Digitalisation – an unstoppable mega trend

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Digitalisation is a mega trend that will influence the building of a future society. As a mega trend, Digitalisation has the ability to find ways to by-pass any obstacles and resistance in its path to influence tomorrow. But many companies and organizations try to resist the mega trends in different ways and live with the illusion that it is possible to contain the digital movement. History tells us that this is not possible and any such attempts are doomed to fail. 

I am sitting in a coffee shop in Sollentuna with a view of the bus station. It is a Monday morning and the commuters are heading into Stockholm on this first day of spring. Even though we had a few months of winter, everybody know that spring is here to stay. The trees are still bare but soon they will be dressed in green leaves and cast comfortable shadows in the summer heat. No idea to resist the seasonal movements. My thinking is that most trends or seasons (changing the nature of our society) are out of our reach to control. New political, technical or economical force erupt and despite our attempt to control, these forces will change our society in one way or another. Digitalization is one of these mega trends, accompanied by globalization and urbanization, and will change our society to something unknown today. But today, I see many companies and organizations trying to resist digitalization but not accepting its fundamental effects – for example, the way companies need to be governed.

During the last couple of hundred years, we have seen several global mega trends and events that changed the world community. For example, Liberalism, founded on the ideas of equality and liberty, evolved in the Age of Enlightenment and was defined by John Locke in the 17th century. The mega trend of Liberalism travelled quickly in Europe through secret meetings, newspapers and general word of mouth. The force of liberalism was a grass-root movement that erupted and could not be stopped – despite attempts by various rulers and governments.  Ambition to contain the mega trend Liberalism resulted eventually in revolution, great war and the crash of empires – to eliminate all resisting forces. Most mega trends cannot be contained and those who survive the fundamental shift in the society are those how quickly grasp its potential and find new ways to leverage the new ideas. Those how try to resist (or don’t acknowledge the shift in market/society) will by all certainty be phased out. That history can tell us – and current mega trends are no different.

For me, digitalization is not a technical evolution but rather an industrial and/or social revolution – driven by citizens and customers on grass-root level. There are endless possibilities to change the way we live, work and communicate with new technology, and the change is appearing in a speed we have never seen before. Even our social and political structure, based on democracy and social liberalism, will probably be adjusted in some way by digitalization, globalization and urbanization mega trends. Scary! But what is important is that is that the mega trend force cannot be stopped – it will find new ways to disrupt. One interesting example is the streaming or peer-sharing (bit torrent) of media (for example The Pirate Bay). It is a movement enabled by new digital technology and challenge the social, legal and economic structure of the society. People can share protected content through the internet without any cost. Media content became worthless over-night. The over-mature media industry is severally challenged by new digital movements. The question I ask myself, without going into the ethical dilemma, is whether this movement can be contained by legal actions? Sites can be closed, but if the force is great enough, the digital movement will find new ways to disrupt. The media industry does not have a chance stop the mega trend! We can see the same trend with other movements in Uber, AirBnB, Ryanair, Skype, Spotify, etc. We saw taxi companies in uproar against Uber demanding legal actions to stop the new digital company – the result was taxi companies adapting new digital business models and focusing on customer experience to compete with Uber. The “traditional companies” decided to follow the digital movement to survive. The traditional players trying to protect a status quo in the industries does not stand a change! Why resist?

When studying companies (in various industries) in detail, we notice that “digital companies” differ from “traditional companies” in the way they are managed and governed. The “digital companies” have customer experience and the rapidly changing market as a starting point for the corporate governance. These are vital characteristics of corporate governance to survive in digital markets where change is fast, fierce and the future. Speed is built into the management system (company DNA) to quickly respond to new customer demand, competition or trends. The question is often how to minimize governance to allow for innovation and creativity in product units working close to customers. Too much bureaucracy, processes and control will obviously have the opposite effect. However, “traditional companies” have been built in a different, predictable and slow, market condition – where productivity, stability and control are the starting point for the corporate governance. Bureaucracy, processes and control are its vital management system to survive, and give the shareholders and market analyst a predicted performance. When the “traditional company” clash the digital market with “digital companies” – the outcome is uncertain. In fact, most of the “traditional companies” will not survive the digital revolution because they simply cannot handle the speed of change.

It takes a “traditional company” 18-24 months to react to a digital trend – what can happen in that window of time? What can Google do in that time?

Business has no sentimentality. Companies that cannot compete will be phased out without pardon. Companies that learn how to align to the new market pre-requisites will survive. But what is remarkable in this industrial revolution is that many “traditional companies” resist the digital mega trend – by legal actions, by keeping its “traditional” corporate governance or pretending that it still year 1985.  We all know how that is going to turn out. Even though all companies acknowledge the need for speed and agility, most companies keep its traditional corporate governance system with opposite effect. Digital transformation is not about technology but rather about leadership, change and governance all captured in corporate governance. Those how understand this paradigm shift have at a chance to survive. Still most “traditional” companies regard digitalization as a technical evolution and not a management and governance revolution. Be ready to be phased out!

To transform one’s corporate governance system is probably to most daring and challenging task to do. I have full understanding that many senior executive resists any change of the corporate governance system as it might jeopardize the company’s performance and their own position. Why embark on a journey into the unknown when the current system works quite well? What if the market predictions are wrong and we embarked on a devastating journey for no reason? How can we motivate our staff to be part of the change journey after decades of heavy control and demotivating positions? These questions are relevant but I would probably ask myself – what if you don’t change?

My recommendation:

  • Do your homework and study how your industry is changing and the level of unpredictability. How is your industry affected by digitalization and new innovative competitors? What does this mean for your company? What is the probability of survival for your company based on the industrial evolution?
  • Ask yourself: what are the main internal and external forces affecting the digital transformation of your company? Is it leadership, culture or your offerings? Is there a plan on how to overcome these challenges? Is your company accepting or resisting the digital movement?
  • Contact Hans Gillior – expert in digital transformation! Our company has a unique analytical tools and methods for addressing the fundamental forces jeopardizing digital transformation. For example, we carry out a digital stress test where we go through 10 real-life scenarios of the digital market, and identify current bottle-necks, unclear governance, ineffective decision-making and other obstacles for change and competitiveness

As the morning proceeds, snow starts to fall from the sky in this first day of spring. The warm winds from the weekend are long gone and the snow pausing the warmer weather to come. There is always short-term resistance to mega trends that might pause the movement for a brief moment of time – but will never be able to stop the moment in the long-run. Rhetoric to make countries or companies great again are only illusions of the ability to stop or pause a mega trend from changing the world community. To go back to a time where the effects of digitalization, globalization and urbanization did not exist. What we have learned from history is that this tactic is not ever successful. It is not possible. Only those accepting changes and the new pre-requisites (and deal with the fear and frustration of change) of competitiveness and society will succeed. Will you?

