How to Lead [Not Just Survive] Digital Transformation

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How to Lead [Not Just Survive] Digital Transformation

so I’d now like to present our presenter Pam Hines Pam Hines is professor and director of the Center on work technology and organization in the department of management science and engineering she studies the effect in technology on teams in collaboration pam has conducted extensive research on the dynamics of cross boundary work teams and teams particularly those spanning national borders she’s also published extensively on the relationship between national culture and work practices particularly exploring how work practices are technology created in one location are understood and employed at distant sites pamela also has a body of research on human robot interaction in the work environment and the dynamics of human robot teams most recently pamela has been looking at the changing nature of work in the face of emerging technologies including the nature of coordination in open innovation changes in work and organic organizing results from 3d printing and the work of data analysts with that i’ll turn it over to you pam right thank you so much Megan so in this webinar we’re going to talk as Megan said about how to lead and not just survive digital transformation we’re going to discuss some of the critical factors for digital transformation and in particular those foundational aspects the differentiate organizations that are prepared and more likely to be successful and taking advantage of the opportunities that digital technologies provide so first what I want to do is talk about what digital transformation is there are actually a number of different definitions out there first one is from Salesforce they say that it is the process of using digital technologies to create new or modify existing business processes culture and customer experiences to meet changing business and market requirements it’s a fairly all-encompassing definition which allows for more modest as well as more dramatic change within the organization the second definition is one by George Westerman who’s a research scientist at MIT Mesa it’s a radical rethinking of how an organization uses technology people and processes the fundamentally change business performance so this is a little bit more narrow definition which focus is more on radically rethinking and fundamentally changing the business the third one from Gartner is more narrow yet they argue that it is about exploiting digital technologies and supporting capabilities to create a robust new digital business model so this is a little bit more narrow because it’s really focused on changing the business model rather than for example just internal processes for this course my definition is closer to the last two I think its digital transformation is really more than just minor changes minor tweaking within the organization but transformational in that we’re talking about radically rethinking optimize your business model and fundamentally changing how business is done I also want to point out that in all of these definitions we’re talking about the entire business we’re not talking about you know just changing finance or just changing manufacturing it’s really the entire organization that ends up getting touched by digital transformation we’ll talk more about that later evidence from the World Economic Forum and others suggests that investing in new business models is probably the most difficult and certainly the most frequently targeted within organizations across industries and this is important because it requires significant cultural change in order to make that kind of a dramatic transformation so I also want to talk a little bit about the emerging technologies that we’re referring to when we talk about digital transformation oftentimes in the same breath we’re going to do digital transformation and these emerging disruptive kinds of technologies those technologies are going to be most likely to shake up businesses and shake up industries so let’s go down the list here on the top right-hand or left-hand corner rather with the Internet of Things and that refers to any physical device which can be connected to the Internet but isn’t used to directly access the web like smart phones or computers the analyst firm Gartner says that by 2020 there will be over 26 billion connected devices everything from refrigerators to cars activity sensors medical monitoring and a whole host of other applications then we’ve got autonomous vehicles and drones that can move people and things around without necessarily having a human driver or controller down we’ve got robotics and robotics operate in all host of domains including industrial robots manufacturing settings but also in the home and operating rooms in the fields picking apples and so on and so forth some of these may be more economist some of them less so but we’re seeing a lot of robotics out there 3d printing is also anticipated to be a disrupting technology and could potentially radically change manufacturing and where parts end up getting made around the world a I that’s the one that we hear about most often and of course there are numerous applications on to AI and we’ll talk about a few examples of the course of the webinar big data data analytics and cloud also really important discuss really frequently and we’ll talk about that a bit more as well virtual reality and augmented reality that’s a technology that is still developing and it’s not quite clear exactly what all the applications of that may end up being the photograph on this slide is a virtual reality being used to train employees to be more empathic and that is one of the applications that we’re beginning to see out there is training and giving people this more immersive experience so that they’re training is more effective then of course we’ve got digital traceability and blockchain which is being discussed quite a bit and social media and platforms which have been out there for quite some time but can make a huge difference in terms of the information that’s available and who the information is shared with and how although AI gets a lot of the attention