Driving Digital Transformation Culturally and Internally with Marco Del Seta (Consultant)

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[General intro omitted.]

Chad Perry:

Today we’re speaking with Marco Del Seta, who I’m here with in person in Florence, Italy. This is going to be a really interesting conversation, because Marco has a really unique blend of experience in software engineering, digital transformation, and management at some of the largest and most respected tech and manufacturing companies in the world, but more recently Marco has been working with smaller industrial organizations, where he’s discovered that they have many of the same challenges as their larger peers, but also have some serious advantages arising from their smaller size. And so that’s what we’re going to be looking at today, including the strategic thought process necessary to make successful digital transformations where it matters most in a smaller operation. So Marco, thanks for joining us.

Marco Del Seta:

Thank you.

Chad Perry:

Now what I want to do is start with a little bit of background about what you’ve been doing and what led you to work with smaller manufacturers.

Marco Del Seta:

Yup. So obviously the bulk of my career has been in tech, so this is where I spent a lot of time, early on in my career, software engineering, all kinds of aspects of that, working for some of the bigger, better known companies in Northern California, and spending a lot of time learning about the product and software development side as well as the IT side. I then made a move into a large industrial company to basically lead the digitalization and innovation team, and spent about three and a half, four years working in this space. And obviously this was a company that poached a lot of smaller companies, so immediately I got involved, and I started realizing what some of the interesting aspects and some of the differences were in that space. Now I’m freelancing, and doing some work with smaller companies, so could be quite small companies, or maybe companies in the 100, 200 million revenue space, so not the big conglomerates I’ve worked for before. Very interesting differences. Fascinating space.

Chad Perry:

So that company that you were previously working with, that was BOC.

Marco Del Seta:

Correct.

Chad Perry:

They are a large, old school manufacturing company.

Marco Del Seta:

Correct. 140 years old, have been making the same product all of that time, more or less. Their equipment’s been around a long time, their employees are around a long time. Very different from tech. A lot of tradition, a lot of established practices, and certainly these are some of the most challenging places where to talk about digital transformation.

Chad Perry:

Yeah, because that can go both ways. You can have serious opportunity in those companies, as well as be fighting against entrenched processes, and that could also apply to smaller manufacturers as well, but this is actually where you really get into the advantage of being smaller is you have this agility. So that’s something that I’d like to cover today, but what I want to start with is, now that you’re doing freelancing and you’re working with these smaller manufacturers, which even at 100 to 200 million dollars or pounds, that kind of turnover’s still considered small to medium size, so what I want to do is look at what is the most important aspect of a digital transformation. So we have a lot of … what I’m seeing is a lot of companies and a lot of leaders, they know that they need to do something, but a lot of times they don’t know where to start. So when you engage with a company like that, what does that look like from the beginning?

Marco Del Seta:

Yeah. So interestingly, it typically looks, organizationally, a lot simpler. You immediately engage with the key decision makers, it is typically the leadership at a board or CEO level that drives this directly in smaller companies, and the questions they have tend to be of two kinds, almost always. The first one has to do with internal challenges, with their own processes, very similar to what you will find in all industrial companies. They have systems that don’t work quite the way they want them to, or they have systems that generate data that they would like to do something cleverer with, or they want to somehow automate pieces of their work which create frustration for their employees, for their customers. So this tends to be one thing.

Marco Del Seta:

The other, I think, is that we don’t know what we don’t know, which is literally the sentence somebody who runs a company like this used with me last week. And he has a company that feels they probably need to change, they probably look at different revenue streams, they need to explore smart cities, smart homes, smart this, smart that, whatever product they might be making, but they’re not sure what’s out there, and they’re not going to do what a big company can do, which is bring somebody in right away-

Chad Perry:

Through a bunch of money at it.

Marco Del Seta:

Through a bunch of money at it.

Chad Perry:

Right.

Marco Del Seta:

Some of these small manufacturers, they will make products, they’re operating on a fairly tight margin, they do very well but they don’t have tons of cash to spend, so they want help understanding what’s a good thing to make a bet on. Those tend to be the two big topics that we come across all the time.

Chad Perry:

Right, so by necessity they have to be very strategic about how they invest their resources, but before you can do that you have to understand what the options are, and before that you have to understand exactly why it is that you’re doing what you’re doing, which you may not even really know what you’re doing, or why you’re doing it.

