Digital Transformation: What It Takes

PODCAST | With Guest Anand Swaminathan | 7 February 2018

Transcript

Narrator

The future of project management is changing fast, on Projectified with PMI, we'll help you stay ahead of the trends, as we talk about what that means for the industry, and for everyone involved.

Stephen W. Maye

I'm Stephen W. Maye for Projectified with PMI. For an easy way to stay up to date on Projectified with PMI, go to iTunes, Stitcher, Google Play Music and PMI.org/Podcast. In this episode we continue our conversation on digital transformation with Anand Swaminathan, a senior partner at McKinsey and one of Fortune Magazine's 40 under 40 most influential young people in business. In our previous talk we covered an overview of digital transformation, why it's so important to nearly every organization's future, the role of project management in its execution, and the implications to work culture, teams and customer experience. In this conversation we dive more deeply into the role of teams in digital transformation success, and the culture challenges that must be addressed.

Stephen W. Maye

I wanna stay with this, this idea of culture which you've talked about again, and I think of it in a couple of different dimensions and I wanna get you to shed some light on this. So, when I look at, uh, an organization that is, that is primed and approaching, uh, some type of a business transformation, whether they're describing it as a digital transformation or not, there are a couple of different elements of culture that I would pay attention to, so I would say 'okay, one thing I wanna understand is, is how must the culture be different in the future in order for this to succeed', and then I'm also looking at the current culture and saying 'what is it about this current culture that will be good at or not good at executing this transformation'. So, so, when you think about digital, are there earmarks of the current culture that you would say 'this kind of organization is much more likely to succeed in a digital transformation' or the other side, 'this kind of organization really, really struggles'?

Anand Swaminathan

Yeah. There's one major aspect of the culture in an organization that fundamentally hinders, uh, the organization's ability to adapt to digital transformation, so. What... this concept of silos, right? Most organizations we know, almost all organizations we know, work in silos, they have a BU, business unit structure or a line of business structure and they say 'yes, we have this line of business number one, BU number two, BU number three' and they operate themsel... and then we have an IT team out here, because you know we have a CIO who'll manage an entire IT organization. The problem is most digital natives, and what digital has taught us is, it's... there are no boundaries, there are no longer these lines and silos, and organizations that continue to operate in silos that they're not willing to create a link or interface across... they really, really struggle, in terms of adopting and, and creating and arriving at the new destination with digital. Because what digital teaches you and what digital enables is this cross-discipline team mindset. One of the things we talk about in the book is a company called ING; ING is one of the world's largest financial conglomerates, and an incredibly successful financial institution. What they had to do over a two year period was they called it re-wiring the way they actually work, and they took this concept of silos and they said 'yes, we have different... you know we have an insurance line of business, we have a retail banking line of business', blah blah, blah. What they did is they said 'what if we actually created cross-functional cross-disciplined teams that are all stacked against solving a new set of customer problems or a new set of corporate employee problems'? So, let's say that, you know customers when they come into ING, they don't say 'hey, I'd like to just buy an insurance product' or 'I just wanna buy a house so give me a mortgage', alright; they want to have a relationship with ING. And what ING decided to do in this is say 'oh, if that's what you wanna do, why don't we just give you the full experience with ING, without you having to talk to my insurance person here, and then go to the next office to talk to the retail banker, and then go to the next office to talk to the mortgage broker; let's not arrange ourselves in that'. So they reinvented themselves and what they've called it is, they now have squads and tribes. What that means is they've said 'look, these are teams of people, who fundamentally bring... you know, you've got dev ops engineers on these squads and tribes, we've got designers, we've got mortgage in... specialists, we've got insurance specialists, we've got retail banking; all of them in one team', and they're all out there trying to figure out 'how do I solve for the best possible experience and outcome for my customer'. This is a massive culture stif... uh, shift Stephen because, what's happened is, you said 'I have silos but I'm gonna break 'em down, and I'm gonna create a type of linkage between these organizational units, in order to allow me to be far more effective'. And one of the things I've seen most successful companies do digitally is break that entire silos, and the larger the organization is, the harder it is to do that. But I'll take one final example which is GE, which we also talk about quite extensively in the book when we think about the culture change. GE decided to break the fact that they have nine independent business units in the organization; one is healthcare, one is aviation, one is power, one is transport. No, hang on. Why don't we create a digital set nucleus for our organization? Let's put that out in San Ramon, California, let's actually bring in the top talent, the engineers, the software developers, the designers, let's put 'em all there. And now let's create that interface, and this... the glue between each of our business units, and that was a massive culture shift that they went through in order to create the next set of outcomes for them and where GE digital and GE now is today.

