Daniel:

Hi, I’m Daniel Torres Dwyer and welcome to LS International’s career success podcast. Digital transformation is one of the buzzwords of the moment. But what does this actually mean as a concept? And, what are the consequences for an organization? I’ve invited Fabio Bozzacchi to discuss this topic today. Mister Bozzacchi is a supply chain leader that has worked with companies like Procter and Gamble, Merck Pharma, and Philip Morris, where he’s led global supply chain organizations at the SVP level. Hi Fabio, thanks for joining us today!

Fabio:

Hi Daniel, thank you very much for calling and, how are you?

Daniel:

I’m doing great and it’s a pleasure to be here and really looking forward to speaking about a topic that we’ve heard about quite a lot out there, I think, digital transformation.

Fabio:

Yes, indeed. Very, very important in these days.

Daniel:

Exactly. What does it actually mean, digital transformation?

Fabio:

I think that digital transformation is easily a cultural change and let me expand on two critical words that have just been introduced. So, I think it’s indeed a change because it implies the thinking, the implementation, and the renewal of the systems on the work processes inside the team, the organization, and even the entire corporation.

Daniel:

Ok.

Fabio:

The thinking about what’s needed to win in the future for the company is respective about the sector and the market really. This is the leadership exercise to rendition the future. The implementation plan is to be carefully planned in parallel to business development, and on top of the continuous improvement. The renewal of the work processes combined with assistance is logical, right? It’s a clear step. But it isn’t for resistance to move into a new digital and more automated work processes is much harder if the legacy systems of our processes are still existing and allowed to be maintained in parallel for a long period of time. In my experience, if I may one principal, we’ve been using to move faster, was the once landed, burn the ship. Meaning that after a careful plan A for the roll out, it’s designed a plan B for a contingency that’s in place; there is no reason to keep more than assistance alive for longer than 2, maximum 3 weeks.

Daniel:

Ok.

Fabio:

This is the cultural change I was referring before. So the cultural, the evidence of the value, the principal, behaviour of the operation. While the value and the principal can be stated for a long time since the start of the company, the digital transformation requires behavioural change. In the respect of the value and the principal. In my experience, I had several examples, but the 2 I can share are the following. So, I would call it people connecting with people, and the other one is believing the data.

We often plan for meetings with our teams. In the past when I joined a company in FMCG we would used to have it face-to-face. This implied flights, costs, time away from home, long hours… Today, we can, I can run a globally leadership team meeting in a virtual collaboration room. It’s face-to-face, but it’s no flights, no stress, maybe just a bit of a reasonable time-zone adaptation. The point here is, yes we can run this kind of meetings, but what about the behaviors inside the meetings? What about the time together? When we were all in the room, how can we recreate that team-building spirit? This shows that we can leverage the digital technology by maintaining a real face-to-face event, where you use frequency during the year, where the objective will not only be the business, but also the team-building activity, the relationship development is still needed. And that’s an experience of life.

The other one is believing the data and use it. The second example is the most simple and tangible. The reporting and scorecards. I’m sure you experienced this one as well. So, one time, we digitized all the reporting system, all data reports were made available through this organization tools on any leadership team member. So, practically it was on their iPhone, mobile, iPad… Next, everyday, on your fingertips you could get all the data. And when I mean the data, I mean performance, lying processes liability, availability in the market, customer service… Is it great? I think it’s great. But then, I just realized that some members didn’t use it. Rather they were still getting an old scorecard through an email chain.

Daniel:

Yeah.

Fabio:

So, what was the behavior there? What was the behavior we showed to the organization? Yes, we invested into the digital scorecards and the reporting to be faster just in time, but the past was better. I had to come back to my team and ask for “burn the ship”. So, leave the legacy behind and move. I think this is an example.

Daniel:

Yes, it is.

Fabio:

About how much the leadership behavior can make the digital transformation successful or a never-ending program.