Marco Del Seta:

Correct, yeah. So a lot of these companies have … If they’re starting this conversation, they’re probably doing okay. They’re not fighting fires, right, that are massive. They’re not trying to dig themselves out of huge challenges. They’re doing okay, they really want to understand strategically … Their budget might be in the low six digits, right. Or what they’re thinking about initially might be a fairly small amount of money, not the kind of money that would buy you a prolonged major engagement [crosstalk 00:06:45]. So they need to find a problem that they can very quickly demonstrate value with. And this, I think, is one of the advantages, because when you talk in general about digital transformation, you talk about big companies having to learn to do things faster, in a more punctuated manner, but a big company, it may be used to an ERP project that will cost them millions and take years, and it’s a very, very big thing, and they struggle to come down to, let’s say, a small piece of automation that will make the life of tens or a hundred employees better.

Marco Del Seta:

For a smaller company, that’s all they can really do. So it does help them really think about okay, let’s pick a couple of things. Do we want to look at something in the data analytics and renewable energy, how to better utilize our resources within a company, or in a fairly targeted manner within a plant? Or I have these professional figures in my company that do this work, and everything’s manual, and there’s lots of pieces of paper and they get lost, and we always struggle to reconcile our books, and this is very painful for us. And they’ll have something like that in mind that is quite small, quite targeted, because their budgets are not going to initially stretch, right. So this is how you have to have the conversation. It’s tempting and easy to get into digitalization journeys that involve high six or seven figure spend, but that’s simply not an option for a company with a revenue stream of say 100, or 150 million pounds or dollars, or whatever. That’s like 1% of their yearly revenue, right. They’re not going to invest that upfront. They need to be focused and targeted.

Marco Del Seta:

And that’s really interesting because, like I said, it really pushes them into what we think everybody should be getting pushed in with digitalization, which is agility, think small, execute, get results quickly, repeat, et cetera.

Chad Perry:

Yeah, that’s a really good point, and it sounds like what’s happening is it’s not that leaders are coming to the table totally in the dark, they have some ideas about what they want to fix in the business, whether or not it has anything to do with digital. They understand some of their pain points, they understand they need to do something, but they need help sorting through what’s important. So given that they are pushed into this situation, for the better, I think, that they need to do small incremental changes. And possibly that could be even significantly less than the budget that even they have in mind. What is kind of the question or the line of thinking that you use to narrow that down?

Marco Del Seta:

For me, it comes back to making somebody happy, because typically if I’m selling a major piece of transformation work, the biggest risk I take on is not technical execution, it’s acceptance of it. If it’s worth its salt, it’s going to be reasonably disruptive. If it’s reasonably disruptive, you risk resistance.

Chad Perry:

Even in a smaller company.

Marco Del Seta:

Even in a smaller company, potentially, simply because a company I was speaking to last week, it’s still a company that’s been around for 120 years. There are many like that in the UK, in the midlands, in the north of England and the industrial heartlands. There are a lot of small to mid size businesses, have been around a long time, very long tenure, possibly even still privately or family owned, resistance is there, and so understanding what’s most likely to get support, so who are your employees that are really feeling the pain? And the leader in a company like that will know people in the company, obviously, much more extensively than in a large company with thousands, or tens of thousands of employees. So they’ll have a pretty good idea this group of people is going to be accepting, is going to embrace. Half the trick with some of these things is getting one or two early successes that you can keep talking to people about.

Marco Del Seta:

So you want to understand where are we going to have an easy in, either because they feel a lot of pain, or because they’re a forward thinking group of people that we can do a project like this, push it through fairly quickly, they’ll embrace it, they’ll become our spokespeople then. That’s kind of how I look at it as an early discussion. I’m trying to dig around with leadership, and find out where are we going to be successful here.

Chad Perry:

Right, so it’s more than just what is the biggest bang for your buck, so to speak. It’s considering all these other aspects of organizational dynamics, and that’s very consistent with the other conversations like this that I’ve been having where most of the time the successful small business owners and leaders are beginning, and pushing through this transformation by inspiring their team to come up with the solutions. Instead of going and commanding that thou shalt implement whatever system or come up with something, it’s we know that you have this problem, tell me what you need. And a lot of times those tend to be very simple, small fixes. And that’s another advantage when you look at this process, is because as an executive leader, you might look at the whole picture and go okay, there’s this whole series of things that create an outcome that I want. And it’s harder sometimes to get down into the details of what’s important, but if you go talk to somebody who has a very narrow view of that whole outcome, then it may be very easy to figure out what can be done inexpensively.

Marco Del Seta:

Correct. And I would say that the first step of an actual engagement with a company like this, it’s fairly standard most people that will talk about doing digital transformation will do things like this, but there are really two core activities. One is really about getting 5 to 10 people from the company to come together with us for a day in a room where we can talk about both what are the things they would really like solutions for, but also, I think quite importantly, we talk to them about ways in which they can self solve problems. And it might be simply doing a spring clean of some methodology there are many flavors of today of identifying and solving problems. But basically you’re bringing people together and you’re getting them to talk about what they want to solve, and you’re also talking to them about some of the techniques that are popular and effective today to address their challenges.

