Rewiring the value chain: How AI and data enable true transformation
True digital transformations means rewiring the business model and value chain, not just going ‘paperless’ or moving files to the cloud. A new podcast from Strategic Gears dives into the topic, hosting a conversation with Nagaraj Padmanabhan and Hanni El Sayed, two seasoned leaders with over 20 years of global experience each in (digital) transformation.
The conversation touched on various issues related to digital transformations. The speakers agree that every transformation needs to start with a clear business case, measurable outcomes, and solid leadership. Many efforts fail when they remain ‘tech for tech’, rather than tech for business.
“The true digital is how organizations or enterprise creates value, delivers value and captures value,” said Nagaraj Padmanabhan, senior partner at Strategic Gears.
“Now what do I mean by that? A true digital transformation should fundamentally change the way organizational business model works and create value for the enterprise shareholders.
When a business decides to make a digital transformation, it should be a multi-faceted and should cut across multiple functions across the organization, front to back. The goals can be greater revenue growth, new revenue streams, monetization of data or assets, or bringing new products to market.
“It really needs to be an end-to-end transformation. Because if it’s not, then it just becomes an incremental upgrade or enhancement or modernization of a specific capability, and then you can’t really call it an end-to-end transformation,” said Hanni el Sayed, associate partner at Strategic Gears.
The rationale for launching a tech initiative should be tied up closely with the value that it will eventually create. It should be linked to the desired business outcome and the way the enterprise functions. This should be clear in the minds of business leaders even before any investments are made.
Misconceptions about digital transformation
There are some stubborn misconceptions when it comes to digital transformations. For example, very superficial digitalization might be misconstrued as a transformation. Simply shifting to a cloud service or moving towards paperless work is not considered a comprehensive transformation.
“If your processes and workflows are not completely transformed, then it is definitely not a digital transformation,” said El Sayed.
“It may be an incremental step or an enabler that helps you move towards digitization and digital transformation, but on its own, definitely going paperless I don’t believe it’s a digital transformation.”
The importance of organizational alignment
Transformations are complex and require resources, capacity, and capabilities from across the entire organization – from front-line sales to back-office operations, IT, and facilities. Without a clear, top-down vision that gets everyone on the same page, it’s very difficult to drive such a change.
Change management is equally important; the teams involved and impacted by the initiative must clearly understand the benefits for them.
“If you don’t have a crystal clear end goal in mind and you cannot articulate your vision from top down, it’s very difficult to drive such a transformation. And the change management is equally important,” said Padmanabhan.
AI as a technological enabler
AI is a powerful tool, but its successful implementation depends on having a solid foundation, especially concerning data. Many leaders want to leapfrog into advanced AI without establishing the basics first.
“A lot of organizations and C-suite executives are using AI as the buzzword of the day. But when it comes to AI, it’s really about setting up the foundations to ensure you have the right data, you have the right data and governance in place,” said El Sayed.
But despite the importance of AI and the data that backs it, the core differentiator between humans and AI remains a sense of judgment, ethics, and morality. AI can process information, but it cannot yet replicate human wisdom in complex ethical dilemmas.
AI should be viewed as a tool that creates opportunities for higher-value work, rather than a threat that replaces jobs. History shows that technological revolutions shift roles, not eliminate them entirely. Upskilling has been a big part of integrating AI effectively for many companies.
"People should be extremely happy about AI – and they can be really smart about leveraging and adapting AI to be on top of the game. The next 10 to 15 years are going to belong to professionals who have the ability to identify the problems which are worth solving at scale,” noted Padmanabhan.
Thriving in an era of change
Continuous learning and adaptability are crucial for staying relevant. It has become increasingly clear in recent years that having a ‘growth mindset’ is no longer optional in so many industries. True learning culture is not built on policies but on inspiration. Leaders must set the example, the speakers argued.
“No guidelines, no policy can motivate people to learn. So my mantra is to lead from the front and to inspire the team. It is very important to create a sense of followership through inspiration rather than guidelines, KPIs and policies,” said Padmanabhan.
“The learning should start at the top to create a sense of inspiration and followership and the entire organization will follow.”
