"The seas generated by a 40-knot wind are not twice as violent as those of a 20-knot wind, they are seventeen times more violent." The quote comes from the non-fiction novel The Perfect Storm, by Sebastian Junger, and popularized in film by the movie of the same title, starring George Clooney as the captain of the Andrea Gail, Billy Tyne. The phrase can well be applied to the digital environment, because it allows us to quickly visualize the exponential nature, the growing complexity of the failure to adapt to the digital transformation process, which could lead to a fatal outcome.
The use of climatological terminology is also linked to one of the documents that most accurately evaluates the state of the economy in its degree of transformation, and with which we wanted to end the year. It is not for nothing that it was authored by SAP, the owner of the famous business software suite of the same name, which, due to its size alone, is able to enjoy data from almost every sector of the economy, and from an endless number of companies belonging to hundreds of branches of activity.
This firm has its own model to describe the impact of digital and technology, called Digital Storm. According to its authors, there are three possible stages in this process, which affect all companies without exception:High Winds,Severe Storm andHurricane. The three phases can be understood as different degrees of approach to the phenomenon, but their identification is important for a parallel estimation: what companies focus on in their digital transformation depending on the stage in which they are identified.
To bring the concept down to earth, let's take the case of the Hurricane stage. These are companies that are primarily consumer-focused, such as banking, retail, telecommunications, media and entertainment. For them, the most important thing (the focus of attention) is the customer/employee experience and innovation in the business model. On the other side would be the Strong Winds stage, in which we find intensive industries such as mining, gas, oil or chemicals, which are focused on business process innovation and workforce productivity, through the Internet of Things (IoT) and predictive capabilities. Halfway through we would find the Severe Storm stage, in which we find automotive, healthcare, transportation, public sector and food companies, among others.
The SAP document also delves into the two main vectors of digital transformation: Top Down, i.e., those that go from the top of the company irrigating all levels downwards; and Botton Up, or those processes that are born from small or medium-sized initiatives throughout the organization and that culminate in reports to the C-level of the company, usually CIOs or CTOs.
The Top Down format is determined by an instruction from the board or CEO, and requires changes across the value chain, value proposition and revenue model, with a well-defined long-term vision that fuels funded projects. Any option is valid to drive change, including mergers, acquisitions or strategic partnerships, and is also conceived as a long-term journey.
The Bottom Up model prefers to focus on specific objectives, which can range from productivity to process overhaul. In these cases, there are an infinite number of initiatives, but only a few (we are talking about between 10 and 15) are financed and germinate into projects with a clear ROI, mainly because the emphasis is on quick wins. Hence, it is a popular approach in asset-intensive industries such as those identified within the Strong Winds stage, where digital leaders and experts focus on initiatives aimed at radical changes in productivity and employee engagement.
Which is the better of the two models? According to their authors, both present their own challenges and opportunities, but success will be defined by how well planned, prioritized and executed the digital initiatives are. In fact, companies that truly intend to transform organizational culture are committed to both models simultaneously, combining strong digital leadership with support for digital champions in the various business functions of the company.
Be that as it may, the trend is univocal: the digital storm is affecting all industries. And the more they insist on not seeing it, the more "perfect" it will be for them. In other words, it will be more difficult to resolve.
Photo by Simon Buchou on Unsplash
