The companies I usually deal with, especially healthy and successful ones, often don’t believe that they need to change. However, I think this is where problems take root. I believe changes should be made when things are going well because when they have gone wrong, it's too late. You no longer have the time, resources and energy to change.

Change, innovation and breakdowns

We know that we have to maintain cars or factory equipment to prevent them from breaking down. I think companies also need constant maintenance for the same reason. How can a company break down, you may ask? The mechanisms are often not obvious. A company can, for example, lose competitiveness, or its image can be damaged. These things may not always be clear to the management.

Companies should have processes in place to evaluate themselves on an ongoing basis. They should aim for constant innovation, and not just in their core processes. Instead, they should be looking to innovate every process that supports the business – and move from a cost vision to a profit vision. In this new way of seeing themselves, companies no longer consider marketing, finance, ICT, HR, and so on, as costs. Instead, they are seen as "business engines." By injecting innovation across all levels, companies can find new energy, new propulsion and new business models that can open up new scenarios.

Why then do I often hear phrases like “we are behind,” “we are not ready,” and “we are not a Silicon Valley company”? Companies need to stop believing that innovation is only for certain companies: those in aerospace, genetic research or whatever. Instead, they must start embedding innovation into every area. 

The role of digital transformation

Digital transformation is a powerful enabler of innovation. However, if it is not properly exploited, it can also be a powerful threat. In a few years, apart from some particular business niches, companies that have not been able to transform digitally will disappear. They will be too slow, too expensive and too inflexible to respond to market changes.

Those who lived through the 1990s as adults realize how much digital transformation and the speed of web expansion has radically changed the business models of companies. The internet is not a fad. It is a new world that has made or broken many companies – and it will continue to do so.

Similarly, Big Data, the Internet of Things (IoT), artificial intelligence and blockchain are not buzzwords or fashions. These technologies exist, and those who adopt them quickly and exploit their full potential will be leaders. The rest will be followers. Companies that are able to become data-driven will be able to take advantage of the immense value of internal and external data, with refined and advanced tools providing a major competitive advantage. 

The need for imagination

Innovating means using new technologies but above all imagining and inventing new possibilities. The real secret of digital transformation is simply doing things that could not be done before. Technology is enabling the global transformation of skills, processes, markets and business models. The first question to ask is not “how can I do it?” but “WHAT I CAN DO?”

The second question is how to deal with the disillusionment of those who have tried, but not found what they were expecting from these new technologies. My responses to them include:

1. Enabling technologies is science, not magic. You need to work through experimentation and adoption in a structured and scientific way.
2. Technology can only give value if it is correctly evaluated against the business expectations and the nature of the chosen technology. You need the right tool and the right methodology each time.
3. The process of adopting new technology needs to involve people. That might mean developing training courses about maximizing the value of the intersection between company and technology. This triggers a virtuous circle between technology and people and supports partnership and mutual strengthening.
4. Technologies are enabling elements. However, how you use and adopt them are equally important. There is nothing worse than a powerful tool not used or used badly.

Counting the benefits

Research from McKinsey suggests that there is considerable benefit from using digital technologies. For example, the costs of maintenance can be reduced by 10% to 40%, the costs of warehouse by 20% to 50% and the time to market can be accelerated by up to 50%. Do you still think it isn’t necessary to change even when you are doing well?