Companies by Design

Hello and welcome to Leading Digital Transformation with Rob Llewellyn and the Digital Transformation People. In this podcast series, Rob interviews experienced practitioners, authors and thought leaders whose stories and experiences provide valuable insights for digital transformation success.

Today, a lot of large organizations are experiencing flat growth, acquisition and in some cases bankruptcy. What they've done in the past to bring them success no longer works as it once did. And doing more of the same won't bring them to where they need to be to remain in business for the next five, 10 or 20 years. Companies of the future don't happen by accident. They're designed. One person helping design these companies in Australia is Heidi Beets. Let's jump into the interview with Heidi and listen to her perspective on how organizations can create a new future for themselves. Heidi, welcome.

Oh, hi Rob. Thanks for having me.

Heidi, A lot of people talk about digital transformation. Is there a consistent understanding and definition of what that actually means?

Well, a lot of the different stakeholders that I speak to have a very different understanding depending on what their background is and what they've been exposed to previously. So I really try and drill down into what their term of reference is. So a lot of people are most familiar with things like operational efficiency and continuous improvement in terms of transformation. And for digital. I keep coming up against referring to it as within context of digital channels for distribution or self service and things like automated marketing, but where I'm trying to help change the narrative and there's lots of other people out there doing the same. Digital transformation to me is really distribution as well as looking at the engine room of the business. So how are we looking to automate through things like straight through processing? So not just the robotic process automation, but straight through processing and also new value propositions. So that's all underpinned by a digital platform. So that's kind of the big banner of what it means to me. So I always try and figure out where people are at and then try and help them come to the realization of the missing pieces.

Yeah, it's interesting, isn't it Heidi? I think people kind of talk about digital transformation in the context of the area that they work in. So for example, you'll find marketing people, they'll talk about digital transformation from a marketing perspective. But of course it's much bigger than that, isn't it?

Definitely. And I see this being a connector role to be able to join those people together. So if you talk to process people, they're like it's all about re engineering the processes and business process management. When you talk to Technical people, they're like, it's different functionality and different platforms that we're looking to implement or streamline and de duplicate. So design people are always going to come at it from, you know, what's the functional use of this thing and how are we building it for best use? So it's really our job to bring those things together so that we're all working towards one view of what the moving state of the future should look like.

So it's kind of like an orchestra, isn't it? You've got all these amazing players within the orchestra and it needs that individual to bring them all together to give that great transformation performance.

Most definitely. And I guess people like you and I have come from more diverse backgrounds, so we've been a Swiss army knife kind of consultant or practitioner or leader. You can really help people to join those dots because if you worked in one functional area or several, it's sometimes more difficult to see how these bits fit together because how would you know otherwise unless you've worked across a lot of different aspects of transformational change?

So which emergent disciplines and practices are required for successful transformation?

Heidi, good question. So I've come from more of a business architecture background more recently, and that's really understanding how you work with the business to decompose the business strategy into executable chunks and then work together to figure out which business capabilities you need to be good at, great at, or even stop doing to be able to achieve your strategic objectives. Really get to the crux of a shared understanding of how work and value flow through the organization. So that's really one of the more elevated things that we're seeing in transnation. And that really dovetails into a broader enterprise architecture space. So that's really helping bring the business technology and things like data architecture together to align, I guess, strategic intent with delivery. Then there's also customer experience management and also service management and design. So that's looking more at orchestrating end to end ideal experiences into complex business systems, but then bringing it all together. I've been experimenting more with enterprise design concepts. So business design and enterprise design. So there's part of that movement growing globally. So that's one to watch out for. And that's really looking at how do we bring all of these, the zoom in and zoom out together to be able to consider both and be able to move the dial congruently.

Heidi, you touched on customer experience. What's your view on customer centricity in terms of transformation? There's a lot of talk around Customer centricity. But what's your view on it?

Yeah, so a lot of people talk about customer experience and customer centricity interchangeably of fans. I think customer centricity is more of an incremental culture paradigm shift. So it's really helping the organization to be more data driven and evidence led. Stay curious. And it's really reshaping how you define value and measure success. So through all those organizational design aspects and I guess it spills into leadership. So it's how you lead your staff and it is your strategy. And I guess just to look at, I wanted to touch on what customer centricity to me isn't. So a lot of people, they're talking about things like, you know, if I break it down to its rudimentary level, design posturing or innovation theater. So attending a couple of days of design thinking course that keep going, delivering as they had already. And also I don't know how many times now over the years I've seen these absolutely exquisite, gorgeous designs that never see the light of day and don't actually get translated into customer and business value. So I just wanted to touch on what I think it is, but more importantly what it isn't. So it's not ticking a box as a one off. It's not running one customer project in isolation. It is your strategy and it really spills through to. It's not just customer centricity in the end customer view, it really talks to the employee experience, the supply chain and also partners so that those aspects will need to work together. So it depends on how you center your business around all of those objects and how they come together to create.

