The Music of The Devil

The most common complaint from leaders of transformation is that one of their key stakeholders “simply does not get it” – “it” being the need for change or the understanding of the approach.  How can this be? Surely the need for change is clear, the concept is not hard to understand. The implication of such a complaint is that the fault lies with the stakeholder. This, of course is invariably not the case.

The vast majority of people come to work eager to make a positive difference. However, companies have evolved to put barriers in the way of enthusiasm. If there were no barriers the required change would have happened already. The job of the transformation leader is to remove the barriers thereby releasing the passion of the people in the company.  If people appear to hesitate, barriers remain and the transformation leader has more work to do. You can follow 3 steps to ensure everyone in your company gets on board your transformation program.

Expect resistance

People will resist change while there are barriers in place. If you do not witness any resistance then you are not looking hard enough or are not really changing anything.

When Rock and Roll emerged in the 1950s it was seen by some as “the music of the devil”, when Bob Dylan changed from acoustic to electric guitar his fans called him a traitor and when Stravinsky premiered the controversial “Rite of Spring” in 1913 there were riots in the streets of Paris. Change will always cause a reaction therefore don’t be surprised by it. When resistance emerges you should celebrate because it will give you the opportunity to address it head on.

Identify the barriers

Resistance is due to real or perceived barriers. You can only deal with the barriers if you know what they are. Some people will voice objections to change and some will not. Those that do will often cover their real concerns with a facade of fabricated issues. Getting to the real causes of resistance can therefore be tricky. I have found the best approach is to actively listen to people who are demonstrating resistance thereby building empathy for their concerns. By listening and playing back their point of view you are likely to gain an understanding and also break down the first barrier – the feeling of not being heard and understood.

Many concerns usually are underpinned by fear. Fear of losing power, fear of presenting a contrary view, fear of being punished for not meeting next quarter’s numbers, fear that I will be criticised by my immediate supervisor who is also resisting. When fear is the driver, the stakeholder may not be as forthcoming with the real reason. In this case it might be better to speak to the people who know the stakeholder best to get a deep understanding.

Deal with the barriers

How to address each issue will be determined by the nature of the issue. The good news is that most fall into common patterns. I have listed some of the techniques that we have developed to address the most common themes.

Ensure that the end state is perceived to be vivid and compelling.  

People are only going to agree to come on the journey with you if they understand the destination and it aligns with their beliefs.  

10x your communication

Transformation leaders (including myself) tend to vastly under-estimate the communication required to secure understanding and buy-in. Take the effort you think you require to communicate then multiply it by 10. You should continually test for understanding and buy-in and refine your communications accordingly.

Co-create the program with as wide an audience as possible.  

There is no better way to create buy-in than making it everyone’s idea.  This is best done by working with the extended top team to create the vision and high level approach and then getting input from across the company. The best programs allow each area to contextualise the vision and approach to be relevant for their own areas.

Showcase the early supporters of the program.

People will be more willing to get on board if they see people they respect leading the way. Therefore make sure early support is highly visible across the company. Make videos, share interviews and publish stories that showcase people who are onboard.

Use cognitive dissonance for the detractors.

By getting those less supportive to publicly show support for the program makes it very difficult for them to resist in private. You can ask seniors in the company to participate in townhalls where there is an expectation for them to show public support.

Ask to perform experiments where people are cynical.

If you encounter stakeholders who have deep cynicism about the approach, you can ask permission to run an experiment to determine the outcome. This is a less threatening approach as there is no obligation to commit until the results of the experiment are known.

Use governance to show sponsorship and align people.

Like most people I am not a great lover of meetings. I have spent a good portion of my career trying to figure out how to reduce the number and duration of meetings in my life. However there is one exception. When designing the governance around transformation programs I encourage longer, larger meetings. The reason for this is to show as many people as possible the sponsorship from the top and the progress being made. It does no harm to allow some healthy competition amongst departments by comparing progress league tables.

Expose the root causes of fear.

If fear is being created by a common theme, you can also use governance meetings to expose it in a safe way.  You can include a specific agenda item to cover barriers and blockers.  An update might be “ We have received feedback that many people are concerned that they are going to lose status as a result of the change”.  By keeping it anonymous you provide safety whilst exposing the root cause.

Give up the credit (this is the tough one).

If you work for an organisation where end of year appraisals and performance assessments have an impact on pay, there is likely to be an informal system of “credit” in place. People will move to demonstrate that they deserve their share of “credit” for the good things that happen in the company. Come the end of the year they “cash in” their “credit” for a pay rise or bonus. As a leader of transformation you must give up your credit to others. You should avoid at all costs claiming that progress is down to your leadership, support and influence. If people see that credit is coming their way due to the transformation program they are more likely to get on board. I have found that the majority of people will give back some credit saying that they could not have done achieved what they did without the transformation team. I have also benefited from the fact that my own bosses were insightful enough to recognise my team’s contribution.