all of these technologies have been identified as potential disruptors to products to companies and to industries the Internet of Things for example is already being used or water supply management in rice fields in Malaysia and as magic fans at Disney which allows park goers at Disneyland to manage their entire park experience through a band that they wear on their wrist so one question that we often get asked is how is the disruption that we’re anticipating today different than in the past with personal computers smartphones and so forth and there are number of things that we believe are different one is just the pace and velocity of change Krieger at the World Economic Forum argued that it took 75 years for 100 million people to get access to the telephone and yet the gaming app Pokemon go hook that many users in less than one month and 2016 so just really really rapid adoption of these technologies the number of patents related to these technologies brew at a rate of 54 percent from 2015 to 2017 so again you know just the pace the velocity of change both in terms of invention and adoption are really outstanding and unprecedented another difference is the holistic nature many of these technologies combined to offer products services and change business models when combined after combining AI and robotics for example or combining the Internet of Things this often combined with AI with data analytics and so forth and these combinations tend to unleash capabilities that can exceed what is possible when they’re deployed separately and certainly exceed what we have seen before data is also a huge aspect here of what is different as I’m sure most of you all of you know there are just vast amounts of data out there readily available about customer behavior customer preferences employee behaviors behaviors of machines and so forth there’s just a ton of information that can be scraped that is available to organizations that can be stored and we now have computational approaches that allow us to deal with these huge quantities of data in order to analyze and rapidly adjust products and services and products that we want to offer and then finally flows of information and this is large part because of social networks data can flow much more easily often outside the control of the organization where information gets put out there by customers by suppliers and so forth and that can go viral it can affect stock prices it can affect customer attitudes toward what it is an organization is offering so with back reap introduction we’ve got another poll and what I’d like to know is what your experience is if your experience is so think about the industry that you’re in and consider how one or more of these technologies might disrupt that industry so give you a minute to complete that poll okay so it looks like the vast majority of you believe that there is going to be a really significant disruption in your industry and I think that really drives with some of the research that has been done a similar question was asked by Gary Kane and his colleagues in a recent book that came out the technology that I see came out a few months ago and one of the things that they did was they surveyed about 4,000 leaders and employees and variety of industries and as you can see from this slide about 87 percent anticipated at least moderate digital disruption and 59 percent expected rate digital disruption according to the World Economic Forum most industries are going to be heavily affected and that includes aviation travel and tourism chemistry advanced materials mining and metals oil and gas professional services retail telecom automotive electricity healthcare logistics media financial services and so on and so forth you know point being that very few industries if any are going to be immune from this digital disruption and that’s another change from past trends in the past what we saw is that you know an industry or a subset of industries might be affected by the introduction of a new technology and with the technologies today that we’re seeing they’re just really widespread here’s another the results of another survey survey item from Kane and colleagues and this one they asked people to the extent to which they agreed that their organization is adequately preparing for these district actions and as you can see only about 44% believe that their organizations are adequately preparing and multiple studies multiple articles bear this out so people are generally expecting a huge shift huge disruption and yet most people are feeling like their organizations their industries are inadequately prepared to deal with the disruption for this on its way here’s another chart that was in the book leading digital by George Westermann and his colleagues and one of the things that they did is they looked at what they called digital masters and to do masters organizations where they have both the leadership to carry out these changes in the digital capabilities to carry out these changes and as you can see from this chart banking height act insurance a little bit lesser extent seemed to have a heart higher percentage of digital masters than for example pharmaceuticals utilities and to some extent consumer packaged goods so there is variance in industries in terms of their level of preparation so what does digital transformation look like within an organization one thing is new efficiencies so a lot of people talk about just using these technologies to do things faster to do things better to reduce numbers of errors and so forth one example of that is Siemens they digitized some major electronics plant in Germany a few years ago to the extent that it was 75% automated as a result of deploying these technologies that increase their output by a factor of 10 significantly decreased defects and increase the speed of production so really getting a lot of advantage out of that transformation better customer experience that’s another goal of most digital transformation efforts and the hope is to deploy products and services that customers enjoy more and build customer loyalty and support one example there is a Marriott hotel chain they have been able to personalize the entire travel journey