In this episode of In-Ear Insights, founders Katie Robbert and Christopher Penn debate today’s hot buzzword in business: digital transformation. What is it? Is it net new to the business world or is it old wine in a new bottle? Listen in and share your own opinions in the comments.
Machine-Generated Transcript
What follows is an AI-generated transcript. The transcript may contain errors and is not a substitute for listening to the episode.
Christopher Penn
This is In-Ear Insights, the Trust Insights podcast.
In this episode of In-Ear Insights we are talking about the buzzword of the year probably, which is digital transformation. What the heck is this thing? Why is it Why is it relevant? is it relevant? And let’s take the grumpy old people approach to it. So to start digital transformation is defined by probably best by former Dell cmo, CTO, Bill smiles, like who’s now over at Hitachi who says that it is fundamentally there’s there’s four basic laws it’s about business models, and not just the business eliminating barriers across time and distance creating new digital assets and predictive intelligence. Now, we’ve had some interesting experiences listening to people talk about this and the the topic in general and how to do it, how do you feel about it,
Katie Robbert
I think digital transformation is something that’s important. But I also think that the term digital transformation is a buzzword that confuses people if I can be completely blunt, I think that it’s bowl puppies.
And I don’t mean that digital transformation as an action as a thing that companies need to do is crap. I think that the buzz term is crap. Because it’s really at the end of the day, when you break down what is digital transformation, it’s about taking a look at what you’re doing, well, taking a look at what’s not working and adjusting, and innovating. So you’re optimizing the things that aren’t working as well for you, and you’re innovating to create new revenue streams to diversify to, you know, stay to keep up with your competitors, and, and to, you know, make sure they’re using the latest and greatest. And that extends not just to technology. I think that there’s this misunderstanding that it’s primarily focused on technology. But we know that it’s people process and technology. And so really starting with the teams that you have in place, the resources, the skill sets, making sure that you have all the right people on the bus, making sure that you actually have a process that’s repeatable and measurable, something that people can follow and say, Okay, I know what’s expected to happen, and not just, you know, throwing stuff at a wall, hoping something sticks. And then you have the technology, making sure you’re not stuck in that phase of, well, this is how we’ve always done it. We’ve always used, you know, Facebook ads, they don’t do anything for us. But we’re just going to continue to pump money into it, that sort of mentality. So I really feel like the idea of digital transformation, it’s not new, it’s not a new concept. The term itself is what’s new, and it’s a buzzword, okay, that’s, that’s my crotch deal. Take on
Unknown
it, get off my long,
Christopher Penn
I sort of agree and sort of disagree. And yes, it absolutely is a buzzword. And a whole bunch of people are using it without having any idea what they’re actually talking about. They just like the sound of it. And I guess it’s better than business process reengineering, which was, you know, the was that was the 90s term. But what I think sets it apart are two things. One is, it isn’t it is about transformation, not optimization. So it’s not making things go in your business do go slightly better with digital is doing things completely differently with digital. And the second, what I think is really relevant is the digital asset portion, which is when you create digital assets, like data sets, like machine learning models, and things like that, you’re creating entirely new product lines, they’re not something that is just a bolt on to an existing service, it is something that is net new to your company. One of the examples that is most popular cited, it is think about both the list of steps that you need to go to use in order to buy a, a box of Captain Crunch cereal, the traditional way, right, you gotta put on clothes, possibly, you know, pants,
get the car, go drive to the store, grab it off the shelf, scan it, get your credit card, or debit card, pay for it, drive home, and now you’ve got your box of cereal, whereas the transformed way is to yell out just smart decision, hey, order, be two boxes of Captain Crunch. And then, you know, two days later, or a day later, or an hour later, depending on where you live, a vehicle just flings Captain Crunch at your front doorstep. And that is a completely different way of getting your cereal, it is still the same end result. But there’s a lot less friction in the transaction. So from that perspective, do you feel like it’s still bs
Katie Robbert
I do. And I am going to disagree with your disagreement of me.
Because we’re saying the same thing, you know, I’m saying it’s optimizing and innovating, you’re saying its transformation. It’s really all a horse of a different color when you get down to it. So in that example of delivering Captain Crunch in a different way, getting it to the end user is the goal, whether the end user goes to the store or drone drops it off on their kitchen counter. And then, you know, their robot Butler picks it up and pours it their cereal, and then feeds it to them. Either way, the person is ingesting a whole bunch of sugar, what you’re describing is yes, is transformation. And you could make the argument, I’m going to make the argument that it’s optimizing because you’re auditing what’s not working, and you’re evolving and changing it. So whether I think what’s going to happen is, you and I are just going to keep bickering about nuance, because optimizing innovating, and transforming are all shades of the same thing. And so I think I can see, I can tell you’re about to disagree with me. Uh huh.
