Digital transformation goes mainstream

Executive Summary

• Digital transformation has become a mainstream business focus that necessitates committed leadership, technical expertise and change management to implement and optimize the benefits.
• Digital platforms and data they can produce present new opportunities to gather business insights, engage customers and optimize collaboration between employees and partners.
• The adoption of new digital tools is redefining business models and core processes, and changing the relationship organizations and employees have with technology.
• Digital transformation will continue to evolve and companies need to stay abreast, listen to customers, assess needs of today, and anticipate changes the future holds in store.
• Cyber security threats will grow alongside increasing reliance on digital tools and workflows, requiring persistent vigilance and proactive mitigation measures as digitalization evolves.

Drivers of Digital Transformation

In 2019, Kestria (formerly IRC Global Executive Search Partners) teamed up with Robinson College of Business at Georgia State University to conduct a study on the drivers, applications and challenges of digital transformation among global businesses ranging in size from under 250 to over 10,000 employees. The survey leveraged Kestria’s extensive global network, with 40% of respondents being C-level leaders, 21% executive level, and 14% being company shareholders or board members. Overall, 80% of the respondents said the organizations they represented were under pressure to adopt digital technologies to conduct business, and 34% noted that they had already completely restructured their businesses around digital tools.

Given the accelerated adoption of digital tools for business continuity amid the global upheaval in 2020, few remain unconvinced about the importance of digital transformation today, as demonstrated clearly in the virtual roundtable discussions hosted by Kestria summarized herein.

The survey demonstrated that prior to 2020, C-level leaders who had little appreciation for what digital transformation could do for their organizations represented one of the biggest obstacles to digitalization, with 31% of respondents indicating that their top brass lacked the “hard” and “soft” skills to facilitate the adoption of digital strategies. The survey also indicated that when C-level leaders had little appreciation or understanding for how digital transformation could benefit the organization, the same deficiency was perceived of leaders just below C-level, along with a perceived failure to understand the return on investment associated with implementing the strategy.

In cases where C-level leaders had demonstrated the technical capacity to craft and implement a digital strategy, and the soft skills required to communicate their strategy to shareholders and board members, digital initiatives driven by those senior leaders, and by operational and functional areas, typically received the support and resources needed for successful implementation. The survey indicated that when C-level leaders have little appreciation or understanding for what digital transformation can do for their organization, however, only those digital initiatives they spearheaded received the resources needed for implementation. Reluctance within an organization to implement digital transformation, therefore, was directly linked to senior leaders with a poor appreciation of the potential benefits, and a corresponding failure to communicate their strategy to, and garner the requisite support from, shareholders and board members.

A New Sense of Urgency

The two virtual roundtable discussions hosted by Kestria in late March 2021 provided confirmation of the changes in attitudes resulting over the preceding year. Participants in the roundtables indicated that any reluctance there had been to implementing digital transformation prior to the year of lockdowns quickly dissipated when it became clear that business continuity depended on the adoption of technological tools.

“There was a key that turned once we decided to go online. We had to become productive, growth-minded and very efficient in an online environment, and productivity went through the roof,” said VanDyck Silveira, CEO at Trevisan Escola de Negócios, a business school based in São Paulo Brazil. “There is no way I could have predicted in 2019 that this is where we would be. It is the ride of a lifetime; it is like I am walking into a new business,” Silveira added.

In the past, digital was just an afterthought, an add-on or complement to the business, added Ryan Vergara, Head of Digital Solutions, Phillipines at Roche, a global pharmaceutical and diagnostics company based in Basel, Switzerland. With the push from senior management, however and a specific call for digital to become second nature, it’s become easier to drive digital initiatives throughout the organization, Vergara said.

“We’re flexible to adopt it, but we need guidance on how best to adopt these technologies,” said Andrew Mok, Chief Information Officer and Digital Advisory, Infrastructure, Security and Robotics at Montreal-based Medicom Group. Our ways of working have changed to match the technology, and will forever evolve as well,” Mok added.

WESCO International, a global supply chain solutions company based in Pittsburg, Pennsylvania, transitioned to digital virutally overnight, said Akash Khurana, Executive Vice President, Chief Information Officer (CIO) and Chief Digital Officer. “There is a huge acknowledgement of what we are able to do in a virtual environment. We completed a merger of two companies digitally,” Khurana said, noting that productivity at WESCO had also increased considerably alongside its digital transformation.

“This era made the case for us to accelerate our journey. We always had talked about how we should leverage digital technologies to deliver these solutions and make them more scalable. Before Covid, we had to stitch things together and make a business case for it. Now we have a platform, which is a launchpad for products that we take to market. If you do it right, it will allow you to scale up very quickly and bring incremental revenue,” Khurana added.

At CJ Logistics, a supply chain solutions company based in Chicago, there’s been a palpable shift in mindset, such that it’s become completely acceptable for employees to work remotely, dispelling the notion that, “If you are not in the office, you are not working,” said Chief Information Officer Greg Sheen.