Marco Del Seta:

And then the other big exercise you have to do very quickly upfront is effectively an ethnographic exercise, right. I’m a digital transformation person, I’m not a pump manufacturer or construction person. I don’t do this work. I’ve seen manufacturing environments in [I-Tech] I’ve spent a lot of time in, I’ve spent a lot time in manufacturing environments of a certain kind, but they’re all pretty unique, even aside from the fact that companies are pretty unique. So I might go and spend a day or two with a plant manager, or a site manager of some kind, and just follow them around, and understand what they’re doing, and just try to see for myself okay, what does their day look like and what are the things they’re doing which clearly looks [inaudible 00:15:07]. When you’re a small company, one of the interesting things is that you will do a lot of things manually and not notice because you don’t do a lot of it, right.

Marco Del Seta:

And that’s okay. Some of it’s going to be okay, right. I mean you don’t want to implement software for something that it takes one person three minutes a day to do, right. Unless it’s being done thousands, tens of thousands of times every day. And a smaller company isn’t necessarily going to have that kind of challenge, so some of the things you might look at in a bigger company were oh my God, somebody’s doing this process manually 200,000 times a day across my plans, I need a piece of software for that. In a smaller company, that might not be worth looking at, so you want to go in, you want to understand what are the things that are actually painful and making their lives hard.

Marco Del Seta:

People come into a room and talk to you from a company, and they’ll have their pet peeves and pet pains, but they might not even notice something that they’re obviously doing that obviously could be done better just because they’ve been doing it for so long, so you have to observe and have this sort of attached observation and recording aspect to it, sort of a gather data about what’s going on. And then these, I think, are the two key pieces very early on. The more you can understand both what people are frustrated and aware of, and what people are not aware of but challenged by in their everyday jobs.

Chad Perry:

Yeah, and you had mentioned before, when we previously spoke, that a lot of times smaller companies have a challenge staffing or resourcing these projects because they don’t have the availability or the capacity internally, and they don’t have the experience, so they either have to go staff up on something that they’re inexperienced with, or they have to find a digital partner, and larger vendors, larger digital partners oftentimes don’t really have it in their business model to work with the smaller players, because the smaller manufacturing business is going to be unique. It’s going to have a lot of the challenges as a bigger one, but the margins for the work aren’t going to be there.

Marco Del Seta:

Correct.

Chad Perry:

So what does a smaller company do to overcome that?

Marco Del Seta:

Other than come to people like me.

Chad Perry:

Right, of course.

Marco Del Seta:

Which would be self serving. Yeah, I think there are a number of options here. One is frankly to partner with a smaller organization through your local networks. They are there. There are people doing this work at a lot of different levels in a lot of different places with different levels of engagement needed. The other aspect of this is, I think, you can wait, right. This is a negative option, but it’s certainly an option. You can wait until things are sufficiently established that you can almost buy … off-the-shelf solutions is probably a bit of a misnomer, and a lot of these companies have been burnt with off-the-shelf solutions which are designed for everybody and therefore for nobody. So you’re back into the same problem where, if you can’t invest your own time and resources to make them work for you some way or another, you’ll still be challenged.

Marco Del Seta:

This is also where governmental organizations can have a meaningful role to play. What we see in the UK, for example, is an attempt to set up programs, and grant awarding institutions to help smaller companies pay for some of this work, either in the form of out and out grants, or activities around the whole Made Smarter initiative in the UK. The UK is one of the most progressive countries in Europe on R&D tax credits, and they have a very flexible notion of what can count as a tax credit, which is a good thing. I mean it’s effectively forward looking investment that isn’t just buying a new piece of kit of something that you’ve been doing for the past 50 years, right. So that, you can pay for people’s salaries, if you need to take some of your employees, employ them to work on projects, you can claim credits for it.

Marco Del Seta:

So there are all kinds of things that … So that’s actually one thing we like to talk about, these companies about is one of the things we’ll do is we’ll actually sit down with the finance people and enlighten them on the world of grants, credits and all of that, so that they can recoup some of the upfront cost of some of these projects. And I think you’re looking at being creative, right. And there are a number of ways of doing it, because certainly the size of the projects initially and throughout is not going to be enormous, and certainly not at a level that might interest a very, very large consulting player.

Chad Perry:

Right, you’re not going to bring in Siemens on a small project.

