On 20th March, Marc Sansó gave a presentation as part of EAE Business School’s Focused Program. The Director of the MIB took the opportunity to tell the students about the situation of change that many executives are currently facing.
Traditionally, the competences required of a Director were authority, knowledge of a specific area and financial management. This type of skills and competences were the winning formula before the arrival of new technologies. However, in recent years, these competences have gradually changed. The current digital situation requires directors to measure up to the challenges of the day.
Marc Sansó gave a presentation at the School on this issue, in which he emphasized that “we have to keep one step ahead of these changes”. It is our job to disrupt, keep specialized in a certain area and organize a strategy to carry out.
The Director of the School’s MIB began be setting the scene. Although the Industrial Revolution reached its climax decades ago, this stage began with a disruptive technology, namely Watt’s steam engine. From that point onwards, the social development of mankind and the size of the population grew alongside each other exponentially. For the first time, the steam engine meant that progress was driven by a technological innovation. These innovations changed some of the professions that existed at the time, economic movements and life expectancy, as well as leading to subsequent advances such as electrification.
The Digital Age that we now live in also began with a disruptive technology in the form of digitization. Although we are still implementing these technologies, we have managed to develop subsequent advances, such as the internet. This technology has enabled us to surpass the operational limitations of our brains and, as a result, it has triggered changes in professions, settlements, life expectancy, communications and economic movements.
Sansó explained that, right now, we are undergoing a process of “technology adoption”. We have constantly increasing access to superior and more affordable technology. Therefore, we are currently following a model of exponential rather than linear development. This is all happening right now, and the curve of the exponential development is below current exponential developments.
One clear example given by Sansó was the evolution of computers. The growth triggered by the emergence of the ASCI White/Red computer was enormous, but that is nothing compared to the growth represented by new supercomputers. With the development of Tiahne-2 in 2013, it became the world’s most powerful supercomputer, with a performance of 33.86 petaflops. However, even this pales into insignificance compared to the Sunway Taihulight, the supercomputer built three years later, which boasted a performance of 90.01 petaflops.
Before applying the theory and practice of the disruption that we are witnessing, the Director of the School’s MIB asked two questions: How do we identify change processes in competitive environments? How do we evaluate the impact of change prosses in traditional organizations and value propositions? As Sansó explained, these changes come from specialized segments. Moreover, the changes do not generate a shift in terms of the definition of the product but rather the solution that it covers. In the beginning, as with any change, it tends to be met with rejection and uncertainty. As well as giving rise to new business agents, within the digital world, they usually involve profit redistribution.
This new business model means that digitization involves some inevitable costs. Sansó discussed the costs of friction, search and object of purchase. The friction costs involved in digitization are associated to the difficulties that exist between the value agent and the target market. Search costs refer to the efforts made by a customer when looking for a service or product. In terms of objects of purchase, the Director of MIB referred to the confusion in relation to the real reason for buying a product or service by our customer.
As Sansó emphasized, this digitization leads to the emergence of new competitors, who come on to the scene with a new model that minimizes the inefficiencies of previous models. The tasks performed by people in earlier models can now be performed more efficiently by machines. By reducing these costs, new business models can start competing.
The transformation of business is complicated and involves a constant tug-of-war between the strategic vision and operation execution. One cannot be successful without the other but few of us are comfortable in both fields. Sanso explained that, although digital business is a disruptive transformation, it is not possible to achieve a major change without visionaries willing to surpass the limitations, without worrying about the details. Gartner has been working over the last few years to help IT and sales executives to develop their digital business ambition. As a result, they can create the catalyst that drives their organizations into action. His model sets out a roadmap for digital business.
Sansó then moved on to another key point of his presentation. He emphasized that intuition is no use at all without specialization. While we may now know the key factors in this disruptive model, we cannot prematurely take the leap into this world of digitization without being well trained.
The Director of the MIB discussed the importance of Industry 4.0, by which we mean companies whose activity is based on the Internet of Things, cloud computing and big data. The advantage of such companies is that they have a great capacity to adapt to the environment. Their production processes are automated and interconnected thanks to the cloud, which enables them to adapt sooner. Unless we have a clear understanding of the activity of the Internet of Things and Industry 4.0, “we are dead”.
After embracing all this knowledge, it is important to know which strategy we are going to implement, and how we are going to execute and monitor these actions. This is where the competences required of a Director in the Digital Age are based, as Marc Sansó explained in his presentation.