For many organizations, the technical tools were already in place, or were readily available, but the organizations’ relationship with and attitude towards technology had to change for digital transformation to gain traction, said Rodney Johnson, President of Erudite Risk, a risk management and security firm.

New Business Models, Engagement Channels and Collaboration Tools

Digital transformation has been driving enterprise-wide change on multiple levels for the past several years, allowing early adopters to develop new business models and update the way they operate, improving efficiency and productivity.

As the digitalization trend accelerated amid the threat of a global health crisis in early 2020, the need to leverage digital tools to engage customers and mine data to gain insight into consumer behavior, new trends and shifting demand, became more widely recognized. Digitized data, processes and workflows are changing the nature of work itself, meanwhile, facilitating automation, collaboration and reallocation of human resources to more value-added tasks. As technology plays an ever-greater role in connecting people and things, the ability to monitor and evaluate business operations and performance will reach new heights. Cyber security threats will only grow alongside our reliance on digital tools, however, cautioned Johnson, and these risks need to be actively mitigated.

Roche suspended all physical customer-facing activities a month before the mid-March 2020 lockdowns were imposed, redefining its business in the process, noted Head of Digital Solutions Ryan Vergara. The company made a fundamental shift by moving all its activities to alternative digital channels via a new virtual platform, he said. The results speak for themselves: despite doing away with face-to-face meetings with doctors, sales didn’t waver. Its business model has shifted in the process, from selling pharmaceuticals, to gleaning insights from customers and stakeholders to improve the healthcare ecosystem, he added.

For Allergan Aesthetics, a subsidiary of Chicago, Illinois-based AbbVie, there are three areas where digital transformation is making an impact: process; products; and people, according to John Bessis Country Manager, Greece and Cyprus. Allergan is also making use of new platforms to engage customers, mining data and focusing on sustaining performance by keeping employees engaged and improving collaboration. “Empowering confidence, even through digital transformation, is important to our work and our industry. It’s critical that our customers are confident in the products we create and deliver to them, that patients everywhere are confident in our industry, and that we have confidence in one another and in the company we represent. It’s meaningful and relevant in all parts of our business,” Bessis said. The company is also using digital engagement tools to better understand the needs of its customers, identify pain points, and deliver the right content at the right time, he said.

Trevisan Escola de Negócios, the business school based in São Paulo, doubled enrollment in the year following the March 2020 lockdowns, expanding to 12 international markets via its digital platforms to engage large Brazilian expat communities, CEO VanDyke Silveira said. “We used data to create different value propositions, which we would not have been able to do without a digital structure,” Silveira noted.

“Technology is just the enabler,” however, Silveira added. “There is no way we could have done this with just the technology,” he said. Agile decision-making and strong communication were key, and stakeholders understood quickly that the viability of the business hinged on effective communications in the digital environment. Trevisan identified champions within the organization who understand that the future is digital and would help propel the internal changes being carried out, he said.

More Than a Stopgap Measure: The Future is Digital

Many measures implemented by government and corporate entities over the course 2020 were designed as stopgap measures to tide citizens, employees and organizations over until normalcy was restored. Forward-thinking organizations that committed to digital transformation understood that the measures needed to position companies for the future were anything but temporary, however, and took the opportunity to implement structural changes that served to insulate their organizations from the impact of ever-changing health safety measures, while building more resilient businesses with digital at the core.

“The challenge is to stabilize the culture to sustain what we have been able to achieve in the last 12 months,” said Wesco CIO Akash Khurana. “We have to define hybrid and work-life balance; we have to think of productivity in a hybrid environment.”

Despite the consensus around the need for digital transformation, legacy processes, systems and tools can take time to catch up and filter throughout an organization, noted Khurana. “From an IT perspective, conceptually and philosophically, we’re leaping into the future; but the business needs quite a bit of time to catch up,” he said.

Sustaining the momentum of digital transformation requires leadership with a clear strategy that is communicated effectively to all stakeholders, and an aptitude for change management. Elements of business sustainability, including striking the right work-life balance and maintaining productivity through external shocks, are key components of a well-crafted digital transformation strategy.

In order to get successful change, we need to look at every angle, whether you fulfill that with education, additional handholding, tools, or methods, said Medicom CIO Andrew Mok. It’s crucial, meanwhile, to be mindful about how those changes will affect the customer, he added. “We always map and remap the customer journey. If we inflict this change, how does that impact the customer, if at all? If it makes it harder for your customer to do business with you, then you’re actually at a loss.”

The definition of digitalization itself is also evolving, and not in a linear fashion, noted Erudite Risk President Rodney Johnson. While the process of transforming an organization to optimize the benefits of digitalization requires planning for the next five-to-10 years, Johnson said the outlook and planning horizon he contemplates with clients is more like a couple decades. “We have to look far forward, at what we do not know yet.”