Hans Gillior – Senior Advisor and Digital Guru

Current state of the IT Organization – a digital confusion

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Digitalization is on the top of the CIO agenda in 2017. But what does it actually mean? It is quite evident from CIO studies that CIOs today take a very technical approach to digitalization rather than focusing to matters that are essential for the survival of the company (leadership, governance and people) in the digital era. The result is a digital confusion where expectation and ambitions are not aligned in the company. To be successful, we need to understand the different aspects of digitalization and do our homework – what does this mean for us.

Currently, I am reading one of many CIO reports outlining the CIO agenda for 2017. It is an important publication setting the scene for the Swedish IT industry for the year to come. Even though it is a local report, the scene is like many other geographical locations. It is a report that has been published many year and includes 244 Swedish respondents this year. It is a report stating “digitalization” as the biggest focus and challenge for CIOs going forward. But what does “digitalization” actually mean? Are IT organizations driving the right agenda in 2017 to boost digital performance of the company/organization?

Digitalization is truly a complex topic which definition has changed frequently in the last couple of years. In fact, most IT professionals have their own interpretation of “digitalization” and it complicates matter. I remember my first encounter with “digitalization” at a Gartner conference in 2011, and how “the NEXUS of Forces” (social, mobile, cloud and information) was going to revolutionize the IT and business organizations. At that time, “digitalization” was mainly IT/technology driven but quite immature in the eyes of the CIO. Since then, the meaning “digitalization” has altered to focus on leadership, management, agility and organization. “Digitalization” has taken an external focus to focus on the customer, competition, and speed of change. Not seldom we hear talk about management 3.0 and agile management to represent the necessary engine for digitalization 2017. It is all driven by a rapidly changing business landscape and customer behavior. How digitalization will be defined in the future is impossible to predict but we can be sure that the speed of change will not decrease in any way. Digitalization is today not primarily about technology and IT but rather a great force targeting the softer aspects of the organization (leadership and culture). The company with the most dynamic organization, motivated staff and focused leadership will survive the digital revolution. In other words, it is not a technical revolution – but rather a management revolution!

The CIO study 2017 states that most IT organizations are in a transformation mode trying to cope with increasing demand for digitalization (top challenge/interest 2017). The expectations do not only come from customers but also from business and executive leadership. The fear of losing market shares and revenues in a completely changing industry is driving a desperate and short-sighted behavior. But when studying where CIOs 2017 will focus their time and investments – we see how CIOs define “digitalization”. The top three focus areas for 2017 include Cloud, Mobile and modernizing “old” IT systems. The top three investment areas for 2017 include Cloud, Mobile and Security. Even though “IT governance” is considered a key question for 2017, investments and focus is on more technical topics.  In other words, “digitalization” is defined by CIOs as improving IT/technical capabilities – somehow aligned with 2011 Nexus of Forces. This definition is quite far from how “digitalization” is viewed today – with focus on leadership, organization and governance. The question I ask myself when studying the report is who sets the “digitalization” agenda and who influences CIOs in 2017? The answer in not surprising – media and suppliers!

My point of view is that most IT organizations are forced into “digitalization” by business or corporate leadership without complete knowledge of what “digitalization” means for them. It is more important not to lose speed and position in the digital race than understanding what the race is all about and how to win. In fact, only 31% of respondents in study reported that they had a digitalization strategy. If you want to survive the “digital race” it is important that you go beyond media and suppliers and own your own ideas, analysis and conclusions about what digitalization mean for you. The conclusion might be scary and tough but it is necessary to for digital survival. How many have done that?

Maybe it is time to divide the word “digitalization” into two different streams or concepts. To separate between “IT Digitalization” and “Digital Transformation” as these two concepts address different aspects of the organization and competitiveness. These are two concepts that are often mixed up and used as synonyms – which they are not.

Definitions:

 IT Digitalization: A concept of using IT technology to digitizing business/customer processes with an internal perspective – increase internal capabilities and productivity. Digitalization is all about implementing new IT services in Cloud, Business Intelligence/Big Data, Security, Business Systems (ERP), Internet of Things, Mobility and more.  These are indirectly enablers to creating customer value. CIO responsibility. Easy to invest in and implement!

Digital Transformation: A concept to transform the leadership and governance of the company or organization with an aim to optimize customer experience over time (unpredictable). Digitalization is about change in leadership, culture, governance, agility to respond quicker to new trends and customer behavior. CDO responsibility. There are direct enablers of creating customer values. Difficult to invest in and implement!

“Moving Microsoft Office into the Cloud with Office 365 – what value does that bring to the customer? This is IT Digitalization!”

When studying companies and organizations, it is quite evident that these two concepts are often mixed. I don’t know how many companies I have studied that invest heavily in “digital transformation” but is in fact investing in IT tools and processes. It is like re-painting your car and hoping it will perform better. Not going to work – but at least you have done something! What complicates the situation even further is that both “IT digitalization” and “digital transformation” is needed to build digital competitiveness. We need efficient IT services but also agile and innovation IT organizations (leadership and governance) to support business competitiveness. With IT only focusing on “IT digitalization” will continue leave them as a bottle-neck for “digital transformation”.

Anyway, going back to the CIO study 2017, it shows CIO focusing on “IT Digitalization” of the company/organization with heavy IT focus. This is obviously quite natural as this is mainly the responsibility of the CIO in the organization and should not be under-estimated. It is an important part of the digitalization journey. No problem there! But it is important to notice that most CIOs are part of a “digital transformation” driven by Business, CDO or Executive Team which another purpose – where IT plays a different role. Topics to support “digital transformation” (governance, leadership, change management, agility) is far down in the priority list or not visual at all. Reasons might be many but probably they relate to management, business and IT have different definition of agenda and meaning of “digitalization” (IT Digitalization or Digital Transformation). In any case, this miss-match in expectation and ambition create great confusion in the organization where the digital initiative is lost or slowed down. CIO need to align his/her agenda to the business, CDO or Executive Team and not run his/her own race when it comes to “IT digitalization”. This is obviously quite complex and require different skills in terms of leadership, governance and strategic planning. It is these kinds of capabilities that determines whether IT is a bottle-neck or strategic enabler in the “digital transformation”.

My recommendations:

  • Own your own analysis of how to support digitalization or the digital transformation. Listen less to media and suppliers and more to yourself.
  • Understand the expectations on IT – IT digitalization or digital transformation? These are not the same! Are you focusing on the right things?
  • Free up time in your agenda to understand why, how and when to support digital transformation. Time is of essence!
  • Contact Hans Gillior to support both IT Digitalization and Digital Transformation! There are endless number of consultants focusing on IT Digitalization but very few on Digital Transformation.

The complexity of the CIO role is obviously to support both the IT Digitalization and Digital Transformation whilst ensuring the day-to-day operations. How to free up time, resources and build awareness to drive these areas with right focus and competence? How to prioritize? Looking at the CIO report 2017, I see that 90-95% of respondents talk IT digitalization – with new e-commerce platforms, automating sales processes, implementing Office 365 and other cloud services. Digital Transformation is neglected and the price of neglecting might carry a heavy price in the next years to come. To drive IT Digitalization might be the role of the CIO 2017 but the role need to drastically change to support digital transformation – that’s where the survival of the company lies. It is going to be interesting to see the CIO report 2018 to understand how things has progressed. I would very much question the competitiveness of a company with an IT organization listing cloud or sales platforms as their focus 2018. Something to think about!