You know, when you get down to the actual definitions, yes, they are three separate terms, but ultimately what companies are doing. And I am going to say that in your example of a new data sets, new digital assets, you’re talking about a very small number of companies, whereas the majority of companies aren’t even at that stage, yet, they need to even take a step back with their people in process, they can’t even focus on the tech and the digital assets. At this point, my disagreement with you is that we are saying the same thing, your disagreement with me is that we’re saying different things. So here we are, the,
Christopher Penn
the nuance to me, or the differentiation to be, I guess, is thinking in terms of like the martial arts, there are, there are the basics that you do that you keep, you know, you just keep practicing over and over again. And that really is optimization. Like, you need to get better at being able to punch somebody in the face.
Whereas innovation is OK,
now that you learn how to punch somebody in the face, let’s learn how to kick somebody in the stomach, right? It is a different way of doing something, the end goal, the end outcome is the same, right? Just like getting the captain crunch to you, is the same. Like it’s, that’s the end goal. But the process by which you do it, going back to your example of people, process and platform, the process is totally different. Same guidelines, like, you know, this is person front of you, and you want to lay some smack down on them. But the methods in which you do it and the strategy which is different than you, because your your range is different. Your how, what part of your body using to hit them as different and they you know, give somebody a stick or a sword or nine foot Halbert. Yes, same general outcome. And there are some strategies that are transferable. But there are some that are that are just are not, you cannot use a nine foot Halliburton the same way that you can hit somebody with a one foot stick, I would argue that optimization versus innovation, they are different because there’s plateaus, you can there’s only a certain point at which you can optimize after which something is as good as going to get without serious diminishing returns. But then there’s a completely different way of doing the same thing to get a similar outcome. But it’s not it’s not continuing to tune? Is it something that’s broken? Maybe. But is it something is it a totally different way of doing something? I think there’s, I think there is value in that in as it applies to digital transformation to say, yes, let’s totally so your personal over here who is the copy paste person, guess what your jobs going away, because we don’t need a copy paste person anymore, we now have a machine to totally do that a different way.
Katie Robbert
So it’s interesting as a as you’re explaining your point of view, again, we’re not on different pages about this, I think ultimately, what it comes down to is a company’s having the ability to grow and evolve. And so to your point, your options, amazing the things that are working and making them more efficient, you’re making sure that people are doing the right things so that they are more productive, and then you are innovating to create a new business model or to completely change broken business models, you know, so I think that that’s really that’s really the goal of quote unquote, digital transformation. So in your opinion, why why the word I understand transformation, why the word digital,
Christopher Penn
because internet sounds too cheesy. And that’s I think that’s an important distinction, though, is that there is it’s, it’s using specific digital technologies to replace things that are analog. So going back to the captain crunch example, you’re eliminating a whole bunch of analog steps for you, the customer, yes, someone still has to get in their car to drive the thing unless it is, in fact, actually drone delivered now, which case someone still has to something has to get the captain crunch on to the drone. So there is still that real world component. But it is it is faster because it’s more machine assisted, and there’s conceivably fewer people involved, or those people have been redeployed elsewhere. And I think that’s the distinction of its digital versus analog as opposed to, you know, internet or about, it’s getting rid of analog things when they are less efficient.
Katie Robbert
That’s an interesting point. Because I, I feel like the aspect of people, your resources, your decision makers, and that’s the part that often gets skipped over when people are undergoing a digital transformation audit. You know, they’ll take a look at a high level at an org chart and say, Do you even have a marketing team? Do you have a sales team? Okay, great. But there’s not that deep dive into what skill sets can we automate with robotics, with machines with, you know, process automation to not eliminate people, but to evolve those roles from copy paste to something a little bit more useful, productive, something more insightful, something deeper, and it takes out that human error piece of it. Because when people do the same repetitive tasks over and over again, there’s this fatigue that sets in, and that’s when
that’s when problems start to happen. So I do find the idea and the theory behind digital transformation in this new era. Very interesting. But you know, I also that’s where I go back to the it’s bull puppies. It’s not a new idea. It’s something that companies to your point in the 90s and probably way before that have been doing, in your opinion, what is this resurgence of this need for digital transformation? Why is everybody clamoring to digitally transform these days
Christopher Penn
consulting companies ran out of things to sell
Oh, I mean, there is an aspect of that you need to create a buzzword term. In order to be able to sell a new thing at a higher price. A HubSpot spent 10 years and 100 million dollars rebranding Seth Godin permission marketing into inbound marketing, right. It’s, it’s the same, it’s the same leopard with different spots, but it is functionally the same thing. The same is true of it, think about it, we had for decades take us, we have six segment, we have business process reengineering, different leopard. Now what’s what I think is different is the plot. But obviously, the platform piece is different. But so is the process piece. Because
when you do that true innovation, you are you are taking existing processes, and saying this process could be made significantly shorter, and to your point, have significantly less human error involved in. So I think there is a differentiation, when you look look at something like business process reengineering, or you look at t qm or any of the older disciplines, they really are focused on, let’s make the process better and faster, right? Let’s make it better. Let’s make it faster really did they say throw that process out, right? Because it just a it because we’ve always made the assumption like this process is important, because it’s important to the business. So even if it’s crappy, we still kind of have to do it. When I used to work at at&t, there were a whole bunch of huge, terrible processes in place, and no one was ever willing to throw them out.
