The Holy Trinity of Transformation – Culture, Leadership, and Sustainability

The digital transformation is not a panacea; it is a complex but essential obligation for the company to change.

Successful companies reaped significant benefits. The Deloitte Digital Transformation Survey 2020 showed that greater digital maturity goes hand in hand with better financial performance. Companies with greater maturity in this year’s sample were about three times more likely than companies with less maturity to report annual growth in net revenues and net profit margins, a pattern that is consistent across sectors.

COVID is a catalyst for change

COVID-19’s stream of digitally-oriented solutions offers companies a unique opportunity to reflect on how technology decisions are made and apply them in new and meaningful ways. Covid-19 has significantly accelerated the adoption of technology in all sectors. According to a Fortune-Deloitte CEO Survey and KPMG 2020 CEO Perspective Survey, more than 75% of CEOs agreed that the pandemic accelerated their company’s transformation plans. As Microsoft CEO Satya Nadella noted, “we have seen two years of digital transformation in two months.”

Most people forget that digital transformation has less to do with technology and more to do with the culture and change in the organization’s business. Key stakeholders need to fundamentally rethink customer experience, business models, and operations. It is about finding new ways to add value, generate revenue, improve efficiency and, most importantly, promote sustainable innovation. Remember that moving to the cloud is not a digital transformation.

Crisis of racial innovation

I firmly believe that uncertainty stimulates creativity. Crises are the breeding ground for innovation. You need to make decisions quickly and you will never have enough time or information to carefully consider difficult choices.

McKinsey’s analysis shows that courageous innovators come out of crises before their colleagues and have had an advantage for years. Innovators not only outperformed the market during the financial crisis but also widened the gap during and after the recovery. The analysis of the performance of approximately 2,000 companies between 2007 and 2017 about the S&P 500 confirms these conclusions: By remaining focused on growth and innovation during a recession, the top performers achieved higher returns for shareholders.

The focus on growth and innovation during a recession helped top performers achieve higher returns for shareholders

Antonio Neri and other leaders say the pace of the technological revolution is accelerating, that digital transformation and local digital businesses are leaving their competitors behind.

So, what does it take to succeed?

Do existing leadership teams have the resources to bring about a true digital transformation? I thought it would be a good idea to watch how companies allocate essential resources. A study by Harvard professors and executives Darden and Spencer Stuart, published in the Harvard Business Review, addressed this specific problem. The team analyzed more than 100 search criteria for C-suite positions at Fortune 1000 companies in a wide variety of sectors and the results were very impressive.

Even before the pandemic, there was an increase in research on technology and digital skills: 59% of searches by managers involved technological or digital knowledge. The company’s boards of directors requested these skills in a wide variety of roles. This fact also indicates that people with the right skills are already in leadership positions. It is not new that 100% of the specifications for CIOs, CMOs, and CTOs sought technical or digital skills. However, the features that were overlooked in the search for technology and digital skills were more revealing. Less than a third of the job specifications for CHROs and directors of accounting have declared the necessary skills. Even more worrying, only 40-60% of job seekers as CEO, CEO, and CFO need digital knowledge.

At the very least, we need all leaders to understand how to build digital businesses. This change alone can make the difference between success and failure.

But is that enough for now?

Almost all organizations have their own efforts to increase the digital transformation in 2020-2021. Success depends on choosing the right technology platform, as well as leadership, agility, talent, and a clear vision. A new and emerging factor is the desire of consumers for the brands they use to focus on sustainability issues. The same applies to employees and prospective employees. The driving force behind this change is largely due to the idea that the environmental footprint of human activities is a probable cause of the crisis we face today.

As we continue to talk about common polluters, such as public services, transport, agriculture, and the causes of climate change, some less discussed and more interesting facts will make the subject more understandable.

Did you know that Google is responsible for about 40% of the web’s environmental footprint, processing 3.5 billion searches per day? They have been CO2 neutral since 2007, but their infrastructure still emits a significant amount of CO2.

  • Did you know that Bitcoin currently uses enough energy (121 terawatt-hours) to run Cambridge University for almost 700 years?

To address sustainability in a meaningful way, we need to take a holistic view of the actors, their impact and then look for a beneficial solution. Otherwise, it is doomed to fail.

As a first step, 26 corporate CEOs in Europe signed a statement in support of the EU’s green and digital transformation. They formed a European Green Digital Coalition, which is committed on behalf of their companies not only to make the technology sector more sustainable, circular, and zero polluting, but also the sustainability goals of other priority sectors, such as energy, transport, agriculture, and construction, while contributing to an innovative, inclusive and resilient society.

In the future, a company’s commitment to ESG-related programs will increase its ability to attract investors and retain talent. Companies also realize that, when integrated with strategic digital transformation decisions, ESG factors can provide potential long-term benefits. One of the most important levers for switching to sustainable systems is technology, a lot of technology, and a lot of investment. But how to make it accessible to everyone and, at the same time, profitable for suppliers?

HPE is a company that has made significant progress in this direction by adopting the dual doctrine of digital transformation and sustainability. Your customers can reduce their energy costs by more than 30%, eliminating the oversupply of HPE GreenLake. In fact, its consumption-based offering reduced the customer’s carbon footprint by 50% in one case. Minimizing electronic waste is also another goal for them.

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