LEADERS ARE STRUGGLING TO KEEP PACE IN INDUSTRY 4.0 – DIGITAL TRANSFORMATION, AGILE METHODOLOGIES ARE VITAL TO SUCCESS
Senior executives are perpetually challenged to parallel their individual skill sets with the fundamentals of their organizations as they evolve through the life cycles of launch, growth, scaling and sustainability. Needs of businesses change and the reality is that there are very few leaders with the cross-disciplinary acumen to address continuous, aggressive progression.
Just because an entrepreneur is charismatic, capable of ideating a valuable product and has a flair for attracting investors, it doesn’t mean he/she will be a CEO capable of guiding the company 20 years into the future. As we saw this past month, this reality is exactly why talented entrepreneurs are voted out of their corporate leadership roles by the very companies and boards they founded (even when it costs the company billions to facilitate their exit).
Imbalances between executive competencies and organizational needs permeate businesses of every industry, size, scope, scale and function. No entity is immune and, unfortunately, the disparities are becoming more prominent as a result of Digital Transformation. After all, one of the hallmarks of the current global ecosystem is rapid, exponential change. Given that many leaders innately struggle to adapt personal skill sets to the needs of their evolving companies at various phases, it only follows that speeding up those evolutions, while simultaneously layering in digital complexities of the Fourth Industrial Revolution, can make life in the c-suite extremely complicated.
C-SUITES ARE THE TIPPING POINT BETWEEN DIGITAL TRANSFORMATION FAILURE OR SUCCESS
Some executives are better suited to handle the impacts of change. Myopic leaders with limited aptitude tend to be overwhelmed by the demands of rapid progression, while cross-disciplinary leaders capable of embracing a holistic, futurist view are actually motivated by it.
I define Digital Transformation as a commitment to digitize an entire organizational framework, spurred by advancements in Artificial Intelligence (AI), Machine Learning (ML), Blockchain, the Internet of Things (IoT), Cybersecurity, the Cloud and more. Today, it’s no longer a question as to whether an enterprise needs to embrace these tools; the only issue is how to do it. Stakeholders are unquestionably aligned behind the concepts of Digital Transformation, often to a fault (i.e., raise your hand if you have observed Fortune 1000 companies considering smart contracts for the sake of using smart contracts). This over-reach is certainly not the case when it comes to implementation. Execution is where leaders are running into the greatest roadblocks.
Digital Transformation is providing more opportunity to advance intelligent enterprises on a universal level and billions are being invested into the technologies as a result. However, according to a recent McKinsey study, only 14% of global c-suite executives believe that their Digital Transformation efforts are yielding measurable performance improvements. Furthermore, only 3% consider their organizations successful at sustaining change. Clearly, we need more focus on how Digital Transformation is considered through the lens of organizational strategy and operations, particularly at the c-suite level.
7 TRENDS OF DIGITAL TRANSFORMATION THAT ENCOURAGE FUTURIST MINDSETS IN THE C-SUITE
As business leaders in the Digital Transformation era, we talk a great deal about big data, including how to address both structured and unstructured resources. In a business environment where every entity is determined to dominate that data, we have made significant progress teaching machines (how to teach themselves) to automate those processes for us. While the initiative is revealing findings and observations that we as humans would have missed on our own, I fear that the noise in the system generated by that progress is distracting leaders from observing and responding to the “obvious”. And by “obvious” I mean the trends that we as creative, agile, innovative, imaginative and competitive executives should be noticing on our own. The balance of this article summarizes a few such observations.
Consider the following beneficial trends that we observe every day as a result of technologies like AI, ML, Blockchain, IoT, Cybersecurity and the Cloud. Until now, none have been explored as broader strategic disruptions that can be reapplied to encourage c-suites to embrace a more futurist mindset, but after a significant amount of thought and research, I assert that they should be. They include:
- Rank collaboration first, competition second
- Circumvent overlap and repetitive tasks
- Embrace open sourcing
- Leverage decentralization and distributed systems
- Take risks, learn fast, fall forward
- Prioritize workflows over silos
- Invest in continuous learning and digital literacy
1: Rank Collaboration First, Competition Second
One of the most notable developments stemming from Digital Transformation relates to organizations that would otherwise be fierce competitors, collaborating to develop core foundations that will achieve a broader long-term mission and vision. They recognize the value in sharing resources to develop standards and a more cost-effective baseline.
