Why should we continually create value, and where can we start?

What is the first quality that an innovative company must have? Some will say creativity, others speed, empathy, resilience, and more. We can consider all of them legitimate, but they in turn are part of a broader category: being smart.

However, the concept of a smart company, rooted in the trends of Industry 4.0 and Digital Transformation, remains unknown to organizations. Every year companies make great efforts to develop actions, and every year we see how they struggle to succeed.

The problem is not motivational; I think a lot has already been written about the power of innovation, automation, and technology. Companies want to change, they want to transform, but the obstacles are still there.

My experience started in the manufacturing industry; It was my window to enter the world of entrepreneurship and business. I worked for years, and I saw many cases of success and failure. Paradoxically, although the manufacturing industry is not much in the press anymore (being overshadowed by large technology companies), the reality is that the challenges it faces and the solutions it proposes are not very different from those of any other industry.

In short, the Financial Services, Transportation, Healthcare, Wholesale/Retail industries, among others, face the same challenges. Everyone must answer the same questions:

• How can we improve our processes?
• How can we provide a better service and a better customer experience?
• How can we find new profitable business models?

The rules of the game have changed for all participants. The Manufacturing, Financial Services, Transportation, Healthcare, Wholesale/Retail industries strive and invest heavily in optimizing their processes, improving the quality of their products, enhancing user satisfaction, and increasing profits.

The incubator of the problem

Year after year, we see companies making their projections, building their plans, and executing them. However, drawbacks persist. The problem is easy to identify but complicated to solve: there is no general strategy.

Companies randomly develop different pilot initiatives and, sadly, are doomed to failure from the start for two reasons:

• The solutions are not aligned with the business strategy 
• There is a misalignment between IT and OT
• The scalability is not considered (“Pilot Purgatory”) 

The result is a vicious circle: companies develop isolated solutions that are not integrated; these proposals do not generate solutions; therefore, they fail. The answer: create new alternatives. The result is that year after year; companies end up building an operational Frankenstein impossible to manage.

Experience indicates that some companies assume Digital Transformation as a to-do list of actions they have to complete and not as a tool to obtain results and create value. They consider that their evaluation and performance is in the implementation regardless of the results.

Developing AI, IoT, or Machine Learning without a generalized and shared strategy by the organization is like constructing a building from six different models. It is entirely unfeasible.

Putting the puzzle together

The arbitrary implementation of technology is like driving a Formula 1 car on a track without lights. For this reason, the first task of a smart company is in its ability to link Products, Processes, and Business Models. The organization has different teams, but these must be aligned; They must know where the curves of the circuit are, when to stop in pits and when to accelerate fully. Technology will be the tool that allows them to adapt to the obstacles of the race.

A Formula 1 team competes to achieve two objectives: the Drivers' Championship and the Team Championship. For their part, smart companies should have two horizons: innovation and continuous improvement.

I have experienced this in the manufacturing industry, but over the years, I have seen that it is a necessity for industries in general. They are the keys to success and survival. Today, it is believed that innovation only comes from technology, which is a complete fallacy.

Traditional companies can be innovative; in fact, they are obliged to be and often they don't need technology. As they develop a strategic approach to identify and correct mistakes and reinforce strengths quickly, they will be able to find new alternatives and create higher-value: they will be innovating.

Continuous improvement and innovation are two aspirations that are connected. As companies can assess what is happening in the world and what their users need, they will be able to detect errors and develop successful solutions. This process must be a continuous, organized, and strategic regime. 

An unbeatable tool: communication

Companies are made up of people who have different knowledge and goals. Therefore, consultants must learn to communicate assertively with each of them. While we encourage and work very hard to build an overall strategic plan, we must be able to tailor the message to each of the areas of the organization. Organizational culture must be consistent, but its richness lies in its diversity.

Therefore, innovation and continuous improvement will not impact in the same way in the IT department as in Marketing or logistics. They are all critical; thus, everyone should be motivated. Everyone deserves to understand how this shared vision will help them reach their specific goals; therefore, they must know how to add value from their own fields.

This factor is essential. When companies develop Digital Transformation strategies and actions, they invest a lot of money and effort in methodologies and technologies, but unfortunately, more human and relevant factors, such as communication, are neglected. If the teams do not understand how transformation affects their daily tasks, they will not be motivated, and they will not be able to integrate into the global vision.

We must admit that it is not easy; it is delicate work, indeed. But it is precisely the balance between generalized vision and specific messages that will ensure the success of the initiatives and the transformation.

Changes knock on the door without warning

A smart company works in the present continuous: it continually evaluates its performance, and it adapts as many times as necessary. Innovation and continuous improvement are the boats that allow companies to stay afloat despite storms.

Industries and businesses are undergoing changes that no longer come only from technology but from the world at large. The COVID-19 Pandemic is a wake-up call. There are no industries shielded from changes, circumstances, and contingencies. For this reason, those organizations that have in their culture and DNA the ability to understand the context, the pain of the users, and the volatility of the market, will be better prepared to make critical decisions that keep them in the game.

The challenges of Digital Transformation have been showing for years how slow companies are; Today, the COVID-19 has revealed how damaging that slowness and that cultural inability to cope with changes and contingencies could be.

Companies and their teams must assume that continuous improvement and innovation are the paths that lead to functional and profitable solutions. It doesn't matter if it rains or snows, if they follow that path in a disciplined way, they will reach their destination and find positive results.