How to Drive a Successful Digital Transformation
Carlos Moreira, Head of Digital Transformation at Sumol+Compal, shares his learnings, best practices, and experiences from more than ten years in the digital transformation space.
What is the Greatest Barrier to Digital Transformation?
The main obstacle to digital transformation, Carlos explained, is the resistance to change. Even with a clear vision and investment in new technology, the success of a transformation relies heavily on the people and culture within the organization. Carlos has observed that many change programs fail because the culture of the organization is not taken into consideration. Implementing changes is often more difficult than simply developing prototypes and testing new solutions. It is important for organizations to recognize the magnitude of this challenge and to have a change management program in place to address it.
Is a Change Management Program the Best Way to Address This?
To ensure the success of a digital transformation effort, Carlos advised taking a holistic approach that goes beyond simply implementing a change management program. It is crucial to identify current pain points and align them with the company's long-term strategy, and to allocate sufficient time and resources to building digital capabilities. Additionally, building goodwill within the organization and maintaining a strong connection to ongoing business operations can facilitate the implementation of changes.
"That's something we are doing at Sumol+Compal and we are taking our time with it, and our board members recognize the value within these initiatives, as well as the people around us from multiple departments. Yes, it's taking time and it's not as sexy because the revenue or return on investment is the same, but it will be. We are pushing for a little further down the road and this we believe will help us tremendously."
Carlos Moreira -
Head of Digital Transformation at Sumol+Compal
What Innovations are Catching Your Attention?
Before diving into the technology itself, Carlos explained how it is essential to consider the proper approach to implementing new trends within an organization. While it is encouraging to see individual departments taking initiative to experiment with technology and innovation, it is important for these efforts to be cohesive and aligned with the overall strategy of the organization. Technology has the potential to benefit an organization greatly, but it is crucial for leadership to understand and utilize these capabilities to their full potential. Middle management is often more attuned to the potential of technology, but it is important for leaders at all levels to be aware and educated about how it can be leveraged for success.
"This means that there is a need for a paradigm shift where everyone has a clear understanding of the capabilities, so that the company's strategy is indirectly influenced by the capabilities of the technology. Where I see the role of technology and digital transformation is, in fact, the core of coordinating these efforts and acting as a clear enabler or potentiator of technology within the organization across multiple departments. Each department has its own issues and pain points, and you really need a third party that looks at each of the problems and is able to connect the dots and present that to the board members. From what I'm seeing right now, at least in large organizations, which is my reality, it's not really about VR or AR. It's much more about AI and process mining; anything related to optimization, efficiency, and automation of existing processes. These may not be the sexiest topics, but if done correctly, they can yield fantastic results."
What is Your Advice to Leaders Embarking on a Digital Transformation Journey?
In his work, Carlos frequently references the concept of ambidexterity. In order to effectively navigate digital transformation, organizations must operate with two engines: one that maintains and optimizes current business processes, and another that actively seeks out and explores new opportunities. This exploration should not be confined to traditional research and development, but rather should encompass all potential avenues for innovation within the organization's value chain.
To successfully implement these innovations, it is essential to have a dedicated unit for exploration and a structured approach for integrating them into the organization. Maintaining a clear separation between these two engines can prevent new business models from disrupting existing ones, but this requires a departure from traditional structures, cultures, and processes.
“Business as usual is usually a well-oiled machine that is optimized to deliver a specific outcome. Let's use Sumol+Compal as an example. We have five factories that are focused on high volumes. Our plant managers are focused on efficiency, high volumes, and low product rotation in order to achieve the best possible outcomes from our machines. However, current trends in the food and beverage industry involve personalization and a limited series of products, which is on the opposite side of the spectrum. It's unlikely that existing business as usual will easily accept this new reality and be happy about it because their objectives are not aligned with it. There is nothing in the business that indicates this is a good thing. People need to recognize that the other engine needs to be close by, but not entirely on top of the existing structure. I strongly suggest that anyone interested in this topic look into Clayton Christensen's work on this.”
When is Your Newsletter Coming?
The newsletter will cover the unique approach that Sumol+Compal is taking during the initial phase of their digital transformation. Carlos will share details on the various methodologies, tools, and frameworks they are using, and invite insights and critiques from readers. The hope is that the insights gained from this case study will be valuable to others embarking on their own digital transformation journeys.
"I believe the most significant aspect of what we did was the ability to involve the entire company. We conducted workshops with every department in the organization where we were able to sit down and listen, and complete specific exercises to understand how people view the role of technology, the role of their own future within the company, and share how digital transformation does not have to be considered a bogeyman that will steal your job. The way we dealt with this was by targeting existing pain points and conflicts and trying to be a helpful presence. This is what I will be sharing in my next article."
1.One of the main obstacles to digital transformation is resistance to change, which can be addressed through a change management program.
2.To successfully implement digital transformation, it is important to identify current pain points and align them with the company's long-term strategy, allocate sufficient time and resources to building digital capabilities, and maintain a strong connection to ongoing business operations.
3.It is crucial for organizations to approach new technology trends in a cohesive and aligned manner, with leadership at all levels understanding and utilizing technology capabilities to their full potential.