Influencing at all levels is the fifth essential habit of leading transformation.  In previous blogs I have covered “Insistence on improvement”, “Intellectual Humility”, “Impatient Learning” and “Inciting a Movement”.  There is one more to go in the series and if you would like it and any other posts sent to your inbox as soon as I publish it please enter your email address below.

Do leave a comment if you have other methods that help influence others to join the journey.

Inciting a Movement

Why is it that the vast majority of corporate transformations do not achieve their stated ambitions?  Why are people in companies so cynical about change programs?  Why are employees so keen on keeping things the same even when it is clear that the very survival of their company depends on changing.

Success or failure depends on your transformation philosophy.  Depending on your philosophy you are likely to choose 1 of 2 ways to design a transformation. One approach, let’s call it type 1, is almost guaranteed to fail or at best deliver short term diluted results. The other approach, type 2, when successfully designed and executed will not only exceed any stated business outcomes but create a motivated, purpose driven movement within the organisation that can learn and adapt, drive future improvements, attract the world’s best talent and ultimately make the world a better place.

However most companies choose a type 1 approach as it is what is taught in business schools, recommended by consultants and expected by boards, shareholders and investors. Organisations that take this approach are destined for a long uphill battle often littered with face saving manufactured results. Employees are perceived to resist change and be “the issue”.  Whereas the true resistance lies in the mindset of the leaders. The lack of intellectual humility in ego-driven leaders means that new approaches are shunned and the old type 1 approaches remain in place.

For a leader to embrace a type 2 approach requires intellectual humility, a passion for learning but most of all faith and trust in people. A belief that people always aim to do the right thing, they will be motivated by meaningful work and that the role of the leader is simply to create the conditions so that change can happen. 

So what are type 1 and type 2 transformations?  

Well type 1 transformations are those that treat a company as a machine and apply industrial-age management techniques to bulldoze the company into change. Business cases are written, consultants are hired not just to advise but to actually do the work, the transformation is set up as a project with a beginning and an end. People who are seen to get in the way are fired, the remainder have KPIs linked to financial reward to incentivise them to achieve results. Those results are defined in purely financial terms. There is tight governance where leaders micro manage, make top down decisions and ultimately create a culture of fear.

Leaders of type 2 transformations on the other hand consider their company as being made up of people. People with passion, skill and experience, that if unlocked can move mountains. Leaders of type 2 transformations realise that nothing changes unless the behaviour of the people changes. Type 1 leaders will focus on changing a technology or process, type 2 leaders will focus on equipping, empowering and enabling people so that they will be motivated to improve processes and technology themselves. Type 2 leaders recognise that companies exist not to make their shareholders richer, but to improve the lives of their customers, their employees, the members of the communities in which they operate and future generations.  Having strong financials is of course essential to keep a company in business but it is not the primary outcome.

At DBS we ran a type 2 transformation. The transformation was named as one of the top ten transformations of the decade by Harvard Business Review alongside companies such as Microsoft, Netflix and Amazon.  It took DBS from being an underperforming bank known for its poor customer service to being the first bank in history to be named as the Best Bank in the World by all three of the top financial periodicals. Many cases studies and articles have been written about DBS but none that I have seen have highlighted that simple fact that it was type 2 thinking that led to this success. While I was at DBS many companies came to see us to learn from our success. Since retiring from corporate life I have been advising companies. And I have seen that most companies are set up to drive change with type 1 thinking and are thereby destined for disappointment.

This is unsurprising. I used to by a type 1 thinker. It was what I was taught.  It seemed to work for short term projects. It was almost by chance that we stumbled into a type 2 approach at DBS. But it was when we started to implement type 2 principles that we created a movement within the company and the magic started to happen. So if you are lead change in your company it may be worth while thinking which approach you are taking.

The “focus on inciting a movement” is the 5th habit required of leaders that are driving transformation. I have covered the others in previous posts.

I will be covering the fifth essential habit for leaders of transformation in my next post. If you would like to it to appear in your inbox as soon as I post, please leave your email below.

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The Power of Impatient Learning

What happens to our curiosity as we grow up?  As soon as we are born we are asking questions of the world. Before we can talk we are looking at, touching and (in the case of my children) tasting everything around us. The moment we can string a question together we ask incessant mostly unanswerable questions to our irritated parents. But then we go to school and something happens. We are rewarded for answering questions from an ever-decreasing corpus. No credit is given for asking great questions. By the time we enter the work-place, all curiosity has been beaten out of us. We enter a world of work where everyone seems to be an expert and asking questions becomes an act of personal courage rather than driven from a sense of wonder. Yet curiosity is what drives innovation. Challenging questions provoke better decisions. We all have innate curiosity yet the companies that employ us are suppressing it rather than utilising its boundless power.

