How do you start a digitization project?

Introduction

Since around 2016, the requirements for implementing digital and automated solutions for business processes in reorganizations and transformations have been constantly increasing in our projects. This applies equally to B2C, as well as B2B applications.

What we notice again and again is that words like digital transformation, digitalization, blockchain, up to the almost mystical artificial intelligence AI, naturally trigger shining eyes and delight in many customers.

But watch out!

That doesn't apply so much to our side. We know from completed projects that this is real back-breaking work and not hip, as the buzzwords suggest.

Thus, we have to make it unmistakably clear to our clients again and again that digital transformation does not only mean the introduction of new digital technologies, but also the use of these technologies. And this is where the first steps in defining the digital business model matter. It should be developed as a low-fi model and quickly tested for user-friendliness and meaningfulness with potential customers. Quick and incremental adjustments are then necessary. Not infrequently even, a complete new start.

In order to create real and fast added value, one should start from a continuous process with several initiatives running simultaneously. It should be clear here that this is not a classic project management according to MS Project. The so-called Lean Startup approach has proven to be particularly efficient here. This way of thinking and planning is mostly used by specialized investors in the startup market.

However, it can be really difficult to get even a single successful digital initiative off the ground, especially for larger companies with established business models.

To overcome this challenge, we have found the provocative word of the "serial innovator". This is to say that the ability must be developed to rapidly develop multiple LoFi models and also test them in parallel. Our experience clearly shows that the path is not easy. We are convinced that you have to start developing this corporate culture right at the beginning of the reorganization and/or transformation project. Of course, we always start with the internal processes and set up such projects with the employees of our clients. One notices very quickly that the employees find joy in it and, if successful, their self-confidence grows exponentially. Thus, this phase is already real reorganization, but also training for new skills.

With such an attitude as a serial innovator, our client will be better able to develop digital models, to use the really necessary digital technology to really reach the customer needs. If digital models are to be brought to market, you have to find out what customers want and what they are willing to pay for. That then has to be matched with the technology that really works for the case and proves to be economically viable.

Both feet on the ground! No dreaming about the beautiful digital world and artificial intelligences! At least not now.

So that means trying many different LoFi models. You have to experiment and realize that many of these experiments will fail. At this point, the reader can familiarize himself with the ideas of Design Thinking.

Our experience at iManagementBrazil shows that one can assume a 70% - 90% failure rate.

So if you take the classic project management approach here and claim to build and test a hi-fi model from the beginning, you usually only work on two to a maximum of three initiatives. It is clear that probably not many success stories will be written here.

On the other hand one cannot simply waste time and capital senselessly by testing one LoFi model after the other. And this is where basic considerations of the Lean Startup approach come into play early on.

The pillars

So what are the pillars to be able to start such a project? In our experience, there are three critical but supporting pillars: Funding, expertise and technological capability. These Three Pillars need to be built on good foundations to continuously test and develop digital initiatives.

Critical check-up

But it is also clear that actually no small or medium company in Brazil has such strong foundations. And to make one thing clear, even we at iManagementBrazil do not have the necessary pillars for every project. Therefore, before awarding a project, we check together with the potential client whether such a project is manageable. The idea is that our expertise and experience with those of the client form such a powerful team to manage such projects. This evaluation phase also includes, for example, jointly considering how the management should be adapted and the company's way of thinking changed. Here we want to define the general guidelines and guard rails together with the future client already in the contract initiation phase.

Project Craft: Financing

With our clients, we need to develop and test digital LoFi models to see if they are desirable by the client, technically feasible by us, and viable enough to move forward.

At this point, there is the permanent risk of wasting budgets on digital innovations that don't deliver real value, or not ensuring that promising projects receive sufficient funding.

To minimize these risks, in projects with Brazilian startups between 2017-2019, we developed a relatively informal process that visualizes and prepares for evaluation a limited budget for a digital LoFi model development by answering 17 questions.

In this process, total funding is not released immediately, but is divided into several stages. If the specified targets are met, the project is available for a further, larger round of funding.

In this phase we are also involved with iManagementBrazil in a very intensive mentoring with the client.

Project Craft: Expertise

Digital LoFi model development requires experts in technology, data analysis, data curation and agile design thinking. But talent alone is not enough. Experts must be able to overcome isolated decision-making processes with a decidedly high degree of uncertainty and drive the initiative forward.

This is where iManagementBrazil regularly steps in as a very strong arm with high project experience. We regularly support here with the robust ability to bring about decisions in unclear moments and situations. We also have a network of experts such as software developers, increasingly also in no coding, data analysts, design thinking and agile coaches.

As a matter of principle, we ensure that there are always two people in the governing structure who are aware of all the details: one person from the project team and one person from the client's senior management. This ensures acceptance and support of the project.

Project Craft: technological functions

Digital models often offer features that users cannot find elsewhere. Nevertheless, it can happen in the project that considerable resources are spent on the development of technological functions, which nevertheless only provide basic functions desired by the customers, instead of creating a real competitive advantage.

Our experience in recent years shows very clearly that two stringent tactics should be widely followed in digital model development.

On the one hand, programmed modules available on various platforms should be used primarily for individual functions within one's own digital model. Proprietary programming for standard functions within a digital process of a business model should be avoided. With our clients, however, we ensure from the outset that their own database is created with these standard templates.

This accelerates the later development from LoFi to HiFi model enormously. It also builds up internal know-how, which accelerates the development, testing and implementation phase when the model is further developed or completely new, derivative digital processes are created, and increases the knowledge within our clients' companies.

In an evolutionary way, this methodology creates a certain startup mentality among our clients. Also, in a soft way, this approach to starting digitalization projects provokes an adjustment in the leadership and mindset of our clients.

The Real World Test: test and learn

The transfer from a few leftover digital LoFi models to HiFi models requires a mindset massively focused on test and learn.

Especially in traditional mid-sized companies, the principles of linear long development process were and still are the main focus. Testing in the market came very late. Namely, when a new product or service came to the market. But when jumping from the LoFi to the HiFi model, nothing changes in the way of working on the project. The same rhythm is maintained. The difference is of course in the selection of the LoFi models, which have now been sorted out. At this point, there is of course already a significantly higher budget available and the risk of failure is already noticeably reduced.

However, the team still has the autonomy to try out new things, the support from management to test these ideas step by step, and mechanisms to evaluate whether it is worth pursuing them further.

At this point, you can evaluate whether you might also want to use external accelerators, or work with startups from incubator centers in São Paulo. A few years ago, we also had a case where the parent company decided to spin off the digital business model into an entirely separate company and also involved external investors.

Current

Currently iManagementBrazil is involved in a project to build a NFT trading platform in Brazil.

NFT stands for Non-Fungible Tokens. They are generally created using the same type of programming as cryptocurrencies such as Bitcoin or Ethereum. In our current case, the trading platform is powered by Ethereum.

NFT marketplaces are the hubs where valuable assets, especially digital assets, are increasingly traded.

Non-fungible tokens (NFTs) are also in the spotlight in Brazil, changing the way we look at assets, investments, artworks and rare collectibles. Dedicated NFT marketplaces are where you can buy these unique digital creations.

Based on digital blockchain technology, NFTs are irreplaceable and immutable digital tokens in the form of photos, audios, GIFs, 3D models, videos and much more. In addition, NFTs can also be embedded in a metaverse, a self-perpetuating digital universe that can host many characters and worlds. NFT transactions are usually conducted in cryptocurrencies.

In addition, many NFTs are sold on virtual marketplaces. These are websites that allow both trading and minting of NFTs and are mostly based on the Ethereum blockchain.