Digital Transformation – a Definition and Thoughts on Principles

 

In my previous post, I suggested that the term “Digital Transformation” is not well understood, and all too often misused. In this post, I’ve attempted to put a little more structure around my earlier thinking, and offer a definition, including some initial thinking about the principles that we need to guide the digital transformation journey.

One of my motivations for doing this was a recent article by Archana Deskus, Intel SVP and CIO, in which she identified what she called the 3 hard truths of digital transformation.

Truth 1You must disrupt yourself … or someone else will.

Truth 2: Digital transformation isn’t about an IT strategy. It’s about leveraging continuously evolving technologies to change your entire business.

Truth 3: Transformation requires massive shifts in culture, operations, and people – with change and culture being the toughest aspects.

She concluded the article by saying: “The leaders who embrace digital transformation as a journey versus an end-state, and who keep an eye on reimagining the norm and embracing the complexities, will find it to be a game-changing path worth taking.

The material below is part of work I’ve been doing on a couple of initiatives and is still very much work in progress. However, I   found her words so reinforcing of what I have thought and been saying for quite some time that I wanted to test it out earlier than I had planned. While quite a bit of  the material has appeared in some shape or form in earlier posts, quite a bit is new, and I’ve attempted to net it out, and put more structure around it here.

Definition:

Digital transformation is an ever-evolving digitally-driven and enabled journey of exploration and experimentation. It represents a cultural and mindset change which involves continually challenging all aspects of the status quo. It requires reimagining and fundamentally transforming government, business and society in a way that is inclusive of and creates value for all stakeholders.

Possible (areas for) Principles:

  1. Digital transformation is about much more than technology – it is fundamentally about culture and mindset and requires moving beyond a technology mindset to a business value mindset.
  2. The primary focus of digital transformation is on outcomes that create and sustain value for a broad range of stakeholders including organizations and people who are involved in or affected by the outcomes.
  3. Digital transformation’s reach goes beyond business and financial measures – it impacts, and its performance and value will be measured against the 3 dimensions of the Triple Bottom Line[1]: social, environmental, and economic.
  4. Realizing the potential value of digital transformation will require ongoing and fundamental changes to the nature and purpose of organizations, including, but not limited to their governance, business models, processes, people skills, and organization structure.
  5. Digital Transformation requires an obsession with simplicity and reducing complexity – transcending traditional roles and hierarchies, dismantling bureaucracy, and getting things done collaboratively, and flexibly through teamwork and responsible autonomy.
  6. Digital transformation requires recognizing that leadership is a behaviour that must be nurtured, empowered and rewarded throughout an organization, with leadership at the top creating an innovation-minded culture that fosters creative thinking, agility and speed based on a solid foundation of trust and empowerment.
  7. Digital transformation requires a more data-driven, flexible, and adaptable decision-making process, embracing openness and transparency, and focused much more on evidence and much less on traditional hierarchy and ego.
  8. Digital transformation requires the capability to rapidly adapt and up-scale or pivot as circumstances change.
  9. Unlearning is critical for digital transformation – it’s not what you know, but what you’re willing to unlearn, that will hold the key to successful digital transformation.
  10. Digital technology is itself neutral. When used ethically, it can contribute to positive outcomes for stakeholders. However, when used unethically, either accidentally or deliberately, its use can cause great harm. Organizations and society must be constantly aware of, and pro-actively guard against such misuse.

As I said at the beginning, this is still very much a work in process – as is digital transformation itself. As such, I would certainly very much welcome feedback or comments on the material.

[1] Source: John Elkington, “Towards the Sustainable Corporation: Win-Win-Win Business Strategies for Sustainable Development,” California Management Review 36, no.2 (1994): 90-100. Also see Elkington’s “rethink” in BR, June 25, 2018 https://hbr.org/2018/06/25-years-ago-i-coined-the-phrase-triple-bottom-line-heres-why-im-giving-up-on-it (the title is misleading).

Digital Transformation – Breaking Free of the Industrial Age Straitjacket

This article originally appeared on the Institute for Digital Transformation website.

A search for Digital Transformation on Google finds ~500,000,000 results, which is likely close to ~500,000,000 more than would have been found only a decade ago. However, finding a clear, let alone consistent definition is more difficult. The term is not well understood, and all too often grossly misused. Part of the reason for this is that neither of its component words are well understood. The purpose of this article is to clarify what digital transformation is, or should be, and what it isn’t, and to reframe it in a way that makes it more understandable.  I close by discussing the significant cultural changes that will be required if we are to come close to realizing the full value of the digital age.

I’ll start with “transformation”, a word that  I first used more than two decades ago in the first version of The Information Paradox in the context of the three stages of evolution of the use of information technology: Automation of Work; Management of Information; and  Business Transformation. I aligned the third with the implementation of what was then an emerging type of software labelled Enterprise Resource Planning systems (ERP), which I positioned as being complex systems. Over time, I became increasingly uncomfortable with my use, or misuse, of the term. I understood why when I was exposed to  David Snowden’s Cynefin Framework. He describes four stages of system evolution: simple/ordered; complicated; complex; and chaotic. It became clear to me that what I was describing as complex were, and still are certainly complicated endeavours, often requiring significant organizational change (a requirement usually recognized too late and poorly managed). They are primarily about integrating information and making it more accurate, accessible and timely. There are proven practices available to do this, although, again,  all too often not adopted, or adopted too late. They do not essentially change what organizations do – they just do it differently and, hopefully, better. That certainly involves considerable organizational change but is hardly transformational.