The problem is partially created by the corporate structures that have evolved over decades. For example consider how funds are allocated for business initiatives. An idea is promoted by a business leader who will pull together a business case which at best is a guess based on a set of unspoken assumptions but is often an overly spun work of fiction. We then assign accountability to the business leader to deliver the business case. Her bonus will depend on the outcome and therefore she will spend all her energy demonstrating that the original idea remains a good one despite any emerging contradictory evidence. There is strong pressure to avoid the challenging questions and curiosity is suppressed.

Therefore companies find it hard to stop investments that are not working.  Riskier bets are avoided as it means someone has to stake their career on the outcome.

A large part of the key to unlocking curiosity therefore is to re-invent the structures that suppress it. For example here are three elements of an alternate approach that replaces the career threatening business case with a curiosity driven approach.

  1. When considering how to improve an aspect of business performance, define the desired outcome very precisely. Identify the exact measure that you will use to measure attainment of the goal. This can be financial e.g. revenue from new customers over the next 3 months or a customer goal e.g. improvement in the App Store rating over the next 10,000 downloads.  Then specify the 3 to 5 drivers that you believe have most impact over the outcome and you can influence. For example salesperson training or the response time of the app. Ensure that outcomes and drivers can be baselined and measured. What you have is a simple model of your business and your strategy. Interestingly, the choice of drivers and outcomes is often at odds with a previous stated strategy.  
  1. Build an understanding of the causation between the drivers and the outcomes by running a series of experiments. As opposed to pinning all hopes and reputations on untested assumptions, set out to learn what are the most impactful drivers. List out the hypothesis, construct the experiments and look at the results. There should be as much celebration if the hypothesis is proven to be incorrect as if it is correct since you will have avoided wasted effort. Through experimentation you can learn whether you have the right drivers and become increasingly granular in your understanding of the relationship between driver and outcome. This approach is of course based on the scientific method which has been the basis of scientific learning, but shunned by the vast majority of businesses, for centuries.
  1. Change the way business reviews are conducted. Other than help remove obstacles, senior managers reviewing such an approach to improving business performance should focus on 2 questions during a business review

    What do you expect to learn from the experiments that you are running next week?

    What did you learn from the experiments you ran last week?

This approach forces a conversation based on curiosity and soon the focus of the team will pivot to question how to increase the rate of experimentation so that the learning can be faster. They will have developed the habit of “impatient curiosity” which is one of the six essential habits of transformational leadership.

Following this approach means that accountability for outcome remains but is not fixed to a set of assumptions that cannot be adjusted. 

I covered “insistence on improvement” and “intellectual humility” in my recent posts and in my next I will dive into the fourth essential habit of transformation leadership. 

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Curiosity Killed the HIPPO

One of the hardest things for leaders to do as they find success in their careers is knowing when to shut up. The more senior a leader becomes, the more the people in their organisation scrutinise their every word and action. Suggestions become commands that quickly cascade throughout the company. A view stated too early in a conversation will close down any contrary views reducing the quality of decisions and ideas. Well intentioned leaders wanting to add improvements to ideas presented to them can destroy the commitment of the person delivering the idea by appearing to make the suggestion their own.

In their defence leaders are expected, by all around them (including themselves) to be the expert in the room. The Highest Paid Person’s Opinion or HIPPO tends to win the day. In our fast changing, complex world where no one person can be the expert in anything, this is increasingly a problem. Mental models that have served us well are no longer relevant. Leaders need to ensure they take advantage of the collective intelligence in the room and fill missing information with data and experimentation. The first step is to listen to others and seek out data before speaking out.  

In his book Rebel Ideas, Matthew Syed talked about the value of having diverse teams so that more is known about problems before deciding on a course of action. The more diverse the team the more diverse the opinions and thought processes are and the better the decision making.  However to allow this diverse collective intelligence to operate, there needs to be an environment where people feel they can air a contrary view without fear of negative consequence.  It is a leader’s role to create such a climate. For many leaders this does not come naturally. Some I speak to who have, shall we say, an “assertive manner” tell me that people need to “just grow a backbone” or “get thicker skin”. This is obviously an attempt to put the blame for the problem that they have created on others.  Leaders should go into decision making processes with intellectual humility and genuine curiosity. Curiosity is the antidote to fear. As a guide there are 3 steps that leaders should take when embarking on a decision making journey.

