By: Cesar Gon
Named as the biggest challenge by C-Levels today, achieving success in the process of transforming companies into digital has a secret: the generation of business results from the beginning.
In my 24 years at the head of CI&T, I have built a conviction: the more technology gives us tools to change the world, the more the human factor matters. It is the human potential as a transformation agent, to drive evolution, that moves us beyond the results that technologies alone would be capable of generating. This potential, in my view, is realized through the combination of two variables: our knowledge and with which we are connected.
If we think about the current business world and the speed with which it dives into digital with its VUCA nature (Volatility, Uncertainty, Complexity and Ambiguity), the more we realize the need to access and take advantage of all this human capacity. We are experiencing an infinite number of possibilities for connections with other people and access to information sources that multiply our transforming power. When that multiplied power meets a purpose, it is able to achieve the unimaginable in a way that no technology would be able to do by itself.
This is where I come to one of the great paradoxes of the moment: on the one hand, we have this new and expanded human potential, and on the other, the old corporate environment in which companies are still anchored. Companies, especially large and more traditional ones, are not prepared for this new professional profile. There is a huge gap that does not allow organizations to take advantage of the potential that people already have. Packed with human and technological capabilities, companies are unable to access them to achieve the ultimate goal: satisfying the new digital consumer.
Then comes the need for digital transformation, which in addition to the numerous and worn-out market definitions - is nothing more than preparing the company to release and use this potential that is already installed to meet, satisfy and delight its customers. But how? Why has this still not happened? Why don't we feel that, from within our big and beloved companies, we will be able to really achieve that goal and make big changes in society?
To provoke reflections on the subject and present our commitment to answer these questions, we gathered senior executives from the largest companies in Brazil and around the world at the beginning of April, at the CI&T Business Impact Summit 2019, at the Cubo Itaú headquartersin São Paulo. Together, we built new connections and polished our knowledge on the topic. I wanted to sharemy insights in the hope of helping those who are facing the enormous challenge of transformingtheir company from the 20th century - the industrial era, with a focus products - into the 21st century - the information age, or digital, customer-focused.
The big challenge?
During the event, we conducted the Business Impact Insights Survey in partnership with the Opinion Box. We analyzed the responses of 200 leaders present at the event about the digital transformation processes that they’re implemented at their companies, and we arrived at interesting results. 70% of C-Levels in large companies believe that the biggest challenge they face today is to achieve success in their transformation processes. Again, even in companies with processes already installed and reaping some good results, the gap I mentioned above is still showing itself strongly.
"Companies are made not to be changed. The antibodies are very strong."
Paula Cardoso, CEO of Carrefour eBusiness, on the panel at the Business Impact Summit
The other result that caught our attention is linked to our commitment to making the digital transformation effective and sustainable: generating business impact during the process. Only 12% of respondents reported generating business impact as a driver for starting their transformation. While the majority, 24%, pointed out the improvement of products and services, and another 23%, the maintenance of market leadership as their main drivers.
In our view, there is no way to sustain a digital transformation - whether with the objective of improving offers, maintaining leadership or solving other specific pains - without first thinking of generating quick results. In other words, no major goal, no true north digital will be achieved without companies reaping tangible business impact on their journeys in the short term. Therefore, the 12% that bet on impact generation are on the right path.
Understanding the Problem
There is a lack of answers or even tangible advances when it comes to digital transformation. Within the last 2 years, over 6,000 people (4,000 alone in 2018) came to visit us at CI&T.
The surprising thing is that they were not exclusively the usual IT professionals, but instead senior leaders from the most diverse areas, being 108 CEOs and, most of them, from large corporations, leaders in their segments.
Listening to these top executives, talking to our main customers and analyzing these discussions in depth, we find three main pains that cause companies to start their processes and invest in digital transformation. It is these pains that we need to focus on:
1 - Companies that need agility at scale
Mainly formed by highly-regulated traditional companies, with a strong command and control bias, such as banks, this first group feels tied to very large technological platforms and overly bureaucratic processes that make them slow to meet consumer needs and to gain business agility in scale.
