Digital TransformationI recently returned from my first trip to Brazil, where I spent a week meeting with executives of several of that country’s largest companies.  The eighteen workshops, meetings and lectures were focused on the topic of Digital Transformation, and my treatment of this topic in “Jerk”. Everyone is talking about Digital Transformation, but many are still struggling to understand what it is, why it is necessary, and how to actually do it.    This was as true in Brazil as in all of the other countries I’ve recently visited.  But, in this set of discussions a few new themes began to emerge that may provide some clarity about digital transformation in Brazil, and I hope that these may resonate with others, too.

Risk Avoidance Versus Risk Management

It is almost impossible to discuss transformation without also discussing risk.  Over the last twenty years most companies have built extremely robust risk management infrastructures.  Expectations of quarterly growth, predictable profits and constant improvement mean that risk must be managed with great care.  However, there can be a point at which risk management becomes risk avoidance – stifling innovation. In transformation, your organization may have an idea of where you want to go, but what it will take to get there will be difficult to predict. Becoming comfortable with the risk associated with change is a key to success with transformation.

This risk hurdle is even greater in Brazil.  While many countries around the world have implemented low, or even negative, interest rates to encourage economic growth, Brazil currently holds its rate at over 14%.  This high rate is being used to combat high inflation, and it makes investment in business a significant challenge.  These executives are being pressed to ensure their investments produce high enough returns to recover this rate, at a time when they also need to be transforming themselves.

What was clear in these discussions was that risk avoidance is the wrong approach. To succeed, organizations must be open to taking risks and accepting a degree of ambiguity.  But to do so successfully, it is best to take many small risks quickly, rather than a few big risks that take a long time to resolve themselves.  As I state in “Jerk”, fail fast, fail small and learn quickly.

Value Versus Values

Another common theme in our discussions was the increasing social awareness of Brazilians, particularly amongst younger people. The purchasing power of Millennials and Gen Z is growing, as they represent an ever-larger portion of the country’s population.  These younger people are digitally-centered, and socially aware.  Value for money certainly matters to this group of consumers, but so too do values, social responsibility and stewardship.

These are things that are difficult to represent on a balance sheet or a return on investment analysis, yet they are rapidly growing as the differentiators for young people looking for employment. To capture and keep these customers, organizations must continue to compete on value, while differentiating on values. Engaging customers’ sense of morals and purpose is becoming the deciding factor, and organizations must clearly state where they stand on social issues, and back that up with deeds.

The Flattened Organization

Another common theme was the desire of younger people to have influence on the job.  Many of the companies I met with have long histories in Brazil.  They have traditional business models and traditional, hierarchical modes of operation.  Several executives mentioned that younger people do not operate well in decades-old bureaucracies – and with good reason.  For most of their lives, Millennials and Gen Z have been surrounded by completely open communication.  They have been taught to comment on other peoples’ outputs instantaneously, reflexively, and often times with far too much candor.  When they come into work, it is often hard for them to control this reflex.

In some ways this lack of decorum is a bad thing; older generations have learned to respect the chain of command.  However, Digital Transformation is more of a social and behavioral change than a technical change, and this openness will be normal in the not-too-distant future. Businesses will do well to embrace this change, if only to ensure that it leads to productive outcomes.

This is not difficult to achieve, given adequate support by executive management. In Brazil, I saw several examples of reverse-mentoring.  Here, the most senior executives of the organization were paired with some of their youngest employees, in order to develop a better understanding of both perspectives.  The greatest success seemed to come when both parties learned from each other, and interacted in eachother’s world. Nearly all of the executives who were participating in these initiatives felt that they were extremely valuable, and recommended the approach to assist in transformation efforts.

Post Olympics Promise

My trip followed the successful conclusion of the Olympics in Rio de Janeiro. It was interesting to note the number of Brazilians I met who were relieved that the Olympics were managed successfully, as many were apparently worried that it was not going to turn out as well as it did.  I for one am very happy for Brazil that it represented itself so well with the games.  It’s growing population, economic power and global influence is likely to increase substantially in the coming decade, and success with the Olympics should demonstrate that the country deserves recognition and respect on the global stage.

Brazil has many challenges ahead: political, economic and social.  These are the same challenges faced by all nations feeling the affects of the Digital Trinity of Mobility, Social Media and Analytics.  Success in the future will have less to do with how much you have today.  Rather, it will depend on how well you prepare for tomorrow.  If the country’s business and political leaders embrace these changes they can propel Brazil to a leading role on the world stage.  After my first visit to the country, I’m left with the belief that Brazil has an excellent chance of succeeding in this goal, and I will watch the digital transformation in Brazil with great interest – and, hopefully, be asked to participate in that endeavor.