Moving on to “digital” we have seen increasing use of the term Digital Transformation over the last decade. Unfortunately, in this context, the word “digital”  is still equated by most people to be just another word for information technology. As a result, digital transformation is more often than not still used in the context of the complicated work that I wrongly labelled transformation 20 years ago. This is well  described by Gartner in their Information Technology Glossary, where they say “The term is widely used in public-sector organizations to refer to modest initiatives such as putting services online or legacy modernization. Thus, the term is more like “digitization” than “digital business transformation.” [1] While likely more prevalent in the public sector, I would argue that is also more than often the case in the private sector.

Over the last decade, I have reframed the term to be “digitally-enabled business transformation”, and taken it further to describe it as “an ever-evolving journey of digitally-enabled business transformation”.  Digitally-enabled business transformation is about a lot more than technology.  While new and emerging technologies, including the internet of everything, smart everything, quantum computing, augmented analytics, AI, machine learning, deep learning, robotics, RPA etc. are both driving and enabling the transformation journey, technology is only one part of the transformation. The journey of digitally-enabled business transformation will require continually reimagining, rethinking, and reinventing all aspects of the business model. It will be about new models of how work is governed, lead, organized and managed.

Our traditional industrial age, top-down hierarchical control-oriented approach to governance, leadership and management, and the resulting organizational structures are no longer fit for purpose in in a digital world. One indicator of this is that only 30% or less employees feel engaged with their organizations (and it’s not much better for managers). In his new book, “Humanocracy”, Gary Hamel capture the reasons for this, saying that “The typical medium- or large-scale organization infantilizes employees, enforces dull conformity, and discourages entrepreneurship; it wedges people into narrow roles, stymies personal growth, and treats humans as mere resources.” He goes on to say that “…a small but growing band of post-bureaucratic pioneers are proving that it is possible to capture the benefits of bureaucracy – control, consistency and coordination – while avoiding the penalties – inflexibility, mediocrity and apathy.”[2]

The global and social context within which we live and work has changed beyond recognition. We are more globally aware and socially connected. We have 24/7 access to almost unlimited knowledge, information and expertise. As Gary Hamel’s book illustrates, we are increasingly seeing organizations exploring and experimenting with new and emerging business models. Organizations that are enabling greater engagement and two-way communication with and between employees. That are orchestrating self-managing teams who can work collaboratively in a much more agile and responsive way. That are “democratizing” their approach to leadership and governance – letting their people use their brains again with light but relevant and appropriate oversight. Organizations that are committed to continually reimagining, repurposing and reinventing themselves.

We now have a vision of what the future of work could be, but don’t see that anywhere close to being universally realized. The challenge ahead is to break out of the straitjacket of more than a century of hierarchical, siloed industrial age mindsets which are controlling, risk-averse and “know it all”. To evolve them into mindsets that are enabling, learning and willing to try new things and fail. To move to a more agile and inclusive approach to governance, leadership and management. A value-focused, data and analytics-driven, agile, sense and respond approach that transcends functional and organisational boundaries, and engages employees, customers and other key stakeholders. One that places accountability and decision-making at the most appropriate level, while supporting decisions with broader and more knowledgeable input. One that can survive and thrive in an ever-evolving, complex and chaotic context.

All this will require a major cultural change. A fundamental rethinking and reimagining of how all organizations, public or private, large or small are governed, lead, organized and managed, and of the capabilities that are required to ensure and assure that the use of technology contributes to creating and sustaining business and societal value in the digital world. It will require replacing current top-down, hierarchical and siloed processes with leadership across and beyond the C-suite with leadership capabilities recognized, nurtured, and empowered throughout organizations. Only when this is done will we come close to realizing the full value of the digital age –  a new era of digital exploration, experimentation and transformation.

[1] Source: Mckinsey Information Technology Glossary, https://www.gartner.com/en/information-technology/glossary/digital-transformation

[2] Source: “Humanocracy: Creating Organizations as Amazing as the People Inside them”, Gary Hamel and Michele Zanini, Harvard Business Review Press, 2020

Fear, Frustration and Hope in a Covid19 threatened Digital World


Photo by CDC on Unsplash

We live in unprecedented times. With Covid19, we are in a global war with an invisible enemy – a war in which we are both potential victims of, and foot soldiers for that enemy. We all live in fear for ourselves, and even more so for our families – our parents, children and grandchildren, as well as for all those who are more exposed and at risk to this unseen yet ever-present enemy.