Stephen W. Maye

That's fascinating, and it takes me back to a change that we started seeing in a lot of healthcare circles some years ago, which was as, as hospital systems, as physician's practices and so forth began to, uh, reorganize themselves, both in terms of their roles and their relationships to other specialists and other service providers, and even physically restructuring their campuses and their buildings, to actually deliver healthcare centered around common patient needs, and, and this to me is, is essentially moving that model into a whole variety of other industries.

Anand Swaminathan

That's exactly right, I think as one of the industries I had pointed out early on right, healthcare started moving in this mindset much earlier, um, financial services...

Stephen W. Maye

Yeah.

Anand Swaminathan

... and get companies moved in this, they started early Stephen, because they are already, uh, tied in digital right? They already have q... elements that is so digital and related to how they actually operate as companies and businesses and providers, but they had to think about that and that culture shift came a little bit more naturally to them, because they knew they had to adopt, they knew they had to change that way very, very quickly to drive better patient outcomes, to drive better outcomes for healthcare professionals. I'll give you an example there which is Phillips. Um, Phillips is a, of course a, you know manuf... device manufacturer among many things, right from light bulbs all the way through other products and services, but one of the interesting things Phillips did in healthcare, they actually said 'can we reinvent using digital capabilities, can we reinvent the way we serve hospitals and doctors'. And they came up with this concept of well, Google Glass is now a technology, it's out in the market, can we equip a surgeon with Google Glass so that we no longer need an anesthesiologist to do as much as they're able... that they need to do, because if you think about an anesthesiologist's role in an OR they actually sit for long, long periods of time, just waiting, because they just have to watch and monitor the patient. What if...

Stephen W. Maye

Right.

Anand Swaminathan

... using the data and technology you're piping that information of the vitals and stats of the patient into the Google Glass of the surgeon, and this process is actually now saying 'hey, anesthesiologists, you could actually go serve other patients now, you don't have to sit here and just read your book, while everything is going on, you can go serve more patients, reach... touch more lives, and the surgeon is actually even more effective because he's not distracted by someone speaking in his ear, he just sees the data in his Google Glass very clearly. So this is a mindset shift right, and this is a mindset of Phillips using digital capability to transform the healthcare industry, and how they provide it. So I think that cultural shift is happening, but in healthcare as an example it certainly happened, um... it started early on.

Stephen W. Maye

So, before we move off of this, one more quick question. You talked about the, the kind of breaking down, uh, of silos as a means of facilitating that culture change that, that often or always, I'll let you, you describe it, often or always has to happen in order for a major digital transformation to be successful. Are you finding that, that in most organizations, they actually have to break them down, or is there an effective kind of bridge building between the silos that, that gets the job done?

Anand Swaminathan

I think that you can actually do it two ways, um. First of all, I think culture change isn't always in digital transformation, and I don't believe... e... even organizations like Google, Microsoft, others who are technology natives, have had to go through that. If you just look at what's happened under the leadership of Satya Nadella, in the last three years the Microsoft stock has doubled since Satya arrived. He has had to fundamentally change the organization, shifting from selling Microsoft Office on CDs to now selling it as a subscription service. That's an entirely different model; that's a new...

Stephen Maye

Yeah.

Anand Swaminathan

... way to operate. And Satya's had to do that and he's made those changes in that organization, so. I think culture change is just a mandatory requirement in the digital era, and by the way, it's also not a one-time change, you have to keep reinventing yourself and keep making those cultural changes over and over again, because our customer expectations change very quickly, our employee expectations change very quickly, so it's a non-stop era. But at the end of the day, I think you know the, the way this is really happening and the way it's necessary to fundamentally changes, what are the ways in which we are serving our customers? How are we thinking about serving our customers? What is happening with our employees? I think grounding ourselves that the culture change is happening, when we think about that customer mindset, when we think about the employee mindset, that's when the change Stephen happens very effectively, but it is something that is... it is mandatory.