using extensive customer data they even have a I powered BOTS for mostly for their more technologically savvy customers but the Box enabled people to for example change reservations and so forth much more easily and what they’ve reported is that they’re seeing an increase in customer loyalty and also increases in market share and attribute that to the advances that they’re making using these technologies now doing business in this business differently is when we’re really beginning to talk about more fundamental business model changes one way to think about this is it’s a matter of paying attention to what is out there what’s going on in the market what the technologies are and using that information to disrupt your industry from within not waiting for Airbnb uber and so forth to execute the disruption for you one example is DHL their logistics company shipping things around the globe and one of the things that they noticed is that 3d printing is likely to come on the scene and to the extent that it does in in a big way anyway it will disrupt logistics it will disrupt the need to move products as they happen in the past so as a result they’re incorporating Kirby printing into their core services in a sense internally disrupting the logistics industry generally continual innovation when we look at organizations that are successful in digital transformation we see continual innovation they’ve set themselves up as an innovation company and have innovation forward cultures and then the last one in some ways is the most important and that is we haven’t talked about digital transformation as as if you go from state a to state B and in fact it’s not that that discrete new years the French essentially looking at a continuous dynamic process there is no state B there is no end goal the idea is that it’s really about digitally transforming and having an organization a foundation that supports this kind of constant change so those are the organizations that are most successful in in achieving digital transformation or digital transforming you know the ghaib foundation and they are prepared for this ongoing dynamic change okay so we’ve got one last poll here so my question to you is given all of this that we’ve been talking about what’s required in your opinion for digitally transforming and I’d asked you to check just the top three and it’s not that the others aren’t important but I’d like you to really prioritize what would you focus on first okay hopefully everyone’s had a chance to respond here so of course all of these are required but perhaps to varying degrees and in different sequences depending on where you’re at we tend to hear a lot more about access to digital talent and having an architecture that supports access and integration of data so that you can actually deliver business value of course these are critical and they support these credits and services well we also need a digital culture we also need some of these organizational aspects okay so I’m gonna move on and it isn’t as much about the technology as we might think and that’s one of the things I’m hoping that you’ll take away from the webinar today is that it’s not just a pure focus on the technology but it requires an understanding of digital trends and technology as well as some of these organizational aspects changes to culture and practice so here a few quotes from the cane a tall book this is not about the tools but the ability to operate effectively in an environment dominated by those tools Rogers in his book the digital transformation playbook says digital transformation is not about the technology it’s about strategy and new ways of thinking in an HBR article or in chippewa say you know it’s really a myth that digital is about the technology Westerman in a Sloan management review article says that digital isn’t the answer transformation is really what we should be focusing on and anything more extreme view in an article in the kinsey quarterly caitlin and colleagues say yeah well template technical capabilities are crucial a strong and adaptive culture can actually help make up for the lack of them so you know too much focus on technology the evidence suggests in distract the business from focusing on the vision of what a transformed business needs to look like and what that means for customers so you know really keeping a focus you know having that that technology background having the technology talent is critical but we also really need to keep focused on building an organization that can support the development of the innovation that’s required this is a another study that was done this is actually a survey of 25 industry and research consulting panelists across a variety – interest industries other things that was interesting about this is these are really experienced people so they had on average a little under ten years of experience in digital transformation and for the most part they held senior positions like CEO chief digital officer and so forth and now this suggests only and the numbers here are the percentage of panelists who selected this item as one of the top 10 choices as being important for successful digital transformation and as you can see a lot of these values of it they’ve identified really get to the culture of the organization so open this toward change focusing on the customer being willing to learn innovation agility knowledge sharing attitude toward value of cooperation and so forth so what I’ve done is I’ve pursed it a little bit differently but capture all of what was in that last chart that we saw and distilled sort of what is in the research and what the opinions of experts have been who are leading these digital transformations and I’m focusing on these five items and in the center you have customer-centric and that’s in the center because all of these capabilities are employed in service of providing customer value oftentimes through new business models but just in general you know this focus on the customer as a way of leveraging these new technologies with customer centered as a starting point of the other organization organizational factors lay the groundwork for digital transforming including being fast and nimble being able to move