Marco Del Seta:

It might be a challenge, right. And without wanting to speak for folks, I mean some might like to do it, some not so much, but the equation’s always going to look a little odd to a bigger entity coming in and doing something like this. And so I think, one of the most challenging things is that you’ve got a little bit of money, it’s not enough to interest certain people, you could probably use a little more cash to do things and help you piece it all together. And these are some of the things you can do, I think, quite effectively.

Chad Perry:

Yeah, and this is part of the lesson that has to be learned with this whole industry 4.0 is that it’s not about technology, it’s about what technology is enabling. And technology, as with every other industrial revolution, it is enabling a new level of competition, and that is about using every resource you can to stay competitive, including finance, including the strategy of your business, including how you work with other organizations. I mean it’s not just about going out and hiring somebody, you could find other businesses in your network that have the same problems, and perhaps you could pool resources, because software only has to be built once, and there’s a lot of different ways to build it. And this is what a lot of vendors are trying to do is they try to build a platform that can then be customized. If you go into that knowing that if you have 5, 10, a dozen companies that all share the same problem then it may very well be possible to pool your resources and to solve that problem very effectively to have a nice little competitive advantage.

Marco Del Seta:

Yeah. I think there was an interesting conversation around this last November at one of the big conference events in the UK.

Chad Perry:

Is that the one in Liverpool?

Marco Del Seta:

In Liverpool, yeah.

Chad Perry:

Okay.

Marco Del Seta:

There were discussions around competitive advantage in a number of sessions, and in a number of Q&A, one that I was a part of. The thing about competitive advantage is … So roughly speaking, right, when you’re looking at new toys, the world breaks-

Chad Perry:

Which, let’s face it, that’s what it really is.

Marco Del Seta:

It kind of is, right. But it breaks into three parts, right. You get the toy before anybody else. And if it’s a really good toy, if it’s a really good, effective, change driving, revenue enhancing, savings promoting piece of tech, or whatever it might be, process, first people to get it obviously have the competitive advantage. They have something that others don’t, therefore are able to sell themselves overall over something like that. The difficulty for that is that, in order to be there, you’re most likely having to be somebody who either builds the tool themselves, or pays somebody to build it just for them.

Chad Perry:

You’re paying a premium-

Marco Del Seta:

To get that advantage.

Chad Perry:

Right.

Marco Del Seta:

Right, and so it’s risky. Not a lot of small, medium size companies are necessarily going to do that. Some might, but it costs money and it’s a little bit like making lots of bets. And if you make enough, eventually some pay off sufficiently that they repay you for all the investments you’ve made, but that investment might be substantial. It’s like betting on 32 different numbers on a roulette table over and over, and then your numbers keep coming up frequently enough that you can balance out, or something like that, right. I mean you’ve got to play it like that, except make money, which you don’t in a casino, so it’s got an added challenge. And for a small company, running that kind of strategy might be tough, but when competitive advantages emerge then you have to time it, right. You need to get into the market, because once it’s clear that there is an established competitive advantage with say using data to do certain things, if you don’t then you will eventually lose out.

Marco Del Seta:

So what you don’t want to be is the third bucket of people, which are the people that have waited so long to get onboard that they end up going out of business. And you’ve got to time it … Obviously the closer you are to a truly competitive advantage stage, the riskier and more expensive it is, and potentially scary for a smaller company, so it’s understandable they don’t come on stream in very early waves, right, always. Unless they are genuinely an innovator that starts themselves as a company doing something disruptive and new, but then don’t wait too long. It’s okay to be in the middle bucket of the people that look at industry 4.0 and think this is important, I need to do something like that, I need to do something about this, I need to understand what it needs to do for me, don’t wait too long or you’re going to be in the last bucket.

Chad Perry:

Right, but one of the problems with being in that first group of innovators is that competitive advantage doesn’t last, and in fact, depending on your business model, perhaps it’s built in to be an innovator on the cutting edge, but for the most part the cost of whatever you have is going to come down precipitously, and it’s going to be accessible to the larger market. And this is especially true with something like hardware. What I’m seeing is machines, and physical process related innovations are on one track, and then you’ve got this other track, which is really what I consider to be kind of the boring stuff, which is what’s going on in your back office. And that, to me, is actually the scarier, more urgent thing, because what’s happening there is we’ve had software around long enough to now we’re getting to the point where things are so commoditized that you can pay £10, or whatever it is, for a subscription service, try it, if it doesn’t work move onto the next thing. And we’ve got APIs that allow all of these systems to be connected.