2 - Companies having difficulties in becoming a customer center
This second group is made up of giants like iconic brands, such as Coca-Cola and Nestlé. They know a lot about their business, they know how to at focu on products, but they have a hard time transmiting the company's focus to the consumer because they have operations designed to be very far from them in the chain. Coca-Cola does not know exactly who consumes Coca-Cola. Nestlé has the same pain: discovering, among the millions of Brazilians who appear as numbers in spreadsheets, who their customers are, what they like, what they believe, what they want. Also part of this group are companies like insurance companies that know little about the client because they work through brokers.
3 - Companies that need to take a leap forward, find the path of disruption
The third group includes companies that already see the possibilities of this new set of exponential technologies, and they typically have an idea of the opportunities and their chances of disruption. They want to develop new business models and generate new sources of revenue, and find the new one billion dollar business. These are the motivators who embark on the digital transformation journey. However, there is a lack of the ability to develop human potential and the ability to articulate that potential with technological possibilities.
Your company can identify with one or all of the pains and, as a rule, the progress of the journey ends up triggering the need to work and improve some of the other fronts. The important thing here is to define guidelines at the start.
The next step
With that clarity, it is time to move towards the solution by building a step-by-step transformation journey that does not intend to impose drastic changes in culture, practices and processes. In our experience, this doesn’t work. Instead, we propose the Lean Digital Transformation (LDT) model, an articulation between a solid Lean base, combined with Agile methodology processes and practices along with Design Thinking , capable of paving sustainable paths of digital transformation that generate positive business impact.
The result of 13 years of intense learning, LDT is based on client focus, collaboration and the gradual establishment of multi-disciplinary and autonomous teams, responsible for building experiences for consumers in a fast, quick and continuous manner. Thus, little by little, molds are broken, and the new way of digital thinking starts to take place.
This transformation model has brought excellent results to our customers. This is because of two crucial reasons: the first is that the design of the transformation journey is carried out alongside the cliente, respecting their main pains, specificities and real implementation conditions. Secondly, is the aforementioned strategic focus on generating business impact at the beginning of the transformation journey.
"It is very easy, in large companies, to get lost in processes. They are used to the traditional model. And we understand, that five years ago, that we couldn't do this alone, and we need to plug in the right partners".
Carolina Sevciuc, Nestlé's Director of Digital Transformation, at the Business Impact Summit.
Business Impact: the missing digital transformation link
As I said above, in my view, what is largely missing from the digital transformation process of large corporations is the business impact. I'll explain why. It doesn’t matter how many processes we establish or how many playbooks with adopt to improve company culture or teach how to make better decisions, it’s will not be sustainable if it doesn’t bring tangible results quickly. Without a positive impact on the bottom line in a short period of time, the program will cease to exist.
"(When we started to implement the new process), we found that, before, we had a lot of fake things that carried all the fashion titles and that made us believe that we were super transformers. But when it came to reaping the business impact, we were not as effective as we could be. "
Fabio Mota, VP of Raízen in a lecture at the Business Impact Summit
The generation of impact on business in the short term should be a cornerstone to be able to maintain and expand all these gains at scale. And this is the thesis that we are obsessively pursuing alongside our customers in their transformation processes. In very short cycles, a maximum of three months, the journey of digital transformation must deliver value. If you fail to do this and show that it is improving business, you will fail.
"The big fear of big corporations, especially when they are publicly traded, is 'am I going to be able to deliver my quarterly results without prejudice to my investor's assessment?' The transformation requires a very large investment, a change in the method of work and a very central customer focus. And, in my experience, the first thing we have to do is know how to show results of the process. "
Ricardo Guerra, Itaú CIO, on a panel at the Business Impact Summit
After this talk from our client Ricardo Guerra about the process we built together at Itaú, I allowed myself to re-read a famous quote from Jeff Bezos, Amazon's CEO, about day two, of the the beginning of the company. For me, day two of the digital transformation lacks impact. In my version, the sentence looks like this:
"Digital Transformation without Business Impact is stasis. Followed by irrelevance. Followed by excruciating, painful decline. Followed by death. "
Start at the end
Here, I quote a quote from Neil Armstrong that I read in an inspiring visit to the NASA headquarters in Houston, TX during my stay in the city following the Lean Summit 2019:
"Start at the end and work back."