  1. Assess the dimensions of the problem. Problems and decisions come in all sorts of shapes and sizes. Some require urgent action where there is no time for discussion. Some have critical implications where delegation is not appropriate but a  good proportion are suitable for discussion and are an opportunity for everyone to learn.
  2. Ensure the knowledge in the room is aired. All too often a leader (Boss Bob in the picture above) does not extract the collective intelligence in the room. Not only does Bob think that he understands pretty much everything about the issue in hand, he airs his opinion too early closes down others who have have alternate views and suggestions on how to improve the decision. It is often the quietest person in the room (Introverted Irene) who has the most valuable thing to add but is drowned out by the loudest (Loud Larry) who has an inflated view of their expertise. Like all companies, at DBS we had our share of Bobs, Larrys and Irenes. So we introduced a meeting ritual called Wreckoon. Wreckoon was an idea borrowed from the software developers at Netflix. In order to encourage their developers to write stable code, they introduced software into their data centres to deliberately cause problems, for example intentionly shutting down a server. Netflix named this software chaos monkeys and formed a new discipline called chaos engineering. At DBS our developers did something similar in our data centres but named the software Wreckoon. In order to improve our decision making processes, we had the idea of applying chaos engineering to our meetings to ensure we were maximising collective intelligence and encouraging alternate viewpoints that would be the equivalent of shutting down a server. We mandated that in meetings, there needed to be a “Wreckoon” slide inserted at the most critical point in the associated slide deck. This slide apart from having a cartoon image of Wreckoon would ask questions such as: What have we missed?  What is the contrary view?  When the slide was shown, the chair of the meeting encouraged everyone to answer the questions especially those that had not yet spoken. The results were very positive. In my experience, 90% of the time when we used Wreckoon we got valuable information from the group that we would have not otherwise.  More importantly, Wreckoon became part of the vocabulary.  People would say “I am going to be a Wreckoon here”. This was a signal that someone was going to air a contrary view but with the safety of knowing that the behaviour was to be encouraged.  
  3. Extract the knowledge that does not exist in the room. Not everything can be known before a decision is made but there should be explicit consideration for what is not known and whether there is data or experiments that can fill the gap in the timeframe.  The leader’s role is to encourage the team to experiment and analyse any data. The leader needs to ensure that he/she does blindly overrule the data based on their own potentially outdated mental models. This behaviour is the subject of my next post.

“Intellectual Humility” is the second of the 6 habits required to lead transformation.  My last post covered the first – “Insistence on Improvement”.

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A Ticking Timebomb

When the pandemic first hit most of us were surprised at the effectiveness of distributed virtual workforces. We also learnt how relentless Zoom calls and lack of demarcation between work and home can lead to burnout and other mental health issues. However, as we gradually emerge from COVID 19 it seems that most office-based companies intend to reap benefits of reduced real estate cost and employee flexibility by adopting some version of hybrid working. Whilst such a move has clear upsides, there is a ticking time bomb that is not receiving enough consideration. Unless we have a radical rethink on how to protect corporate culture it will whither to the point companies will be destroyed. The impact will affect the very nature of work for future generations. What can leaders do now to halt the decline?

Back in February 2020, a son of a friend of mine was excited to join a financial services company straight from college as a software developer. The company was located downtown of a vibrant city and he was looking forward to both learning new skills and forging new relationships in the office, over lunches and drinks after work. Five weeks later and before he was able to make any meaningful relationships he, like many others, was working from home. Meetings switched immediately to Microsoft Teams and were largely camera-off affairs. When he needed help, rather than chat to the person sitting beside him he was told to schedule a meeting. As the pandemic eased, as soon as he was allowed to do so, he returned to the office but he discovered that he was alone – his colleagues preferred to continue to work from home. After two and a half years he still has not an inkling about the company culture, has become disengaged and is now looking for a new job.  

Because of COVID, employees of companies worldwide have experienced the flexibility of working from home and the elimination of painful and expensive commutes and are now choosing to work from home and are prepared to move to companies that allow them to do so. They are prioritising convenience and flexibility over comradeship and culture. This is not only impacting the minority who are looking for an office-based experience (especially those new to the company) but is putting entire companies at risk over the long term. It is hard to see how corporate culture is going to survive. Given weaker culture, less and less people are going to engage with the companies and work will become increasingly transactional.  

Interestingly most of us did not feel the way about our families as we emerged from the pandemic. We did not decide to move to a hybrid model for hanging out with our friends. We have returned to the traditional model of hanging out face to face. In this case we have prioritised camaraderie and relationships over “flexibility”.  What does this tell us about what we really think about work?