Chad Perry:

And so what’s happening is there’s this new baseline of productivity that is being created. So you’ve got all this innovation happening out on the edge cases, but what’s happening is the market as a whole is moving to adopt the advantages created by the years and years of technical and software innovations where now this truly is a point of saturation. So it’s not really about the leading edge stuff. Yes, AI is cool, AR is cool, 3D printing is definitely making changes in the physical process, but for the most part what I would suggest to most small business owners is that if you look at your business, first there is almost assuredly a massive amount of opportunity in there. And software is the cheapest part of the industry 4.0 movement.

Marco Del Seta:

I think there’s a lot in that, yes. So maybe with a slightly different way of looking at it, and competitive advantage can apply to a lot of things. Certainly unlike tech and consumer driven tech, most people working in the manufacturing space are not going to be likely to leverage a competitively advantageous innovation in their product in quite the same way, right. I mean if you’re a traditional manufacturer, it’s unlikely that a lot of the disruption is going to come on the product side of thing, or less likely, perhaps. And you probably won’t make as much money out of it as a tech start up will when they hit the unicorn idea.

Chad Perry:

But with less risk. With more risk, I mean. Right.

Marco Del Seta:

With more risk, yes. And so it is more challenging in that space, but competitive advantage can come in the form of a new and enlightened IT strategy. It doesn’t have to be about transforming your product by adding all manner of extravagant, or perceived as extravagant. I think that’s a good thing. I think you have to explore things in that area too, because the way you look at your business models and the like, and the way that you interface with customers, and collect information about them, there’s a lot that can be done in that space, but it can be difficult, and it can be difficult to actually charge your customers for it, especially if you’re not a direct-to-consumer industry. You can’t sell ads for it, which is the way that a lot of the tech industry makes money in sort of it’s-

Chad Perry:

So you mean as the manufacturer.

Marco Del Seta:

Correct, as a manufacturer, right. But as a manufacturer, most likely you’ll have an IT strategy that is … I don’t want to generalize too much, but most people are challenged with both their IT infrastructure and their IT strategy. A lot of IT leaders in these companies might think they would want to do their job differently, or would want their job to look a little bit different, and there’s opportunity in there for sure, right, to look at it very differently. We don’t fully and always understand, for example, the cost of a large off-the-shelf solution, and as you said, things are getting a lot more fragmented now after years of IT consolidation into smaller numbers of systems that did lots of different things. It’s easier to manage them like that, and one of the things you get when you have something like you just described with small applications, pay a subscription, no longterm, connect it to other things easily is you’re not locked in. If you don’t like it, if it’s not working for you, if you want to try something else, it’s easier to do that, right.

Marco Del Seta:

Now that can give you a flexibility, and an agility, and a lower level of spend and commitment to a technology footprint, which can be a huge advantage, right. It can let you then address problems within your business a lot faster, so I completely agree. And something like that could be looked at as a competitive advantage every bit as much as some clever piece of AI that makes your product 10 times smarter, and maybe it a lot more valuable for some of these companies, absolutely.

Chad Perry:

Yeah, and I see that … So when we say competitive advantage, that can really be something that is actively not available yet, or not implemented in other competitors, or it could just be that you’re maintaining a minimum baseline of being able to be competitive, and that’s what a lot of the IT stuff is about. It’s about being more efficient with your existing resources, which is the bare minimum that you’re going to have to do to survive this transformation. And I’ve actually seen small business owners on both sides of this. So I’ve seen the ones that a lot of times you hear, “I want the freedom and the agility to be able to assemble all these small applications together.” And so they’re looking for small subscription services that solve one or a handful of problems, and they want them to have APIs so that they can connect them together. And there’s a lot of really good platforms that allow you to do that without a lot of code, they’re called low-code, or even no-code solutions.

Marco Del Seta:

It’s a movement. It’s a thing now.

Chad Perry:

It is an actual thing now, and for good reason, right.

Marco Del Seta:

For good reasons, absolutely. Yeah.

Chad Perry:

You see the commoditization of these engineering skills and that’s a good thing for the companies that are consuming those skills. On the other side of that, as you mentioned, if you have a system that does everything you need, that can be an advantage in terms of management, but a lot of times, when you look at taking something like that off the shelf, then you run into a problem of well it doesn’t actually do exactly what you need. It either is too big, or there’s some other issue with it, because those projects tend to have a high failure rate, as you know coming from an IT background. However, I have seen a handful of small business owners that have invested in their own custom projects, and sometimes that goes well, and when it does go well they get exactly what they need for their unique business. And that can be more of a competitive advantage.

Marco Del Seta:

Yeah, I think the key … It’s funny, we talk about commoditization in this space, but I made this comment last week in talking to a small business I know, a person that runs a company, and they were a little puzzled because it’s not a commonly articulated concept, but you are in fact seeing more and more commoditization of apps themselves in the business space. I mean applications are already commoditized in everyday life.