At a time like this we need strong, decisive and transparent leadership at all levels. Leadership that must also be compassionate and comforting in helping us understand that we are all in this together, and that collectively we can and must play our part in beating this enemy. Here, in Canada, and in our province, British Columbia, we are seeing that, as we are generally across Canada. But this is a global war with an enemy that moves fast and silently, and respects no borders and no-one, and that can be anywhere at any time. At a time like this, it is immensely frustrating that we are not seeing a collaborative global response to this global enemy. Instead, from many leaders across the world – some more so than others – we have seen, and are seeing: Denial instead of action; Delay instead of speed; Secrecy instead of openness; Division instead of unification; Competition instead of collaboration; putting Self-Interest ahead of the interest of the people, and (largely driven by that same self-interest) putting National Interest instead of global interest…and the list goes on.

In what we once referred to as the IT space, but what is now increasingly becoming an all-encompassing digital world, we have suffered from similar failures of leadership for decades. We have seen, and continue to see many billions of dollars spent on technology with all too often little or no value being delivered as a result of those expenditures.

In this current crisis, it is frustrating to see the inability of aging technology systems – systems that have been neglected for far too long, to respond to critical needs in an agile and timely way. We are experiencing the result of years or decades of little or no investment in maintaining and updating our technology infrastructure. Where new investments have been made, they have all too often failed to deliver the expected value – assuming that value was even clearly defined at the outset, which is generally the exception rather than the rule. These investments are often made without clear understanding, ownership and accountability from the business or organizational leadership, and without inclusive and ongoing engagement of those who have to use and live with the systems and applications resulting from those investments.

But there is also hope. During this crisis we have seen, and continue to see the ability of organizations and individuals in all sectors to pivot to new ways of delivering their products and services. As Satya Nadella, Microsoft’s CEO, summed it up, Social distancing rules have brought forward the adoption of a wide range of technologies by two years. A comment echoed by Google’s CEO Sundar Pichai predicting a “significant and lasting” impact from the forced move to online work, education, shopping, medicine and entertainment.

In the case of healthcare, digitally-enabled services that have been discussed for years or, in some cases decades, have been delivered in a few weeks. Manufacturers have retooled their production to produce respirators and Personal Protection Equipment. Distilleries have switched production from liquor to hand sanitizer.  In response to a request from local hospitals, Quinn Callander, a 12 year old boy scout in Vancouver, Canada answered a request from the local hospitals for a device to help relieve severe pain from pressure and friction of wearing masks for long periods. Working with his 3D printer, and by prototyping several designs, he developed a simple but effective “ear guard” strap. In just a few weeks, he has produced 1,700 such straps, a volunteer group he is part of has made an additional 5,000 straps, and he has made the design available for others to download[1]. Across America, makers of all ages and skill-levels have thrown themselves into helping to alleviate the shortage of personal protective equipment (PPE). Some are actually making masks, shields and gowns. Others are collaborating on designs, and making those designs public. Still others are trying to figure out how to get PPE to those who need it most as quickly as possible. These charitable tinkerers provide ground for both a deeply American sort of hope—strangers doing as much as they can, wherever they can, for the good of their neighbours—and despair, at the colossal federal failure that inspired them[2].

An article in the April 25th edition of The Economist under the heading “Creative Disruption” discusses the pandemic “liberating firms to experiment with new ideas”, and being to do so at breakneck speed, and without huge financial outlays. But, as evidenced above, it’s more than that. It is actually liberating organizations of all types, and in all sectors, as well as individuals of all ages across the world to do so. As Michael Waters said on April 30th in the Financial Times, “The pandemic is working on all the main levers that affect the pace of digital adoption: consumer behaviour, business processes and government regulation”.

We are seeing examples of outstanding leadership coming from everywhere and anywhere, but not, in all too many cases, from those in “official” leadership positions in the public and private sector. The challenge ahead, when the Covid19 crisis is brought under control, to whatever extent that may happen, is how to keep the momentum, and not slip back, as The Economist article says, to our comfortable traditional world of  ‘“analysis paralysis”, an affliction caused by top managers having pored over the same irrelevant case studies at business school.’ We need to tap in to that outstanding, yet previously unrecognized leadership that is everywhere and everywhere. This will require rethinking, or blowing up previous models of leadership and management

We need to ask ourselves, when the crisis abates, are we going to fall back to the traditional world of ineffective leadership, bloated inefficient bureaucracies, and disengaged employees and citizens, or are we going to learn from the crisis and move forward together to a better world. A world in which leadership is a behaviour, recognized, nurtured and rewarded throughout an organization, with leadership at the top playing a role akin to some combination of an orchestra conductor, and an air traffic controller. A world in which: Bureaucracy, a term coined roughly two centuries ago is no longer fit for purpose when today’s employees are skilled, not illiterate; Competitive Advantage comes from innovation, not sheer size; Communication is instantaneous, not tortuous; and the Pace of Change is hypersonic, not glacial. A world in which employees, as in the case of China’s Haier, are engaged as “energetic entrepreneurs, and an open ecosystem of users, inventors and partners replaces formal hierarchy”[3].

[1] Source: Fast Company, April 9, 2020, “This 12-year-old invented an ingenious solution to one of the biggest problems with masks”

[2] Source: The Economist, April 30, 2020, “America’s Makers and tinkerers turn their hands to PPE

[3] Source: The End of Bureaucracy, Gary Hamel and Michael Zanini, Harvard Business Review, November-December 1918 Issue

IT and Digital Failures – the Time for Study is Over – it’s Way Past Time for Action!