Hans Gillior – Senior Advisor and Digital Guru

Read more blog post on hansgillior.wordpress.com

 

Age of globalization and digitalization – let us focus on value creation!

The age of globalization and digitalization is here. Is it running like a tsunami across the globe changing the foundation of business and society. Is it possible to stop the tsunami? How to respond to the age of globalization and digitalization? It is all about “value creation” and how companies and organizations are organized and governed to meet the expectations of the end-customer. In the end, an employee, manager or company that does not create value to its customers have no justified existence on the global and digital arena.

It is the age of globalization and digitalization. An era where capital, services and production means flows across national borders with ease. All transfers are enabled by digitalization – where processes, information and IT are not contained to a region or country. It does not matter if a product or service is produced in Mumbai, Beijing or Stockholm – they all compete on the same market.  It is an era where products and services are produced and managed where it is most cost beneficial and value creating. If the total value of service is higher being produced in Mumbai – then that sets the standard for that service. Location is not the key determinate in that value equation. What is important is that I can consume the service or product when, where and how I see best fit. How the service or product support my life style and personal branding. For example, do I really want to post on social media that I am a customer of a certain bank? The down side to the age of globalization and digitalization (often called “new normal”) is that societies and companies compete on an international scale with high unpredictability, and where work is moved around in a quite chaotic way. This is the reality of “new normal”. No one is protected in the unpredictable digital landscape. An article in Dagens Nyheter (a couple of months ago) concluded that up to 40% of the work force will be affected by digitalization and globalization – when routine work is being automated with smart robots or digital solution. This scenario is having/going to have huge influence on societies, governance, and solidarity. It is with great anxiety that I follow how nationalistic movement is USA, Europe, and other parts of the world is trying to stop globalization and digitalization – with tighter immigration laws, trade tariffs, walls and old nationalistic rhetoric. One can see the similarities to the 1930’s.  The age of globalization and digitalization is here. My question is where the tsunami of globalization and digitalization can be stopped? Probably not. What does this mean for companies, organizations and IT?

The key effect of globalization and digitalization is revolving around the concept of “Value creation” – how well we create value and experience for the end-customer. The fact is that globalization and digitalization will enable a movement (or change) in the business environment to ensure that value is optimized to the end customer. New player will succeed if they can create more value than traditional players. Companies will move production or service to where more value is created. Companies will keep those employees that contribute to the experience of the end-customer – the rest will not be used (phased out). This is harsh reality but is the way that corporations and organization are developing today. Value creation must directly or indirectly be linked to experience of the customer. Doing administrative service might not be direct value-creation but if the work free up time for management (to boost value creation) then that has a natural part of the company. But how do we define value creation? Here are my thoughts:

Value: all activities or investments that contributes to fulfilling or exceeding end-customer expectations – and hence building the corporate or organizational brand.

The definition implies that companies that do not create value for their customers (in one way or the other) has no place in the market. The customer will go to the company that optimizes the value creation for them. Others will be faced out. The challenges in bank and finance sector today can be very must linked to this definition. How does a bank meet the expectations of a customer? What are the expectations of a customer – and how does it change over time? Why are FinTech companies so successful in conquering the bank/finance industry? The thing is that customers and customer expectations is the starting point for designing/running the bank, not the other way around. How many Business Controllers (measuring cost – creating value of customer?) are in the organization – and how many Performance Managers (measuring value creation) are there? All employees, leaders, functions, organizations must understand their value contribution/proposition and linkage to the end customer. When looking at the IT organization of these organizations (also in general), my view is that these are very much separated from the customer interface but rather work in the back-ground with focus on operations. When studying the new digital start-ups, they have a different approach – total focus on the customer journey, experience and value creation. How to compete with that?

So, what does this mean for the IT organization? Well, IT plays a pivotal role in the globalization and digitalization era as more and more companies are becoming digital (IT intensive) to gain (or keep up with) competitive strength – following customer needs. Today, all business models rely on smart use of IT in some way (stated in research by CSC). But also, IT is undergoing a revolution in terms of management and structure. During the last 10 years, SCRUM (agile development) has revolutionized IT development boosting value creation, business interaction and time to market. It is a grass-root movement that has completely changed the way IT organizations operate. But an overwhelming majority of IT organization try to contain agile development by strengthen tradition governance – with total miss-alignment thus. Is that possible? There is a glass ceiling above agile development and portfolio management not aligned with governance, strategy and general IT management. Either IT organization has to go agile all the way (to support globalization and digitalization) or close down all agile movements dragging IT back to the 1980’s (traditional and silos – not recommendable). Unfortunately, I see many IT organization taking the second option.

I think the fair question to ask is how an IT organization creates value. How does employees, managers, functions, tools/processes, competence and ecosystems create value? First, value takes an external perspective – meaning that value is created by the receiver of services or products. In other words, it is business or the end-customer that defines how IT delivers value – not the IT department itself. The other components (employees, managers, organization, tools/processes), etc. are only enabling value creation. These are assets of the IT organization all supporting the vision and mission of IT. If an asset does not support the vision and mission (creating value) – then it has not place these and need to be faced out. This also means that development methodology and governance model also are assets to support the vision and mission of IT (creating value). These needs to be aligned to the business and customer requirements – not the other way around. Unfortunately, many IT organization tend to see governance and organizational functions separated from the customer value perspective. Good luck with that!

My recommendations:

  • Link all elements/assets of IT to the customer value perspective. How does for example help-desk, contract management, incident management, and other functions relate to customer value. How can value creation be boosted? My test is to think – does the end customer want to pay extra for the IT organization running a function this way? If not, then there must be another way!
  • Dare to challenge the traditional and learn how to survive in the new normal. Whatever you know today will rapidly change and not be true tomorrow. The greatest asset of a leader today is to enable continuous and agile change. Dare to listen to the agile team! Learn and implement agile methods for your management team.
  • See through the fog. There are endless consultancy firms that have “seen the light” and offer quick (technical) fixes to IT organizations. There are no quick fixes – it is a difficult journey focusing on people and management! Ask someone who understand the core complexity of globalization and digitalization. What does this mean for you?
  • Contact Hans Gillior – your partner on the digital transformation journey.

We have during the last 6-9 months seen country after country react to the increasing globalization and digitalization by electing leaders and decisions with a strong nationalistic touch. But what we need to understand is that globalization and digitalization cannot be contained – in the same way that nationalism could not be contained in the 19th century. Any attempt to contain a global force of this magnitude will make the change even harder. There are many historical examples of this change – with devastating results. Our role is to make this swift as smooth as possible understanding how companies, employees and structure creates value. A company that does not create value for its customer with soon be passed by a new (digital) competitor.  That is the true reality of globalization and digitalization. Either we accept it or we will be faced out. The choice is ours.