Chad Perry:

Right, so your consumer iPhone.

Marco Del Seta:

Exactly. On your consumer devices, applications are things that people spend a few weeks making, charge either nothing, or a buck, or a couple of bucks. People either buy them or they don’t, they use them or they don’t. And they turn around very quickly. They’re actually not supported in the long run unless they grow dramatically.

Chad Perry:

And there’s not that much complexity [crosstalk 00:34:48].

Marco Del Seta:

There’s not complexity in it, it’s just you try them, they work, they don’t work, you move on quickly. There’s not a lot of commitment either on the side of the people building these technologies or the people using these technologies. So it’s a classic commoditization story. That’s beginning to filter into the business space, in the business application space, so you can see an architecture for a small company of a core of what is their important data, what is their redline platform to run their business, and then around that can be an ecosystem of either off the shelf or custom built. I’m not even sure that distinction’s going to matter as much going forward frankly, in some ways.

Chad Perry:

It matters in the execution, right?

Marco Del Seta:

Potentially, yes.

Chad Perry:

Because if you’re a leader and you’re pushing this forward, it’s a lot easier to screw something up if you’re built.

Marco Del Seta:

Correct, but once you understand what is the core of your technology strategy, what is the important thing for you, what are the pieces of data you need, what are the pieces of software you can’t do without, around that you can be creative, and it’s potentially a lot less risk looking at areas like this for a smaller business to generate productivity and improvements, because you’re not doing something like trying to design a new product, or where effectively until you’ve actively tested the market with the product, you won’t know whether it works or not, right. But when you’re looking at what’s going on within your own company-

Chad Perry:

That’s a known quantity.

Marco Del Seta:

Right, it’s a known quantity. Once you have your baseline, okay, this is the data I always have to have, my financial software I’m not going to mess with, or whatever it is.

Chad Perry:

Right, you don’t need to reinvent the accounting software.

Marco Del Seta:

No need to reinvent your accounting software, but then, around that-

Chad Perry:

But you may have issues with getting information in and out.

Marco Del Seta:

Exactly, so a small company classic problem, timesheets, right. A lot of them still manage these things.

Chad Perry:

And they’re always a little bit different [crosstalk 00:37:05].

Marco Del Seta:

Different, so they’ve looked at solutions, and they just can’t be … or they have an accounting system that they’ve set up a certain way, and they need to track certain things, and they simply can’t do it on an off-the-shelf system, and more and more it becomes a possibility to call somebody in, build a quick app so you can do timesheets.

Chad Perry:

Yeah, and this is a very practical lesson for anybody in an executive leadership role dealing with IT is that if you’re thinking about the actual tech, your head is not really in the right space. What you need to be thinking about is information in and information out, because that’s all that software really does. It just makes the processing of that information … I mean in theory you could do the same thing, run a business in the same way with pen and paper, or even clay tablets, but we get our productivity gains from being able to process information in interesting ways at volume, right, at scale.

Marco Del Seta:

Correct.

Chad Perry:

So an executive who is thinking about this, no matter what size business, they need to be thinking what is the information that is going in, either from my people or from my process, from my physical manufacturing process, and then how do I want to see that out. And it seems like that’s actually a point of confusion, or a real tripping point for a lot of people is they don’t really, fully understand what it is they need or want. So what can somebody do in that situation? How would you help somebody through that?

Marco Del Seta:

I think it comes back to they think they don’t know, but they do. Sometimes the confusion is that there’s something that’s painful and problematic for them but they don’t envision it ever being done differently. They can’t even conceive of it being done differently, right.

Chad Perry:

They don’t bother to think about it, or they just don’t understand what’s possible?

Marco Del Seta:

I think it’s the art of the possible. I think it’s very much the art of the possible. They might not think that it’s financially wise to invest in fixing a certain thing, so I think it’s having conversations that bring a lot of these things together. What are the challenges? Are there easy ways to solve them? What are the approaches that bring digitalization and automation in effectively in these situations? I mean people might have had a bad experience with a meaningful IT or technology implementation, and therefore assume that, as a matter of fact, that’s somewhere you shouldn’t go unless you really, really have to, right. So a lot of it I think is getting the conversation to the point where okay, yes, I’m confident this is something we can try. The other thing, I think, from people who want to engage folks in doing digital transformations is make them understand that you can give them a meaningful toy to play with in a few months. Actually do it, right, like that.

Chad Perry:

Small increments.