Daniel:

Yeah, I think this example was very representative. Digital transformation is, as I’ve said before, that we’ve heard a lot about it, I think even to the extreme of it becoming a buzzword. Why do you think there is this feeling around?

Fabio:

Ah, yeah. I think you’re definitely right. So, it can become a buzzword because organizations often expect that within new system developments through artificial intelligence – so, machine learning – application of the results will come and it will be visible in one-go, immediately. I would say never underestimate the resistance and the fact that the works needed – and I’m back to this one – have not become a compelling need for the leadership, for the organization. Then, the moving to digital is no more than just another hub in your iPhone.

Let me give you another example, let me use “some time ago”. So, some time ago, we invision to move into autonomous planning. We call it…

Daniel:

What is autonomous planning exactly?

Fabio:

Yeah, we call it subdriving operation.

Daniel:

Ok.

Fabio:

Practically, the big idea was that all the parameters were maintained in the system, while we cannot let the system plan autonomously. Those were the predicted trails. In applying few algorithms of machine learning with an external company to optimize it and progressively removing the need for a planner interaction, I mean a planner decision – is it a right plan, is it the good plan, is it delivering the profitability, is it delivering the right inventory level… Well, this is a big idea, right? The issue is that often we underestimate and we underestimated one of the fundamental fill in the digital era. And this is what I think, it’s the master data accuracy. And we think that the system can do all the things. Indeed, it can be done, but the results require, still, a lot of planning intervention. And why? If you ask the question of why, it’s because the master data, in planning master data is not right. It’s not exactly having the effect you’d like

In net, I would say the digital move becomes a buzzword if the assessment of what is needed is not done thoughtfully. And the implementation plan is not detailed and accurate enough. As an example, we can consider that an extremely detailed assessment of the master data is always the first step of the journey. This is my… the experience I’ve ever had.

Daniel:

Yeah.

Fabio:

If the assessment is not done properly, the operation will not see any tangible improvement, and then, voilà, the resistance comes again versus the legacy, and it will be impossible to overcome. The typical sentence is “I don’t trust it. I will do what I was always doing”. That’s the buzzword.

Daniel:

Yeah. Ok, interesting. And, you know, we’re having all this discussion about, you know, digital transformation, what it means, how to do it better, how to do it worse… But why is it actually necessary, or important to an organization to undergo this transformation and spend money and time?

Fabio:

Yes. That’s a good question. I would say that’s a hard question, but let me take it in this way. I would say there is no other way to compete in these days than to be really at the leading gage about the digital transformation. We live in an expansion developing time, I think people will explain very well how, I mean, what expansion means. But what today is just an idea, it can be very probably designed and experimented in a 3rd time that we had two years ago. So the customer in the consumers are not any longer willing to pay for any inefficiencies. Every penny counts. And the competition in service differentiation is everyday the challenge in any industry and sector. I mean it’s in pharma, as well as FMCG, and it is in technical equipment. The digital transformation is the most important, the most needed change to be fast an, and adapting fast to the changes.

We can also test fast, fail small and learn and improve big-time. An example based on experience is the traceability, big deal in pharma industry.

Daniel:

Yeah.

Fabio:

Traceability is no longer only an industry work process. The traceability has become a competitive advantage to secure quality and service along the entire supply chain. In the past, everything, I would say, was done even manually. So this is valid for a shopper, as well as a customer and supply relationship. “I want to know where my chemicals are”, “when they got delivered”, “which is the certificates of productions and quality” and all that. And I can really have it on a snapshot. This means that the traceability through digital can grow your business: you can provide a better service at a lower cost to the consumer, as well as remove losses inside the supply chain. Could we do it some years ago? Oh, yeah, sure. But the level of data we have today, and the ability to manipulate them thousand times better and faster, counts simply amazing. So that’s what I think is important.

Daniel:

That shed some light on it. And if you had to break it down, what do you think are the most important steps to lead a digital transformation?

