Digital Transformations

No digital technology can replace managers in driving change or introducing simplification.

The digitization of unnecessarily complicated processes / misunderstanding automation with transformation, introduces the risk of radicalising obsolete practices, making them even more complex and reducing the possibility of changing them.

People skills, process simplification and then the adoption of digital technology  are the essential ingredients. Digital Transformation (DX or DT) is increasingly the undisputed protagonist of technical and managerial literature.

This attention given to the opportunities offered by DT, a belief in the thaumaturgical power of digital technology in solving problems and achieving corporate objectives emerges. Before evaluating enabling technologies to be adopted, it is advisable to ask yourself if your organization is ready to face it, decide where and at what depth to apply it and fix its expected value.

It is therefore necessary to analyse whether the operational models adopted by the Company are adequate to the context, to the opportunities offered by the market -  to the needs of the Customers.

Coping with complexity by fighting complication

Complexity is an external  factor, specific to some industrial sectors, markets or regulatory contexts in which the Company operates. Conducting a business in a complex sector requires strong skills, a focus of internal structures on common objectives, operational dynamism and streamlined decision-making.

Complication is an internal factor, independent of the context in which the Company operates. It is often useless and therefore can be harmful. It derives from successive sedimentations accumulated over time in terms of processes, behaviours, structures, roles and procedures that are no longer necessary and appropriate to the context. Sometimes it is even generated by some functions within the organization itself, to affirm their existence.

Companies that operate in complex sectors and who react by introducing excessive complication internally are destined to fail, or in any case face economic losses. The internal complication is in fact among the main causes of:

• Lack of listening to the customer;
• Slow decision and reaction times;
• Conflict in the relations between functions.

Unnecessarily complicated organizations tend to become "self-referencing"; failing to deal with the outside world, recognizing themselves as different from all the others.

They focus their energies mainly on themselves, failing to transfer the desired value to customers.

The growing complexity that companies and organizations face is well known. Not so well known is the increased level of complication introduced in business management.

A study of Boston Consulting Group calculates and compares the growth of the complexity of the business with the growth of the business complication in the 6 decades 1955-2010. The order of magnitude that separates them is surprising:

Six Simple Rules: How to Manage Complexity without Getting Complicated - April 1, 2014 - Yves Morieux, Peter Tollman

Role of Digital: a double-edged sword?

Surprisingly, for those involved in digital technologies, this incredible trend of business complication has been detected in the decades in which technologies have been made more and more available and therefore adopted by companies. One could wonder: does digital help companies simplify processes, reduce complexity, mitigate complication?

Digital technologies have been sometimes used to merely replicate the way organizations operate, generating only the value of the speed of execution of repetitive processes that may not even be necessary anymore.

• How many companies take the opportunity to transform their business models and simplify their way of operating by fully grasping the value of technologies?
• To what extent are the regulatory contexts and the new digital relations required by the National and International Government Agencies  (apparently "selfish") are  interpreted as an opportunity and driver of innovation?

Digital Leadership. The skills needed by Digital Transformation

Digital Transformation cannot be delegated to brilliant “techies”. Managing change and directing the organization towards transformation requires strong and new managerial skills. Digital vision, knowledge of phenomena and creativity are needed, but also "organizational strength" in change and execution. As evidenced by the survey published in the MIT Sloan Management Review of April 2019.

"How Digital Leadership Is (n’t) Different" Gerald C. Kane, Anh Nguyen Phillips, Jonathan Copulsky, and Garth Andrus

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Take away

Digitize does not mean Improve.

Digitalize does not mean Transform.

It is necessary to become aware of the useless complication, to address its simplification and therefore to digitize its transformation.

A strong and visionary leadership is key for success.

Donatella Paschina
Associate Partner, Milan