4.Carlos sees AI, process mining, and anything related to optimization, efficiency, and automation of existing processes as being particularly important for large organizations in the digital transformation space.
Carlos, thank you so much for joining me today for this Aim10x interview. I'm really looking forward to diving deeper into digital transformation with you. So just to begin, could you tell me a little bit about what you do and introduce yourself? So, hey,
first of all, thank you for having me.
It's always a pleasure. Very happy to share the knowledge that I have with you and everyone listening. So my name is Carlos Moreria, and I'm responsible for the digital transformation program at SUMOL+COMPAL. We are a food and beverage company and the leader in our market in Portugal.
And our products are available in more than 60 countries worldwide. So that's it for my responsibilities. Okay. And so you are leading digital transformation.
And I know that this is something that you're really passionate about. Could you tell me what excites you so much about it? Honestly,
I've been working in digital transformation for almost ten years now. And that's something that for me was very clear from the very start, which is the ability that we have, if you're working in digital transformation, ability that you have for empowering and enacting change into organizations and into people, and also alongside that, being able to see and work with technology, be it existing or regular technology or the emergent new ones that everyone wants to talk about and work with.
So I think it's an area where you can on one hand, actually change lives and change how people work and go on with their jobs and how fulfilled they feel, but also to be very close to the digital technology, and that's something that at least for me, I like a lot. So I feel very fulfilled, very happy and super challenged because it's always changing and it's always evolving. You mentioned the word challenge.
So what would you say in your experience is the greatest barrier to implementing a digital transformation strategy?
Well, I would say that the biggest challenge is people's aversion to change. Okay. I think that regardless of your vision, regardless of the technology that you already have or the money that you have to put in place to buy new technology, people and culture is the core element for all of this. So, when looking into my experience, I feel that most of the times the transformation programs that I've been a part of have failed or didn't reach their full capacity or full potential.
Simply because the organization did not recognize that culture was a big part of the change. So, making new prototypes and testing new solutions, looking to pain points and all the drills about digital transformation, they are not enough because people will tell you that they don't want to change. But also the ones that tell you that they do want change and they want to make it happen. They will struggle, when it comes to that moment when suddenly things are different.
They will face hardships. And that's something that most of the time certain companies and organizations lack to fully understand the extent of the challenge and the need to have a change management program in place as well. So you would say that the
best way to actually address that barrier is through a change management program. Yes, but not only.
Yes, but not only because, I mean, that's a whole different topic and that's something that should and must be addressed. Yes. But I would also say that something that has helped me a lot is to start clearly the digital transformation program by the digitalization side of it. So looking to the business as usual, understanding the existing pain points, And how are people or existing operations struggling due to those pain points and try to help first the business as usual.
So don't just jump directly into the flashes and the innovation theater that many people talk about. Don't jump to that. You need to change the culture. You need to empower people.
So first, and foremost go towards the existing pain points, but link them. Yes, link them directly and prioritize them directly to the strategy of the company for the next years. So if you have ideas and you have your own digital transformation strategy to change your organization and to grow ten times, I'd say be sure to give the first year in two years of your digital transformation program to a strong digitalization because this will ensure two main things that will help you a lot. The first one is the goodwill from the organization.
So people will look into the digital transformation program and it won't feel like an outsider to their activities, but someone that has helped them in the past. And if you need their help along the way, they will be there for you. And the second thing is you will be building new technology foundations that will be required for the fantastic flights that you want to make. Because even if you bring blockchain, AR, VR for the organization.
That would be amazing. But most likely, if you have any link which normally exists for most of the new ventures. If you have any link to the business as usual, you will benefit greatly from having the right infrastructure and having an organized business as usual, With good platforms and good processes so that you can actually leverage on that. And that's something that we are doing at SUMOL+COMPAL and we are taking our time and our board members recognize the value within these initiatives and also the people that surround us from the multiple departments do recognize and do value what we're doing right now.
So, yes, it's taking time. It's not as sexy. No, it's not. The revenue or the return on investment is the same.
No, it's not. But that's something that we are pushing for a little further down the road. And we believe that this will help us tremendously. I also wanted to talk a little bit about your newsletter that you share on LinkedIn Unboxing Digital Transformation.
I really enjoyed reading it, especially the last one which was Leading Digital Transformation. So I wanted to dive a little deeper into that with you. Since you clearly stay up to date with digital transformation and the latest trends, what are
some of the new innovations on the market that are really catching your attention these days? Well, I think before going or jumping into the technology themselves, I think we need to talk a little bit about how these new trends need to be tackled inside organizations.
So if you look into existing organizations, many times different departments are taking different approaches. They are themselves experimenting with new technology, new innovations. Which is interesting. And it shows proactive people trying to make an effort to change for the good.
But these efforts inside realisations, they need to be concentrated and they need to be somehow coordinated. Okay. Because right now and I talk a little bit about that in my previous article, which is, technology is so ubiquitous nowadays that everyone can have a chance and everyone has the possibility to make something different. But when we look into the leaderships inside organizations, you can see that the middle levels are people that can actually act upon and understand.