A recent article in diginomica, “Senate agrees to launch inquiry into Australia’s digital government failures” caught my eye. My immediate reaction was “Here we go again”, quickly followed by a somewhat more lyrical “When will they ever learn?”
The challenges of IT projects have been analyzed extensively over many decades. Most of us are familiar with The Standish Chaos Survey, the 2015 results of which reported successful projects constantly representing only ~30% of the 50,000 surveyed projects (where success is defined as on time, on budget and with a satisfactory result).

A 2012 Mckinsey article, based on research conducted on more than 5,400 IT projects by Mckinsey and the University of Oxford, found that half of large IT projects (costing >$ 15 million) massively blew their budgets. On average, large IT projects ran 45% over budget and 7% over time, while delivering 56% less value than predicted. The projects in total had a cost overrun of $66 billion, more than the GDP of Luxembourg. The impact of these failures is more than financial. In the case of healthcare, for example, the impact includes significant avoidable loss of life, pain and suffering.

More anecdotally, The International Project Leadership Academy Catalogue of Catastrophe records quite a few troubled projects from around the world, many, but not all of them IT projects. The list includes the UK’s NHS National Program for IT in Health, the original budget for which was $4.6 billion, which had risen to $24 billion when it was cancelled in 2010. At the time, and possibly still now, it was the world’s largest civil IT project.

Challenges to success – being on time, on budget, and achieving the expected value, are common across private and public sectors and across all jurisdictions. If one were to take all the studies, audit reports, and other post-mortem review of so-called “IT projects” or, more recently, “digital” initiatives, you could fill a medium-sized – possibly larger – library. The good news is that you would only have to read one or two of them to realize that they all came to basically the same conclusions, and made basically the same recommendations. It’s great business for consultants, as they can usually just dust off and tailor a previous report – a great but expensive example of re-use. Over the same time, research papers and articles beyond count have been written on this topic, and frameworks, methodologies, tools and techniques have been produced (almost) ad nauseam. Yet, despite this, very little has changed, other than that the impact of these failures, as technology becomes increasingly embedded in everything organizations do, is both more severe and more visible, not the least so in the public sector.

The underlying causes of both earlier “IT project” failures, and those of more recent “digital” initiatives are basically the same. They include:
1. A continued, often blind focus on the technology itself, rather than the change – increasingly significant and complex organizational change that technology both shapes and enables, and which is required if organizations are to come anywhere near realizing the potential value from their digital investments;
2. The unwillingness of business leaders to get engaged in, and take ownership of this change – preferring to abdicate their accountability to the IT function (I should add that I have also seen cases where IT leaders know this should be owned by the business leadership team, but do not believe that they have the competence to do so);
3. Failure to inclusively and continually involve the stakeholders affected by the change, without whose understanding and “buy in” failure is pretty much a foregone conclusion;
4. A lack of rigour at the front-end of an investment decision, including, what is almost universally a totally ineffective business case process, resulting in lack of clarity around the expected outcomes, the full scope of effort required, the assumptions being made, the risks involved, and how progress and success will be measured;
5. Not actively managing for value; and
6. Not managing the journey beyond the initial “project” completion.

A much over-used definition of insanity, commonly yet apparently inaccurately attributed to Albert Einstein, is “doing the same thing over and over again and expecting a different result.” This is certainly a good description of the where we are today. It should have been obvious to anyone reading any of the previously mentioned reports and studies that the issue of IT or digital failure needs to be re-framed from a technology delivery problem to a business problem of managing increasingly significant and complex organizational change. A business problem that has had a global cost estimated by Michael Krigsman, a respected industry analyst, to be in the order of $US3 trillion/year. And that cost doesn’t include opportunity cost – the non-realization of expected value.

So, why is it that business leaders – in both the private and public sector, have not stepped up to the plate? Despite the term “digital” now being much more commonly used – or abused –  in place of “IT”, digital is still largely equated with, and thought of as, a technology implementation issue. We certainly don’t need any more studies! As a client of mine once said, the less will we have to solve a problem, the more we study it. We need leaders to finally wake up and understand that this is not a technology implementation problem, but a problem around understanding, accepting accountability for, and managing the business change required to create and sustain business value from leveraging digital. We need these leaders to move beyond eternal studies to action. I discussed this in an earlier post, “Digital Leadership – Much More Than IT Leadership”. What follows builds on parts of that post.

In this new digital era, technology itself, how technology is delivered, how it is used, and by whom are changing at an ever-increasing rate. This is blurring the roles and responsibilities of IT and other business functions, and giving rise to a fundamental rethinking of how IT, and its delivery and use is governed and managed, and the capabilities that are required to ensure and assure that the use of technology contributes to creating and sustaining business value. The role of the CIO is being questioned ad nauseam, particularly as it relates to the CMO, and a new position, the CDO, is appearing. And, of course, let’s not forget the CTO. However, the answer is not as simple as renaming the CIO position, getting a new CIO, or appointing a few new CXOs (or now, due to alphabetic limitations, CXXOs).