quickly to identify and act on these opportunities voracious learning you’re really focusing on figuring out what you don’t know and learning new things unbound collaboration you know one of things that we’re seeing is that a lot of collaboration of particular collaboration across boundaries that is much more fluid is an indicator of success for these organizations that are digitally transforming and having an appetite for risk so being willing to take risks to fail and to try again so having to unlearn a learning centric culture a culture that is moving fast where you can take the risk we’ve got unbounded collaboration are all intended to really support the development of these new capabilities and of course these are all overlapping you know these there’s a reason that I have all of these together in one diagram all of them sort of feed on and support one another a little bit more on the customer centric piece on Westerman in his book leading digital points out but there are four things that digital masters tend to do to transform the customer experience one is importantly they design customer experience from the outside in meaning that they really kind of step back and look from the customers experience they’re taking the customers perspective and they are empathizing with the interests the preferences and the needs of customers and then they’re designing from that standpoint as opposed to what you know we sometimes traditionally done which is develop a new technology or develop a new product and then figure out how we might get that out to a particular customer base another thing that digital masters do to transform the customer experience is to increase reach and engagement these because these companies are really out there engaging with customers really trying to understand what they care about and talking with them the third thing that Western identified is putting customer data at the heart of the experience so really gathering this data that are available on what customers are doing what it is that customers prefer what their patterns are and so forth and then using that as a way to improve the experience so there’s a really nice example with Airbnb where they use data and algorithms to provide pricing tips to hosts so that host can get more bookings so they pay attention on a day-to-day basis what customers tend to do and then based on that help the hosts understand how they might want to drop or increase their prices in order to maximize the number of people who stay in there Aaron Airbnb and the prices that they’re getting and then finally seamlessly meshing the digital and physical experience this is something again that digital masters do for example Burberry they have done an excellent job of bringing digital into the retail experience they have something called a retail theater concept so if you go into one of these Burberry stores you can actually watch runway shows live in the store and if you see something that you really like you can actually order it via an iPad so they blended this digital and in-store experience and created an online experience that really gives you the feel of Burberry so there’s a very narrow line between the intense tour experience and the online experience it’s like coming into Burberry’s world turns out that more people actually see the Burberry brand be a digital than through any other medium these days and they’ve been rated as fast companies top 10 most innovative retail companies as a result of the transformation that they’ve demonstrated okay so I’m going to go into a little bit more detail on the time that we have on nimble and fast and also unbounded collaboration so let’s start by talking about being nimble and fast so nimbleness and agility generally referred to being able to act and react quickly to assess and then rapidly adapt to new situations changes in the market changes in technology and so forth and those organizations that are successful in digitally transforming tend to be very agile very nimble what why is that important for digital transformation well the base have changed as we talked about before requires really a constant rethinking of direction and pivoting some evidence suggests that you know a few years is about the most that a company can continue with any one direction with no changes and still be viable and in some cases it’s going to need to be even more frequent than that so of course it’s important for digital transformation part of that is scanning the environment identifying hazards identifying opportunities formulating strategic initiative in order to go after those opportunities and then of course an organization has to be able to implement these new ideas to be able to very quickly pivot quickly change from offering one product or service to offering another product or service and that’s one of the places that you know digital masters or organizations they’re really successful at doing this really excel and differentiate themselves so it’s really about speed and it’s about innovation so how do you design for nimbleness one is having an organizational structure that really promotes nimbleness many of us have a lot of experience with traditional hierarchies and hierarchies were designed in order to be reliable efficient but not necessarily to be quick and as a result now these traditional hierarchies are breaking down and they need to be broken down to some extent so that people can work with those that they need to work with in order to really get things done often agile organizations are structured as fluid squads that are loosely connected based on the customer needs our particular project initiatives and their interdependencies so much more fluid structure that can change rapidly business processes important to think about how projects enter and activities are organized and managed you know we’re come gone are the days of a really extensive long term detailed project plans in favour of Sprint’s or other short time frames to rapidly ask experiment get feedback adjust and then continue on oftentimes their daily stand-up meetings frequent communications and so forth in order to be able to want a line across the business systems also need to allow for this fluidity