On Leading Digital

I recently finished reading Leading Digital – Turning Technology Into Business Transformation – by George Westerman, Didier Bonnet, and Andrew McAfee. This book was graciously offered to me by Capgemini during the recent CIO Perspectives event in Houston. As the title and introduction summarize the core of this book is: “Our most fundamental conclusion is that Digital Masters— companies that use digital technologies to drive significantly higher levels of profit, productivity, and performance—do exist, but they’re rare. For reasons that we’ll explain here, most firms fall short of digital mastery. That’s the bad news, and it’s why we believe you’re probably not ready to survive and thrive in the second machine age.  Here’s the good news: the reasons that companies fall short of digital mastery aren’t mysterious or too numerous to list. In fact, the reasons are pretty easy to categorize. Companies that struggle with becoming truly digital fail to develop digital capabilities to work differently and the leadership capabilities required to set a vision and execute on it. The firms that excel at both digital and leadership capabilities are Digital Masters.”

Below are key excerpts from the book that I found particularly insightful:

Digital Masters excel in two critical dimensions: the what of technology (which we call digital capabilities) and the how of leading change (which we call leadership capabilities). These are two very distinct dimensions of digital mastery, and each plays its own role. What you invest in matters, to a point. How you use those investments to transform your company is a key to success. Neither dimension is enough on its own. Each is associated with different types of financial performance, and each provides only partial advantage. Taken together, they combine to give Digital Masters a clear advantage over their competitors.

On Creating a Compellinq Customer Experience:

Put customer experience at the heart of your digital transformation.  Design your customer experience from the outside in. Increase reach and customer engagement, where it matters, through new digital channels. Make data and analytics the lifeblood of your customer experience reinvention. Seamlessly mesh your digital and physical experience in new ways. Keep on innovating—it’s never over. Every digital improvement in customer experience will open up new possibilities.

On Exploiting the Power of Core Operations:

Free yourself from old assumptions of the predigital age. Look for bottlenecks and inefficiencies in your processes, and consider whether new digital technologies can help you rethink your operations. Consider how each of the six levers may help you improve operations. If you can’t address both sides of a paradox at once, start with standardization or control. This may open up possibilities to address other levers. Consider examples from inside and outside your industry. As with customer experience, a strong digital platform is essential for operational transformation.

On Reinventing Business Models:

Constantly challenge your business model with your top team. Monitor the symptoms that drive business model change in your industry—for example, commoditization, new entrants, and technology substitution. Consider how you might transform your industry before others do it. Consider whether it is time to replace products and services with newer versions if your present offerings are under digital threats. Consider creating brand-new digital businesses using your core skills and assets. Consider reconfiguring your delivery model by connecting your products, services, and data in innovative ways to create extra value. Consider reinforcing your presence in your current market by rethinking your value proposition to meet new needs. Experiment and iterate your new business model ideas.

On Crafting Your Digital Vision:

Familiarize yourself with new digital practices that can be an opportunity or a threat to your industry and company. Identify bottlenecks or headaches—in your company and in your customers—that resulted from the limits of old technologies, and consider how you might resolve these problems digitally. Consider which of your strategic assets will remain valuable in the digital era.

On Engaging the Organization at Scale:

Lead the engagement effort to energize your employees to make the digital vision a reality. Use digital technology to engage employees at scale. Connect the organization to give a voice to your employees. Open up the conversations to give everyone a role in digital transformation. Crowdsource your employees to co-create solutions, and accelerate buy-in. Deal with the digital divide by raising the digital IQ of the company. Deal with resistance by being transparent and open about the goals.

On Governing the Transformation:

Look internally (e.g., IT, finance, HR, and capital budgeting) for effective governance practices. Consider which digital decisions must be governed at the highest levels of the company, and which can be delegated to lower levels. Place somebody in charge of leading digital transformation, whether that is a chief digital officer or another leader. Identify governance mechanisms, such as committees and liaisons, to assist in governance. Examine whether you need a shared digital unit, including the resources it would have and the roles it would play. Adjust your governance models as your company’s governance needs change.

