and it is each individual who decides to open it or leave it closed. As the guru Don Tapscott would say: “Technology may open doors, but it can not force anyone to go through them”
Culture is a concept that comes from anthropology and that translates into a set of rules and values of a company that are manifested through behavior. In this sense, it is the non-contemplated variable that unforeseeably alters the expected results of a business transformation. And it is always the most important variable of success in any business transformation, because it can act in two ways: as a catalyst or as an obstacle.
DO YOU WANT TO THINK ABOUT IT?