Peter F. Drucker is considered the father of management and is one of the most studied authors in business schools. One of his many teachings in the form of a quote is that "the best structure will not guarantee results or performance. But the wrong structure is a guarantee of failure". This reflection is more than appropriate for today's topic, which is none other than the latest 2020 Global Digital IQ study by PwC USA on the return on investment in Digital Transformation, and the figure of those who are successful in the field.
The consulting firm calls them "transcenders", i.e., those who go beyond the usual practices, and who are precisely those who are the most successful. Those who know that transformation is a question of structures, not technology. This explains to a large extent the gap between expectations and reality when it comes to assessing the "payoff" of these processes, since on average the former are much higher than the results. Instead of analyzing the causes of those who do not achieve their goals, the study takes note of what those who experience higher rates of return have done correctly.
The headline finding of this report makes it clear: only 5% of companies are doing everything they can to get the payback from digital. "To thrive, not just survive, you will need to navigate the maze of economic uncertainty and the breakneck pace of digital." That winning 5% are the "transcenders," defined as those who "don't dabble," but "dive in," and for whom their daily "lunch" is the economics of disruption: mergers and acquisitions, business model changes, or leadership changes at the senior level.
The data were obtained from a macro-survey of 2,380 executives in 76 countries, from companies with annual revenues of between 250 million and 50 billion dollars. From their responses, PwC analysts have summarized the restructuring (i.e., looking for that "better structure" that Drucker proposed) needed to make the most of Digital Transformation in four guidelines: change of command culture; serious investment; putting people first; and building resilience. Let's look at them in some detail.
1. Change the command culture
Transcenders "don't just talk big, they act," the study states. So much so that the vast majority of those at this level of success (84%) not only encourage but de facto demand that goals be achieved through collaboration and cross-functional work. For them, the concept of "digital" is part of the corporate strategy, and is not a concept that is tied to additional efforts or specific lines within the company. They capture ideas, work on them and drive the business forward, keeping digital in mind most of the time (on average 96%), and encouraging innovation: in 94% of cases, leadership does not stand in the way of innovation.
2. Investing "for real
Digital Transformation is NOT technology, but it must use technology, and the best possible technology. Transcenders invest 33% more than other companies in technology, processes, operating models and ways of working, precisely to reach the stage of digital supremacy. Digital investments in these cases are aimed at growing the business, not cutting costs as seems to be the mandate for companies that are not in the top 5%. That is why three quarters of transcenders derive significantly higher value from their investments in technology and new ways of working than other companies.
3. Putting people first
It is clear to them. Transcenders claim to have more innovative professionals, more active in driving the business and more focused on the positive impact of their innovations. So they devote more resources to skills enhancement, new ways of recruiting professionals, and attracting talent. And retaining that talent, motivating where necessary, and continually investing in training processes, as more than half (63%) of these digital leaders report.
4. Resilience: we live with uncertainties
Compared to their competitors, transcenders are not uncomfortable with change. In fact, their corporate DNA leads them to navigate change and "be ready for anything". They know that Digital Transformation is a process that does not end as such, and so they learn from challenges knowing that change, de facto, is the constant. Parmenides beats Heraclitus: two out of three transcenders have experienced a major disruption in their business in the last two years, and the result has been that they have become stronger.
Embracing Digital Transformation is a matter of predisposition, not inevitable suffering. That is why Drucker's lessons serve us better today than ever: because the necessary structure involves the entire business in a cross-cutting way, and not departments or highly specialised areas.
Photo by Joshua Rodriguez on Unsplash