And you just mentioned Heidi, that you know, some of the ideas that you come across really nicely presented, polished ideas never see the light of day. Why do you think that is? Of course it's different in different organizations, but typically what's something which you find is commonly happening in organizations to stop these ideas seeing the light of day?

Yes, I've seen a few patterns with this and through no malicious intent whatsoever. But it depends on your frame of reference when you're trying to solve problems. So when some people come in and do unstructured blue sky innovation thinking and they're applying that to a continuous improvement, incremental improvement problem, it doesn't quite work because you've got all these constraints. So by that I mean you've got business rules that you need to comply with or maybe need to challenge. You've also got things that regulators insist on that you can't Move the dial on that. And then you've also got decisions to make around how much technical debt are you willing to take on, how much pain are you willing to put your frontline staff through through implementations that are so rapid that it's eroding your core business. So there's all of these considerations and that translation takes a very different skill set and mindset and that transition from think, feel, do and qualitative and quantitative research and intent in the customer experience design when the rubber hits the road and you're trying to implement that into a complex business system with humans as customers and humans as employees, with all these extra restrictions around funding models, around control and span of accountability for leadership, it's complicated. So you really need to start using tools like the service design canvases to be able to thread through what's happening to the customer and join it with what's happening in the business. So you've, you've got conscious decisions that you're making rather than just saying, well, that's too hard, we've got too many constraints. We'll come back to that later, because it's sometimes so big that you can't move the dial incrementally on it.

Heidi leaders have been around for as long as organizations have, and of course it's a critical role within any organization that harbors hopes of transformation. So what does transformation mean for the future of leadership?

Well, I think that a lot of larger organizations have got command and control style leadership and it's more aligned to how you'd manage a call center in some instances. And that necessarily won't lend itself nicely to where we're looking to implement more creatives in design and we're looking to implement more algorithms. So we're going to need different skill sets. And when you have more specialists to support this design and architecture function and doing things like automation and radical transformation, you need to manage them in a different way. So it's more about setting direction and supporting people and empowering them and trusting that you've got the right people with the right skill sets. So it's really about having the humility to tap into what do we need and take advisory on to understand what the gap is, because it's not what you've already got. In most cases, you need something different, otherwise you're going to get more of the same. So it's really understanding which technical and which other kind of skills do we need and how do we nurture those so that we're not having people without those skills directing how the Work is going to be done down the track because it doesn't quite work.

So of course this requires a lot of change in the way leaders think. So what paradigm shifts in thinking are required to instigate meaningful and effective change?

Well, I really think transformation is about next level change management. And I'm not talking about change management from the point of doing a push of things from a project out into to operationalize value. I'm really talking about a cultural transformation which is enabled by digital and technology but not led by it. So that really starts lending itself more to things like those shifts to organizational psychology skill sets and organizational design expertise. So really linking organizational design and enterprise design to what's happening in technology and you're really ramping up your service delivery capabilities. So linking front and back office in ways that companies may haven't had to over the years. And also with the future of work changes, there's going to be requirements. We're going to see more of a shift to things like requirements for neuroscientists and algorithm or model managers to make sure that there's ethics applied, you know, so that the models aren't biased and we're looking to have integrity in what we're automating.

You know, Heidi, the words culture and people tend to be bandied around quite a lot when people talk about transformation. You know, what are some things that we can do to ensure that we nurture a culture because we're not going to change it overnight, that we nurture a culture into one that's going to help the organization transform and evolve our people to create that new organization. What are some things we can do?