Consider for a moment the notable contributors to blockchain platforms like Hyperledger. The Linux Foundation sponsored initiative features stakeholders in shared environments investing in a fundamental platform that will (1) benefit their industries as a whole and (2) provide a launching point that every contributor can leverage for their own benefit. There is power in numbers, and it is impossible to ignore that simultaneous investment in repetitive core fundamentals doesn’t benefit any entity, industry or ecosystem.
Another example of collaboration among competitors can be found in the recent announcement by Ford and Volkswagen that they would be sharing resources regarding artificial intelligence for automobiles. The alliance was announced to drive scale and efficiency by enabling both companies to share their investments in vehicle architectures to deliver more innovative future technologies. This includes potential collaboration on autonomous and electric vehicles, as well as mobility services.
In June of this year, Deloitte and MIT Sloan Management Review revealed the findings of a global executive study that found that c-suite executives are universally seeking improved collaboration, however 80% admitted that their organization didn’t do it well. Additionally, a recent Harvard Business Review article entitled “Cracking the Code of Sustained Collaboration” describes the effort as both skillset and a psychological approach. Both of these entities support my assertion that we need disruption and mindset shifts in the c-suite if we are going to make our Digital Transformation investments more successful.
Competition, egos and accountability streams found among competitors in enterprise have a direct parallel to what we often see in the c-suite. In a room full of experts in the realms of operations, finance, technology, human resources (et al), it isn’t unusual to find egos and territorialism overwhelming the broader mission, vision and values of the organization. At a time when the data and capabilities of Digital Transformation should be encouraging a holistic view and the elimination of silos, the inability of leaders to sacrifice their ego to advance the broader mission is a prescription for the undermining of implementation. In the words of Ryan Holiday, “ego is the enemy”.
Howard Holton, Chief Technology Officer of Hitachi Vantara, agrees. “The days of the c-suite being just another tier of management are dead and buried,” he said. “Today’s leaders need to put their own egos aside and align their days to the strategy of creating a successful future for their businesses. Eliminate silos, streamline workflows, enhance communication. All for the purpose of creating an environment of collaboration to fulfill the corporate strategy as a single, unified force. This is not a single mind, but rather the voices of the collective, working together with a singular goal. Focused on the end goal, the strategy, and fed by analytics. Agile and determined, they change with the market demands and achieve greatness. Fail to adopt collaboration, fail to be agile, don’t adapt to changes in the market? The price is failure.”
In the c-suite, attractors must be built faster than detractors, or the environment can grow toxic. Visionaries inspired by Digital Transformation don’t waste their time and resources reinventing the wheel; they partner first, distinguish second. As members of the c-suite, we have to remember this lesson every day on both an internal and external level.
2: Circumvent Overlap & Repetitive Tasks
Several years ago, I coined the phrase “c-suite repeat” to describe an emerging phenomenon I was observing within enterprise. The concept stemmed from overlapping and repetitive lines of authority among members of the c-suite, particularly in rapidly growing and diversifying environments. Accordingly, the tendency is increasingly common in the era of Digital Transformation since the pace of growth often blurs lines of responsibility. Its very existence makes the already challenging aims of flexibility, agility and cost effectiveness even more elusive.
Enterprise collaboration requires a shift in mindset that competitors don’t always have the foresight and courage to move beyond. Particularly in emerging industries, this often means that competitors waste valuable resources getting from Point A to Point B, while others are making the same stride. Yes, both entities evolve to Point B, but none are market differentiators or value disruptors. Is there value in that process or did both just waste resources? I would argue it was inefficient repetition, not innovation.
At my last organization, I directed the online gaming advisory division of a prominent international consulting firm. As a liaison between the vendors and operators, I observed providers set on being first to market, all ultimately duplicating core functions, solutions and offerings without a distinguished disruptor among them. They invested billions into duplicative solutions, only to find that there was inadequate demand from operators and insufficient differentiation in the offerings, in part because of the challenges in tying into the core platforms of various client systems. Consolidation and M&A activity followed (resulting in enhance c-suite repeat in several cases), with no provider ultimately gaining the revenue and profit margins they sought from the outset. Had they embraced collaboration to circumvent overlap, sharing resources to avoid repetition, technology and APIs that allowed for universal adoption, they could have saved billions in wasted investment.
