Connected Companies

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.

Hi, it's Rob Llewellyn here and welcome back. Today I'm joined by Lee Bryant. Lee is the co founder of a company called Post Shift and they work with companies, both large organizations and startups across all key areas of modern digital operations. Lee is of the belief that the greatest priority for digital leaders these days is to redesign their organizational operating systems to create connected companies. Let's jump into the interview with Lee to dig deeper on this. Lee, welcome.

Thank you. Nice to talk to you.

Lee, let's start off with quite a fundamental question about digital transformation. In your perspective, what's the real value of digital transformation for companies these days?

I think the biggest challenge and one of the most important issues right now is the readiness of organizations themselves to deal with both the opportunities and threats posed by sort of digitization in the broadest sense. I think there's been, you know, people use the term in very different ways. I think some people use it really just to talk about marketing and social media, which I think is, you know, part of the picture, but it's a very trivial part of the picture. Others might use the term to refer to new digital apps and products, products and services and so on. But I think the big picture challenge is that most of our organizations, and not just businesses, you know, government and public sector as well, are not structured and not ready to become sort of digital first organizations. So I think the first challenge really is this sort of digital optimization of getting people ready. So, you know, a more connected company, a more sort of data driven company and something that's more sort of laterally connected rather than sort of vertically hanging off a hierarchy. So I think that's challenge number one. I think challenge number two is how we then sort of transform our ways of working using digital technology. And then we come to sort of the icing on the cake, if you like, which is our ability to use this new sort of structure and way of working to generate new products, new services, innovation and, you know, sort of customer facing value from, from the whole thing. So I think that's in summary how we see digital transformation, which is first and foremost about creating organizations that are ready and fit to thrive and survive in the digital era.

Now that all sounds really good, but I know it's easier said than done. So how do organizations do this and overcome the challenges that you've just described.

It's tricky. I mean there are some fundamental blockers to digital transformation in organizations today. So give you a few examples. The sort of annual planning and budget cycle in most organizations that really acts against agility and sort of adaptability. For example, the role of these sort of internal functions like hr, IT procurement, they've often been seen as sort of little power centers who some people call the department of no. You know, they're not on the hook for positive outcomes, they're just sort of compliance police and make people work in a certain way or make people follow a certain process. So these are the sort of, you know, typical barriers that people face when they try and become more agile in the way they're working or more adaptive. But there are many more. And I think probably the most important is the whole culture of cascading hierarchy based management and performance reviews and KPIs. This is a very, very old fashioned way of trying to sort of motivate action, coordinate work and keep people aligned towards the strategy. And we have far superior methods available to us now in a modern connected organization. So these are the things that tend to hold it back. And so therefore these are the things that you really need to work on and provide viable alternatives to if you're to be able to transition from a sort of, you know, late 19th century, early 20th century model of managing the corporation to a sort of 21st century model of, you know, a live learning organization, a connected organization and something which is fundamentally a lot more agile than today. Because I think one mistake that people make sometimes in digital transformation initiatives or projects is that they believe there is a sort of a single destination, there's a target operating model that we can sort of plan our way towards. And once we're there, tada, change is done, we've succeeded and we can just operate that model. In actual fact, there is no destination. What we're trying to bring to organizations is constant adaptability, constant sensing and responding to external threats, external opportunities or changing customer needs or changing circumstances that the market. So building in that sort of constant shift, that constant agility and adaptability, that's really the goal for me rather than some sort of model or architecture of the perfect organization. That having been said, we do have some templates and we do have some examples of things that we know work. So I think one of those is this sort of, you know, Amazon championed business as a platform model where you connect the organization horizontally, you try and turn processes into services, you pursue automation and then you end up with a sort of a service platform, of the components, the sort of business cogs, the algorithms, the calculators help run an organization. And then on top of that platform, you can have a lot more freedom and agility for small teams to work with customers and deliver value using those services. So that's probably the dominant model. But I think also you can look at examples like Spotify, who have a very successful small team model, and a few other case studies which are well documented in the literature as well.

You mentioned some of the old ways of working. And we know of course that these large organizations that become large because they've been around for a long time, they've become very good at doing the same old practices over and over and over. And of course we know it's really difficult to change behaviors and working practices. So, you know, in light of all that, Lee, do you think large established firms have a future in the digital world?

I do. You know, for several reasons. I'm a big fan of. Well, I'm a sort of history nerd. So I'm a big fan of old organizations, sort of 100, 200, even more years old. And if you look at the history of Europe in particular, you know, the post world war sort of European progress and development that we've seen has been largely a result of various industries developing quite strong high scale positions. Whether it's sort of automotive and engineering in Germany, whether it's sort of, you know, design businesses and consumer businesses in Italy or Scandinavia. These large firms have played a role in social development, not just in terms of their own profit taking. And so I think we need them. And although software will be everywhere in the digital era, it won't be everything. You know, we still need power supplies, we still need, you know, turbines, we still need sort of vehicles and homes and all this sort of solid matter based products that startups are not really going to replace. So I think for me it's a wonderful sort of once in a generation challenge to be able to work with these large companies on their transformation without dropping the ball along the way. In other words, it's one of those sort of cliches that you need to sort of rebuild the plane in flight. But there's definitely some truth to that. And I think that's where you really learn your trade if you can actually bring large organizations with you or seed them with change loops and iterative change processes that actually start to scale and go beyond what you can achieve yourself.