Marco Del Seta:

Small, targeted, fast, because I just think a lot of folks will look at this, and most comparisons they will have will be the projects that were a lot bigger, were a lot more painful. And one of the key things on the culture side of the transformation is bringing in approaches and methodologies that aren’t like that. And if you don’t see that, you may actually be very aware that you have a problematic space where, if you could do things faster, things would be better, but you’re simply not able to conceive how that can be possible in less than the timeline that you’ve traditionally been exposed to with your tech projects, right. So you’ve got to talk to them about, convince them, expose them to, bring them through to the point where they’re willing to try this for three or six months.

Marco Del Seta:

Then you have to deliver. I mean you have to have a workable proof of concept in three months. If you don’t then obviously you failed them, but what you can do is basically bring them on that journey where they’re willing to give it a shot, and then actually deliver it. You have to be able to deliver it. If you can’t, then that’s it.

Chad Perry:

Yeah. This is an interesting mix of top down … I would almost say it’s like planting seeds and then watering those seeds, right. You want your garden to grow up, but you have to give it the right inputs, you have to put it in the sun, you have to give it good nutrients, and that goes back to what we were saying earlier, where the successful small manufacturing businesses that are making this digital transformation, it seems like they all have in common that they are making their people an integral part of this in saying this is about making your job easier, so that you can focus on more of the work that you want to do, more creative, whether you’re a craftsman on the floor or whether you’re doing something in the back office. So that’s an interesting way of looking at it, because it’s very consistent with what I’ve been hearing that it’s all about giving your people the ability to drive that transformation, versus you trying to just decide this is where we’re going.

Marco Del Seta:

Yeah. So one of the questions I like to ask is say, with respect to established figures and roles that people might have in these companies, and we could have a debate as to whether roles like chief innovation officer, or chief digitalization officer make any sense or not.

Chad Perry:

If you have the luxury of-

Marco Del Seta:

If you have the luxury of it. A smaller company won’t, so to the extent that they’re going to take things like this forward, they are going to go into the jobs of existing people. And so I like to ask leaders, I mean how would your head of IT see their job? Literally at that level, have you sat down and talked to them about whether they would like to do something like this? These are roles that maybe have been shaped up to be more conservative, more about managing cost, more about managing risk. One of the big challenges, I think, in companies of all sizes frankly, is that the places where you would expect to find the skill and drive to execute on some of this change have been shaped to manage a very different agenda. And at some point that has to change. Somebody has to take this on in the company, become the leader for bringing in industry 4.0 technologies and whatever. And we’ll find that a lot of the candidates have been traditionally given job remits that are very conservative, almost negative, sort of preventative-

Chad Perry:

Yeah, it’s a very specific lane to stay in [crosstalk 00:44:50].

Marco Del Seta:

… rather than change advocating, right. And my view is that a lot of them would rather do a job that had more change advocacy in it. They’ve had more fun in it.

Chad Perry:

This gets back to the point that you were making about having small wins, especially in the beginning. And this is the analogy I was trying to make with the garden, is that you don’t just go to your people and say, “Okay, we’re going to do this digital transformation. Tell me what you want to do,” right. It’s come up with a couple of things with them collectively, do the agile approach, fail fast, get something working, whether it’s a piece of software or just some way of showing a positive outcome. And what other small business owners are finding is that that will naturally incite people to start coming up with other ways, and that transformation builds its own momentum without necessarily having to push it at the executive level once you’ve got it started and made that investment in time.

Marco Del Seta:

Correct, that’s the hope. I think that is the ultimate objective is that key figures in your company find that this is something they want to not just be a part of, but be driving, and it then becomes part of how you do things. So in the end, from a strategic/organizational standpoint, one of the pieces of thinking that has to happen in smaller businesses, but I think in any businesses, but particularly in smaller businesses because you can’t expand and refactor organizations with quite the same level of flexibility is how do I see this continuing and building on, and who in my company is going to do that? I mean we’re all planting seeds, right. The senior executive is planting a seed, the CEO is planting a seed, right, the people that come in and help you to begin with are planting seeds, but ultimately the growing and the tending is going to be part of the company itself. So this is about changing the way you do things.

Marco Del Seta:

What does that mean? It means, for example, that people feel they’re working in a culture where they’re empowered to come up and say, “I don’t think this is working very well,” and where they have ways and means to look at something like that and give intelligent answers, and possibly solutions, right. So you’ve got to build an organization within the confines of what you can afford that will do that. Otherwise, it really is not going to be substantially different than any externally driven IT project that a company might do.

