Business impact: the beginning of the transformation

Considered the biggest challenge of today by C-Levels, achieving success in the process of transforming companies for digital has a secret: the generation of results for business from the beginning. Discover the paths.

In my 24 years at the head of CI&T, I have built a conviction: the more technology gives us tools to change the world, the more the human factor matters. It is the human potential as a transforming agent, to boost evolution, that moves us beyond the results that technologies alone would be able to generate. This potential, in my view, is realised through the combination of two variables: our knowledge and those to whom we are connected.

If we think about the current business world and the speed with which it is diving into digital with its VUCA (Volatility, Uncertainty, Complexity and Ambiguity) nature, we realise the need to access and take advantage of all this human capacity. We are experiencing an infinite number of possibilities for connections with other people and access to sources of information that multiply our transformative power. When this multiplied power meets a purpose, it is able to achieve the unimaginable in a way that no technology alone would be able to do. 

It is at this point that I come to one of the great paradoxes of the moment: on the one hand, we have this new and expanded human potential, and on the other, the old corporate environment to which companies are still anchored. Companies, especially large and more traditional ones, are not prepared for this new professional profile. There is a huge gap that does not allow organisations to take advantage of a potential that people already have. Filled with human and technological capabilities, companies cannot access them to achieve the ultimate goal: to satisfy the new digital consumer.

Then comes the need for digital transformation, which - in addition to the numerous and worn out market definitions - is nothing more than preparing the company to release and use this potential that is already installed to meet, satisfy and delight your customer. But how? Why doesn't this happen? Why do we not feel that, from within our large and beloved companies, we will actually be able to achieve this goal and make great changes in society?

To provoke reflections on the subject and present our commitment to answering these questions, we met senior executives from the largest companies in Brazil and worldwide at the beginning of April, at the CI&T Business Impact Summit 2019 event, at Cubo Itaú's headquarters in São Paulo. Together, we built new connections and refined our knowledge on the subject. In order to share this knowledge and bring my insights in the hope that I can help those who are facing the huge challenge of moving their company from the twentieth century - the industrial era, focused on the product - to the twenty-first century - the information or digital era, focused on the customer - I am writing this article.

The big challenge

During the event, we conducted the Business Impact Insights survey in partnership with Opinion Box. Cross-referencing the responses of 200 leaders present at the event about the digital transformation processes and the business impacts they generated in companies, we arrived at interesting results, which you can access here. However, I will mention some of them. The first is that 70% of C-Levels at large companies believe that the biggest challenge they face today is still to achieve success in their transformation processes. Again, even in companies with processes already installed and reaping some good results, the gap I mentioned above is still strong, preventing the achievement of objectives.

The other result that caught our attention is linked to our commitment to make the digital transformation effective and sustainable: the generation of business impact during the journey. Only 12% of respondents presented the generation of business impacts as a driver to embarking on a transformation. Meanwhile, the majority, 24%, pointed to the improvement of products and services, and another 23% to the maintenance of market leadership.

In our view, there is no way to sustain a digital transformation - whether with the objective of improving offerings, maintaining leadership, or remedying any other specific problem of the company - without first thinking about generating rapid results with the process. That is, no big goal, no digital true north will be achieved without companies reaping tangible business impacts on their journeys in the short term. Therefore, the 12% that have invested in generating impact are on the right track.

To support our thesis, however, I believe it is necessary to go back a few places and deepen our understanding of the real problem faced by companies in their processes.

Understanding the problem

The lack of answers that companies find for digital, or even tangible advances in the transformation of those already on the path, has led us at CI&T to receiving visits by more than 6,000 people in the last two years, with 4,000 in 2018 alone. What is surprising is that they were not exclusively IT professionals, our usual contacts during 24 years of business, but senior leaders in the most diverse areas of companies, including 108 CEOs, with the majority from large corporations that are leaders in their segments. This makes clear the relevance of the subject beyond being a market buzzword.  

Listening to these senior executives, talking to our main customers, and analysing these movements in depth, we encountered three main problems that cause companies to start their processes and invest in digital transformation. It is these problems that we need to focus on, since we will outline the strategies for the construction of a digital operation based on these. They include:

1 - Companies that need to gain agility at scale in business

Mainly formed by traditional companies, with a strong command and control bias and highly regulated, such as banks. This first group feels tied to very large technological platforms and overly bureaucratic processes that make them slow to meet the needs of the consumer and to gain business agility at scale.

2 - Companies struggling to become customer-centric

This second group is formed by giants with iconic brands, such as Coca-Cola and Nestlé. They know a lot about their business. They are fantastic at focusing on products, but they have a lot of difficulty transmuting the company's focus to the consumer because they have operations designed to be very distant from them in the chain. Coca-Cola does not know exactly who consumes Coca-Cola. Nestlé has the same problem: discovering who their customers are, what they like, what they believe and what they want, among the millions of Brazilians who appear as figures in spreadsheets. This group also includes companies such as insurers that know little about the customer because they work through brokers.

3 - Companies that need to take a step further, to find the path of disruption

The third group includes companies that already see the possibilities of this new set of exponential technologies and have leads about the opportunities and their chances of disruption. They want to develop new business models and generate new sources of revenue, to find the new one billion business. These are the motivators to embarking on the digital transformation. However, the ability to develop human potential here and the ability to coordinate this potential with technological possibilities are lacking.

Your company may identify with one or all of these problems and, as a rule, advancing the journey ends up triggering the need to work and improve some of the other fronts. The important thing here is to set a guideline at the start.

