The strategy of digital companies
The path for digital maturity demands profound changes in organizations, with commitment, investment and assertive leadership. This is what a Deloitte's international study, in partnership with a MIT publication, has indicated.January-March | 2018
From time to time, the market acknowledges important revolutions, that heavily impact organizations of all sectors. The introduction of steam-powered machines, in the 18th century, was the First Industrial Revolution. At the end of the 19th century, electricity and production lines enabled mass production. The Third Revolution marked the development of computers in the 20th century, which allowed industries to automate activities that used to rely on human work.
Today, the world is experiencing the dawn of Industry 4.0, in which technology ceases to be just a tool. It affects both the means of production and the customers and their habits – whether in a startup or in a large corporation. Innovations such as Internet of Things (IoT), advanced robotics, data analytics and Artificial Intelligence have already changed and promise to change even further the work environment in the 21st century.
It is not a coincidence that most organizations are currently incorporating one or all of these technologies to be able to say to their stakeholders: “I am digital”. However, are they really? A study from Deloitte and MIT (Massachusetts Institute of Technology) Sloan Management Review – “Achieving Digital Maturity – Adapting your company to a changing world” – shows that the situation is not actually that. Many organizations are still far from being considered a “4.0 company”.
The survey interviewed executives from 117 countries and 29 sectors of the economic activity. Almost 5% of the responses came from Brazil, a country with the third largest participation in the study. The interviewees were encouraged to imagine an “ideal organization, transformed by technology and digital tools that improve the processes, engage talents and produce new value generating business models”. Then, the executives were invited to assess their companies by taking this ideal as a reference.
Only one fourth of respondents fit within the concept of digital maturity – which is the ability of companies to successfully adapt themselves to changes caused by technological innovations. Other 42% of the respondents are in the intermediate stages of development; and 34%, in the initial stages.
According to the report, 40% of approximately 3,500 executives interviewed stated that their companies needed to improve their strategy and innovation model to differentiate themselves and reach digital maturity. This virtue implies going far beyond the mere adoption of new tools, which are only part of the journey. In fact, many companies adopt cutting-edge technologies, but have not become 4.0 yet.
The survey sought to identify the characteristics of successful companies in this process and those that are still at the beginning of the path – and understand what separates them. According to the publication, 80% of the companies with digital maturity indicated having a clear and coherent planning, against the 19% that showed an opposite attitude. After all, if 85% of the interviewed executives agreed that it is important to be a “company 4.0”, why do most of them still struggle with it?
Successful companies have managed to create a digital culture that permeates all areas and, especially, use technology to drive business and not only improve processes.” Fabio Pereira, Deloitte's Consulting partner, specialist in technology and leader of the organization's CIO Program, Fabio Pereira, Deloitte's Consulting partner, specialist in technology and leader of the organization's CIO Program.
Some characteristics contribute to this maturity. The degree of risk tolerance and the agility in dealing with the error are certainly among the main points. A little more than 70% of the interviewed companies with digital maturity encourage risk taking, against 29% of the organizations that are in the early stages. “In order to innovate, companies must foster a culture that embraces risk and creates an environment where employees feel comfortable to stay”, says Gerald Kane, editor of MIT Sloan Management Review.
Another quality of these organizations is that they effectively act to build a 4.0 environment – investing time, resources and people. Less advanced companies, on the other hand, only discuss the topic, without turning words into actions. In this almost apathetic situation, the “magic”, which is integrating digital into the business strategy, rarely happens. The result? Approximately 75% of the organizations with a high degree of maturity claimed to use the technology to do business with an innovative approach, compared with 32% of respondents from companies that are in the other end.
Being digital is to understand how new technologies change businesses and to be able to navigate in this scenario. When this happens, this concept is no longer a mere cliché and becomes meaningful. As noted by David Cotteleer, Vice President and CIO of the motorcycle assembler Harley-Davidson, in a statement to the survey: “Everyone talks about being digital, but it is not enough to create a strategy for this. It is necessary to look at the business from a digital perspective to discover where technology can make a difference.”
In Brazil, the Boticário Group has this idea as the premise for its projects. In 2016, they created the “Ânforas”, or “stores of the future”. These locations promise to offer a personalized experience to the consumer – and technology works to achieving this goal. Through an application installed on the customer’s smartphone, the clerk has access to their personal data, preferences and purchasing history. With this information, he can suggest products closer to the customer’s taste. To give greater agility in the service, the system made cashiers – and their queues – unnecessary. The purchase may be completed directly with the seller. “Our digital solutions are designed to solve problems and to delight customers”, says Nicolas Simone, CIO of Boticário Group, which already counts with 70 stores of the future.
The “present” trap
Some deficiencies of companies at the beginning of the digital development give valuable clues to understanding the success stories. One of them is the lack of long-term thinking. The study identified that the number of digitally mature companies that plan actions within a horizon of five years is more than double than among companies in the initial phase of the process.
The digital planning of food manufacturer Ajinomoto, for example, aims at 2025. “We have an aggressive expansion plan and we must prepare the company for it”, says Alexandre Telles, IT manager of Ajinomoto. “We need to adapt to continue being relevant to our customers, who may have different habits in a few years.” The company’s plan has three stages: foundation, consolidation and excellence. In the first, the main topic does not even appear. “We want to revisit the company’s core business to prepare it for the next step”, explains Telles.
Another common point of companies that do not evolve at the same speed of the pioneers of the digital maturity journey is the lack of multi-functional teams to implement projects, in addition to the existence of a managerial structure that makes the process of innovation difficult. The result is that many of these organizations are trying to impose a mandatory digital culture by their leaders, as if this transformation could be achieved through an order. The most innovative companies follow the opposite path: they have already exceeded the expectation for all employees to have the vision to embrace digital projects and cultivate an attitude that permeates throughout the company. More than that, they offer resources and opportunities for this culture to thrive.
Last year, the Boticário Group created Botilabs – a co-working environment installed at the company’s headquarters in São José dos Pinhais (PR) – to integrate professionals from different areas, startups and partner companies. The intention is to develop innovations to keep the brand’s products relevant.
At Botilabs, a team triages the best ideas. The approved initiatives are tested internally or in some stores of the group. Depending on the result, the action is either immediately implemented or put on a “shelf”, awaiting for a more propitious moment. “We’ve created a structure that accepts error and performs with agility in a multidisciplinary environment”, says Nicolas Simone.
Companies with this positioning enter into a virtuous circle: the fact of being digital stimulates continuity in this path. Deloitte’s study showed that nearly 80% of companies 4.0 plan to increase investments in this segment in the coming months. In a short time, the distance separating companies pioneering this revolution in relation to those that have not spent enough time and money to implement their digital strategies will significantly increase.