Leaders, especially those driving transformation need to focus more than ever on building culture. When your team is physically in the same location it makes it far easier to drive engagement and culture. Observing the informal rituals, having conversations in the corridor, even seeing how people are dressed inform people of the culture. Leaders of transformation have more opportunities to impact the culture when people are in the office. For example the characteristics of the physical office space drive behaviour more than most give credit for. At one point in my career in addition to my role as Chief Transformation Officer, I oversaw the real estate and facilities for DBS. It was during that time I discovered how powerful physical space can be as a driver of positive change. People tend to behave based on the physical environment around them – you behave differently in a library and a supermarket.

Left untended desired culture will decay over time. When people are not physically together the culture half life reduces dramatically. As people leave and new people join the culture will be lost and engagement will drop. As people feel less engaged they will look for higher pay and flexibility elsewhere. Companies will not be able to attract talent. There will be no engaged army for future transformation.  Companies will erode and ultimately whither.

Leaders need to act now. They should understand the drivers of decay. Some of the factors are as follows.

  1. Starting health of culture
  2. Attrition rate
  3. How much effort leadership puts into maintaining and developing culture. Taking a culture by design approach is key.  Scott Anthony and I wrote about this in and the approach is detailed in our book.

 Leaders have 3 choices.

  1. Do nothing.  Believe corporate culture is a thing of the past and accept that work will be increasingly transactional. 
  2. Insist people come into the office and work on the employee experience so that more employees will prioritise camaraderie and culture over flexibility and reduce the risk of people looking to other companies that provide flexibility and offer higher pay.
  3. Continue with hybrid working and work ten times harder on developing culture using a “culture by design” approach.

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It’s breakfast time and digital culture is hungry

Why is it that everyone sagely agrees with Peter Drucker’s aphorism that culture eats strategy for breakfast but the vast majority of companies spend far more time on their strategy than their culture? We organise strategy offsites, strategy departments are set up, extensive strategy documentation is developed, expensive strategy consultants are engaged and we present strategies for endorsement to our boards. Yet for most companies any focus on culture is simply well-meaning lip service or a part-time hobby for an overstretched HR department.  Is this because defining and progressing towards a target state culture is hard?  Is it because demonstrating that culture yields direct business benefits is not possible?  Is it because we do not really believe Peter Drucker?  

As I wrote in the first post in this blog the single biggest insight of my career to date is that transformation is about people. Processes and technology do not change themselves. People drive change and to drive transformation at scale you need to create any army of engaged and motived people. There are many stats quoted (mainly in the presentations from those highly paid strategy consultants) on the low percentages of successful transformation programs. These failures are often due to the lack of focus on culture, not the application of the wrong strategy.

More and more strategies are centred around digital transformation. Successful digital transformation is not about the blind implementation of new technologies but the mindset of continuously improving customer solutions by the application of suitable technology. True digital leaders are impatiently curious about what works and what does not. This is a culture issue not a strategy issue – digital culture eats digital strategy for breakfast, lunch and dinner.  Strategy, digital or otherwise is important in setting direction but sustained execution depends on behaviours. Yet pretty well everyone I speak to agrees that in their companies there is much more focus on digital strategy and little or no attention to the behaviours. Part of the reason is because how to develop corporate culture is not taught in business schools, it is not role modeled by leaders – it is new for most people. The good news is that more and more companies are believing in the importance of developing a digital culture although are not sure exactly how to go about it.  The even better news is that it is not difficult if you are prepared to focus on it. Here is the high level approach.

  1. Be explicit about your desired culture. Corporate culture is the sum of the behaviours of the people in the company. You should define the desired behaviours that are going to enable the purpose and accelerate the strategy of the company.  This helps to address the link between culture and business outcomes.  At DBS we set out to be a 27,000 person startup as we wished to operate at speed and at scale.  Clearly we were not a startup, we were a fifty year old bank but we precisely defined the behaviours of a startup that we wished to emulate.
  2. Build a dedicated program to develop the future state culture based on the “culture by design” approach that we pioneered at DBS and set out in the book Eat Sleep Innovate that I co-authored with Scott Anthony, Natalie Painchaud and Andy Parker.  I shall be writing more about this in future posts so you do not need to buy the book to learn more but essentially you will need to address culture blockers through the conscious introduction of rituals, vocabulary and enablers.
  3. Measure progress.  The future state culture must be defined in terms of observable behaviours so that progress can be measured and issues identified.

The corollary of the afore-mentioned “one big insight” that transformation is about the people is that corporate culture is an important asset of the company. The leadership of a company are the custodians of this asset. The board should ensure that culture is nutured and developed by the leadership. There should be culture offsites and teams dedicated to defining and developing the culture. Progress should be reported in annual reports

And of course if you need a highly paid culture consultant you know how to reach me!!!