Hans Gillior – Senior Advisor/Digitalization Guru

Understand the nature of “disruptive” – key for success in digital

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When studying “disruptive” events from a historical perspective, we see a surprising trend! The event is often insignificant but grows into a “disruptor” by the nature of the environment (declining powers), insecure leadership and inability to re-invent itself. Digitalization is hence not about advances in technology but rather about “old fashion” leadership trying to cope with the unknown. By understanding the nature of “disruption” we can prepare and protect ourselves from its forces. 

The word ”disruptive” has become a key synonym to digitalization where new technology and trends will fundamentally change the business game. We see “disruptive” as new business predators or viruses that will ultimately change everything we know and management – to something new and unknown. If we take a historical perspective to the word “disruptive” we can learn to locate the “disruptive” trends, foresee its affects and how to protect ourselves. History is fill with disruptive event that has shaped the modern world and made it what is it today. These are generally small, and for the moments, insignificant events that in a historical perspective have great impact. Who would have know that Luther’s 95 thesis on the Wittenberg’s All Saints’ church door in 1517 would divide Christianity, affect the power balance in Europe and lead to the brutal 30 year war? The event is an excellent example of a “disruptive” event that changes the game. But why do these events have such impact on history?

My favorite “disruptive” event is the assassination of Austria Archduke Franz Ferdinand in Sarajevo on June 28th, 1914. We all know the story of how Gavrilo Princip (a member of the nationalist movement Mlada Bosna – “the black hand”) shot Franz Ferdinand and his wife on the streets of Sarajevo and that the event launched Europe into the First World War. The story is partly true. The fact is that the assassination was an insignificant event that did not even make the headlines in the major newspapers. Many Austrians were quite happy to get ride of an unpopular Archduke (even though he was considered a reformist). So why did the insignificant event launch Europe into war? Obviously, there was the uprising of Germany, suspicious and rivalry between the European states, decline of Austria, Russia and Ottoman (many with insecure leadership) – and frankly Europe had not had a major war for 100 years to redistribute the power between the major states. The scene was set! But still the “disruptive” event might have gone unnoticed if it wasn’t for Oskar Potiorek – the governor of Sarajevo (responsible for the agenda and security of Franz Ferdinand). To save his career, he blamed Serbia for the assassination and engaged the Austrian senior generals in his views of who was to be blamed for the assassination – and that Serbia should be punished (something he could arrange). The generals with support of Emperor Franz Josef place a harsh ultimatum on Serbia – with back up from Germany in case of conflict. The rest is history! The war raged for 4 years and killed around 20 million people.

When studying the “disruptive” events that change the paths of history, we see a pattern. These “disruptive” events are often quite insignificant but grow in magnitude by the way the society (and especially men with power) interprets and acts upon these events. The way it grows is a result of the conditions of the environment is grows. What would have happened in Pope Leo X or Holy Roman Emperor Charles V had not reacted to the famous thesis in Wittenberg? What if the Austrian generals did not act upon the words of Oskar Potiorek? What if the Austrian-Hungarian Empire was not on a deadly decline with “old fashion” leadership? Very little! But we can learn is that the fear of losing (power) or decline (of an empire) are great catalyst for transforming an insignificant event to a “disruptive” event. In the end, it comes down to unsecure and traditional leadership that is challenged by new “unknown” powers that has the ability to re-distribute power. We see the same pattern over and over again. Do you agree?

So, when studying “disruptive” in a digital context – do we see the same patterns? Well, let us study the latest “disruptive” trends such as mobility (with the launch of iPhone), streaming music (with launch of Napster and Spotify) and Internet telephony (with Skype). We can also add Uber, AirBnB and other disrupters. I remember when iPhone was launched in 2006 and how I saw that an insignificant event. Why did the world need another phone? How can iPhone compete with Nokia, Siemens or SonyEricsson? And it probably was. But the “launch” of iPhone was transformed into a “disruptor” in the mobile phone industry by the response of the traditional phone makers – something they did not understand and feared. It was the “traditional phone killer”! What is also interesting is that the “iPhone” hit the market in the exact right time when consumers where a bit tired of the tradition phone, many saw stagnating sales, an over-belief in their own capabilities and many phone makers saw it difficult to re-invent itself – due to poor land insecure leadership. We see the same trend in other industries such as teleco, hotel business, taxi/transportation, music/publishing, etc. Industries that were wide open for a “disruptive” to conquer the market.

Today, we talk a lot about the next disruptive trend that will change the business in our industry – and that we need to be on the look out. It will put you out of business! We try to understand the new business model of AirBnB and Uber to reposition and protect ourselves from the next disruptor. But studying examples in history and digital era – we see that disruptive events are a result of other forces than technology or an assassin. It is a result of a insecure and fearful industry who lost the energy to reinvent itself and listen to the demand of its consumers. Technology might be an enabler but it is in the leadership where the real force is created. Digitalization is not a technical revolution – it is a revolution in leadership, culture and management!

Today, we read in media of Ericsson sacking 800 people in Sweden to cope with the new digital competition. Cost savings is key to survival. Ericsson, with a proud history of innovation, has been by past new competitors and it now on the decline. It is easy to blame technical evolution and “disruptive” for the business path but the fact is that the “disruptive” is a result of an industry unable to re-invent itself, scared leadership afraid of losing power (market shares), and an over-belief of its own capabilities. When changes comes, they react in the same way (as many traditional business dinosaurs)– cost focus rather than focus on changing culture, management and listening to what customers actually want (value). From a historical perspective, the declining journey of Ericsson is no surprise and in the end – it is all about an “old fashion” leadership, culture and management structure unable to cope with the “unknown”. Don’t blame the competitors!

My recommendations:

  • Take a movement to study the industry you are positioned in. Does the industry have all the elements of being disrupted? What is the best way to react to new technology or events? Are they a threat or opportunity?
  • The way to protect a company from “disruptive” trends is to “disrupt” your own leadership, culture and management structure. It is a painful journey but it makes you survive in the digital era.
  • Call me – let us continue this discussion in another forum. We need to learn about the forces of digitalization and how “disruptive” trends growth from insignificant to market changers.

The word “disruptive” has become a buzzword to describe the possibilities and affects of digitalization. But “disruptive” events, technology or business are often insignificant when they occur and grow in stagnated industry, leadership or power structure. It is not the “disruptive” itself that causes change but rather in the protection of the “old”. The only protection is to re-invent oneself – our leadership, culture and management structure. It is painful – but to run out of business is even more painful. The choice is yours.

Hans Gillior – Digital Though-Leader and Senior Advisor

 

Boost the value of information – for great decisions

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The validity of the strategy is equal to the validity of the information and/or hypothesis that it is based on. Inaccurate information will deliver an inaccurate strategy. But how do we boost the value of information and ensure great decisions? Here are my views!

November is the time of setting the direction and budget for the coming year. For some time, most organizations has analyzed and discussed how to address the new digital arena with fierce and fast moving competition. Trends have been examined and benchmarking has given new light on the cost levels in the organization. The new direction and budget is decided in executive forums and later distributed and cascaded down in the organization. Everybody is to follow the revised direction within the set cost frames. But how valid and accurate are these decisions – and do they actually create customer value in heist of digitalization? The fact is that the decisions taken today or tomorrow are based on “old” information that does not reflect the current challenges. Let us discuss how to improve decision-making for a while. It is all about the value of information.