I have, over many decades, used the simple formula below to describe reason for the current dismal state of affairs:

OO + NT = COO

The formula represents that simply applying new technology (NT) to an old organization (OO) results in a Complex Old Organization (COO). Gavin Slater, the new head of the Australian Government’s Digital Transformation Agency (DTA), used a variation of this formula in a recent address to the Australian Information Industry Association, in which he replaced COO with EOO – expensive old organization.

Digitization cuts across organizational silos, and across all levels of organizations. Realizing value from digital requires more than putting lipstick on the old industrial age pig, with its hierarchical, command and control approach to governance, leadership and management. It requires continually rethinking, reimagining and reinventing every aspect of our organizations. Digital transformation, or more accurately the on-going and ever-evolving digital journey towards a digital ecosystem will require digital literacy and collaboration across and beyond the C-suite to ensure that their organization has, as EY’s David Nichols said in a May 2014 CIO Insight interview, “an integrated and holistic plan to really leverage digital”. This includes questioning their very purpose, how they are organized, the very nature of the work they do, who does it, and how it’s done. It requires challenging established cultures and long-held beliefs. The digital economy both enables and requires a different view of leadership. As Sally Helgesen said in a May, 2014 article, “Leadership’ isn’t Just for Leaders anymore”, leadership no longer, or should no longer equate with positional power and has, or should become a behaviour that is broadly distributed, recognize and rewarded.

Organizations must tap into the collective knowledge of all their people…~70% of whom feel no engagement with their organizations today. As Julian Stodd said in a June, 2017 blog, “The Age of Engagement”:

“The mechanisms and mindset of engagement in many organisations lags far behind the lived reality of the Social Age: Organisations exist in a realm of expertise, domain specific input, hierarchical power, at a time when communities are rising, co-creation is maturing, and dynamism is key. The solution will not be adaptation within an existing mindset, but rather a paradigm shift to a new space: the Age of Engagement.”

Peter Staal extends this thinking in an August, 2017 article, “Organizations of the future operate as communities”, in which he says:

“Meeting the demands of the digital age will require a new way of working. Take for instance the decision-making process. Organizations no longer have the time traditionally taken up by this process through a decision tree. The future belongs to organizations which are made up of multiple autonomously operating communities forming part of the larger whole (so-called pods).”

This is not a new concept. It was original posited in the early 20th century by Oswald von Neil-Breuning with his law of subsidiarity – an organizing principle that matters ought to be handled by the smallest, lowest or least centralized competent authority. This means locating accountability and decision-making at the most appropriate level, while supporting decisions with broader and more knowledgeable input.

We could have adopted such a concept long before now, indeed, some organizations have done so. For organizations to survive and thrive in the digital economy, this is no longer an option! We certainly now have the technology available today to support such a concept. However, I’m not sure we will see this widely accepted  any time soon – likely not in my lifetime. As Steve Vamos said in a 2012 Australian Review article:

“The challenge ahead is to unwind more than a century of industrial-age mindsets at work which are controlling, mistake-averse and “know it all” and evolve them into mindsets that are enabling, learning and willing to try new things and fail.”

Laurence J. Peter, author of The Peter Principle, echoed those sentiments when he said, “Bureaucracy defends the status quo long past the time when the quo has lost its status.” The reasons for this are well laid out by Ted Bauer in an August, 2017 article, “Bureaucratic management ain’t going anywhere”, as summarized in the figure below.

As an eternal optimist, I hope that he’s wrong, but as a realist, having pushed similar ideas for many decades, I think it will take some time before we see the extinction of the organizational dinosaurs. This will certainly be the case if we stand on the sidelines and wait for it to happen. As a former colleague, Don Tapscott,  has said for decades “Leadership can come from anywhere”. We must all take a leadership role in making it happen.

The Dark Side of Digital

 Four years ago, I wrote reflecting on my 50 years in IT, and the pursuit of value from the use of IT. I described the changes that had occurred over that time since I started my working life as a computer operator on an IBM 1401, which had a (not really published as such) processing speed close to 10 million times slower than today’s (2013) microprocessors, 8k of storage (later upgraded, with an additional unit, to 16k), no solid state/hard drive, displays or communication capability, and no operating system (that was me!). Weighing in at around 4 tons, it needed a fully air conditioned room, with a raised floor, approximately twice the size of my living room.

I described how my world in 2013 compared with that time. I had powerful technology in my small home office, wirelessly connected within my house, and to the world beyond through the internet. I had access to an ever-growing body of knowledge that could answer almost any question I had, and which enabled me to manage my banking, pay bills, check medical lab test results, organize travel, shop, read books, listen to music, watch videos, play games, organize, edit and enhance photographs and videos, and a myriad of other tasks.

I went on to describe how, beyond my individual world, at the enterprise level, the technology model is changing from computing – the technology in and of itself, to consumption – how individuals and organizations use technology in ways that can create value for them and, in the case of organizations, their stakeholders. I discussed the extent to which technology, and how it was being used, was continuing to change, at an ever-increasing rate, including:

  • increasing adoption of the Cloud;
  • Software (and just about anything else) as a Service; the explosion of “Big Data”, and, along with it, analytics and data visualization;
  • mobility, consumerization and BYOD which fundamentally changes how, where and when we interact with technology and access information;
  • the ”internet of things” (IOT) bringing with it unprecedented challenges in security, data privacy, safety, governance and trust; and
  • robotics and algorithmic computing which have considerable potential to change the nature of work.

