The Second Wave of Digital Transformation

A step forward in business strategy

by Felipe Monteiro, INSEAD professor, and Marco Stefanini, global CEO of Stefanini

The digital transformation is inevitable. What started as a way of raising awareness in companies to adapt to market changes has expanded at an unprecedented speed. Technology is no longer just a tool for solving problems, facilitating everyday life or increasing productivity. It becomes an ally of creativity, bringing man-machine, physical-digital and virtual-real closer together.

"More than new skills, digital transformation is the result of cultural and individual transformation."

The innovation has never been seen in such a valued place. This approach is portrayed  in the book The Innovator's Method, where authors Nathan Furr and Jeff Dyer discuss how they developed, based on research conducted at large corporations and successful startups, the method of the innovator. It encompasses the creation and launching of ideas that come to market and become solutions or products that help transform business and generate significant results.

Assuming that changes “must happen,” and no longer “can happen,” it is critical that corporations have a sense of urgency and humility to embrace the digitization. In this case, they do not need to know the end point, but the direction in which they are going. If they don’t know how to get there, a tip is to get closer to the driver and work in a collaborative way. If on this trip you find success, your learning will be enriched. Connect with people and ideas that are different from your own that reflect the diverse society and its aspirations.

If the first wave of digital transformation was marked by the awareness of enterprises regarding the importance of digital transformation, the second wave personifies the change itself. From the technology experimentation process to the implementation of a more robust process, the second wave indicates a step forward, focused on business strategy.

It's time for executives and business leaders to put their plans into action and face the challenges and opportunities offered by the transformation journey. The ideal path is to look at the legacy and build a solid bridge to the future by attracting and retaining talent that can innovate.

And for the second wave to actually happen, the commitment of leadership, which needs to point where to go and mobilize the team, is essential. The Innovator’s Method book shows how critical it is for C-Level executives to encourage experimentation and empower teams to turn ideas into real projects.

Since every transformation generates pain, the leader must take responsibility and show that the benefits of change are far greater and more sustainable than the temporary pain caused by the process.

The second wave of digital transformation is already happening, though at different levels. In the lead, the United States has a “boiling” scenario with the emergence of several startups - most of them related with artificial intelligence. China follows a similar but more centralized path.

The third way comes from Europe, which invests in disruptive solutions with a look at the social impact of new technologies. The most common questions are: How will we prepare and deal with the new workforce? What are the ethics behind digital transformation?

In the case of Latin America, where the technological legacy is smaller, the advances may merge  the three paths mentioned earlier, promoting what we call Leapfrog, that is, skipping steps to make the transformation faster, lighter and more inclusive.

Moreover, to get on this wave, corporations need more than qualified professionals. With leadership engagement, it is important to foster initiatives that enable employees to be open to new things and change their mindset. More than new skills, digital transformation is the result of cultural and individual transformation. The sooner the   awareness occurs, the more likely it is to reach the second wave with competitive differentials to better understand the customer and excel in an increasingly dynamic and creative economy.

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