I think the argument for something that when you’re going from analog to digital is yes, this gives you the excuse of the opportunity to throw out a bunch of things that that simply shouldn’t make it into the digital era.
Katie Robbert
We know that it’s q4, we know that a lot of companies are focused on their 2019 planning. They know that they’re evaluating things they know that they’re trying to reset, set up new goals, new measurements for the upcoming year, how important is it to do some level of digital transformation before you start creating new plans and strategies?
And is it important to you it? Are they independent things, or should you really do them together,
Christopher Penn
I would argue that a a transformation effort is is obviously rooted in reality, you can’t shut down your company and just, you know, wholesale reboot it. But at the same time, it’s one of those things that I think you have to approach. If we go to the development examples. It’s, it’s not something you can do in a waterfall way, it’s something you have to do in an agile way. Because again, you can’t shut everything down. But the the little loops of Agile can get bigger and bigger and bigger as you start to transform more my processes. So it really is, I think it begins in process itself, like, what are the process disease you have? pick the ones that are, if you’re on a on an Eisenhower matrix, which ones are least urgent, which ones are the least important? Can you ditch them entirely? Or can you automate them in some way? make them go, and then you work your way up the value chain from little tiny things like, Hey, can we get the intern to stop copying and pasting eight hours a day, all the way up to the CEO saying, yep, I’m going to completely change how I work and how I manage the enterprise. But I don’t think you can ever divorce them from the reality of the company, which is like, you still gotta keep the lights on them the trains running? And so when you’re looking at 2018 and 2019 planning and what’s going forward, it should be what can what can we make 5% better in the next three months? What can we make 10% better than the next six months, and so on? What’s your perspective as someone who has a strong background in process product and, and making a company run,
Katie Robbert
I think you’re exactly right in the exam in the development example, you can’t fight it all off at once. It has to be those smaller iterative milestones. And I think that that’s important, not only in planning and execution, but also in this idea of digital transformation. And I think that that’s something that is daunting and overwhelming to a lot of companies where they get this notion perhaps, top down of, okay, we need to undergo a digital transformation. Well, that sounds like it’s a big deal. And it really doesn’t need to be. And I think that that’s, again, one of the misunderstandings of digital transformation is you can start small and continue to build on the progress that you’re making. So to your point, if you start with, okay, how many people do we have just copying and pasting things? Let’s take a look at that particular skill set that process that job, what is it that we’re trying to accomplish with this thing, is there a better way to do it and take it piece by piece. And so it’s the same thing with process. It’s change management, really. And with change management, anyone who’s tried to do any aspect of it knows that you can’t change everything all at once. It has to be in small bite sized chunks, you change one thing, let people get used to that demonstrate that it’s working, demonstrate that it’s more efficient. And then you move on to the next thing, trying to change everything at once. Opens yourself up to chaos, chaos, vulnerabilities, errors, problems, issues, turnover. And it’s the same thing with a digital transformation, where it’s literally just change management where you need to evaluate what you want to do, and then take it piece by piece. Because to your point, you have to keep the lights on, you have to keep moving forward. You can’t just tell your customers Okay, we’re gonna shut down for three months while we get our house. That’s not gonna work.