The next step

Obtaining this clarity, it is time to move onto the solution by building a step by step journey of transformation that does not intend to impose drastic changes in culture, practices, and processes overnight. In our experience, this is not going to work. Instead, we propose the Lean Digital Transformation (LDT) model, a coordination between a solid Lean base, turbocharged with Agile methodology processes and practices and Design tools and thinking, capable of paving safe and sustainable digital transformation paths that generate positive business impacts.

As a result of 13 years of intense learning, LDT is based on customer focus, collaboration, and the gradual establishment of multidisciplinary and autonomous teams, responsible for building memorable experiences for consumers in an agile, fast, and continuous manner. Thus, little by little, the silos are broken, and the new digital way of thinking is installed in the company.

This transformation model has continuously brought excellent results to our customers. This is for two essential reasons: the first is that the design of the transformation journey is carried out alongside the customer in a particular way, respecting the main problems, specificities, and real implementation conditions. The second and main reason is the aforementioned strategic focus on generating business impact from the beginning of the transformation journey.

Business Impact: the missing link of the digital transformation

As I said above, in my view, what is lacking in much of the digital transformation processes of large corporations is the business impact. I will explain why. As much as the process contracted in the market or the playbook adopted improves the company's culture, teaches us how to make better decisions, improves our vision of technology and expands our innovation potential, it will not sustain itself if it does not bring tangible results quickly. Without a positive return in the balance sheet, board, bottom line, or business, in little time, the program will be swept under the corporate carpet.

The generation of short-term business impact must be a cornerstone to maintain and expand all these gains at scale. And this is the thesis that we are obsessively pursuing alongside our customers in their transformation processes. In very short cycles, of a maximum of three months, the digital transformation journey must deliver value. If you cannot do this and show that it is improving business, you will fail.

After this speech by our customer Ricardo Guerra about the process we built together at Itaú, I will reread a famous phrase by Jeff Bezos, CEO of Amazon, about day two, the beginning of the company's decline. For me, the day two of the digital transformation is the lack of impact. In my version, the phrase goes like this:

Begin at the end

Here, I will quote a phrase from Neil Armstrong that I read on an inspiring visit I made to the NASA headquarters in Houston (USA) during my stay in town to accompany the Lean Summit 2019:

If we really want to harvest results for the business, we have to start a digital transformation program by defining the impact we want to generate and then retrace the journey backwards. These impacts should be related to remedying the main problems of companies (mentioned above).

For this regressive planning, however, it is necessary to combine the disciplines of Strategy, Design and Engineering and to design the journey that will lead the company to achieve the result it wants. These disciplines, as a rule, already exist within companies, but they are disconnected, communicating through corporate silos. While strategists create books with interesting visions that get shelved, designers create campaigns that win awards at festivals and engineers develop great technology architectures, none of them generate real impacts for the company. It is time to harness the transformative potential to coordinate these skills in a Lean Digital way.

3 branches of knowledge: strategy, design, and engineering

Impact at scale

In addition to the central thesis of coordinating in this way to generate business impact, it is necessary to develop the competence to scale this model in the company. This is undoubtedly a great challenge. It is not trivial to find the harmony between the verticality of working by value stream in multifunctional, autonomous teams, and the horizontality of scale, of transforming this way of operating into a standard in the company as a whole.

Thus, we revisit and reinforce the foundations of our LDT model, establishing four pillars that really make the transformation happen on an organic scale within the company. These include:

1 - Client centrality: the whole company must move in this direction. 

2 - Creation of small autonomous teams: it is not possible to achieve speed and agility of digital or transform the company from end to end without an operation format based on multidisciplinary and autonomous teams with exclusive dedication to a value stream. 

3 - Bold goals: to innovate, it is necessary to take risks, to have the discipline of wagering on something higher than you will be able to achieve. This is definitely not a typical feature of traditional corporate environments.

4 - Ability to generate rapid cycles of experiments to create constant learning: it is essential that there is an environment conducive to experimentation and the learning of each team in the process must be available to others. There must be exchanges and collaboration for the construction of collective intelligence quickly and constantly. An organisation that learns with speed is able to create the future.

These four pillars are non-negotiable and must be at the heart of any strategy to accommodate methods, processes, and tools for implementing a consistent transformation.

Results for customers

Lastly, to give concreteness to our thesis, I will briefly present some cases of large customers who, at the beginning of their digital transformation processes, were already able to install digital capabilities and move the business impact pointers in a very relevant way. They all designed the journey using the LDT model, establishing the primary problem and defining what business impact they wanted to achieve.

Coca-Cola: with the installation of new agile work processes, the company reduced lead time six-fold, that is, the period between the conception and delivery of a new product in the hands of consumers, which was 18 months and became three months. 

Grupo Ânima Educação: already in the first four months of work, it managed to reduce the development time of new digital solutions from 30 to eight days, which generated a significant increase in its NPS (Net Promoter Score). In addition, the first solution developed following the Lean Digital methodology remedied one of the main problems of the business, which was the online re-enrolment process.

Azul: gained agility in creating new products and services: from 11 to 3 months. The optimisation of the solutions also brought good results, such as an increase of 30% in the number of participants in the TudoAzul Advantages Program and 39% in the total miles redeemed in the period of 18 months.

Vivo: in the first cycle of work, during the first 90 days, it managed to double the conversion rate and use of the B2B platform. 

Raízen: in six months, it doubled the conversion rate of the use of the plants.  

I hope that I have fulfilled my purpose in this article of bringing insights that can help you unlock your company's transformative potential. And returning to my visit to NASA, I leave you with a provocation:

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