Strategy and technology in the digital transformation
On 19 April 1965, Gordon E. Moore published an article in the magazine Electronics anticipating a forthcoming technological revolution. In that article, he maintained that the industry was ready to double the number of transistors that a microchip could contain each year, while the costs of manufacturing them would fall. He considered that this trend could continue for at least 10 years. Some time later he co-founded Intel Corporation, the largest manufacturer in the world of integrated circuits and processors with the highest rate of penetration in the personal computer market today. What is now known as “Moore’s Law” was revised by the author himself to consider the doubling of capacity every two years. This prediction still holds true now, more than 50 years later.
The constant increase in processing capacity and lowering of the costs of production predicted by Moore are behind the changes taking place silently in our daily lives. Deeply-rooted habits such as sitting around the television with the family, going to the newsagent’s to buy the paper or tuning in to the ratio to listen to the news have gradually given way to watching series on our tablets or cell phones when we have time, reading the news on the same devices or listening to the news through the same smart speaker that we consult whether we are going to need an umbrella that day, or ask to turn the heating on an hour before we are going to arrive home and, please, turn the light off before closing the door when we go out.
“We must make sure the transformation is aligned with our business”
Naturally, the technological development that brings all these innovations to our homes has previously been incorporated in our companies, and if we look back, we will see that the tools we use at work have changed a great deal.
But although companies have been incorporating technological developments naturally over time, something has been changing in recent years. The emergence of new business models is bringing profound changes to the different industries, in which very young enterprises use technological development to create new models that make them giants in a very short time in sectors that were until very recently dominated by companies established as leaders in their respective niches. In some circles, this is being referred to as the fourth industrial revolution.
In view of the natural result of this movement, our CEOs and executives are now paying more attention than ever to the digital transformation of businesses. Several studies have shown that the digital transformation has become one of the main concerns of companies in 2019 and investment in digital transformation projects increases every year. Both the benefits of jumping on the band wagon and the risks of letting the opportunity slip by are perfectly identified.
But when taking on projects that will help an organization to go digital and change over to a model of company that uses technology and data for the constant development of all aspects of its business processes, the failure rate is excessively high. Although three out of four companies analyzed in a study by Forrester claim to have completed or be immersed in projects for the digital transformation of their organizations, certain indicators suggest that 80 % of those initiatives fail or are suffering lengthy delays that prevent them from seeing a clear horizon for their application.
Identifying the necessary technology is not a problem. Organizations such as Gartner point the way. In its report “Strategic Technology Trends”, Gartner invariably identifies, each year, the strategic technology trends that will affect and transform the different sectors of economic activity. There are also numerous studies identifying the technologies that are transforming each area of activity, which help us to choose them.
Probably, the first problem is precisely thinking that digital transformation just means applying certain technologies identified in those trends to our business, without a clear goal that will enable us to generate a real impact on that business. We must make sure the transformation is aligned with our business. By focusing exclusively on the implementation of technology as an end in itself, we run the risk of converting our initiative into a mere project of modernizing the technological infrastructure, while disregarding our business processes. Digitally transforming an organization entails adopting business processes and practices that help the organization to compete effectively in an increasingly more digitalworld.
In order to reach digital maturity, we must integrate technology into our business areas, changing how we operate and bring value to our clients. But above all, it requires a cultural change, in which organizations must continuously challenge the established order, experiment and accept failures.
To take on this cultural change, the transformation initiative must necessarily be promoted top-down, starting with the CEO and moving down to the lower echelons of the organization. To achieve digital maturity in organizations, we must focus first on changing the mentality of their members, processes and organizational culture, then decide what tools to use and how to do it. Strategy must drive technology, not the other way around.