Digital transformation: A calm approach
Most people agree on the urgency of digital transformation, but some panic and rush to reinvent established processes. Alithya takes an unambiguous, yet reassuring look at the issue, reminding us that innovation is not a new phenomenon and that it remains a challenge of skills.
Technologies, data, processes, and methodologies are all excellent tools, However, transformation really begins when organizations and their teams broaden their thinking, skills, and limitations at every stage of the life cycle of the company which they serve.
In recent years, the concept of digital transformation has been communicated in pervasive and often radical terms: transform or die! You have to personalize customer experiences, create new business opportunities, automate operations, and renew your technology infrastructure. Add data, new management practices, and more to the process, all driven by transformation of a business model based on clear strategic objectives. And don’t forget about manpower shortages and generational gaps. All in all, it’s a balancing act that managers want to demystify by going back to the basics.
Humans have been innovating and perfecting since the beginning of time, The same goes for organizations. The innovation cycle has been studied for more than 80 years, going back to economist Schumpeter who, in 1942, referred to the notion of ‘destructive creation’ in his book Capitalism, Socialism and Democracy. To quote: "The problem that is usually visualized is how capitalism administers existing structures, whereas the relevant problem is how it creates and destroys them.
Innovation: a challenge that has been around forever
Innovation concerns products, services, processes, and business models. Even business models are born, evolve, die, and are resurrected, IBM has moved from selling servers to consulting, while Apple has evolved its business model to offer online services. And don’t forget the sharing economy, which is undermining the taxi and hospitality industries.
Innovation is also part of a business cycle that discovers, designs, develops, markets, and improves. Business intelligence and the arrival of new approaches such as creative thinking (design thinking) or iterative methodologies favors the emergence of new opportunities, reduces failures, and plays a part in acceleration of the cycle.
Additionally, dissemination and adoption cycles help spread innovation in the marketplace. Customers discover a new product or service, they evaluate it, buy it, and use it. Internally, what we refer to as ‘change management’ is a similar process. Using Customer Relationship Management (CRM) tools, digital marketing, or online distribution can better target and customize an offering, accelerate its marketing, and facilitate feedback between the company and the marketplace.
Increasing pressure and accelerating cycles
It’s a fact that knowledge is acquired faster and information is transmitted more quickly in today’s world. Additionally, greater availability of capital facilitates investment and accelerates the lifecycles of technologies, products, and organizations. A majority of innovators agree that one of the main drivers of these cycles is competitive intensity, particularly when the arrival of certain technologies breaks down entry barriers for a sector of activity,
Over the last 30 years, with the emergence of the Internet, the transportation, banking, telecommunications, media, retail, and travel sectors have all had to evolve. The acceleration of new developments means that few sectors can continue to operate in the same way that they have been doing. And a key part of the solution lies in skills.
The strengthening or obsolescence of skills
It’s interesting to note that a company's inability to adapt to technological change is a greater source of organizational mortality than economic factors (1), It’s been shown that the principal cause of organizational mortality is not tied to economic cycles as much as it is to skills obsolescence as a result of radical technological change in the industry. When technological innovations and new players render business skills obsolete, the market changes and some big players tend to disappear to the benefit of newcomers.
Among the skills at risk, one can first think of market knowledge. Customer behavior and expectations change with new competition, so we need to rediscover customer and competitor behaviors and analyze them continuously. That’s where the use of data makes great sense, However, it’s still necessary to know how to interpret the data and, above all, use it to generate actions, opportunities, and better anticipation
New technological tools and methodologies are also shaking things up. A system administrator who has been viewed as a technology ‘expert’ for 10 years no longer is, and project managers must relearn new methodologies, The addition of new expertise and the transfer of skills is essential, without creating generational conflicts between old and new. Change management is the key to bringing such transition to fruition.
Finally, the ability of a management team to clearly recognize and endorse these changes, particularly within the business model, is absolutely essential for the transformation process to begin. At that point, among other options, the opportunity presents itself for integrating advisors and leaders from other industries into the management team in order to adapt the business model based on know-how and a variety of different experiences. But it’s important to legitimize their efforts while allowing them to achieve their objectives.
In order to fully address opportunities for innovation and transformation, pragmatic and intelligent guidance plays a vital role in adapting to technological and human change. Alithya not only looks at transformation from an IT perspective, but above all from a strategic and human angle. Our teams include specialists with rare skills who have spent many years serving our clients’ needs, and we assist management teams with their strategic planning and alignment in order to foster sustainable and profitable transformations.
(1) ANDERSON, P.; TUSHMAN, M. L. (1991). Managing Through Cycles of Technological Change. Research Technology Management, 34(3), 26-31.