Leadership Lessons

  1. Spend as much time (if not more) on culture as you do on strategy.  Culture improvement is your most powerful execution enabler!
  2. Be explicit on the behaviours that are required to deliver on your strategy.  This is your future state culture.
  3. Implement a program to develop the future state culture.

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The Biggest Silo of them All

What happens in your company when IT systems fail, software development projects are late or there is a data breach?  Do the business people indignantly escalate the issues to the IT department? Do they write angry emails to the CIO?  If that is the case and you aspire to be a digital company then you have a problem. Such friction between business and tech teams is indicative of a company that does not realise what it means to be digital and is a huge obstacle to transformation. Digital companies do not differentiate between business and technology. Leaders of digital companies are ambidextrous – they know how to prioritise between investment in system performance and revenue generating features. They know that they are accountable for keeping for system stability, security, customer experience as well as  meeting financial targets. Unfortunately ambidextrous talent does not typically exist in legacy companies where organisational structures and processes tend to reinforce the tech and business silos. However It is possible to bridge the chasm.

In 2017 at DBS we had huge digital transformation aspirations. We had stopped comparing ourselves to our traditional competition and started to use the big tech companies as a benchmark. Our internal mantra was to put the D in GANDALF, where GANDALF was an acronym made up from Google, Apple, Netflix, DBS, Amazon LinkedIn and Facebook. But we had a hit a roadblock. The silo between our business teams and tech teams was creating a blame culture. Whenever there was a systems issue the business team finger pointed to the tech team. The CIO would get a stream of escalation emails. The IT team complained that they did not have enough budget to cover stability, security and end of life investments while the business teams accused the tech teams of sandbagging budget to fulfil their own agenda. The relationship between the two departments was not conducive to achieving our digital ambition. So we approached some our friends in a couple of the GANDALF companies and asked how they dealt with the silo between tech and business. They all looked at us as though we were stupid. They told us “Tech is business and the business is tech”.  There is no silo. But you do need leaders who can span both disciplines.”  

This was a lightbulb moment for us. We realised we needed to fuse out business and tech teams together. We looked at how tech companies were organised. We studied the Spotify model that had been embraced by fellow financial companies like ING. Eventually we landed on something that we called a Platform Operating Model (POM). 

  1. We grouped our applications, associated talent and budget into logical groups aligned to business, support and enterprise functions. 
  2. We appointed joint leadership – one from tech  and one from the business.  This “2 in a box” structure was a proxy for ambidextrous leadership
  3. Each platform had a joint (across business and tech) strategy, budget and KPIs

We took 6 months to design the details and implement.  But when we implemented the new model in early 2018, the finger pointing between business and tech stopped literally overnight.

There was immediate recognition that in a digital business keeping the systems up and running is a business responsibility not something that can be mentally outsourced to the tech leader. At business reviews our CEO started to ask business leaders to explain the tech elements of the joint strategy and the tech leader the business components.  Platforms were given a single performance rating at the end of the year.

Other challenges remained and took time to tune and resolve. But this single change to the operating model had put us on track to become a GANDALF company.

Leadership Lessons

If your tech and business teams are at odds you will never become a digital company

Develop ambidextrous talent but you may have to develop intermediate steps such as 2 on a box to get there.

Address corporate process such as budgets and performance management to reinforce alignment between the IT and business functions

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Digital to the Core

In mid 2015 a group of executives were huddled in a windowless Mumbai conference room debating how to overcome what many believed to be an insurmountable challenge. Half the room were bankers, the rest were an eclectic mix of entrepreneurs, transformation specialists and designers. The bankers were adamant that the task in hand was not possible – the regulations were too onerous and the infrastructure too immature. The non bankers, unencumbered by careers of interactions with banking regulators, were sure that it could be done. The task? To launch the first fully digital bank in India. A bank where customers could open an account without visiting a branch. A bank that could be run with 10% of the staffing levels of a conventional bank. A bank that was not just a fancy front end app supported by armies of humans, but fully digital from end to end. The team needed a new approach if they wanted to move forward. What unfolded in that room changed the course of the project.

The team tried a workshopping technique called “back-casting” that involved designing the implementation from the future back rather than from the present forward. The team described precisely the new bank’s future customer experience and operation model and then defined the bold steps that needed to be taken to get there. The technique had been designed specifically to help teams overcome big challenges. Coming out of the exercise were three stand-out principles that proved to be pivotal.

