In today’s fast-paced, technology-driven world, the ability to embrace change is not just a strategic advantage, it’s a survival imperative. To remain relevant and competitive, companies must navigate the turbulent waters of digital transformation. However, the sheer size and complexity of established companies, which once guaranteed stability and market dominance, now may become their Achilles’ heel in the digitization process. In this context, understanding the critical need to embrace change becomes paramount, but what defines this digital transformation?
What defines digital transformation?
Digital transformation is the comprehensive integration of digital technologies into all areas of a business, fundamentally changing how the organization operates and delivers value to customers. It marks a culture shift involving optimizing processes, enhancing user experiences, and improving decision-making, ultimately fostering continuous innovation and adaptability to evolving technological landscapes. MIT Sloan says digital technology boosts revenue and transforms the customer experience, operations, and business processes. When mismanaged, companies risk becoming obsolete.
What defines a big company?
Big companies are large-scale enterprises characterized by their extensive resources, significant market dominance, and decades of established operations. These corporations typically have substantial financial capital, advanced technological infrastructure, and a vast workforce, enabling them to influence market trends and set industry standards. Their longevity and success are often rooted in well-established processes, robust brand recognition, and expansive customer bases. But how can powerful companies face problems in digitization processes?
Digitization challenges
Despite their resources and market dominance, these corporations often face significant hurdles in effectively implementing digital solutions. A Harvard Business Review survey reported that, in large companies, innovation initiatives that cut across many areas may be disregarded right away due to internal politics, turf wars, and a lack of clear goals and internal alignment, making it challenging to swiftly adapt to new market dynamics and technological advancements.
Engagement – the people
For large companies, fostering engagement can be particularly challenging due to the sheer scale and broad age of their workforce. Employees might resist change, especially if they are accustomed to established processes and systems. This resistance can stem from a fear of the unknown, a lack of understanding of new technologies, or concerns about job security. Within this scenario, organizational leaders must foster innovative ideas from every team member, aiming to test and, if successful, implement the contribution to enhance internal processes.
According to McKinsey, engaging the specific roles of integrators and technology-innovation managers is key to building capabilities for the entire workforce, bridging potential gaps between the traditional and digital parts of the business. In this regard, leadership roles help strengthen internal innovation capabilities among colleagues.
Data
Digital transformation is all about data. However, the Journal of Petroleum Technology reported that 80% of employee time in the offshore industry is spent looking through unstructured data to inform decisions. Thus, big corporations present vast amounts of data and must effectively give purpose to it to drive informed interpretation and decision-making, which involves data collection, treatment, structuring, and analysis.
In this scenario, effective data management is crucial for an in-depth analysis of a company’s financial, operational, and overall performance. For this purpose, companies must repurpose how they organize their data to connect and share information across all functions of the organization. According to a Kearney survey, leaders in the energy sector believe that the best opportunities for regeneration (digitization) come with systematic changes in their business models, including leveraging a responsible and profound review of data analytics.
Innovation capabilities
Innovation is at the heart of digital transformation, yet fostering it within large companies can be particularly challenging. The bureaucratic nature of big corporations often stifles creativity and slows down the innovation process. Decision-making layers, risk-averse attitudes, and a focus on short-term results can hinder the development and implementation of innovative digital solutions.
In this sense, new technologies need to be integrated into pre-existing and long-time consolidated systems to build a foundation for innovation, which can be complex and time-consuming. Forbes highlighted that big companies often fail to innovate because they are built to do the same things repeatedly, faster, cheaper, and better, rather than to develop new and different solutions. Furthermore, big companies, that have years of well-established operations and data management, may struggle to solve occurrences by developing innovative initiatives.
How to embrace change
The mentioned factors are inherently related to the ability of an organization to be flexible and open to innovation. Traditional hierarchical structures, rigid processes, and complex decision-making processes can slow down the implementation of digital solutions. The Boston Consulting Group reported that larger companies often have more to lose, which can make them hesitant to take risks on new products or services that could potentially damage their planned strategy.
For this reason, smaller companies have been taking the central stage of leveraging bigger opportunities for changing current processes and dealing with data by solving specific problems faster and with higher flexibility. According to the Harvard Business Review, unlike big companies, smaller corporations such as startups are the main R&D focal point that innovates in a faster and cheaper manner, representing the main catalysts of digital reinvention. Essentially, the ability to adapt and innovate will determine how big companies succeed in achieving digitization and securing their place in the future digital economy.
About the Author: Jorge Kawano