If we really want to reap results for the business, we have to start a digital transformation program by defining the impact we want to generate. These impact must be related to remedying the main pain points (mentioned above).
"You must pull a business unit and isolate it, work on the basis of experimentation, with short cycles, understanding the client's need, leveraging results, showing that you can grow the client base quickly and monetize in a different way what the client really values. Setting up some successful cases, this draws a lot of attention. So, you speak the shareholders' language. Start from the point where they value it and show that you are not going to give it up. "
Ricardo Guerra, Itaú CIO, on a panel at the Business Impact Summit
For this regressive planning, however, it is necessary to combine the disciplines of Strategy, Design and Engineering and to design the journey that will lead the company to achieve the result it wants. These disciplines already exist within companies, but they are decoupled, communicating through corporate molds. While strategists generate books with interesting visions that get shelved, designers create campaigns that win awards at festivals and engineers develop great technology architectures, none of them generate real impact for the company. It is time to take advantage of the transformative potential of articulating these competencies in a Lean Digital way.
3 branches of knowledge: strategy, design and engineering
In addition to the central thesis generating business impact, it is necessary to develop the competence to scale this model. This is, without a doubt, a great challenge. It is not trivial to find the harmony between the vertical of working by value stream in multi-functional, autonomous teams, and the horizontalof scale, of transforming this way of operating into a standard in the company as a whole.
Thus, we revisit and reinforce the bases of our LDT model, establishing four pillars that really make the transformation happen on an organic scale. These include:
1 - Customer centricity: the entire company must move in this direction.
2 - Creation of small autonomous teams: it is not possible to achieve speed and agility of digital or to transform the company from end to end without an operation based on multi-disciplinary and autonomous teams with exclusive dedication to a value stream.
3 - Audacious goals: to innovate, it is necessary to take risks, to have the discipline to bet higher than you will be able to achieve. This is definitely not a typical feature of traditional corporate environments.
4 - Ability to generate rapid cycles of experimentation to create constant learning: it is essential that there is an environment conducive to experimentation and the learning of each team in the process must be available to others. There must be exchanges and collaboration to build collective intelligence quickly and steadily.
These four pillars are non-negotiable and must be at the center of any strategy to accommodate methods, processes, tools for the implementation of a consistent transformation.
Results for customers
Finally, to give concreteness to our thesis, I quickly present some cases of large customers who, already at the beginning of their digital transformation processes, were able to install digital capabilities and move the pointers of business impact quite significantly. They all designed the journey using the LDT model, establishing the main pain and defining what business impact they wanted to achieve.
Coca-Cola: with the installation of new agile work processes, it was able to reduce its lead time by 18 months to just three months.
Ânima Educação Group: in the first four months of work, it managed to reduce the time to develop new digital solutions from 30 to eight days, which generated a significant increase in its NPS (Net Promoter Score). In addition, the first solution developed following the Lean Digital methodology healed one of the main pains of the business, which was the process of online re-registering.
Blue: gained agility in the creation of new products and services: from 11 to three months. The optimization of the solutions also brought good results, such as the increase of 30% in the number of participants in the TudoAzul Advantage Program and 39% in the total of miles redeemed in the period of 18 months.
Vivo: already in its first work cycle, in the first 90 days, it managed to double its conversion rate and use of its B2B platform.
Raízen: in six months, the conversion rate for the use of its plants doubled.
I hope, in this article, that I have fulfilled my purpose of bringing insights capable of helping you unlock the transformative potential of your company. And, returning to my visit to NASA, I leave here a provocation:
"We will use what we learn on the Moon to take the next giant leap - sending astronauts to Mars.”
Jim Bridenstine, NASA Administrator