It was clear to the team that the new bank needed to be digital to the core. They could not simply apply “digital lipstick”. In order to scale, all processes needed to be digitally automated. There could be no manual hand offs to the operations teams. There could be no residual manual steps for the back office planned to be fixed later and then forgotten. In addition the customer journey had to been frictionless but could not rely on a branch network. This meant working with technology partners who could provide solutions in three areas – natural language processing AI for a sophisticated chat bot, security software to allow digital onboarding and a financial management capability. To take advantage of the AADHAR biometric verification system that had recently been implemented by the forward-thinking Indian government, the team decided to partner with an Indian coffee shop chain where customers could use thumb scanners to verify their identity and also get a free cup of coffee.

Like product companies that “design for manufacturer”, the bank recognised the need for products and journeys to be designed with operations in mind . To optimise for productivity and risk the operations teams were included in the design stage to ensure products were “designed for operations”. For the new bank this approach was not going to be good enough. The bank needed to be run with a staffing level a small fraction of that of a traditional bank. The team realised they needed to design for no operations. Processes had to be straight-through. Products had to be standard and simplified to eliminate the exceptions that drive manual processing.

Similarly the new bank needed a customer support model that not just reacted to customer problems but predicted and prevented them. Best in class customer service units focus on dealing in with customer queries completely at the time of contact and “first call resolution” is recognised as the metric that drives customer satisfaction. However the team realised that they needed to create a level of reliability and ease of use where customers did not need to call at all. The team introduced the concept of zero call resolution – involving frictionless customer journeys and the use of AI to predict problems before they occurred. The team set themselves a challenge of preventing 1 million customer problems before they occurred.

Breaking the larger problem down in these concepts energised the teams. More traditional problem solving techniques could then be employed. Not only were the concepts the foundation of the new bank in India which was launched less than a year later but also were retrofitted into the existing digital offerings in the more developed markets.

Leadership Lessons

Starting with the end in mind and defining the key steps together helps to overcome seemingly impossible barriers.

Eclectic teams are more likely to have the belief and creativity to drive ambitious innovation.

Breakthrough solutions can be usually be applied beyond the current solution.

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Are you Future Ready?

Companies that execute successful transformations seem to be able to predict the future better than others. They spot trends early and are able to make informed investment decisions that give them a head start developing innovative solutions. Do they employ psychics or have leaders with superpowers? Clearly not. It is because they follow a structured approach to understanding the future. 

There has been a lot said about agility and the need to sense and respond. Being able to quickly adapt to changes is an essential component of being prepared for the future. However not enough companies focus on improving the time it takes to sense trends.

Like everything in life to get better at something you need to put in the time. Reading articles on the plane (remember that?) isn’t going to be enough. Best in class leaders allocate significant amounts of time with their top teams getting inputs from world class thought leaders, deep subject matter experts as well as the views of their own people. Based on these inputs leading companies develop an informed view of what they collectively believe the future holds in 5, 10, sometimes even 100 years out.  With this in place informed investments can be made to best prepare for the predicted future.

It is important to remain focused on the emerging trends that are going to be relevant to the business. There is going to be hype and it is very easy to get sucked in. If you cannot see line of sight on how a new technology is going to help improve the lives of your customers or solve a business problems, park it for now and revisit. When blockchain first emerged it felt that all of the world’s problems were going be solved but to date only a tiny fraction of use cases ended up solving real problems.

While I was at DBS we spent 3 days every year with the CEO and top team focusing on the emerging trends, getting the views of the world experts, studying the best in class across all industries and asking our own people for their views. The majority of the time was spent debating the relevance of trends to the business and selection experiments to run to learn more.  

In addition each business area went through a back-casting exercise based on a board game we created called North Star where leadership teams visualised the future by prioritising a series of pre-canned technology, macro social-economic and industry statements (eg 80% of cars will be autonomous, average life span will be 110)  in terms of probability to be true in 10 years and relevance to their respective businesses. The teams then decided what areas should be invested in over the next 12 months to prepare for the predicted 10 year view. A proportion of the annual investment budget was then allocated to creating experiments to test feasibility and viability of the ideas. This resulted in a more ambitious innovation strategy.

However, there is one big danger out there – the HIPPO or Highest Paid Person’s Opinion.  No-one can completely predict the future. Those that do just are lucky. The leading innovative companies consistently estimate that one idea in 20 is a good idea. Therefore you have 95% chance of getting it wrong. Therefore you should expect to be wrong. However it is not uncommon for the entire workforce to pivot to something that the leader has said in passing in a meeting. Egos and ignorance can make it tough to change course. Therefore companies pursue what Scott Anthony would call “zombie projects” too long. Best in class companies build a culture where each idea is treated as imperfect and is tested and tuned through experimentation and data.

Leadership Lessons

Spend time as a leadership team getting inputs from all quarters to make an informed view of the future

Make sure that the focus remains on future trends that are most relevant to the business and customers and make the relevant investments now to best prepare for your predicted future.