Well, you can't truly have a cultural change without helping people connect to something greater than themselves as an individual or within a certain team. So you need to motivate and inspire people to lift out of their cost centre or what their leader might be trying to drive and really a greater good approach and say actually it doesn't matter about you or me in this. We've got companies going broke, they're going becoming bankrupt, they're getting acquired hostile takeovers. What are we willing to compromise on? To have relentless focus on customer and business value and we take our egos and ourselves out of it. So you really, it's up to the leaders to set what that should look like and give them something bigger than the team or the business unit to connect to so that it should be obvious what the right thing to do is. It shouldn't even be a conversation in some instances. So that's just a different way to approach it. And it's quite a difficult thing to do. But also to back that up, you really need to re engineer how KPIs work or OKRs. So how do we actually reward people? What behaviours are we rewarding? How are we making sure that we're focusing on the right outcomes so that we're looking to managing strategic risks effectively? We're making sure that we're not just looking at operational efficiency and getting stuff done, but we're nurturing other parts of the business that are more aligned to what the customer cares about. So that shift in culture has to be backed up with how we measure and reward success. Otherwise it just doesn't stick.

Now my next question might build on what we've just been talking about. I don't know yet. In your experience, what's the biggest obstacle for large organizations to embrace transformation?

Okay, so I think change is happening so rapidly that at times it might be hard for leaders to fully comprehend. I mean we've got day to day jobs, we've got the businesses running, but really hard to comprehend the actual impact of certain unprecedented strategic risks that are out there. So how do you quantify something that you've never seen before? How would you know what the impact is going to be when you're trying to keep the lights on and keep the fires at bay? So that's really hard. So I think having an intimate awareness of both extreme operational efficiencies that you may have and making sure that you're addressing funding those and also addressing the strategic risks. So by that I mean where you're likely to be disrupted is something that every executive should have on their must do list. And I really think that the biggest barrier to that is transparency of having the information to understand where you've got these inefficiencies and risks as well as trying to have the right skill sets in place so you've got that strategic intelligence and you can understand and react to those signals of change in time to be able to react. So that will involve changes to how you fund things. Innovation versus improvement. It's quite a difficult challenge, but it's a conscious choice. So I think that side of it needs to be re engineered as well. And I guess the linchpin of it all is you need to have leaders that are empowered to be able to act. So large corporate successes and how they everything that they've done to get them to where they are today, that's actually their biggest risk now. And that's a common thing that I'm seeing when I talk to people across the continents and what companies have done for years doesn't necessarily work in the same way. So we're facing constant changing market conditions, increasing customer expectations, and ever increasing regulatory change. So the bars continually lifted higher leaders will now, I guess, need more humility to be able to have the insist on getting the transparency. So investing in data to know when these things are not going to plan and have an awareness as to what that new state of play might need to look like. So that really requires hiring the right skill sets to get them over the line to be able to do what's required to remain in business for the seeable future.

Heidi, I just want to touch on innovation with you. Now we mentioned earlier on that, you know, some ideas never see the light of day. What's your view on the way in which organizations are approaching innovation to enable them to create that new future?

I'm going to go back to the language. So a lot of people, when they're talking about complex problem solving for a complex business problem that they already have for products and services or markets or customer segments that they already have today, they refer to that as innovation, and that's actually improvement. So even diagnosing the problems and opportunities correctly. So for me, innovation is planting lots of seeds, looking across what other people are doing in adjacent markets, in locally, across the world, and other technology advancements, other companies that are emerging and looking for those changes that are happening, being tuned into that and being able to fund experimentation and not expect a return on investment. So that's probably the biggest confusion point that causes so much damage in that space. So we try and fund things like they're an improvement and we want return on investment in 12 months. And that's not how it works. I like to think of it like a farmer, as an innovation practitioner. So they're planting lots of seeds and then you've got a firefighter, so they're putting out the fires. And you've only got a limited set of resources, which is the water, and you're trying to grow the value which are the trees. So you need to keep the fires at bay and nurture the seedlings to be able to grow the most value. So you need a balance of the two. And I don't think people consistently understand the differences between one or the other.

Heidi, we could go on about this for hours, I'm sure, but we're going to have to wrap it up there. But listen, before you go, where can people go to learn more about what you've got to share on this subject or connect with you.

So if you can get me on LinkedIn. Heidi beats on LinkedIn.

Excellent. And we'll put a link to that in the show notes. Heidi, thank you so much for your time today.

Thanks Rob. Really appreciate it.

We hope you enjoyed this episode of Leading Digital Transformation with Rob Llewellyn and the Digital transformation people. Visit thedigitaltransformationpeople.com to secure the knowledge, talent and services you need for Digital transformation success. To continue your journey as a Certified transformation professional, visit roblewellen.com be sure to subscribe to the podcast and follow us on Twitter at the Digital TP and Obert Llewellyn.