Fabio:

Based on my experience, and again, I’m just providing you with what I think it is, the 3 most important things are: creating the vision about the needed change and the value of it; engage and communicate the change properly within the organization at each and every level, so go up to the CEO, down to the last person in your organization; and a detailed planning that continuously updates. Continuously updates as the most credible. As it has been evident to me, then we need to explain why we are changing and transforming to the digital move. And designing the new organization according with the system and the work processes. Let me expand with this one. Often we introduce some AI interfaces and some machine learning, but we forget that now the organization is still in the old structure. And if the old structure is an old, vertical hierarchical way and now we are working horizontal, because the data is visible to everybody, you need to make sure that the new digital environment connects with this real time-structure. So, the visibility of the data happens to be at the lower level. So, creating the vision is enough but it’s not all. Engaging communication it’s ok. But the planning and the continuous updates will make the system, and then you got to change your organization accordingly, because, otherwise, you miss the leadership engagement at each and every level, and the governance on this transformation.

Daniel:

Yeah, because you were mentioning resistance before, and, you know, people sticking to their old ways, which I think, you know, related also to the company culture, is probably the most intangible and probably most challenging part of this whole process. What’s your take, Fabio, on how to overcome that resistance?

Fabio:

I love this question because resistance and objections is exactly something that we, as a leadership, we need to influence, and then try to overcome. I think the only way to remove the objections is to stay clear to what is a compelling move for the transformation. Why did we make the company more profitable? Winning in the market, and what’s for you, so your work will be more meaningful.

Daniel:

Yeah.

Fabio:

So, instead of transactional work, you move to judgemental, decisions, scenario analysis through big data, AI, machine learning… So, the way to overcome the resistance is connected also to the digital awareness, I would call it, digital awareness index inside the company. If it is low then you would have gained a very clear thinking about the business and what it is needed, and a very detailed implementation plan, a strong clarity about the of seasonal work-processes. People sometimes change platforms, I would never mention the large platforms that are in the markets, and then they lose sight of what these platforms are going to deliver. And then the leadership says “ok, I have a huge investment. What’s the return?”. And, if it is not clear, then the digital transformation will not happen, that would create resistance.

Yet we may say this is a project management basic requirement, right? So, I mean, I would say this is not a big invention, but what a belief. What is behind the removal of the resistance? The objection is the visible leadership commitment to make it happen, communicate clearly and provide regular update about the status and, most importantly, the achievements. The organization will look at the leaders to see if the behaviours are changing. People will see and feel if it is a buzzword – and I come back to your previous question – or it is a fashion of the week, and behave the same way that it will.

Let me take back the example of scorecarding. Am I using the new system, or am I still going to the people to ask the numbers? That will make the difference. I would say I leave it to you, but on top and beyond the technical mastery that is absolutely needed at each and every level, leadership is at the core of the transformation, as any in the past.

In those days, I would say just 50 years ago, a man decided to take over control from a computer, and landed with only 10 seconds of remaining fuel.

Daniel:

Wow.

Fabio:

This is the human factor through the confidence and the leadership skills to lead any large transformation. I would mention that the sentence was and the statement of that guy was “Houston, the ego has landed”. I’m referring to the man on the moon, right? That happened exactly on those days, 50 years ago.

Daniel:

Yeah.

Fabio:

So I would never forget the leadership is attached to people and there is a strong human factor, even in the digital transformation.

Daniel:

Thinking digital, at the end of the day there are some, of course – even though all the world is changing a lot – there are some common factors of success, compared to fifty and probably 5 thousands years ago.

Fabio:

Absolutely.

Daniel:

Excellent. Well, look, Fabio, it was a pleasure to have you here. I really enjoyed this conversation about digital transformation, resistance, culture change, and leadership. So, thanks for joining us today.

Fabio:

Thank you very much and looking forward to the next one!

Daniel:

Excellent, and thank you to all our listeners and see you in the next edition of the podcast.