Stephen W. Maye

That's fantastic. So, Anand, when you think about these, uh, all of these changes that are happening so, some differences perhaps in how we're planning, how we're setting up, some differences in how we approach the organization, so. As you said in some cases it's this highly effective bridge building, in some cases it's actually breaking down the silos and, and reorganizing, uh, even structurally. When we think about all of that going on, are there any unique or new or special roles that come to play that perhaps are not part of what we think of as traditional large project, large program, uh, execution?

Anand Swaminathan

Yeah, so one of the things that... a new role that has emerged quite a bit and we again reference this in the book because we say 'the role of the chief digital officer' or 'the role of the chief data officer', or 'the chief data scientist'. These are roles Stephen that didn't really exist in the past, um, and the reason is, in order to drive that culture change, and you mentioned the point about you know, do you break down the silos or do you create a bridge? Um, my answer to that question by the way is, in most organizations you have to figure out how to create an eff... extremely effective bridge; breaking them down is possible, and trying to create the silos down but the larger and larger the organization is, the harder and harder it is to actually break down a silo, so what you need to create is this effective bridge. These new rules of chief data officer, chief data scientist, chief digital officer, these are the roles to drive those bridges, and to create the bridges, because what these individuals do, is in many cases they are digital natives or they are people with a steeped background in change and technology and culture management. So what these folks come and do is they say 'how can I build that bridge very effectively, very fast, how do I do that, how do I make that happen'. And so it's taking that mindset and driving that change, you must have some of that to happen, you need some new rules, because what they do is they become... it's almost like saying 'oh, we just brought in a chief change officer' [LAUGHS] because at the end of the day, that's what they are, they are there to figure out what change is required, how do I...

Stephen W. Maye

Yeah.

Anand Swaminathan

... embrace and make that change, and then how do I actually build the sets of bridges.

Stephen W. Maye

That's a big job.

Anand Swaminathan

It has been a tremendous job, but here's actually one other thing I will say about that though Stephen, it's a job that'll also go away in a very few... in just a few years. So it's not a job like a chief operating officer or chief financial officer or CEO that'll stay there forever. We talk about this in the book because when we interviewed a number of clients and companies to say 'how do you think about the CDO, the chief digital officer role, the chief data role', they said 'these are some very, very important roles' but they said 'we need it now, we won't need it forever', because the whole organization will learn how to operate that way over time, they will know how to change it. So I think actually it's a job that's somewhat time boxed; you make the change, you teach the organization how to go through that culture development, teach the organization how to go through that transformation journey, and guess what? You're gonna be out of that job, you need to go onto the next job [LAUGHS]. Um, so I do think it's a bit more of a short-lived versus a permanent, uh, role that'll be in organizations.

Stephen W. Maye

See I, I think you've hit on something important there, not only what you've described about, uh, these roles or potential roles, chief digital officer, chief, chief data scientist potentially, but the fact that we can acknowledge important high-powered high-leverage roles that are intentionally temporary; I think that's important. I think it's important that we can acknowledge that, and that we can even apply that more broadly and say sometimes we need to create governance and oversight models that are intentionally temporary, sometimes we need to create processes for risk identification and escalation, and managing progress and predicting prognosis, that are intentionally temporary and, and I think I hear that as kind of an undercurrent of a lot of what you described about this idea of effective digital transformation.

Anand Swaminathan

Absolutely. I think, I think there is a... digital again is evolving at such an incredibly fast pace that digital is indeed something that is always evolutionary, and what's interesting is how should we think about our, ourselves, the roles in organization, everything else it will be temporary, it'll keep on evolving, and I think this is gonna happen more and more and more, because we're gonna find that digital is just ever-changing, customer expectations are ever-changing, employee expectations are ever-changing, because of that we're gonna have to have organizations that are quite amoeba-like and can keep changing shape, keep changing roles, and you bring in these temporary, uh, you know solutions or temporary roles, to give yourself the right momentum, point yourself in the right direction, but be ready to abandon those once that is no longer needed and go to the next stage.