Expect to be wrong.  No-one can accurately predict the future so you need to continually check that ego driven beliefs are not taking the company in the wrong direction.

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Being Data Driven

One swallow does not make a summer (a fact that I have found to be oh so true since relocating to Edinburgh!) nor does one pie-chart in a powerpoint make you a data driven company. When I became Chief Data Officer at DBS in 2016, I was tasked with making DBS “data driven”.  How hard could it be?  We had several successful transformations under our belts and surely this one would be just a rinse and repeat. As it turned out it took me three years simply to figure out what a data driven company actually was and then getting to be one was the biggest challenge we had ever faced.

Prior to 2016 we had been operating as a “powerpoint driven” company where decisions were taken in meetings by the most senior person in the room based on the content of a slide deck. So when I took on the role I asked many leaders within and outside DBS what they considered a data driven company to be. I was told that data was the new oil or water or even blood. People referenced TV shows and movies – Minority Report anyone? Every software vendor claimed that Artificial Intelligence was embedded in their products – data was clearly becoming the new snake oil. Of course as soon as we announced our intent to be data driven there were claims that we were already data masters – “We are a bank – we use numbers all the time”, “Look at the pie chart in my powerpoint”. We knew we had to do some heavy lifting in terms of addressing data quality, bringing all the bank’s data into a new tech data platform, investing massively in training and attracting the best talent. However we did not have a clear view of what the end state looked like.

Three years down the line it felt like we were in good shape – most of our data was of high quality, referenced with metadata and residing in a leading edge data platform. We had trained huge amounts of people and attracted some great talent. Because we adopted our tried and tested approach of encouraging people to just dive in and have a go, we had over 100 projects underway and were starting to deliver real benefits. However what we really had was just a bunch of projects. We were not running the company day to day using data. Powerpoints still ruled the roost.

Then the epiphany came. We were inspired by the evolution of data use in Formula 1 Motor Racing. Over the past few decades the sport had gone from using signboards at the side of the track to sophisticated instrumentation on the cars that transmit huge amounts of data during the race to allow the pit-wall crew to make real time adjustments to strategy. In between races experimentation and data analysis’s results in continuous incremental improvement. We asked ourselves what would it take to run our business this way.

We realised that to be data driven we needed to completely re-imagine how to run the company. Despite the progress we had made, this final step was going to be the largest and toughest. We needed a new approach so we developed the following 5 steps:

  1. Be ultra specific about what constitutes success of the business. What is the exact outcome measure that needs to optimised. In F1 it is obvious: “Did you win the race?”. In business it can be less clear. Through discussions on outcome measures we highlighted some mis-alignments in our strategies that we were able to iron out.
  2. Identify 3-5 drivers that have the biggest impact on the outcome. I am no expert but I would imagine winning a F1 race is impacted by engine performance, tyre strategy, driver capability, pit stop timings etc. In business there can be a tendency to analyse the outcome – in review meetings leaders tend to drill down on revenues by geography or product rather than focus on what they can influence i.e. the drivers. Furthermore there is scant thinking about the relationship between the drivers and the outcome. If training improves the performance of a sales team, what kind of training works best and by how much? A data driven company seeks to continually improve their understanding of the causal relationships between drivers and outcomes.
  3. Identify opportunities to apply machine learning to improve the drivers’ impact on outcome. Machine learning can beat humans in predicting outcomes given the right data. Therefore developing models that take some of the guesswork out of people’s job makes sense. Who is the best customer to call next? Does this transaction look suspicious?
  4. Relentlessly experiment to test hypotheses. In order to continually optimise, previously held beliefs need to be challenged. A data driven company is an experiment machine and focuses on accelerating the speed of learning by investing in experimentation infrastructure, processes and training. Which leads to the big one….
  5. Change the leadership culture to start asking questions rather than giving answers. The big tech companies who excelled in an experimentation-led approach consistently told us that only 1 in 20 hypotheses are proven to be correct and therefore leaders should expect to be wrong. A HIPPO culture where the HIghest Paid Person’s Opinion always wins results in learning opportunities being blocked. We therefore encouraged leaders to ask 2 questions of their teams. “What experiments are you running next?” and “What did you learn from the last set of experiments?”. Oh and this helps create a culture of psychological safety – an essential ingredient for innovation.

Leadership Lessons

  • Spend an inordinate amount of time aligning leadership understanding of what is meant by “being data driven”.
  • Focus on improving drivers and not acting directly on outcomes.
  • Expect to be wrong and therefore focus on test hypotheses through experimentation.
  • Becoming data driven is a culture shift more than an investment in technology, process and data scientists.