I closed by talking about what hadn’t changed, and what needed to change. Putting my value lens on, I lamented that, then, 15 years since The Information Paradox, in which I described the challenge of getting value from so called “IT projects”, was first published, the track record remained dismal, and realizing the value promised by IT remained elusive. I attributed this situation to several factors, the primary ones being:

  • a continued, often blind focus on the technology itself, rather than the change – increasingly significant and complex change – that technology both shapes and enables;
  • the unwillingness of business leaders to get engaged in, and take ownership of this change – electing to abdicate their accountability to the IT function; and
  • failure to inclusively and continually involve the stakeholders affected by the change, without whose understanding and “buy in” failure is pretty much a foregone

 

What a difference four years makes

OK – that’s (probably more than) enough of a recap – I’m now going to fast forward some 4 years (a lifetime in the digital world) to today, 2017. While the challenge of creating and sustaining value from our use of technology described above is still real, our failure to address it, along with an almost total failure of leadership – technical, business and government leadership, have brought us into an increasingly dark place – one that I think few of us saw coming, certainly not unfolding as it is. I call this place “the Dark Side of Digital”. I alluded to it in 2013 in discussing IOT, robotics and algorithmic computing, when I said that they brought with them “unprecedented challenges in security, data privacy, safety, governance and trust…(and) have considerable potential to change the nature of work” – I would now revise and add to the latter saying “…have considerable potential to fundamentally impact the future of work and, indeed, the future of society”.

The elements of this dark side fall into three main categories:

  1. Cybersecurity: This is the most traditional category – one that, albeit not so- named, has been with us since the advent of computers, when cards, tapes or
    other media could be lost/stolen. However, as our connectedness continues to increase, so does our susceptibility to cybersecurity attacks, with a growing number of such threats arising out of machine-to-machine learning and the Internet of Things. There are nearly 7 billion connected devices being used this year, but this is expected to jump to a whopping 20 billion over the next four years. Most cybercriminals are now operating with increasing levels of skill and professionalism. As a result, the adverse effects of cyber-breaches, -hacks, or –attacks, including the use of ransomware and phishing continue to escalate resulting in increased physical loss and theft of media, eroding competitive advantage and shareholder value, and severely damaging reputations. More severe attacks have the capacity to disrupt regular business operations and governmental functions severely. Such incidents may result in the temporary outage of critical services and the compromise of sensitive data. In the case of nation-state supported actors, their attacks have the potential to cause complete paralysis and/or destruction of critical systems and infrastructure. Such attacks have the capacity to result in significant destruction of property and/or loss of life. Under such circumstances, regular business operations and/or government functions cease and data confidentiality, integrity, and availability are completely compromised for extended
  1. The Future of Work: The fear that technology will eliminate jobs has been with us pretty much since the advent of the first commercial computers, but, until the last few years, the argument that new jobs will appear to replace the old has largely held true. Now however, the revolutionary pace and breadth of technological change is such that we are experiencing a situation in which, as recently described by the Governor of the Bank of England, Mark Carney.

“Alongside great benefits, every technological revolution mercilessly destroys jobs & livelihoods well before new ones emerge.”

Early AI and IOT systems are already augmenting human work and changing management structures across labor sectors. We are already seeing, and can expect to continue to see uneven distribution of the of AI impact across sectors, job types, wage levels, skills and education. It’s very hard to predict which jobs will be most affected by AI-driven automation.

While, traditionally, low-skill jobs have been at the greatest risk of replacement from automation, as Stephen Hawking says, the “rise of artificial intelligence is likely to extend job destruction deep into the middle classes, with only the most caring, creative or supervisory roles remaining.” He goes on to say that “we are at the most dangerous moment in the development of humanity”.

  1. The Future of Society: On the societal front, a paradigm shift is underway in how we work and communicate, as well as how we express, inform and
    entertain ourselves. Equally, governments and institutions are being reshaped, as are systems of education, healthcare and transportation, among many others.

AI and automated decision making systems are often deployed as a background process, unknown and unseen by those they impact. Even when they are seen, they may provide assessments and guide decisions without being fully understood or evaluated. Visible or not, as AI systems proliferate through social domains, there are few established means to validate AI systems’ fairness, and to contest and rectify wrong or harmful decisions or impacts. Professional codes of ethics, where they exist, don’t currently reflect the social and economic complexities of deploying AI systems within critical social domains like healthcare, law enforcement, criminal justice, and labor. Similarly, technical curricula at major universities, while recently emphasizing ethics, rarely integrate these principles into their core training at a practical level[1]. As Mike Ananny and Taylor Owen said in a recent Globe and Mail article[2], there is “a troubling disconnect between the rapid development of AI technologies and the static nature of our governance institutions. It is difficult to imagine how governments will regulate the social implications of an AI that adapts in real time, based on flows of data that technologists don’t foresee or understand. It is equally challenging for governments to design safeguards that anticipate human-machine action, and that can trace consequences across multiple systems, data-sets, and institutions.” This disconnect is further adding to the erosion of trust in our institutions that we have been seeing over several decades.