for example through the sharing of information across these squads or teams pushing down decision-making to the lowest possible level enable to to enable rapid action it also requires systems that provide information at those lower levels which is much more possible these days than it has been in the past and we need leaders organizations that are successful at doing this have leaders that see themselves as enabling others rather than directing so micromanagement and digital transformation are really not very compatible because you need people to be able to see what needs to be done and do it and be trusted to move forward and all of this is sustained by clear vision and priorities and that’s when the crucial leadership roles and has pointed out by many experts and a lot of research on digital transformation is it’s crucial that you’d have a clear vision so that everybody knows the direction that they’re moving and they can make decisions and come up with these ideas and meet customer needs in a way that’s aligned with that so it’s really about sort of steering the ship in a particular direction and letting everybody know that ok so I’m going to talk just for a couple minutes here about unbounded collaboration unbounded collaboration as I sort of alluded to earlier the general consensus is that digital transformation requires extensive collaboration across boundaries including functional boundaries expertise organizational boundaries often times sometimes geographies and so forth and collaboration unlike in decades past needs to be much more fluid so any Edmonson the Harvard came up with this idea of teaming versus teams to describe this ongoing process of collaborating with people as needed on a given project so one of the reasons that this is so important for digital transformation is because diversity is said to be a key driver for innovation and innovation is central to digital transformation and we hear this from multiple sources that without diversity teams and organizations you can’t get there there was a study that was done by Forbes with that three hundred and twenty or so executives that had direct responsibility for diversity inclusion programs these were all global enterprises most of them had c-level titles or board members and they’re all across the globe and as you can see here when asked the question sent to which they agree that a diverse and inclusive workforce is crucial to encouraging different perspectives and ideas that drive innovation 85% agree with that so you know in general that seems to be the consensus but is that true it turns out the decades of research say yeah maybe not it kind of depends so this is some work sort of a stylized graph based on some ugly Fleming’s work at Harvard and what you can see in this graph is two things that I think are really important one is that as the diversity of team members disciplines those up the value of innovations on average goes down which is the complete opposite of what we tend to believe at least should be happening but at the same time if you look in the upper right-hand quadrant the only time they’ve have breakthrough innovations is when you have higher levels of team diversity and that’s sort of the conundrum so on one hand you really do have to have high levels of diversity in order to achieve innovation and yet oftentimes it doesn’t work out why is this often times it is because we don’t have strong cultures of collaboration that’s really essential for these digitally successful or those that are transforming using digital now they’ve got strong cultures of collaboration they incentivize people we’re working across boundaries they emphasize hiring for in developing skill in this cross-boundary collaboration so there’s really an intentional effort to ensure that people are able to work across these boundaries that they can deal with the kinds of conflicts that that come up they can figure out how to integrate these really different perspectives that ultimately could provide higher levels of innovation so with that we’ll just wrap up you know one of the main things I want to leave you with is that technical skills digital literacy architecture to deliver are all crucial to digital transformation but so is digital culture and some would even argue that you have to have that as a foundation so my definition of digital transformation or digital transforming which I prefer is a radical and ongoing rethinking of how an organization employs technology people and processes to fundamentally change the customer experience and business performance so with that we’ll turn it back over to Megha great thanks much Pam this is a really important and timely topic so I hope everyone enjoyed the presentation today before I’m going to move on I want to talk a little bit about the program that’s sponsoring this webinar today as Pam noted we’re living in a time and of unprecedented change digital technologies are continuously disrupting the marketplace and forcing companies to rethink the way they operate remaining competitive over the next decade will require much more than just integration of new technology and staying one step ahead of digital disruption companies must learn how to strategically utilize this technology and continuously innovate which will improve their products services and efficiencies all in support of better customer experience this program will cover tools and techniques we’ll which will teach you and your team what you need in order to thrive in today’s tech driven market registration is open year-round and you can visit our program website which has been posted in the QA and under the article on the live website website I am going to bring some of the common questions over to Pam so the first one ham is a lot of people asked us very similar questions so I’ve moved it into one so there’s a list of a list of industries that they want to know if you think are going to be impacted so I’m going to read the list and if there are any that you want to so it’s community medicine education travel food service hospitality social services and local government they would like to know if any of these you think will be disrupted I think all of them so can you give me each