Definition:

The value of information is based on how well it represents a situation at any given time – to enable correct and valuable decisions.

I often meet companies (especially IT organization) who present their strategy as a great piece of art. It has been developed for a long period of time using the best consultants in the business or the best minds in the company. It is “the” document that will guide them through the threats of digitalization and strengthen their market position. It is often a masterpiece! When I suddenly ask them how the strategy was developed, and the validity of its information and/or strategic hypothesis – I get a face of confusion.

“Well, you know, we did a thorough trend analysis and benchmarking, and that is what the strategy is based on. It took us 7 months to gather and analyze the information – and another 5 months to produce a world-class strategy. It is now decided in our executive forum! We are prepared and very proud!”

Wait a minute! In my world, the validity of the strategy is equal to the validity (or quality) of the information and/or strategic hypothesis that it is based on. Inaccurate information will deliver an inaccurate strategy. Frankly, I do not question the method for trend analysis or benchmarking (or strategic analysis). I am questioning the validity of that analysis from a time perspective – are the assumptions, analysis and hypothesis still valid 12 months after they were collected? In most (IT intensive) industries, the value of information has been reduced by 70% over a 9 months period. This means that the information collected 12 months before does not represent the current business conditions (high probability of high deviations) – and hence, the strategy should not be trusted. How much are you willing to pay for the accurate information?

“In most (IT intensive) industries, the value of information has been reduced by 70%

over a 9 months period.”

My point of view is that the problem of inaccurate information is one of the biggest concerns of a company today. First of all, that most strategic documents are based on invalid information and secondly that it takes too long time to companies to respond to information (normally around 18 months). Accurate information is the foundation for running a digital business, meaning that the company (governance function) needs new routines for how to quickly collect, analysis and make strategic decisions – while the information is still valid. The more digital the business is (IT intensive), the faster this chain of activities needs to work. In other words, the way to enhance the value of information is to continuously validate the strategic hypothesis that your strategy is based on. Are they still valid after 3-6 months? If not, what has changed and how does that affect the strategy? We call that an iterative strategic process (time boxed) that revolves in the same pace as the market.

My favorite example of inaccurate information are worldwide studies that are produced insights to a certain industry or function. These reports are valuable for the direction of business and IT organization. But the fact is that most of these studies take 12 months to produce – and the information based is often invalid when the study is released – and even older when the information is used for company steering. To actually base a strategic decision on these reports is absolutely lethal. The question I ask myself is what purpose these reports fill – other than pure marketing?

My recommendations:

  • When studying your business or IT strategy, what information (sources) and hypothesis is the document based on. Are information and/or hypothesis still valid?
  • How long time does it take your organization to a new digital trend? What if a digital start-up challenged your business with new innovative products/services – how would your company react?
  • Contact Hans Gillior – expert in iterative strategic processes!

It is the time for setting direction and budget for the coming year. But already now, most of the strategic information and/or hypothesis are quite invalid – and should not be trusted. The decisions taken in executive forums are based on imperfect information – guaranteeing inaccurate decisions. But it does not have to be that way! There are methods of guaranteeing accurate and valuable decisions by viewing information from the right perspective – by continuously validating the value of information. How difficult can it be? That is exactly what we do in our personal lives when we study the weather – to select appropriate clothing.

Hans Gillior: Senior Advisor and Digital Evangelist

Mastering Moments of Success with Strategic Design Prototyping

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What is the value of a static IT strategic document or IT Operating model? There is no correct or optimal way of working but only moments of success that comes and goes in random. The only way we can master this scenario is to constantly challenge and re-design the organizational prototype – for example operating model or constitution of the management team.

The fact is that I have 10-15 years of experience in IT management and operational design – in terms of strategy, governance and leadership. During this journey I have been convinced of how strategies are developed, or how governance structures are developed. In the end, it is a change journey that needs to be supported to boost performance. But what if we oversaw the most fundamental aspects of IT management and operational design – the fact that we do not have a concrete question and answer to what the document is set to support. What is it that the operational design/strategy is set to solve? And, will the question be the same today as tomorrow? Probably not.

Most IT organization (also business) I have encountered has some sort of business or IT strategic document or operating model. It has been developed over long time in the management team with (often) support of expensive consultants that guide the team on the right path. The final product is often a lengthy document describing new goals, organization and important initiatives setting the direction for the coming years. What I find interesting is that IT management is trying to define an engineering problem where there is a clear answer to how IT or business should be run in a correct way. If we only get the structure right, then IT or business run in the correct way – because there is a correct way. It was worked before! That is what consultants want you to believe.

The engineering approach might be sensible in the pre-digital era when the business and market conditions were quite predictable. All unpredictable unknowns where eliminated and all focus was to build “correct” structures to optimise productivity. The optimal structure would then generate the right results tracked with KPIs. Easy as that! But today, the business and market conditions are more complex with high level of unpredictability and unknowns. To be honest, we do not have a clue of how the market behaviour will look like in a year. That is the true affects of digitalization. So, how are we kidding with the engineering approach?

Most of the business problems today are complex. We do not have a clear view of criteria for success or master plan as the conditions and pre-requisites are constantly changing. Answers and solutions (when found) cannot be re-used, as they are a product of the situation they were designed to master. Current problems are often human problems relating to experience and quite messy. Here we need a design prototyping, based on curiosity, where we continuously prototype and adjust to align our solution to the reality. For example, we can engineer design a car but we need to design prototype to design the user experience.

The point is that the current situation for many IT and/or business organization is that the situation is too complex and fast moving to engineer a solution or strategy for. There is no correct or optimal way of working but only moments of success that comes and goes in random. The only way we can master this scenario is to constantly challenge and re-design the organisational prototype – for example operating model or constitution of the management team. Continuous learning is the key but constantly evaluating the true effects your organisation produce. Why is that we have the same members of the IT management team year in and year out even though we know that different competence are needed over time? How long time is the current composition of a management team valid? Anyway, my point is that we have a view that there is a correct way to manage an IT organization and when that has been designed – then we stick to that. However, the changing environment would require the opposite approach with an ever-changing model based on learning, challenging, and adjustments. We are far from this approach!

When studying IT strategic documents or IT operating models, most of these documents have a good view of what they try to achieve – often enhancing productivity in some way. However, the fact is that in the digital era, there is no concrete questions, no ‘silver bullet solution’ or correct answer – only a hypothesis or idea that needs to be investigated. When we find a solution, the moment has changed. Most of the IT strategies or operating models take their starting point for a stable environment that will be equal for the next 5-7 years. Not good enough!

My recommendation:

  • (IT) Interact with business and find a new way of collaboration where you constantly change and update your way of collaborating. New prototyping of how IT contributes with customer value in a changing environment.
  • (IT) Throw away your old strategic document because they are useless. Build a strategic prototype for the next three months and then iterate it going forward.
  • (IT) Dare to re-shuffle your management team and supplier ecosystem each 3 months to take advantage of each moment of success.
  • Contact Hans Gillior – Digitalization Expert – to support your digitalization journey!

