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Digital transformation: adapting is not an option?

25 May 2020
Digital transformation: adapting is not an option? By Lancelot Bosques, Grande Ecole Programme Student

Thomas Cook, Forever 21, Subway, Kodak, all have one thing in common: they are large companies that have failed to reinvent themselves and take advantage of the digital revolution. All of them have experienced severe hardships. Most of them have gone bankrupt. Faced with this phenomenon, large companies are forced to change. Transformation to survive has become the watchword. Adapting has turned into the norm. But how far does this imperative of adaptation go? Who caused it? And how do consulting firms react in this new environment? A Google ex-employee can help us better understand these issues.

He used to work for Google, and now works at EY Wavespace Japan – an innovation hub – as the person responsible for accelerating consultants' projects by providing digital expertise and innovation techniques. These allow the hub to approach customer issues with a fresh-eyed perspective. Such techniques are mainly derived from Silicon Valley companies where "we go fast, we experiment, we make mistakes quickly and we start again" to do in "one or two days what consultants can generate in three to four months," he says.

Start-ups: the main driver of the digital revolution

Having worked for one of the world's largest technology companies, the interviewee recognizes that start-ups are a key driver of digital business transformation today. The facts are not lacking. Amazon, 1994. Google, 1998. Tesla, 2003. Facebook, 2004. Airbnb, 2008. Uber, 2009. As we can see, the date of creation of these digital giants does not exceed twenty-five years. Yet their young age has not prevented them and still does not prevent them from disrupting the global economy and our lifestyles.

These ex-start-ups undoubtedly have a tremendous power to transform the world as new tech companies do. This type of company urges large corporates to reinvent themselves and innovate to be able to "survive". Our vocabulary even underlines this phenomenon. Terms related to the lexical field of adaptation have been widely used in press reviews, academic articles and company press releases: agility, versatility, flexibility, interdisciplinarity, open innovation, cross-fertilization and so on. But if adaptation becomes the norm, what are the concrete impacts on the business of consulting firms?

Consultancies to the rescue of companies

The first observation is that in today’s context of uncertainty and complexity, large companies tend to generate business for consultancies. Their fears are the business fuel of consulting firms. Nevertheless, if adaptation becomes an almost vital prerogative for companies, how many of them dare to fundamentally transform their business? The interviewee’s answer is that the most ambitious projects represent at most one third of their clients’ requests. Mostly, it is less a question of digital transformation than digitization (of a single department, a few outlets or some processes).

Consulting firms try to react to these changes by diversifying their value offerings. One of the most recent trends is the excubation logic. Why would consultancies incubate start-ups and then recommend them to their clients? Can they really compete with accelerators like Y Combinator?

According to the interviewee, consulting firms have a different market focus than traditional start-up acceleration structures. Consultancies adopt a sales approach that is understandable for major accounts wishing to diversify or become more agile. "For many professionals from large companies, incubators and start-ups are… playing at recess". By their seriousness, consulting firms can ensure the link between these two antagonistic business worlds.

Consulting firms themselves in jeopardy?

If startups are the driving force behind the digital revolution, if large traditional companies must reinvent themselves to continue to perform, what about consulting firms? Are they being hit hard by the effects of the digital revolution?

Yes indeed, the digital revolution is not sparing anyone. Take the case of recruiting young talents. Newly graduated students from the best schools are demanding more collaborative, horizontal or flexible management methods. A 2018 Ipsos-BCG barometer points out the drivers of French 20-25-year-old students in their choice of company when they are about to leave school. The drivers are: the meaning given to one's job, the management style, CSR and environmental issues. For this last point, the "Student Manifesto for an ecological awakening" (Manifeste étudiant pour un réveil écologique) is the clearest evidence of this arising tendency. Many people decide not to pursue a linear career in a large group and opt for the agility of startups, more aligned with their values and expectations.

In that context, it is quite logical that consulting firms also suffer in their bid to attract new young talents. So how can they appeal? According to the manager, there is no secret: it is indeed necessary to succeed in being more inclusive, more agile, less hierarchical, to bring stability to young couples ready to start families, etc. In any case, it is a question that does not imply a clear and unequivocal answer since the cultural differences of each country may lead to different conclusions.

At the end of the interview, we discussed the topic of automation. His standpoint regarding the advent of new technologies is balanced. It is undeniable that machines will replace tasks that are currently being handled by men and women. But the adoption of these digital tools has its limits. I will only mention here what he said about crisis times. According to him, in the event of a crisis, "we must be able to know each other and trust each other." The human factor is irreplaceable in business. We will always need to meet, discuss, co-design, argue and make decisions together in the future. For these reasons, consulting still has a guaranteed future. Companies will keep seeking an outside support and human contact. If a mission fails, it will not be enough to simply blame the machines. They will not respond. Only humans will.

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