by: Cesar Gon
Over the last few months, we have been receiving a lot of inquiries from executives looking for something far beyond digital solutions to their challenges.
They’re looking for ways to make their companies more digitally-centric. We get more and more inquiries each day, which is a clear indication of the impact of new technology in today’s business. The market is comprised of the following: There are the companies who were born in the digital age and are creating innovative products and experiences at a very fast speed. Then there are the traditional companies who are trying to reinvent themselves. And in the center of both of it all is the consumer, whose demands, needs, and behavior often changes.
According to The Agility Trap Research, who conducted the “2016 Global Executives Study”, 82% of CEOs across the globe believe that it is necessary to accelerate company transformations in order to keep up with evolving industries. It also showed that more advanced markets can be found within the U.S. and Europe, where 52% of companies are already establishing new digital projects.
Another research by the Enterprise Strategy Group (ESG) called the “IT Transformation Maturity Curve” study, showed that out of 1000 CIOs worldwide, 71% reported that digital transformation is necessary for their business to remain relevant and have competitive capabilities in the new market. While only 5% of CIOs believe that they are prepared for such a transformation.
Some executives have reported having tried or implemented changes meant to create a more digital environment like outsourcing solutions for marketing, strategy and innovation issues and projects, which may work but not necessarily bring on transformative change or long-lasting results. Another common practice is to look to tech giants like Spotify and Google for inspiration. Though this seems impractical since looking at companies like this only shows the end product. Studying tech juggernauts, you may learn about their business model and how it works for them, but it doesn’t show you how it may work for you or your organization. Some of these organizations were “born digital” and may not have had to undergo any transformation, which may be different from your own company. Their reality may not necessarily be your reality and vice versa.
Often, companies hire consulting firms who flag the necessity for a digital transformation. These firms then promise to help modify your business model, though this approach doesn’t often create a sustainable change. In a short time, the new processes are forgotten and people return to the old and tried ways of getting things done. This after spending a good chunk of the budget and teams who have invested time and effort for something that comes short of a true digital transformation.
The path that transformed CI&T into digital
From our experience, to carry out the digital transformation in so-called “slow by design” companies, it’s necessary to create a totally new operational structure. These “slow by design” companies, coined by Eric Schmidt and Jonathan Rosenberg (CEO and SVP of Products of Google respectively)— refers to enterprises designed to be reliable machines to minimize risks.
“The problem is, most companies today are run to minimize risk, not maximize freedom and speed. Information and data is hoarded not shared. Their design is a vestige on an era when failure was expensive and deliberation was a virtue. Decision-making power lies in the hands of the few. In other words, most companies are slow by design! This doesn’t work in the Internet Century.”
Eric Schmidt, quoted in How Google Works, Schmidt, Rosenberg and Eagle, 2014
CI&T wasn’t born digital. Although we are a tech company, in our first decade we were a software factory, following traditional industry standards. Our philosophy was based on command and control and we had 450 complex practices to do the job. When we felt the necessity to adopt a more agile and faster model, the result was a gradual and productive break down of silos, bureaucracy, and processes, based on a Lean system. Through a set of simple processes, this methodology embodies a new decisive way of thinking: it standardizes the way problems are solved. The problem is approached the same way—whether the issue is the with the reception coffee machine or if the problem is how to enter the Japanese market. The way to solve each dilemma is the same: analyze the context, discover weaknesses and strengths and perform a diagnosis.
Lean has as a fundamental principle to identify what is valuable to consumers and deliver it in a continuous way. The consumer is always in focus. The management system also aims to reduce waste in production through mapping the value flow and using the pulled systems, which results in a significant reduction of costs. The other principle focuses on experimentation during product development. Experimenting in short cycles allow teams to discover the best solutions and allow them to develop and validate with the target audience quickly.
"One of the secrets of an organization's success is the way it reflects on its problems and how it learns from them"
John Shook, Managing for Learning, 2008
Applying Lean principles in the digital context within CI&T has resulted in a significant reduction of work processes. We went from 450 to 32, which has profoundly changed how our team’s work, as well as, our company culture. We became more agile and we gained the speed that we were looking for. Our digital base was then created, which we call the “Lean Digital Transformation.
Ensuring a sustainable transformation
Lean Digital Transformation proposes a gradual, secure and well-structured transformation into a journey that aims at constant improvement. Having a clear vision of the goal in terms of digital maturity, a three-month plan is outlined prioritizing problematic areas and projects that aren’t being able to be solved satisfactorily with traditional practices. Using Lean Digital methodology, with its short tests and learning cycles, you can find solutions quickly and generate value at the end of every quarter to ensure positive revenues.
The results and output of Lean Digital methods catch the attention of shareholders, as well as, managers, who are able to deliver better results, while employees see their work as something more valuable. With everyone seeing the positive transformation using Lean, all members who are involved then become advocates and get others in the organization involved. Better and faster results along with growing revenue and a more streamlined way of working, the gradual change to the company’s culture and digital transformation then takes effect.
An unexpected challenge
The moment transformation starts—when change within the teams occur, we realized that we had a new challenge: changing leadership practices. Leaders saw the new ways their teams’ were working and yet they continued to carry out traditional thinking and practices. Leaders should be the driver of the transformation, therefore it is their responsibility to influence the attitudes and mindset that will make changes possible.
We found out that leaders generally resist changing routines. Unlike a traditional management system, in which the leader is the distant figure who delegates tasks and waits for results, Lean brings leaders to work along with the team throughout the process. Through specific training, managers are trained to be available and be apart of the practice and “in the trenches” with their team—leading and helping solve problems.
A continuous advantage
At CI&T we believe that companies who learn and applies Lean with digital will successfully and continually have a competitive advantage over their competitors who continue to operate within the traditional model. Lean Digital allow organizations to have the powerful tools to achieve speed at scale while producing quality products.