We've all heard the term software is eaten the world. And of course we've Seen the likes of Amazon and Facebook and Alibaba and all the others that were small startups not so long ago and now taking a real dominating place on the world stage. Do you think that startups will really start taking over in all of these industries?

Lee I think there are many successful scale ups who will grow to compete with some of the existing companies and we've seen that already. Whether they become the same is a good question. I actually don't think that scale requires the sort of linear manual, add more headcount, add more departments scaling model that we've seen in the traditional corporates as they've grown. Instead, I think you can look to the field of what people call exponential organizations, organizations whose growth and scale model is not linear. And so you can still have relatively small headcounts and relatively small teams using automation, using technology, using service platforms to actually achieve scale in the market. So I think we'll see probably three or four different things. I think one thing we'll definitely see is individual startups making an impact, changing the game and then forcing everyone in the market to respond. So Tesla's a great example of that in automotive. Challenger banks like Monzo and N26 and stuff are examples of that in banking. Then I think a second phenomenon we'll probably see is ecosystem development. So somebody creates a platform in a market which enables multiple startups to take a slice of the pie if you like. So I think some of the competition from large companies will come from ecosystems and platforms. And then I think we'll also see, I guess what you might call a more traditional model of startups becoming scale ups and achieving scale, but differently to the large corporates. I think there's no question that in areas like automotive and areas like industrial organizations, we're going to see a reduction in the size and headcount of some of these leading organizations. But what we may not see is a significant reduction in their market share or their sort of overall revenues. I just think that they have to develop more sort of automated, less sort of headcount based approaches to doing what they do today. Otherwise their cost base simply won't be competitive with emerging competition from startup ecosystems.

For example, Lee I think that most of our audience today, they're aware that technology is not the be all and end all of transformation. But that said, of course, a lot of this transformation, a lot of the tremendous progress that we're seeing these days wouldn't be possible without the innovative use of technology. So just focusing on technology and appreciating it for A moment. What in your view is the most impactful emerging technology right now?

That's a good question. A lot of people are going to say blockchain, bitcoin, and I would fundamentally disagree with that. I think that's not going to change the world anytime soon. And I think it's massively overhyped in terms of its applicability and actual practical use cases. I think the real answer to this is not one individual technology, but it's how we see the interplay and sort of co evolution of technologies. And what I mean by that is that there are some quite simple technologies around automation which will take us on a path towards machine learning and eventually to real artificial intelligence, not sort of marketing AI, which is where we are with most of these sectors today. And I think that will combine with other things like simple VR, AR technologies, it will combine with platforms to create a more evolutionary environment around technology. And I think all technologies will develop more quickly in that sort of co evolution configuration. But I think for organizations today, it's really about smart automation and this sort of, you know, what I would label as augmented human intelligence area of technology. In other words, using smart agents, using automation, using some sort of background machine learning and analytics to just give a leg up to people who are doing the work and making decisions and adding value to customers. I think that set of technology together is definitely the most impactful over the next five years for most organizations that listeners will be working in today.

You just mentioned smart automation, smart agents. A couple of months ago I was in Oman in the Middle east and I was speaking at a digital transformation conference for the HR fraternity and there was a big, big concern there about automation destroying jobs. So what's your view on that, Lee? Is it a good thing, is it a bad thing?

It's obviously neither. And both in the sense that we've seen multiple waves of innovation threatening basic jobs. So you know, one of them was the industrialization of agriculture that took, you know, millions of jobs out of the workforce initially. But now we never really consider that. We don't look back and say that was a disaster. In fact, what it did was it helped urbanization, it helped sort of human development and progress. People moved to the cities and then the Industrial revolution came along and created a whole new set of jobs for people who might previously have worked in agriculture. Similarly, when the spreadsheet first entered the market, lots of people feared for the many thousands of sort of human computers and people doing bookkeeping and so on and so forth. But as we saw there again it just led to more innovation and more jobs and so on. So my view in organizations is that we need to be honest and say, yes, there's probably going to be an overall headcount reduction in organizations as they're set up today. But the way that that will be achieved is first of all by automating the really boring stuff that probably nobody particularly enjoys doing, so that we free up people to use their human intuition, creativity and skills to do more with the outputs of that automated process. So I think we'll see first of all a shift in jobs in organizations, you know, away from just repetitive process completion to actually sitting on top of automated processes and using them in a smarter way, or perhaps having more customer facing people or more service, personal service people, etc. And then we will see a general trend towards not requiring the same number of people to create the same value or to achieve the same outcomes in organizations. And so yes, that might result in a net reduction in some of the basic jobs, but I think we will see an explosion in all kinds of new jobs. We're always going to want personal service, we're always going to want quality, we're always going to want professionals and advisors and people to help us. So I think the scope for increase in those areas is quite exciting actually.

Lee, we're going to have to wrap it up there. But listen, where can people go to learn more about the kind of thing that you've been talking to us about today?

So I talk about some of these things on Twitter. I am Lee Bryant. L E E B R Y A N T on twitter and post shift.com is our sort of corporate home. We have our blog there. We share some of our research and bits and pieces. So that's probably the best place to come across these ideas and these concepts.

Lee, it's been terrific talking with you. Thank you so much for sharing your insights with us today.

Thank you. Real pleasure.

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