I have spent 15 years on IT strategy and governance domain – any it is now time to change views on my competence and way of working. To grow in your professional role in to question who you are and what you do. In that sense, need to use “competence design prototyping” to always be aligned with the new business requirements and boost moments of success. My old competence and experience will not guarantee any success in the future. Unfortunately!

Hans Gillior – Digitalization Expert/Senior Advisor

Living in the moment – key for successful digitalization

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We often talk about digitalization being the biggest threat to our competitiveness, but I would say that corporate stress and our diminishing cognitive abilities are much more sever for competitiveness. To remove the stress and anxiety of change is more important. To think, analyze and decide is the core foundation of a digital culture of constant change. Don’t you think?

For a short moment, I found myself standing still on the sidewalk staring at the facade of an old house. It was an Art Nouveau palace from the late 19th century in the middle of Stockholm that caught my attention. Ferdinand Boberg designed the palace with all his glory and never have I truly seen the palace in its proper light and glow. I pulled out my earphones and listened to a combination of street noise and my own breathing. For a brief moment, the time stood still. Amazing! The fact is that I was on my way to (a bit stressed) a business meeting with rock music screaming in my ears – when I suddenly found a bit of beauty on my path. For a brief moment, I forgot about my stressful morning and my planned meeting and only focused on the painted windows of the palace. Nothing else districted my mind. When I arrived to the business meeting, five minutes later than planned but before it was scheduled to start, I felt a fresh and inspired – able to focus, being present and intuitive. I lived in the moment and gave my client the full attention he needed and expected. Great meeting!

Statistics how that digitalization has changed our work place significantly – in terms of pressure, “always on”, information overload, and distractions (PAID). We consume 10 times more information than 20 years ago, working in open landscapes full of distractions, always available and connected through smart phones, and expected to “produce” more with less time and resources. Re-organizations, new directives and endless reports are part of our daily life. Stress levels (internal and external) are increasing every hour. We often talk about digitalization being the biggest threat to our competitiveness, but I would say that corporate stress and our diminishing cognitive abilities are much worse. To think, analyse and decide is the core foundation of a digital culture of constant change.

We become experts in multi-tasking! But the problem is that our minds cannot multi-task – we process each bit of information (or distraction) that we encounter in series in the pre-frontal cortex. The cognitive engine is filled with meaningless information to process (around the clock) hindering the real ability to analyse and decide. The fact is that multitasking reduces productivity, decision-making and creating a stress that consuming us from the inside. Approximately 50% of our office time is spent on mind-chains where our distractions are keeping our mind occupied. We are not focused! The stress we feel at work is sign of time where we do not understand how the mind works. Does it really have to be like that?

A couple of months ago, I was engaged in a discussion with a large IT organization about the affects of digitalization and the need for change. The IT organization was built on a traditional management style where hard work (long hours) and importance (participation in meeting and projects) was considered high status. However, regardless of hard work and importance, not much value was created to the business side. The most interesting part of the story is that the organization was unable to change and transform. Why is that? And how come hard work is more important than the value one creates or the change one enables? Where does this behavior come from? Is it a constant fear of not being good enough?

To be honest, I have over a period a10 years lived and breathed the stressful environment of a large IT organization. I received 150 mails per day, attended 35 meetings per week, worked in an open office landscape and was “always on” answering mails around the clock. I was not particular happy or productive, and my mind was always somewhere else than it should be – always focusing on the next deadline, goal and bonus. Rewarded by recognition of my hard work and of being important. I was always in fear of not being good enough and not performing. But in the end, I started to questions the behavior and asked myself if it all was worth it. How did my team feel about the stress and way of working? I quite the job and spend two years studying digitalization, leadership, cognitive behavior and re-programming my mind to focus on what is important – and producing value! I am a different person new who understands the importance of cognitive skills and leadership – and its affect on digitalization. I am here to help others to change, produce more value and be happier.

Every change is related to a stress and some level of anxiety. Research show that stress releases the same hormones as when we meet a danger (a bear in the forest). Our fundamental instincts kick-in and we attempt to run, fight or freeze. Our cognitive capabilities are out of work. The fact is that our mind cannot distinguish between real or imaginary fear. When we talk about digitalization and a complete transformation of business models and role of IT, then the stress levels shoot through the roof. We are trapped in our own anxiety and change resistance. What we did with the telecom operator was to discuss how to remove the anxiety – and the stress levels. How to make employees feel comfortable in change? We discussed a lot of different aspects of change but one concrete idea was to remove KPIs during the time of change – removing the chance of failing. We discussed not allowing over time and taking your computer with you home. Great ideas – great work!

Recommendations:

  • Recognize that people and their wellbeing (cognitive capabilities) is the biggest asset of your IT organization in the digital era. It is not about tools and processes – but leadership and culture.
  • Take 10 minutes each day to isolate yourself from the daily stress and reflect of your situation. Listen to your breathing! It will make wonders!
  • Think twice before launching a new re-organization or productivity program. What affect will this have on people and their stress? What would happen if you stepped outside the conventional management style and allowed time for reflection?
  • Reduce information flow by 50%! Implement a email and meeting policy!
  • Contact Hans Gillior – expert on digitalization transformation!

A few days after I found myself staring at the Art Nouveau palace on my way to a client meeting, I pasted the exact same spot again – on my way to another meeting. I remembered the feeling of complete harmony studying the façade of the building and listening to my own breathing. I remembered the excellent meeting where I as completely present and inspirering. Once again, I found myself staring at the façade of the building, removing my earphones and allowing for energy and focus fill my mind. Another great meeting! It is my secret place where I re-focus and to be honest, today I often go to that place just to feel alive again. What is your secret place where you reload your mind? If you don’t have a place, take a moment to find that place of corporate mindfulness.

Digitalization – what can we learn from history?

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Digitalization has many similarities to how the Enlightenment period during 18th and 19th century transformed the society into what we see today. Great powers like the Habsburgs failed to adjust to the social development – based on the ideal of Enlightenment and were dissolved after the Great War. What can we learn from history and the Enlightenment impact on World history?

To drive change is one of the key tasks of the digital CIO. Digitalization is changing the competitive landscape and the role of technology in creating customer value. The fact is that major research companies predict that all future business models will depend on smart use of IT and new digital capabilities. Digitalization is not necessarily a technical revolution but rather a management and leadership revolution where the traditional “command and control” management style is challenged. For me, the management revolution is a natural step considering how history has progressed during the last couple of centuries.

The period of Enlightenment in the 17th and 18th century with philosophers and scientists like Newton, Voltaire and Montesquieu challenged the power of the church and ruling houses by questioning authority, legitimacy and became the ideal for liberalism, democracy and religious tolerance. We can trace revolutions, world wars, constitutional government and separation between church and government to the ideas of Enlightenment – all bases of the thesis that “all men are capable to think for themselves”. Interesting is that Enlightenment has its basis in science and greatly valued empiricism and rational thought, and was embedded with the Enlightenment ideal of advancement and progress. With the progress of the enlightenment ideals, scientific development and a stable government (separate from church and wealth) have created a fantastic economic growth creating the society we live in today (very simplified).