Chad Perry:

But this is also a valuable point for working with digital partners as well, because part of the bad experiences that people are having with these vendors is if your vendor is only about execution, that’s a problem in and of itself because they’re not bothering to push back and ask the question why is this even appropriate for you. And so one of the ways that you can ensure that you have a good relationship is by taking this strategic approach, and you don’t have to know … you don’t have to be a strategy expert, but you do need to know that there should be some sort of conversation about what’s important in your business and truly understanding your business before you pull the trigger on any kind of execution, and that could be with the same company, it could be with a different company, although you seem to think that most companies would prefer to have all of that in one house.

Marco Del Seta:

I mean I think it’s easier. It doesn’t really matter all that much. I mean behind the curtains there has to be a lot of flexibility, no matter what, or to step back from being a big entity of any kind, so you’re going to find people … I also think, frankly, that having a little bit of insight on both strategy and execution is helpful. So it’s not so much that it needs to be one vendor, although certainly it’s easier if you write one cheque to one partner to help you, but it is also valuable if that partner can, almost in conversation, tease out not just it’s going to be valuable or not, but whether it’s feasible or not.

Chad Perry:

Right, and that’s very much about the experience they have with that particular execution. So whether it’s software development, or hardware-

Marco Del Seta:

Correct, or hardware or whatever it is. But the more you can bring both insights to the table when having these conversations … I mean this isn’t just a management consultancy exercise, right. I mean this is digital transformation, and you will struggle to be an effective digital transformation advocate with anybody if you don’t understand enough about technology to rule out the ridiculous question, the difficult champion, the obvious, right. If you will. So if you do not know enough about technology that you can’t do that then you’re just a management consultant anyway. Which is fine, I mean you can do it. You go hey, we’ll bring management consultants [crosstalk 00:50:26].

Chad Perry:

Right, but it’s arguably how much value they will have for a small-

Marco Del Seta:

Well, you’re not doing digital transformation. You can say you’re doing digital transformation, but if you have to have a separate conversation about technologies and execution and the like, and you don’t really bring much insight, or obviously it might not be one person coming in, just if they’re completely separate conversations they’ll be stunted, and it’ll look a lot more like speak to a management consultant about how my company needs to work, speak to an IT consultant about what can I implement to work this way.

Chad Perry:

Right, you lose some of the advantage with that crossover.

Marco Del Seta:

Correct. Part of industry 4.0, I think, is to integrate a lot of this stuff into a more unified way of moving your businesses forward.

Chad Perry:

That’s true at every level. That’s true with APIs, data connectivity, but it’s very true, and arguably more important at the higher level, where you’re thinking about how this is used to propel your business. So I think we’re going to have to wrap it up here. One more question, or actually two. I would say, first of all, what is the key takeaway that you would leave small manufacturing executive leaders with regarding this whole digital transformation? And then the second one would be how to get in touch with you if they want to get in touch with you?

Marco Del Seta:

So key takeaway for me … We’ve talked about so much.

Chad Perry:

Can I offer a point to start with here?

Marco Del Seta:

Well offer a point, because … Go ahead, yeah.

Chad Perry:

So what I’m hearing that, aside from just understanding that strategy is very important and a key part of this, but it’s also about the thought process, the ongoing thought process. So this is truly an ongoing transformation. It’s not a project. It’s not just a … I mean there may be single projects, but the leadership needs to be thinking how do we change the culture around this.

Marco Del Seta:

Yeah. So probably the thing we most often end up closing on in this conversation is it’s about the culture. So they’re talking to somebody like me about digital transformation because they think this isn’t a change like upgrading some IT software you’re on or something like that, it’s bigger than that, and it ultimately ends up at that level. And I do come back to, wrapping all that up, where do you want your people to go, right. And talk to them about how this is going to work for them, what they want out of it, what they can get out of it. There are always going to be people in any company, even small, who are passionate and have a lot to contribute to this conversation. Find them, go there, bring them in, ask them what they want their job to be like, and then they’ll be the ones that then flow into that whole who’s going to do it going forward, who’s going to keep it going. It’s those folks.

Chad Perry:

Yup. Great advice. Okay, so how does somebody get in touch with you?

Marco Del Seta:

And I’m on LinkedIn.

Chad Perry:

Okay, and that’s Marco-

Marco Del Seta:

Marco Del Seta.

Chad Perry:

Del Seta. So I’m going to spell that out, it’s M-A-R-C-O D-E-L S-E-T-A. All right.

Marco Del Seta:

Not John Smith. So not the easiest.

Chad Perry:

Well that’s your Italian heritage, which is the reason we’re in Florence.

Marco Del Seta:

Yup.

Chad Perry:

Okay, well thank you so much, and really appreciate your time on everything.

Marco Del Seta:

It’s been a pleasure.

[General outro omitted.]