Adding to the threats to society is the proliferation of internet and social media. In a world where we can all be publishers, we see shades of Orwell’s 1984 in a post-truth word of alternate facts, and fake news. Rather than becoming a more open and collaborative society, we see society fracturing into siloed echo- chambers of alternate-reality, built on confirmation bias, and fed by self-serving populist leaders, posing dangerously simplistic solutions – sometimes in tweets of 140 characters or less – to poorly understood and increasingly complex issues.

 

So, what do we need to do?

The complexity of these challenges, and their interconnectedness across sectors make it a critical responsibility of all stakeholders of global society – governments, business, academia, and civil society – to work together to better understand the emerging trends.

If business leaders expect to harness the latest technology advances to the benefit of their customers, business and society at large, there are two primary challenges they need to address now.

  1. As companies amass vast amounts of personal data used to develop products and services, they must own the responsibility for the ethical use and security of that information. Ethical and security guidelines for how data is collected, controlled and ultimately used are of paramount concern to customers, and rightfully so. To gain the trust of customers, companies must be transparent and prove they employ strong ethical guidelines and security standards.
  1. It is incumbent on organizations to act responsibly toward their employees and make it possible for them to succeed in the rapidly changing work environment. That means clearly defining the company vision and strategies, enabling shifting roles through specialized training, and redefining processes to empower people to innovate and implement new ways of doing business to successfully navigate this new and ever-changing

As a society, if we are to avoid sleepwalking into a dystopian future, as described in 2013 by internet pioneer Nico Mele as one “inconsistent with the hard-won democratic values on which our modern society is based… a chaotic, uncontrollable, and potentially even catastrophic future”, we must recognize that technology is not destiny – institutions and policies are critical. Policy plays a large role in shaping the direction and effects of technological change. “Given appropriate attention and the right policy and institutional responses, advanced automation can be compatible with productivity, high levels of employment, and more broadly shared prosperity.”

The challenge is eloquently described by WEF founder and executive chairman, Dr. Klaus Schwab.

“Shaping the fourth industrial revolution to ensure that it is empowering and human- centred, rather than divisive and dehumanizing, is not a task for any single stakeholder or sector or for any one region, industry or culture. The fundamental and global nature of this revolution means it will affect and be influenced by all countries, economies, sectors and people. It is, therefore, critical that we invest attention and energy in multi- stakeholder cooperation across academic, social, political, national and industry boundaries. These interactions and collaborations are needed to create positive, common and hope- filled narratives, enabling individuals and groups from all parts of the world to participate in, and benefit from, the ongoing transformations.”

 

A call to action!

We need, as Dr. Schwab goes on to say, to “…take dramatic technological change as an invitation to reflect about who we are and how we see the world. The more we think about how to harness the technology revolution, the more we will examine ourselves and the underlying social models that these technologies embody and enable, and the more we will have an opportunity to shape the revolution in a manner that improves the state of the world.”[3]

We cannot wait for “them” to do this – as individuals, we can and must all play a leadership role as advocates in our organizations and communities to increase the awareness and understanding of the changes ahead, and to shape those changes such that, as Dr. Schwab says, they are empowering and human-centred, rather than divisive and dehumanizing.

[1] Source: The AI Now Report, The Social and Economic Implications of Artificial Intelligence Technologies in the Near-Term, A summary of the AI Now public symposium, hosted by the White House and New York University’s Information Law Institute, July 7th, 20

[2] Ethics and governance are getting lost in the AI frenzy, The Globe and Mail, March 20, 2017

[3] Source: The Fourth Industrial Revolution: Risks and Benefits, Wall Street Journal, Feb 24, 2017

Bridging the Gap between Value Selling and Value Realization

All enterprises exist to deliver value to their stakeholders. Over the last few decades, the way that we use technology – and who uses it, has changed dramatically. Yet one thing that has not changed is the on-going questioning of the value received from our investments involving technology. As we move into an increasingly digital universe, with technology becoming embedded in everything we do, there has never been a more critical time to address this question

As I have discussed in previous posts – “Partnering for value”, and “The IT Value standoff”, technology per se is just a cost – it is how the business uses technology, and manages the change that technology both shapes and enables, that determines whether the technology contributes to business value.

What has been lost in all this is the understanding of, and accountability for managing the increasing breadth and depth of business change that technology both shapes and enables, and which is required if value is to be created and sustained! We need to change the conversation – to change it from one largely about the cost of delivery of technology to one focused on creating and sustaining value from business change.

Business value will only be realized from our increasingly significant and complex investments in IT-enabled change when complementary changes are made in the business – including changes to the governance, business and operating models, business processes and practices, people’s work, and the skills and competencies required to successfully get the work done, reward and incentive systems, organizational structures, physical facilities etc. And, the most difficult, changes to organizational culture, and group and individual behaviour.

The value journey starts with the sales cycle, and it is here where the seeds of success or failure are first sown. Did you know that:

  • Over 95% of B2B buyers demand proof that the vendor will deliver value, demanding financial justification / ROI quantification prior to purchase approval (IDC)
  • Yet, only 7% of buyers say the vendors’  content and sales reps are value-focused (The Economist).