Digitalization is like the Enlightenment period creating a push for a new world order with new governing principle in the corporate landscape. From a historical perspective I compare the “traditional” global companies to the House of Habsburg in the early 20th century – completely out of line with the liberal and national movement in their empire. Austria-Hungary was the second largest country in Europe and the third largest industrial power in the world – but it did not help them to avoid the complete collapse following the Great War. Francis Joseph I was a traditional monarch avoiding any kind of chance or modernization – living in his own bubble of glamour. Studying the raise of digitalization we see similar behavior (leadership, governance and readiness for change) in the corporate landscape and we know history will threat powers unaligned to the movements in society.

What we can learn from history is that it is the combination of new democratic governance, scientific/technical advances and enlightenment ideals that makes countries prosperous. It is a painful journey but has made life better for all world citizens. But comparing this theorem to the business world, many organizations display the same behaviour, leadership and governance as the Habsburgs. Yes, organizations focus on technology and science but not understanding that a new leadership and governance is required to boost prosperity. New technology with old leadership/governance is bound to a “crash and burn” scenario where great corporate empires will shrink and disappear from the digital competitive landscape.

During the last five years, I have studied the progression of digitalization and how companies (especially address the new challenges). The starting point was Gartner’s attempt to define digitalization with its NEXUS OF FORCES (social media, mobility, big data and internet of things). Since then there has been a great investment in new technology to boost the corporate digital presence. 90% of all articles and seminaries relating to digitalization still have a technology perspective. Still, we see many companies confused about how to address digitalization – probably because their technology strategy has not increased the digital revenues. What happened? Well, a digital transformation requires change in leadership, governance and digital capabilities and by only focusing on one dimension many companies will fail to achieve the benefits of digitalization. Easy as that! I think that the NEXUS OF FORCES has a good start but did not grasp all the dimensions of the digital revolution.

Companies in the bank and finance industries have been challenged by digitalization a number of years. The industry is an IT intensive industry where IT and technology plays a pivotal role in making the right financial decision, and providing valuable services and advice. The banking and finance industry has been protected by national regulations but also through the large capital base needed to build a financial institution. Today is different where small start-up companies like Klarna revolutionize the industry. What is interesting is that most banks focus on technology investments (new smart IT) and reducing cost/risk as their main strategy for the digital era. As the customer ratings fall and market shares are lost – there is a confusion of what to do. Why is this not working? The answer is simple – a digital transformation requires change in leadership, governance and capabilities – not only in technology. To change leadership and governance is painful and a career suicide but necessary to conquer digitalization. The Habsburgs couldn’t do it and we all know how that story ended.

My point of view is that digitalization is a corporate revolution that easily can be compared to the revolutions or wars of the 19th and 20th century where the “old” leadership was challenged by new ideals and needs of the people. It is not only about technology (big data or mobility) but something challenging the core of business and competitiveness. The successful and prosperous nations (and companies) are the ones that continuously challenge and change their leadership, governance and (digital) capabilities to be one with the movements in the society. However, many companies (and especially IT organizations) are lost in the challenges of digitalization and hence listen to advisors – with limited knowledge of the true nature of digitalization.

I wonder how the great leader Francis Joseph I reasoned about changes in the Austrian-Hungarian society during the 19th and 20th century. Nationalism, liberalism and demand for democracy were changing the roots of the empire and threatened its existence. However, with absolute power, any uprising could be crushed and the empire could continue to prosper and participate in the political game in Europe. The French revolution and the following overthrow of European ruling house was a chock for many rulers and should be avoided to any cost. Any new social trends, and revolts that would challenge the position of the monarchy should be ignored and crushed. The Austria-Hungary was dissolved after the armistice of Villa Giusti, the Romanovs fell after the revolution in 1918, and the powerful Ottoman Empire was divided after the Great War. How did Kodak reason when digital cameras where released in the 1990’s? How do you reason when it comes to digital transformation?

– Hans Gillior: Senior Advisor and Expert in Digital Transformation

Our perception of digitalization

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Our perception of digitalization is a result of all our experience is this practice – spiced with mindset and knowledge. It is our perceptions, through our personal lenses, that define how we view and address digitalization, and business effects we get. Our perception needs to change in the same rate as the digital evolution and it can be a painful journey with out the right support. What lenses do you use to with IT and digitalization?

Our perception of life and circumstance is a reflection of our experience and mindset. Our perception teaches us what is good and bad – and what we can trust. Memories of bad (and good) experience are stored in our mind and use to perceive and evaluate situations. It is one of the key functions of the amygdala part of the brain to translate senses into emotions and actions/decisions – all driven by experience, knowledge and mindset. Our “lenses” of circumstance guide our way through life and help us to make the right decisions. How does this relate to IT and digitalization?

The way we view a brand or product/service is often in the light of previous experience and how they relate to our values and needs. In the same way, the way I perceive digitalization or the role of IT is a summary of previous experience and mindset relating to these practices. I have worked in this domain for 15 years and during this journey I have changed my interpretation gradually based on own experience, inspirations, and new insights. It has been a personal journey where my own principles of IT have been challenged in its core. To change your perception is sometimes painful (I know) but necessary to keep up with evolution. However, some see digitalization as a pure technical trend while others see it as a complete game changer addressing culture and leadership. It is hard to argue that some interpretation is better than others – it is a matter of opinion and mindset. Everything we see is tainted in someway by experience and mindset.

We perceive digitalization in different ways based on our experience – and it hard to say what is right or wrong. 

I often meet “traditional” CIO who has been in the IT industries since the mid-90 with a technical career mastering technology, projects and processes. It was a time where the role of IT was to improve business productivity through cost reduction and automation. A cost efficient IT was a successful IT organization! A career was based on delivering annual productivity gains with limited risk – often through large projects (not always successful) and utilizing smart use of IT. As long as IT was “just” a productivity enabler located in the corner of the organization chart – it was an ok approach since very few understood what IT was about. My concern is that relating to how digitalization is perceived through productivity and technology lenses? How does it look like? How does it smell and feel? Do they see the same picture as business and customers?

In my work as a Senior Advisor to CIO, I often meet CIOs with the productivity glasses on when they discuss IT. They tend to talk the language of digitalization but in the end view it from a technical and productivity perceptive. There is no right or wrong answer – but my main finding is that the CIO perceptive on digitalization is not aligned to how business or customers view it. They see different things! They don’t speak the same language! They rather see disruptive IT trends affecting their business model, fast moving change and need to satisfy the digital customer’s expectations. This is not strange in anyway considering the history and experience of CIOs.

My job as a Senior Advisor to a CIO (and senior IT managers) is to change their perspective on digitalization – giving them a new set of glasses to view the world through. To see the digitalization from a business (and other) perspective and how it affects leadership, governance and capability needs in the IT organization. Today, it is not about productivity but rather how the CIO can ensure business competitiveness and revenue growth through smart use of IT. All business models in the future will depend on IT – that is a fact!