Such battles waste time and effort on an enterprise level and among members of the c-suite. When organizations experience leadership egos and territorialism alongside c-suite repeat (with too many individuals responsible for the same function or overlapping/tangent functions without the ability to collaborate), it truly can be a recipe for disaster. There is a difference between collaboration and shared aims, and overlapping and repetitive tasks. These can be difficult to discern and overcome, but we must.
3: Embrace Open Sourcing
I have sat in front of dozens of c-suites thinking that their organizations would be more likely to achieve its objectives and metrics if they embraced principles of GitHub over their own limited strategy. Open sourcing is one of the tools that has made Digital Transformation possible. The concept promotes a free exchange of ideas and inherently embraces the notion that someone else (we likely aren’t aware of yet) might be able to help achieve our mission in a more efficient, effective way. In an open source environment, more eyes on an issue equates to more vetting…more transparency…more security. As a result, many would argue this yields more useful, scrutinized outcomes.
As I have written in countless posts, there are a number on conflicting dichotomies in business. “Stick to what you know” vs “seek out blue ocean strategies” as one of the most common examples. The answer is specific to every entity and their competitive ecosystem.
In the c-suite, we often find a related inherent dichotomy created between dedicated experts in a particular function (finance, operations, etc.) and their role in achieving a broader enterprise mission. It is possible, albeit difficult, to protect the function while embracing input from parallel considerations. On GitHub, the owner and publisher of a bucket may receive numerous pulls suggesting improved code that can make the program more efficient. The administrator can accept or decline that suggestion if they find value or don’t. If only every member in the c-suite saw input from their peers from this open-minded perspective…imagine what businesses could do.
Leaders can’t drive innovation and disruption within their organizations when their own approach is to keep all-things-strategy close to the vest. This is true within the c-suite and with the balance of the stakeholders impacted by the decisions being made. When it comes to issues like technology, where the CFO, COO, CSO, CTO, CIO, CHRO, etc. all have value and improvements to bring the table, c-suites have to find a way to embrace an open source mentality over territorialism and competition. Doing so can lead to improved processes and value creation that the enterprise would never have obtained otherwise.
4: Take Risks, Learn Fast, Fall Forward
Anyone who has followed my posts dating back to the launch of Escalate Solutions in 2014 knows that I am an advocate of Design Thinking – in large part because I know that most organizations and leaders don’t start by asking the right questions. They think about where they want to go before identifying where they are, and therefore don’t engage on the right strategic path.
One of the greatest advantages of Digital Transformation is that the data capture and analysis is allowing us to identify needs, test hypotheses, gather results and iterate strategically in broader volume. As organizations striving to constantly improve value proposition to clients, its leaders can take more risks, learn fast and fall forward.
The same mentality must be embraced in the c-suite. Core concepts of Design Thinking such as human-centered ideation, clarifying points of view in decision making, empathy-building and defining/testing a higher volume of targeted use cases can be advantageous tools in the c-suite or board room. We simply need to readjust our mentality and approach to make it more commonplace and accepted among key leaders as well as within enterprise.
“Culture change is the strongest predictor of long-term success in digital transformation, but the least-addressed,” observes Dave Mayer, Digital Transformation expert and current EITL Leadership Partner at research and consulting firm Gartner. “Transforming enterprises need to invest in the resources and skillsets to help them move culture toward data centricity, agile thinking, and ecosystem work. That takes more than inspirational breakroom quotes and weekly memos – it requires business ethnography and cultural migration work.”
In the words of Dr. Jeanne Liedtka, Strategy Professor and Director of the Batten Institute for Entrepreneurship and Innovation at the UVA Darden School, we have to discern “what is, what if, what wows and what works”. If every c-suite or board room entered their conversations with this mindset as the backdrop, our leadership interactions would be more effective.
5: Leverage Decentralization & Distributed Networks
Enterprises can’t be agile, flexible and visionary if they don’t have trust. Blockchain is the archetype as to how decentralized, distributed networks bring value. There is no central authority, key participants have the opportunity to weigh in to verify transactions, information is transparent and traceable, and documentation is immutable. The result is trust in the system. Furthermore, if you look at how blockchain and IoT are being utilized to support enterprise at the edge, they are transforming how decision making and data generation/interpretation is happening at every point of interaction. As a use case, it is easy to see how distributed networks improve communication and automate for better efficiency.