Stephen W. Maye

Yeah. So, I know I only have you for a couple more minutes here, so I wanna pull this back around to the idea of the project professional. So if I am a project professional today, whether that is at a, at a senior rank, at a executive level or whether that's someone very early in my career but I intend to focus much of my work on planning, executing, guiding, leading, shaping, delivering projects and, and if we use the big capital P we can say digital transformation initiatives are big projects. What do I need to be doing now to prepare myself to be successful?

Anand Swaminathan

I think one of the things that we all need to be doing right now is learning about everything that's happening within our industry. So if we have a specific industry that we're working in, we need to know what's going on, what's happening in our industry, what the disruption really is across our industry; it is a must right now. So I actually Stephen read about 50 articles a day, um, and the reason I do that is just to try to keep up. I read a number of publications, and you know instead of just reading books I try to read these articles because Ink Magazine will tell you about that founder who's inventing a brand new way of doing payroll processing, and you're going 'oh my gosh' you know? 'If I were ADP I'd watch out', or 'if I was a benefits administrator I'd watch out', because you've got ZenPayrolls, Zenefits and five other companies coming out, rebuilding an industry that is so historic, that is so you know basic, and has been there forever, here you've got to... so reading is one way that I, I really find it prepares me for what's going on. The second element of it is actually going on tours, um, and so what I mean by that is, going on virtual tours or physical tours of what does good with digital actually look like? Um, you know reading and seeing what GE Digital is doing, reading or seeing the interviews with ING, so I go on these virtual tours of these organizations where these companies talk about what have they gone through, what have they been through, what does that change journey look like, and really understanding how that's happening, because that helps me understand 'okay, what do I need to do in my organization, what do I need to do in my role'. And the third thing I do is I fundamentally try to educate myself on what is the role of technology in my business, so how can digital and other capabilities in my business actually change the way I work and I live today, and adopting, not being afraid to adopt it when, uh, when Apple Pay as an example came out, I immediately went down the street that morning that Apple Pay was available, to pay with your you know Apple watch, or to pay with your iPhone, I rushed down to the Whole Foods because they were one of the, uh, places that accepted Apple Pay and I immediately bought some groceries and I said 'great, let me test it out'. I then went down to Radio Shack and then bought a device from there because I said 'great, they accept Apple Pay'. It was for me, 'how do I quickly learn about these new capabilities, how do I embrace myself in that', because that allows me to be a more effective communicator and a more effective manager, in my organization. So these are some of the ways Stephen I think it's important to be able to stay ahead.

Stephen W. Maye

Is there anything that shifts from a soft skills perspective?

Anand Swaminathan

Well, I think that, from a soft skills perspective, it's, it's mindset. Quite frankly it's about you know things like far more listening, less talking [LAUGHS], uh, these days, um, it's just trying to understand and listen much more because, others fundamentally note that, that 18 year old kid or 16 year old kid who's inventing the next way in which we might communicate or talk tomorrow, knows more about it than I ever will, um, and so listening, being open-minded. Other part of it is actually being completely flexible and ready for change. It's not being bound by 'well, what title do I have, what role do I have, what career path and trajectory do I have', instead, 'how am I going to have the opportunity to learn the most that I can, and how can I be very flexible in my working style and my working environment ready to work with any kinds of folks who come in, um, how do I rethink that', and I think it's that mindset again, it's culture, it's an individual culture change that happens with digital because it's a new way that we need to operate in your own environments.

Stephen W. Maye

And with that, Anand gets the last word. Thank you so much for meeting with me today, it has been fantastic talking with you again. I Have thoroughly enjoyed your book, and, and have very much, um, even more enjoyed talking with you, I think you have brought something of, of real value to this community of people that are so central to driving these kinds of projects forward.

Anand Swaminathan

Absolutely. Thank you so much for having me Stephen, really appreciate it and, uh, uh, look forward to more conversations in the future.

Stephen W. Maye

For an easy way to stay up to date on Projectified with PMI, go to iTunes, Stitcher, Google Play Music and PMI.org/Podcast.

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