It has only been in the market for ten years. However, the news shook the world in late 2020: Tesla’s valuation was higher than that of the rest of the automotive industry put together, including centuries-old companies. The lesson is powerful and presents the first big question CEOs should answer in the new year, an answer that should extend at least five years or a decade into the future. Am I headed in the right direction to a digital transformation that will strengthen my new business model? Tesla’s secret to defeating its alleged competitors lies in the fact that it does not sell cars – it sells software/technology. The focus is on innovation, services, and client experience; and not on vehicles per se. Just as Tesla went from being a startup to becoming the star of the industry at the speed of light, any medium-sector business may disrupt its market if it develops the right vision and strengthens it with adequate technologies.
This partially answers the second question that CEOs might ask themselves: Can my company move towards a business model based on data and innovation? To answer the question, I will tell you about one of our clients who, in my opinion, is the perfect example. A long-standing law firm –a leader in judicial report services based in New York– specialized in arbitration cases. Most of the activities involved were face-to-face: visits to the courts, information included in written briefs, interviews with witnesses, and transcripts of statements… The 2020 lockdowns required a change in the procedures. As an inalienable human right, justice had to go digital. This law firm understood that adaptation implied providing video conferencing services and delivering electronic documents, but it took a quantum leap. It redefined the organization’s culture and designed efficient models so that all activities could be carried out remotely: depositions, mediations, arbitrations, and sworn statements. Doing this expanded its business area (it was no longer limited to New York, where it was based). The technology-based solution allows them to now offer very high value-added services across the United States (and why not the globe). Its potential client base has grown, together with the company’s valuation. This is the way CEOs have to think about their businesses.
How can I do this? In practical terms, you must start by defining the strategy. You must understand where you are standing and your actual or potential opportunities. At Making Sense, we call this process discovery: an analysis that involves technology, business, and design experts to rethink the company with a future perspective. This step is fundamental to jumpstart the transformation process. Having a technology partner is essential to bring down cultural barriers, draw up a specific plan to transform any idea that might have come up during the discovery process into particular products and solutions, and, finally, exploit the value of the stored data.
The presence of the technology partner answers another big question of CEOs who have made progress with digital transformation: the attraction and retention of talents with digital skills. In general, specialized businesses have bigger and better tools and incentives to attract candidates, which is much more difficult for companies in agriculture, veterinary, the law, or any other field. Another added value is experience. Having already solved identical or similar challenges in more than one company, the technology partner saves time, accelerates processes, applies proven practices and methodologies, and, as a consequence, makes fewer mistakes.
In 2020, the technology partner promoted a nearly mandatory acceleration of investments in technology. In 2021, the partner was the turning point to consolidate innovation and required acceleration into a strategic vision. With this background, now that 2022 is almost here, the last big question that CEOs must ask themselves before the year-end toast is: What would happen if I do not think of digital transformation in terms of the transformation of the business, or if I do not look for a technology partner to guide me and contribute their talent? The answer is explicitly found in recent history. Fifty percent of the Fortune 500 companies listed 15 years ago no longer exist. This is a trend that is increasingly spilling over middle-market companies. If half the most prominent companies did not survive the vertiginous changes in their respective markets… what chance do middle-sector companies stand? That is why this is the time to make up your mind and decide if you will generate disruption and become the new Netflix of your industry or if you will sink into oblivion through obsolescence.