But, buyers’ concerns don’t end when the sale is made:

  • Recent research from IBM (IBM Strategy & Change, Survey of Fortune 1000 CIO’s) reported that organizations said that 40% of total IT spending brought no return to their organization
  • The Standish Group has reported on the success of “IT projects” annually since 1994, with success factors being: on time, on budge; and delivering the expected features. The 2015 report redefined success as being: on time; on budget; and with a satisfactory result, where satisfactory includes:on-target (% requirements);  satisfied (very high to very low); value (very high to very low); and alignment with strategic corporate goal (precise to distant). They then summarized the outcomes of projects over the last five years using the new definition of success factors, as shown in the table below.

Standish2015

The number of successful projects is relatively unchanged over the 5 years at a dismal 27 – 29%. In fact, in every year since the  report was first published in 1994, the percentage has been close to that range. It is little wonder, given these numbers, that we are seeing an increased concern around value.

As enterprises move into the digital age, if we continue to do things the way we have been, the challenge will only increase:

  • McKinsey, in a recent report (The digital tipping point. McKinsey Global survey results 2014) reported that most organizations have only a basic grasp on the value that digital can create, need to understand better how to match priorities and investments with the areas of highest value, and must work to ensure that their structures and business processes are set up to take full advantage of the opportunities that digital efforts offer.

This is both a challenge and an opportunity for sales professionals. Building  awareness, understanding, and commitment to make the necessary changes should be a joint responsibility of vendors (as well as consultants) and their enterprise clients. This has been the “elephant in the room” for the last 2 – 3 decades, and we will come nowhere near to realizing full business value of these enterprise investments in IT-enabled change is we don’t surface and deal with it.

I have recently been working with a group of sales professionals and consultants in setting up the Value Selling and Realization Council (VSR Council). The proposed charter of the Council is to:

Maximize value from investments in IT-enabled change by establishing, promoting and adopting value management methods, standards, practices, tools, and training that enable B2B solution providers and enterprise corporate executives to collaborate in developing and executing a “roadmap to value” approach, in order to optimize the business outcomes from such investments.

This is an ambitious agenda – one which, if it is to be successful, and not fall into the old “don’t confuse sell with install” mindset, has to address the “elephant in the room” by adding the missing piece between selling value – getting the client to understand the potential value of the proposed investment, and realizing value – the client actually realizing or even exceeding the expected value. This missing piece is enabling value – building the awareness, understanding, and commitment to make the complementary business  changes that are required for value to be realized.

The figure below provides a model of Value Management, and illustrates that a value mindset and supporting structures, processes, roles, responsibilities, and metrics must be established as part of enterprise governance, and that value enablement is a very significant piece of the Value life-cycle – the bridge between selling value and actually realizing it.

Slide3Unfortunately, it is the piece that has been largely ignored, or paid lip service to up till now. This is where the VSR Council has the opportunity to make a real difference, by building a pro-active community of value-focused individuals, including sales professionals, industry analysts, value consultants, and client enterprise professionals and leaders.

The Council is only a few months old, but already boasts a long list of senior level managers from companies such as IDC, SAP, Oracle, Workday, Adobe, Microsoft, Alexander Group, Unisys, Sirius Decisions, Finlistics, Alinean, DecisionLink, IBM, Accenture, JDA, NetApp, EY, KPMG, VMware, Effisoft, etc. Take a few minutes and watch a short video from a few of the founding members (I’m the oldest looking one!).

I attended a first meeting of the Council in Dallas in October. I have to say that I went with some skepticism, not knowing how many people might show up, what their experience might be, how open as competitors they would be with each other, or what their views of value management were – particularly value enablement and realization. By the end of the day, my skepticism had disappeared. We were expecting 15 attendees, and 22 showed up, there was a breadth and depth of understanding of the value space, and a very open discussion, displaying both a broad understanding of the challenges of value management, and a passion to work collaboratively to address them.

As a non-profit, the VSR Council depends upon the time contributions of its members. If  you are  interested in furthering the work of the Council, and “connecting the dots” to value, individual Community membership is free – just click here to register to become a member and join the community. To connect with the community, you can also join the VSR Linkedin Group here. Also, please consider becoming an active member by volunteering yourself or someone working with you on one of the working committees. Help the Council build something great and connect those dots!

A great way to kickstart your involvement in the community is by attending the upcoming VSR Summit, a networking and educational event scheduled for February 29th thru March 1st, 2016 at the Marriott Courtyard DFW North in Grapevine, Texas.  There is a cost to attend and capacity is limited so, if you or anyone else you may know are interested, you should register soon.

We are today at a “tipping point” where, if we are to come anywhere near realizing the full potential of a digital world, we need to connect the dots from ideas to the realization of value. We will not do this with traditional siloed and fragmented disciplines and approaches. The VSR council provides the opportunity to create a professional value management community, connecting those dots, and providing leadership in enabling organizations to create and sustain value from technology-enabled change. I hope that I have the opportunity in the months and years to come to meet and work with many of you in this community to achieve this goal.