Traditionally, two of the most common (and culturally detrimental) characteristics of senior leaders tend to be (1) micro-management, and (2) an inability to delegate and empower next-tier leaders. Thankfully, Digital Transformation is putting a stop to “command and control” temperaments in the c-suite. The pace of business and the inherent capabilities of our technology solutions are making centralized decision making not only irrelevant, but next to impossible to maintain. This is a reality that every member of the c-suite should embrace.
6: Prioritize Workflows Over Silos
Let’s shift gears to evaluate practices for data storage, and how they have evolved through time. Initially, data was stored on a single devices and/or servers, and then virtual machines became an appealing option for more advanced housing needs. Today, in response to Digital Transformation, while some still resides in private centers, most of the data for individuals and enterprise has been escalated to the Cloud.
The volume and complexity of our data has led to the creation of a number of advancements, including the use of containers. Compared to virtual machines that require total replications of an OS and tend to be code and tier specific, containers are more open, agile, fast and efficient data carriers that only share relevant elements on a “need to know” basis. Of equal importance, they can be utilized regardless of the operating system and allow us to deploy to the level of a single function. The scale potential of container applications in the cloud is notable because it efficiently focuses on only the concise, direct and targeted information that we need to accomplish a specific task or function.
Shifting back to the c-suite perspective, there are valuable takeaways that we can apply from the container model. An ongoing concern in the c-suite is the overwhelming volume of information and its ability to distract from specific initiatives and objectives. It encourages contributors to operate in silos, where it is difficult to embrace input and mentalities like cooperation, open sourcing and decentralization.
Containers, when viewed from a strategic standpoint, represent the kind of universal, streamlined and readily-accessible solutions that cross-disciplinary, autonomous teams need in order to focus on workflows and alleviate silos. They are a reminder how we can overcome noise and complexity in the balance of an ecosystem to focus on orchestration and the achievement of a particular, targeted task.
There are software platforms that literally “force” collaboration and workflow prioritization within organizations. I have friends, clients and colleagues working within some of the world’s most advanced technology companies and their day-to-day activities are all monitored and encouraged by the systems they helped create. Workflows are clear, teams are identified, communication volume and content are measured and evaluated, meetings are automatically established and tracked for outcomes, metrics are updated real-time, and decision making is distributed out to the edge to relevant team members most impacted in the workflow. Just as distributed networks enabled by blockchain and IoT are helping to put a much-needed end to micromanagement, Digital Transformation components like the Cloud are helping eliminate silos and promoting workflows, especially in the c-suite if they apply it.
7: Invest in Continuous Learning & Digital Literacy
I am an example of a strategic leader that has invested a significant amount of time and energy into understanding the components of Digital Transformation and how they will impact the future of global business. Personally, I am most invested in the aspects of intelligent enterprises that technology will never replace – human ingenuity, ethics, empathy, emotion, creativity, imagination, design thinking, disruptive innovation and the related, intangible values of leadership and corporate culture. That doesn’t mean, however, that I don’t recognize the importance of digital literacy and continuous learning. You can’t advise about impacts, opportunities and challenges if you don’t understand the fundamentals of what they mean…and you can’t be a member of the c-suite in organization impacted by it either.
Study after study tells us that Digital Transformation investments are not yielding the results that leaders demand. There are countless reasons why this is happening, and I assert that one of the most alarming is that the c-suite doesn’t completely comprehend what the capabilities are or how they can improve the entity’s value proposition moving into the future. The good news is that there are countless resources available to senior executives that need to invest in continuous learning in order to elevate their digital literacy. Take time and invest in them if you need to.
“Where there’s no future vision, there’s nothing to pull toward,” added Dave Mayer. “Digital transformation is all about documenting your vision for your company in five or ten years’ time – using real-world technologies and viable investments – and then dragging that vision back to reality. The phrase ‘art of the possible’ is often overused, but here it’s relevant – and vital.”
In the meantime, for those of you who are comfortable with the technology, keep these Digital Transformation trends that encourage a futurist mindset in the c-suite top of mind during your next executive session. They are proving to be positive disruptors for enterprise, and there is much to learn about how their principles can improve the internal operations of the c-suites hoping to guide them.