Christopher Penn
No, not well as, as someone who met has managed a lot of people talk a bit about emergent versus intentional change. So a lot, I think this is an aspect of digital transformation, or, or any kind of, you know, innovation that gets lost, which is intentional changes, hey, copy paste person, you’re going to stop copy pasting From now on, because there’s a better way to do this, right. And that frees you up to have some more, some more time to do other things that are slightly more valued. And that’s the intentional change. But when you do enough of those little changes, and make the organization suddenly better, in all these different ways you get it was something called emergent change, where the way people work together and the way people do things, new changes emerge that you could not have forecast that you could not have foreseen Oh, this is going what’s going to happen, you know, you knew that making someone stop copy pasting eight hours, it is going to make them slightly happy. But you might not have known that they Oh, actually, they have an aptitude for graphic design.
And it’s only something that would emerge once you take that burden away. How have you seen and managed emergent change in the past? How do you take advantage of it. So that when, when a company is saying like, yeah, I want to do something on digital transfer front, because they can start to look for those emergent changes and capture the value of them faster.
Katie Robbert
So with the intentional change to your point, you’re having someone change a behavior change a pattern, something like that, that you have planned for. The nice thing about a bunch of intentional changes, is it frees up that bandwidth to start to start to see, to even just have a conversation with someone of what else are you interested in. Because if if you take that intern example, where they just copy and paste for eight hours a day, they’re underwater, they can’t do anything else, they don’t have time to explore the other things that they might be good at. And that’s where that emergent change comes in. It’s that innovation and experimentation, that research and development piece that’s so important to every company that is often de emphasized, because, well, how can we make money with research and development you can, but it’s so important to your point to continue that innovation, that evolution, that transformation. And so how I’ve managed it, again, is sort of in those smaller chunks, you don’t to suddenly take away someone’s whole eight hour a day job to try to figure out, you know, can they actually juggle, you have to take it little by little. So one hour a day might be dedicated to, okay, let’s explore something else. Let’s have you try this thing over here. While over there, the trains are still running, the work is still getting done by the people who’ve always done it. But let’s start to throw you into it a little bit more. See if that works. Okay, it didn’t, then let’s try something else. So it’s it’s those small, incremental pieces. But it’s so important to continue to do that. And again, that goes back to change management, where you don’t just swap everything out all at once and create chaos, you take it in very small pieces. So I think the point of all of this is, anybody can digitally transform, anybody can overhaul their company. But do it in a small controlled, iterative, stepwise process way.
Christopher Penn
I want to tackle one last thing. And this is something that we’ve encountered in the past and is very much a part and parcel of digital transformation, which is
how do you motivate people to explore digital transformation on their own as part of their work like a in a in a past life? And we had a team
there were folks like, Oh, yeah, you should say, you should go and investigate this, this is, you know, you care about this, because you’ve said so in one on ones and things, so why don’t you go and read up on it, try some stuff out and, and, and see what you come back with, you know, come back with an idea that we can focus on and no one ever did. And if people were like, Oh, yeah, they gave a lot of lip service day of professional development and learning and training things. But at the end of the day, one of the things I think which sandbags a lot of digital transformation efforts is that the people are unwilling to make that change unless it’s forced upon them. And then they make that change resentfully as opposed to something as opposed to be eager. Again, I want to try something new,
Katie Robbert
what you’re describing is your classic top down, not buying into whatever’s going on at the middle, and lower levels of the company. And it’s not that the top isn’t buying into it, but they’re not consistently supporting it. And so that is actually a really good place for us to start to wrap this up with digital transformation is you have to evaluate all pieces of the company, including the very tippy top of it. It’s not just the middle management and the entry level people who need that transformation. It’s the entire business as a whole. So to your point, how do you motivate people, they need to see someone leading by example, they need to see that it’s okay, for one hour a day, two hours a week, it’s okay to not be doing something billable that it’s okay to do that experimentation. And there’s not going to be someone breathing down their neck saying, Why aren’t you doing XYZ instead. So it’s a culture change, its
transformation can’t happen at the individual level, it has to happen at the team level, it has to happen at the entire company level. And you have to have support from all different aspects, all different levels of the company in order for it to be successful. So if you take that example of just your own individual team, if the person leading the team is not also taking time to do r&d, not also taking time to experiment, then the rest of the team will see that and say, well, that person never does it, why should I have to do it, or my manager doesn’t do it. So I must not be allowed to also do it. So you have to lead by example in some ways, but you also just have to continue to reiterate that verbal support of its ok and then start to almost create those protective barriers around that time, whether it’s the whole team does it all at once, so that everybody’s on the same page or, you know, from four to five every Tuesday, this person you know, is untouchable because they are working on whatever the thing is, that will, you know, feed the r&d of the innovation or the professional development so, it’s, it’s tricky, it’s not, that’s actually probably one of the most difficult pieces of it is that buy in from all levels of the company.
Christopher Penn
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