one in Melissa GaN Community Medicine okay certainly medicine is being heavily affected for example there are apps that are being developed that help for example those going out into communities to serve those communities and provide data so that in those communities you actually have the information that you need about the people that you’re serving yeah there were several people who asked about education rapidly yes so that’s an interesting one because we’re not I would say we’re not yet seeing a real transformation in education it’s certainly being talked about but there’s just no question um you know even if you look at you know some of the online offerings and webinars for example you know what we’re doing that wasn’t done five years ago but I would put that on the lower end of transformation and I do believe that in education there are a multitude of ways that we’re going to see over the next 10 years to do a better job of getting educational materials out to groups that wouldn’t otherwise have had access and also to just educate people more effectively so one of the other questions that a lot of people I think I counted seven people asked some version of this question so there’s a there’s a question around how to get teams to embrace new technology uh-huh so if teams or people are first of all a little worried about what this technology could do to their to their job security but in general just the reluctance to embrace new technology in different teams they were wondering if you had any thoughts or or advice on how to get people motivated to embrace it mm-hmm yeah you know one of the things that has been found in looking at organizations that are more successful a digitally transforming and this has also been who’s been true throughout the decades if you look at what organizations are making dramatic changes it’s often when there’s a sense of urgency you know it’s it’s when it’s clear that if you don’t change then you’re really gonna have a problem with job security right so part of it is really helping people to see what the urgency is in the industry and what you’re operating and the challenge here is that you know if you let’s look at at Airbnb for example or let’s look at uber you know the taxi industry had no idea that that was coming right it’s just boom it’s all of a sudden there and people aren’t prepared same thing with the hospitality industry and Airbnb and that makes it hard to create this sense of urgency because you don’t necessarily see you know this slow-moving wave the coming toward you so the challenge I think is really helping people to see how the destruction has happened in other industries and the ways it could potentially impact the work that they are doing and the business that you’re in so urgency I think is absolutely crucial and the other is oftentimes you know when people resist it’s oftentimes because we’re afraid we’re afraid that we don’t know how to do this new thing we are afraid that we are going to fail and we’re going to be punished for it we are you know we are also potentially afraid that you know this is a trend and we can wait so if we wait that’ll be a better strategy so creating an environment where people feel like they can take time to learn to try out to get better at doing what it is it’s required is really important so creating a safe environment in which people can develop the skills that they need oftentimes will help them to overcome that barrier it’s great so one other question that’s kind of related was do you think in your you know your opinion it would be better to outsource innovation to affirm and then bring it in as more of a directive so outsourcing a solution and then giving that solution to the teams to to execute it really depends on the organization it depends on the industry so in some cases so that one of the ideas that is out there when we talk about organizations and how you manage innovation and also continue to do what you do historically as an organization this idea of exploration exploitation and exploitation is really all about getting value out what you’ve already got so you had some innovation you’ve got some great products and services and so forth and you want to continue to get value out of those so you want to exploit those and often that’s really about standard operating procedures routines doing things the way that they have been done so that you can be efficient about it for exploitation or it for exploration that’s really about innovation experimentation and oftentimes the users require really different cultures so part of what’s behind that question is well we don’t have a culture of innovation who’ve really got an exploitation culture how can we do the innovation one option is to outsource the downside of that is that you never developed the capability within so on an ongoing basis you know again we’re not talking about just this one transformation we’re talking about creating an organization that can continually take advantage of these shifts so one thing that can be done is you can set up your organization so that you’ve got some pockets that are exploiting and some pockets that are exploring and that way you can build the capability within your organization by having a separate culture in a sense but also continue to exploit those those products and then you can move the things that you develop into the part of the organization that’s just really good at the routine and standing that standard operating procedures that’s great thanks thanks so much Pam I know we had so many questions and this will be this will be sent out as a recording so people can review and unfortunately we’re getting close to the hour so we will have to wrap up the QA but I want to thank him so much for this and using webinar and as I said before we have posted the link to the certificate page both in the tune a section of the zoom as well as on the website website so everyone please feel free to to check those out and you’ll see that there are many courses that will be coming live in the coming months we’re incredibly excited about this new program and thank you again so much Pam and hopefully you talk with everyone soon you

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