Some time ago, I worked with a CIO to coach him to master the digital journey and how to create better digital support to business. The industry was changing rapidly and the voice from upper management was getting louder and louder forcing the CIO to build digital strength. What I noticed in our discussion was that the CIO continuously viewed digitalization from a productivity and technical perspective. We discussed digitalization for many meetings and tried to view it from different perspectives. How does our kids see digitalization? How does a specific business executive view digitalization? How does your IT management team view digitalization? We agreed that there are different perceptions (lenses) depending on your experience and mindset. We agreed that there is no right or wrong interpretation. We agreed that he (CIO) needed to understand and acknowledge all different perspectives to support business in the best way. Great! We discussed what “value” actually was and how to change the mindset of his management team. We discussed how IT management teams looked from digital and business oriented perspective. I could tell that he had started his personal journey to something greater – to change his perception of digital. After some time I returned to the CIO and IT organization and experienced a new IT aligned with business striving to digital growth. What they did is a different story – but it was fantastic!

The example is not unique. Digital transformation is mainly a mindset journey to change our perception on IT, business, customers and digital. It is a painful journey where our beliefs and principles will be challenged! If we view business with IT glasses from 1996, then we don’t see the true meaning and challenges of digitalization. The successful digital companies are those that has embarked on a new path beyond the beaten tracks and learned that digital possibilities are enormous – as long as they have the right glasses on.

Digitalization has many definitions depending on how the concept is viewed and perceived. Since the concept was first launched 5-10 years ago, the concept has changed because we have experienced the affects and its evolution. To keep up with the digital evolution we need constantly challenge ourselves to upgrade our glasses to see the concept in the right light – otherwise we are stuck in the trenches of digitalization without moving forward. It is a personal journey that is painful – but worth it.

  • Hans Gillior – Senior Advisor in Digitalization

The art of transformation – all about mindset!

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“It is like changing the engine of a car running at 100 mph on the highway” the CIO said. His face was filled with frustration and worry as he reflected on how his IT organization needed to change. “It is not possible – and I will tell you why”.

The quote from a CIO located in Sweden is not an uncommon way to express the challenges of IT going forward to address the digitalization. It is a challenge of transforming the core capabilities of IT to meet the future demand and at the same time, uninterrupted, deliver value to business in a cost efficient way. An impossible mission what most CIOs are facing today – and keep many CIOs awake at night. But how is this even possible? The answer comes from somewhere unexpected.

The basis for the quote was actually a discussion about how digitalization is affecting the CIO’s IT organization. During the last 10 years, the purpose and mission of IT has change drastically to address business and customer expectations, rather than providing cost efficient operations. Cost efficient operations (operational excellence) were the purpose of IT before digitalization when business and customer demand was predictable and stable. We could then build operating models and process to maximise efficiency with a long-term perspective where demand was stable and constant. In this pre-digitalization environment, people where recruited and organised to optimise efficiency – in a stable environment with complex processes and operating model. Every penny counted! Today, it is different! We no longer have a stable business environment and efficiency no longer counts – today it is about flexibility and agility! IT needs to react fast to changes in the industry and guide business towards products and business models. That is the reality of digitalization!

“No, it is impossible! You see, I have a set of resources (mainly service managers) and way of working, and we cannot just replace it over-night with business and innovative oriented way of working. It is what we need to do – but it is not possible! We have to live with staff and capabilities we have.”

So, what do we do? The answer is easy – nothing! Studies show that most IT organization fail to react to digitalization in the right way (digital transformation) but rather focus more on what they are good at – more processes and cost control. Doing the same thing and expect different result is not a good strategy going forward. We also see that many CIOs are waiting for a moment to peace and calm to run the transformation – after the next re-organization, cost cutting initiative or business strategy workshop. Sorry, but peace and calm will no longer exist! The fact is that business demand will never again be stable and predictable but rather changing with various levels of speed and magnitude. That is the current characteristics of digitalization.

A couple of years ago, I spend some time in Japan to finish my master thesis. Next to my apartment, there was a convenient store called Lawson and they had as a strategy to constantly change their products and services to maximize the customer experience and revenues. Products not selling enough were immediately phased out and new products replaced the old ones. New products and services where constantly tested and evaluated. Speed, change and learning were the core capability of the convenient store. Frankly, going into the store, you never knew what you would find – only that it was the best and most interesting stuff. Lawson was an expert of determining what delivered value and experience to their customer (fast changing requirements) and focused on re-allocating resources to optimize value-creation. Great stuff!

My point of view is that the digital challenges that IT organizations face today are mostly in our minds. We have been taught over the years how to run and change an organization and when we face challenges stretching the boundaries of our experience and imagination, we fail to respond in the best way (sometimes at all). But there are examples of organizations that succeed to manage continuous change – going 100 mph on a highway – mainly because they have an uncompromised view of the new role of IT. They have challenged their comfort zones, the traditional way of working and acknowledged that change is here to stay. They are also great at marketing the new role of IT in the company and educating key stakeholders about how digitalization is affecting business and IT. It is all about leadership in terms of attitude and challenging everything you know and believe in. Yes, it is possible! By stating that change is impossible – you have already failed.

I fully understand the reaction of the CIO that I interviewed. Reality can seem hopeless with endless (contradictory) demand from business, finance and HR – but who said it would be easy? A good starting point is actually to understand what activities that deliver value – and what does not. Focus on re-allocating resources to where value is created and find alternative methods to deal with non-value adding activities (outsourcing or terminate). This is not a method but a mindset that must influence everything the IT organization does – and the learning/adjustments must be done in rapid pace. When a CIO tells me that they are not able to change – it tells me that they do not fully understand how they create value. They are then locked up in their own comfort zone far from where value is created.

My recommendations:

  • Understand what activities that create value to your business counterparts and customer – but also what does not create value.
  • Challenge your own comfort zones! That is the biggest hinder to your success!
  • Understand the new role of the IT organization in the digital environment – and stick to the new role in an uncompromised way. Follow your believes!
  • Contact Hans Gillior and Sofigate – we are experts on digital transformations of IT/Business organizations. We deliver results, value and change!

During the last 10 years, digitalization has been all about new technology, social media, mobility and new exciting tech-companies revolutionizing the business landscape. Does new technology strengthen our competitiveness? Yes, but only momentarily. Digitalization 2.0 is about leadership, mindset and innovative management methods. It is a way to react fast to disruptive trends and opportunities/threats in the market. It takes an IT organization approximately 18-24 months to react to a change utilising traditional IT governance style. How much damage/change has Google (or other digital giants) been able to achieve during that time in the market? It is all about mindset and change management! IT transformation is possible – but only if you believe in it, and are willing to accept the new rules of digitalization. Success is in your hands!

Hans Gillior – Senior Advisor (Sofigate)

hans.gillior@sofigate.com – hansgillior.wordpress.com – @digitalgillior