(by Sandro Zilli, Innovation Manager - Head of AIDR Observatory for Innovation and Digital Growth) Any entrepreneur, manager or professional, describing the sector in which it operates today, would say that the situation is "evolving", but often this much vaunted "change" it is perceived as something that concerns first and foremost others. With digital transformation, talking about changes in the business world seems almost a trivialization, but this is a mistake that can cost dearly to those who cannot understand its scope and speed.
They are quick and disruptive, forcing organizations in every sector to reconfigure if they don't want to risk disappearing.
Some time ago the American cartoonist and writer Ashleigh Brilliant, about the change said:
"Some changes are so slow that you don't notice it, others are so fast that they don't notice you."
This quote gives a good idea of the reality in which organizations operate today, which is increasingly changeable and elusive.
In the digital age, being responsive and fast is a decisive aspect as change affects all sectors and pushes business to new dimensions. This phenomenon expands the traditional boundaries of companies, making them indefinable at times and creating many problems for those competitors who are unable to adapt.
To respond to the changes imposed by digital transformation, companies are faced with a crucial turning point: renew their way of doing business by developing a different vision and an operating model that integrates culture, people, business processes and enabling technologies.
Even a good dose of creativity can be useful in this complex scenario, so that we can learn to think outside the box and guide organizations through the obstacles of change, going beyond vision, the usual rigor and traditional management disciplines.
It is logical to think that those who have invested in technology and skills development in the past may have an advantage in responding to changes in operations and business models. Unfortunately, this is not enough, however, since among the main skills required of managers today, there is also the ability to understand and use data, in order to grasp clues or weak signals that can lead to identifying the transformations underway. In short, they will have to understand the behavior of the market, even the seemingly inexplicable ones, to anticipate a future that is already beginning to manifest itself. Certainly a very challenging task!
To guide companies to success, it is therefore essential to know this increasingly complex “environment” characterized by key factors that can be summarized in three fundamental concepts: Exponential - Disruption - Leadership.
Let's try to better understand the meaning of these three words and their impact on the framework in which organizations operate.
Exponential
Current organizations, from companies to institutions, have organizational models that refer to hierarchical structures, based on silos, with top-down decision-making flows. Often, they are based on ownership of assets and burdened by a scarcity of talent, resources and technology platforms. Practically an organizational scheme that dates back to the last century, an era made up of economies of scale, stability and predictability. They are subjects structured on a linear basis and therefore diametrically opposed to the exponential paradigm.
Due to this linear configuration, most companies may be unable to keep up with the rapid changes taking place because they are not prepared to respond effectively to changing customer needs. To remain competitive in the discontinuity of global markets, it is therefore necessary a transition to an innovative exponential model designed for a more open and transparent world, based on the abundance of data, technologies, platforms, information, which makes the one obsolete and irrelevant. founded on scarcity.
In practice, the challenge for companies is no longer performance, but relevance, or the continuous ability to adapt to changes by rethinking business models, their operations and the entire customer experience.
Basically, we have gone from a company where the main asset was capital, to a data-driven company where the main asset is data. The companies that are worth a lot today are not so much those that generate cash flow, but those that exploit the ability to manage and use data in order to support strategic decisions, discover critical insights, differentiate themselves and create the ideal conditions to obtain an advantage. competitive.
Extensive research shows that leading organizations in the market are changing faster and faster: the average life of the Top 500 Fortunes has been reduced from 75 to 12 years. In the next ten years, it is estimated that 40% of all Fortune 500 companies will disappear for the benefit of new individuals who are more able to interpret the era in which they find themselves doing business. There is no doubt that in this fourth industrial revolution, those who will be able to leverage exponentially accelerating technologies such as Big Data, IoT, Artificial Intelligence, Cloud, etc. will be successful.
And it is precisely the access to information deriving from these technologies that now makes new winning business models possible.
Disruption
The "Disruption" is that external force that creates a break with the past and the status quo. It includes all the changes that occur when new technologies significantly change the rules of business, the lives of people and society as a whole. We are talking about breakthrough technologies that influence the added value, the value proposition of existing products or services and which are of great interest at this time. Examples are startups such as Uber, Spotify, Netflix, Airbnb that have become, in a few years, a globally successful big company capable of revolutionizing their respective markets. Their intuition was to exploit technologies in unusual ways, creating innovative business models and implementing successful strategies that traditional companies had not previously considered. Emblematic is Netflix's paradigm shift compared to Blockbuster. Some business models, such as the Sharing and the Gig economy, which were previously considered not applicable because they were not economically sustainable, have now become disruptive and successful realities. This happened thanks to the action of innovative startups that have been able to interpret socio-cultural changes and respond in an agile and timely manner to market expectations. Disruption can manifest itself at any time, both inside and outside an organization, in different forms and modalities, just think of the Brexit phenomena, the impact of COVID-19, the entry of exponential technologies, to the action of competitors or to changes in customer preferences.
Whatever the event that the company is having to face, it is required more and more adaptability and foresight.
Leadership
The changes we have talked about take outside the box and rewrite new rules, starting with people, passing through processes and then arriving at enabling technologies. It is necessary to be aware that innovation is not limited to the adoption of new technologies, but is based on the significant cultural growth of all human capital to overcome obstacles and resistances in the transformation process.
This step is crucial because the challenge posed by disruption is the creation of a team game between those who have the task of defining the new directions of the business and those who must make the strategy effective and operational ".
To successfully start the transformation process, it is necessary to have leaders on board who have a strategic vision and the desire to risk, not least, who are able to see the product throughout its lifecycle. Leadership is the key to making qualitative leaps in the business system. Only a leader oriented towards innovation and creativity is able to see in change new opportunities for profit and success for the entire organization.
What should we expect from the near future?
The wave of change is objective, concrete and unstoppable, because it is driven by the transformation of the customer, who has developed digital behaviors in every aspect of daily life. The key to success will be to combine the dynamics of exponential, disruption and leadership with new mindest, tools and new skills.
The digital transformation will enable more agile and flexible models, able to simplify and speed up processes to respond to the needs of the market or of the specific customer. All this will make it possible to create cross-functional business nuclei, where individuals will be enabled to design, decide and innovate. In practice, reference will no longer be made to rigid and hierarchical processes, but to lean procedures that will eliminate bottlenecks and to reference figures enabled to manage the process from start to finish.
This new model will be the only way to address the age-old problem of the lack of alignment between market expectations and business responses.
It is therefore evident that today the difference compared to the past is not given by technology but by the digital mindset, skills and knowledge.
This will redesign the face of organizations and change them drastically (as happened for example for Facebook, Netflix, Uber, Google), restoring centrality to the most versatile and important asset of all: the collective intelligence of their people.