May 12, 2022 | DIGITALIZATION

Digitalization hand in hand with digital transformation:
A System Dynamics approach

To thrive in the digital age, companies must undergo two distinct digital transformations. On the one hand, they must digitize by incorporating new technologies into their operations, such as accounting. That is, digitization consists of automating the processes that form the backbone of the business (delivery of goods and services, back-office processes, etc.).

On the other hand, organizations have to become digital. Digital transformation goes beyond the simple incorporation of a software or an app in the company. It is a slow process that not only consists of the creation of digital platforms that connect customers with partners or suppliers, but also, this transformation brings with it the end of traditional business methods and the adoption of a new way of thinking.


In order to carry out both internal and external transformations, business managers must take into account several aspects:

- Differences in leadership: leaders are responsible for defining the digital strategy, the success of the company is largely determined by decision making from the top. Managers have to make clear decisions and ensure the correct execution of digital processes.

- Operational differences, i.e., new digital tools require skilled ICT staff and innovative methods for planning and execution versus using traditional methods such as metrics and customer satisfaction to measure core processes that form the backbone of the organization.

- Cultural differences: there may be discrepancies within the organization itself to see how the management of a digital platform involves changes in the way decisions are made and tasks are performed, although it does not change the basic functions.


To deal with these conflicts, at DLQ we propose the following:

- Separate the teams that manage the company's core operations versus those that carry out digitalization processes so as not to lose focus on the company's mission, vision and values.

- Let leaders break away from established traditional norms and establish new approaches to customer relationship management or new product development.

- Through intrapreneurship, select the best leaders in the organization who are aware of the digital transformation and have the skills to lead it.


From DLQ, being aware of this necessary change for our business network, especially for our SMEs, we work from the inside applying the "Business Dynamics" which allows us to deconstruct complex processes to reduce them to simple processes and define the tasks that compose them as well as the flows that compose those tasks. From there we will start to proceed to their systemic digital reconstruction. Bearing in mind that each process interferes with the others, so we have to deal with the "globality of the system" within the chain of business value generation. . "We take the complex value chain of a company, "procurement, manufacturing, sales and after-sales" and deconstruct it to build it again digitally". - Rafael de la Cuadra, CEO DLQ International Consulting.


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