Digital Transformation and Technological Debt
“Even though human beings and societies have steadily adapted to change, on average, the rate of technological change is now accelerating so fast that it has risen above the average rate at which most people can absorb all these changes”. So Thomas Friedman summarizes the thought of Eric “Astro” Teller in the book “Thank You for Being Late” (1). For a visual representation of the concept, Teller drew Friedman a graph with two curves and a big dot. That graph is reconstructed in figure 1.
Figure 1 – Teller’s graph in “Thank You for Being Late” (1).
This reflection by Eric “Astro” Teller was taken up and further developed by Josh Bersin, Bill Pelster, Jeff Schwartz and Bernard van der Vyver of Deloitte in the introduction to the report “Rewriting the rules of digital age: 2017 Deloitte Global Human Capital Trends”(2). The authors only partially agree with Teller’s conclusions. If on the one hand they recognize that, over time, the gap is progressively widening, on the other they are convinced that individuals have a capacity to adapt to new technologies very quickly and invite us to consider separately the adaptability curves of individuals, companies, and institutions because their adaptation capacities are different, as illustrated in the graph shown in figure 2.
Figure 2 – Deloitte’s graph (2)
Both reflections are extremely interesting, and they inspired me to create the graph you see in Figure 3, related to the speed of digital transformation underway and the ability to adapt that people and social structures show.
Figure 3 – Technological debt graph
I prefer to talk about a technological debt rather than a gap to be filled, because the later we take action, the higher the interest payable to recover the accumulated gap will be.
I focus my reflection only on the digital transformation and not on the technology as a whole, because I believe that, among all the innovations that fuel this very strong technological acceleration, digital transformation represents the most pervasive aspect of this exponential progress. It involves, or may involve, every aspect of our private, work, and social lives.
I think it is significant, as suggested by the Deloitte team, to differentiate between the adaptability of individuals and social structures to digital transformation, and I agree that public institutions have more difficulties than companies, and companies have more difficulties than individuals, in internalizing the great change taking place.
People, in general, react far more quickly than companies in adopting emerging digital technologies and adapting to the “new normal” that the evolution of technology has created. At the consumer level, this reactivity is clear to everyone, such as with the global spread of smartphones and social platforms like Facebook and Instagram. But when we move from the consumer universe to the business world, the adaptability of individuals, in my opinion, does not differ much from the corporate one.
Many jobs will disappear in the near future. Many people who hold important roles also risk becoming obsolete with the evolution of the change taking place. While the concern is tangible, I do not see a great reactivity, an anxiety to understand the implications of change and acquire new skills to stay competitive in the labor market. Perhaps, people are overwhelmed by the change and feel at loss in face of this complexity. There is a lot of talk about the need for continuous learning, but people do not have a clear idea of where to start, the path to take, where to focus, and which training tools to use. If change is perceived as a threat, the most common practice is resistance to change.
Many companies, especially small and medium ones, bide their time. No entrepreneur wants his company to end like Kodak or for a new competitor to make his business ability irrelevant or marginal. But they face an unknown territory, and do not understand the language and dynamics. It is not about acquiring new management software or a new Computer numerical control (CNC) machine, to do better the things that have always been done before. It is about reinventing products and services; to rethink how they are created, conveyed and marketed; to acquire skills and talents to redesign the future of their companies; to create new ecosystems with new partners in which to move and operate successfully. It is about entering a new world where bits (the digital world) and atoms (the physical world) are tightly integrated with each other. The world is populated by many digital sirens that promise to achieve miraculous results with the adoption of their solutions, but often have very little experience in the world of atoms, and who are, in turn, looking for a new positioning.
Often, there are no liaison people in the company or outside who are able to suggest to the entrepreneur the paths to be undertaken, without having interests in specific solutions but with an updated knowledge of what the market can offer and of the trends that will condition the future.
Most public institutions show great difficulty in keeping up with technological development. There is a lack of full understanding of the phenomenon and, consequently, of the ability to govern it from the political point of view, just when it would be most needed. Just to give an example, we are still discussing in Italy and in Europe how to handle the Uber phenomenon when autonomous vehicles are already around the corner, and the concept of mobility itself is taking on unexplored connotations. There would be a need for a more holistic and forward-looking vision, for a new ability to redirect investments towards a future of value. Take the Internet. There is a deserving effort to make broadband available throughout the Italian territory. Apart from disputes between providers and results still far below expectations, we are moving in that direction. But the point, in my opinion, is another: broadband why and for whom? Will it be an infrastructure to allow companies to be more competitive and cities to be smarter, or will it be an infrastructure to better convey entertainment and gaming contents in ever larger quantities? I don’t mean they are mutually exclusive, but the needs in terms of data integrity and security are completely different and lead to different priorities in terms of investments. The whole matter should require a more careful governance by the regulators.
According to the latest Cisco Visual Networking Index: Forecast and Trends, 2017-2022(3), the percentage of video traffic of total Internet traffic will increase from 75% in 2017 to 82% in 2022. This is an impressive figure that should be of some concern to our policy makers. Will our infrastructure only be destined to support this growth? If so, I wonder what value can it bring to our companies and cities? In Holland, they have focused investments on creating a national coverage infrastructure for the Internet of Things with the aim of encouraging the digital development of companies and cities. Over a million and a half devices are already connected. This is a clear indicator of how politics can and should play a decisive role in designing the digital future of a nation. And here in Italy and in the rest of Europe? Do we leave our future at the mercy of the so-called market or are we able to develop policies capable of creating real value?
- Friedman, T. L. (2017) “Thank You for Being Late: An Optimist’s Guide to Thriving in the Age of Accelerations”. Farrar, Straus and Giroux, New York.
- Bersin, J., Pelster, B., Schwartz, J., van der Vyver, B., (2017) “Introduction: Rewriting the Rules of Digital Age” in “2017 Deloitte Global Human Capital Trends”
- Cisco Visual Networking Index: Forecast and Trends, 2017–2022 – November 26, 2018 – https://www.cisco.com/c/en/us/solutions/collateral/service-provider/visual-networking-index-vni/white-paper-c11-741490.html
Bocci, F. (2019) Digital Transformation and Technological Debt. Being Better Matters 28 February. Available at https://www.beingbettermatters.net/digital-transformation-and-technological-debt/ (accessed: date of your access)
Fabrizio is a trainer, facilitator and consultant in strategic thinking, performance measurement and management, organization design and change, digital transformation. He operates through the brand Bocci Consulting, consults with public sector, profit-driven and not-for-profit organizations, coaches executives in Strategy and Balanced Scorecard and speaks internationally.