But when you go to the top leadership inside organizations, there is clearly a lack of understanding of the potential of technology inside organizations. And this shift is somehow lagging behind when it comes to the top leaders inside organizations. And this means that when you look into this paradigm shift on capabilities demands out there, everyone needs to be clearly in their top game when it comes to technology, not necessarily in terms of coding, but in terms of understanding the capabilities, so that the strategy of the company is indirectly influenced by the capabilities of technology.
And this is something that when you look into more than what is captured for me in terms of innovations, this is mostly the topic that concerns me when it comes to to organizations and to digital transformation in terms of trend. Of
course, where I see technology and the role of digital transformation is in fact a little bit coordinating these efforts and acting as a clear enabler, a potentiator of technology inside the organizations and showcasing the ability to coordinate these ventures inside or leveraging technology inside of organizations between multiple departments. Because each department has their own troubles, their own pain points and challenges.
And you really need to have a separate or a third party, let's say, that looks into each of the problems and is able to connect the dots and showcase for the board members what is really in here for the technology, not in terms of specifics, that might be a symptom of a much bigger problem inside the organization. So that's clearly something that I don't I see right now. It's not really about at least in large organizations again, which is my reality. It's not really about VR/AR and so on.
It is much more about artificial intelligence, process mining. You know, everything that is connected to optimization, efficiency, automation of existing processes. Those are maybe again, not so sexy things, but that nowadays, if worked out correctly, they can produce stupendous outcomes. So that's, that's where I'm focused and that's where I'm looking at right now.
And you touched upon this a little bit earlier about the leaders, the difference in the leadership, I guess the middle management or the middle leaders and those on top and the difference in how they understand or look at these kinds of innovations. What would then
be your advice to the leaders perhaps on top as they're looking to unlock the potential in their organizations through digital transformation? I think that. nowadays organizations need to understand, and this has been written in literature for the past 10, 15 years.
Which is, the concept called Ambidexterity, meaning that you need to understand that your organization needs to work with two engines, one engine that is exploiting the existing business as usual, and another engine which is clearly exploring new opportunities. And this engine is an exploration engine. It should not be viewed solely as your R&D department. Okay.
That's not what we're talking about. So when we are exploring here it's literally exploring everything that can be connected to the different contexts inside your value chain, because you can be talking about new business models, new technology disruptions that need to be evaluated, considered, explored and challenged. But all of this needs to happen, again, as I was mentioning earlier, in a coordinated fashion. Okay.
There is no place for innovation to be spurred and acted upon the business as usual. The business as usual is usually a very well oiled machine that is optimised to deliver specific outcomes. Okay, let's use our example at SUMPOL+COMPAL. We have five factories, five plants that are focused on high volumes.
Okay. Our managers, our plant managers are focused on efficiency in high volumes, low product rotation, so that we have the most outcome possible from our machines. If we look into what are the usual the trends right now in food and beverage, we are talking about personalization. We are talking about shorts and a limited series of products.
And that's clearly on the other side of the spectrum. How can we assign or expect the existing business as usual to accept that this will be the new reality and have a smile on their faces? That's not going to happen. And because their objectives are not aligned with that.
There's nothing in our business model stating that this is a good thing. So we clearly need to, as SUMOL+COMPAL and everyone else, needs to recognize that there needs to be another engine that sits very close by and but not entirely on top of the existing structure. And I think for everyone or for anyone interested in the topic, I strongly suggest to you guys to have a look into Clayton Christensen's work on this and also some other books that I can suggest that verse the need for new business units to actually execute this exploration portfolio. And finally, when is your next
newsletter out and what is it going to be about?
What can we expect? Now, I've been struggling to write that one for the past months, but I'm working on it. And I think that the most relevant topic right now that I could be writing about is in fact how we have been conducting this initial phase of our digital transformation program at SUMOL+COMPAL. From what I've been discussing with some colleagues that also work in digital transformation, I believe that the way we approached it, using services on methodology and tools and frameworks, is a little bit unique and I really want to show a little bit more on how we've done that.
And actually get some insights and some critiques, some reviews, some feedback on how it went. Maybe it can help some of the people also tracking their own path inside digital transformation. Because, I mean, for us, it was very relevant from the very beginning to manage expectations from the top leaders, understand the context or historical context even from SUMOL+COMPAL, everything that was happening at SUMOL+COMPAL has happened I got here. And also I think the most relevant aspects of what we did was the ability, again, to involve the whole company.
So we made workshops with every department in the organization and we managed to sit down and to listen and to make some workshops, some specific exercises to help people think a little bit about the role of technology, the role of their own future inside the company, and how digital transformation could be not necessarily a boogeyman, you know. Because every time that you talk about digital transformation in legacy companies, there is always a clear eyes upon you. As you're bringing technology and you're bringing the robots and the artificial intelligence and so on, and you're going to steal our jobs.
That's pretty much there many times and you have to deal with that. And the way we dealt with it was actually targeting existing pain points and conflicts and trying to be someone that's actually there. And then this next article, that's where I'm going to focus the most, trying to help people understand how we've done it. Maybe that can help some others doing this, doing this kind of job.
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