On Building Technology Leadership Capabilities:

Assess the state of your IT-business relationships: consider trust, shared understanding, and seamless partnership. Assess your IT unit’s ability to meet the skill and speed requirements of the digital economy. Consider dual-speed IT approaches such as a unit within a unit or a separate digital unit that combines IT, business, and other roles. Focus your initial investments on getting a clean, well-structured digital platform; it’s the foundation for everything else. start building the right digital skills. Challenge yourself continually to find new things you can do with your IT-business relationships, digital skills, and digital platform.

In conclusion:

Our research has shown that Digital Masters enjoy superior performance, which should be reason enough to get leadership teams interested in the concepts presented in this book. But there’s also another, even more fundamental, reason: when it comes to the impact of digital technologies on the business world, we ain’t seen nothin yet. The innovations we’ve discussed in previous chapters, including social networks, mobile devices, analytics, smart sensors, and cloud computing, are certainly powerful and profound. They’re reshaping customer experiences, operations, and business models. The pace and impact of these innovations have been nothing short of astonishing, but they’re just a prelude for what’s to come. Technology’s role as the endless agitator of the business world will not only continue, but will accelerate—exponentially.

A recommended read in the IT strategy space.

The Advantage

A few years ago, I read The Five Dysfunctions of a Team and it remains to be, for me, one of the most practical and applicable management books. Patrick Lencioni, the author of that book, has published a number of other books which have received high reviews as well, and I decided to read one of his more recent ones The Advantage – Why Organizational Health Trumps Everything Else in Business.

The main premise of this book is that:

The single greatest advantage any company can achieve is organizational health. Yet it is ignored by most leaders even though it is simply free, and available to anyone who wants it.

Sounds simple, so why is it that difficult?

But before leaders can tap into the power of organizational health, they must humble themselves enough to overcome the three biases that prevent them from embracing it. The Sophistication Bias: Organizational health is so simple and accessible that many leaders have a hard time seeing it as a real opportunity for meaningful advantage…The Adrenaline Bias: Becoming a healthy organization takes a little time. Unfortunately, many of the leaders I’ve worked with suffer from a chronic case of adrenaline addiction, seemingly hooked on the daily rush of activity and firefighting within their organizations…The Quantification Bias: The benefits of becoming a healthy organization, as powerful as they are, are difficult to accurately quantify.

What exactly is organizational health and how do I recognize it?

A good way to recognize health is to look for the signs that indicate an organization has it. These include minimal politics and confusion, high degrees of morale and productivity, and very low turnover among good employees…And so a good way to look at organizational health -and one that executives seem to respond to readily— is to see it as the multiplier of intelligence. The healthier an organization is, the more of its intelligence it is able to tap into and use. Most organizations exploit only a fraction of the knowledge. experience, and intellectual capital that is available to them. But the healthy ones tap into almost all of it. That, as much as anything else, is why they have such an advantage over their unhealthy competitors.

How do we create it, or get there?

An organization doesn’t become healthy in a linear, tidy fashion. Like building a strong marriage or family, it’s a messy process that involves doing a few things at once, and it must be maintained on an ongoing basis in order to be preserved. Still, that messy process can be broken down into four simple disciplines: Discipline 1: Build a cohesive leadership team…Discipline 2: Create Clarity…Discipline 3…Overcommunicate Clarity…Discipline 4: Reinforce Clarity.

On the first discipline – building a leadership team, let us start with the fundamentals, with the definition:

A leadership team is a small group of people who are collectively responsible for achieving a common objective for their organization…This is perhaps the most important distinction between a working group and a real leadership team. Collective responsibility implies, more than anything else, selflessness and shared sacrifices from team members.

What are the key behaviors of a leadership team:

On building trust:

Members of a truly cohesive team must trust one another. I realize that sounds like the most patently obvious statement ever made, something that every organization understands and values. As a result, you’d think that most leadership teams would be pretty good at building trust. As it turns out, they aren’t, and I think a big part of it is that they have the wrong idea about what trust is…The kind of trust that is necessary to build a great team is what I call vulnerability-based trust. This is what happens when members get to a point where they are completely comfortable being transparent. honest, and naked with one another, where they say and genuinely mean things like “I screwed up,” “I need help,” “Your idea is better than mine,” ‘T wish I could learn to do that as well as you do,” and even, “I’m sorry”…Trust is just one of five behaviors that cohesive teams must establish to build a healthy organization. However, it is by far the most important of the five because it is the foundation for the others. Simply stated, it makes teamwork possible. Only when teams build vulnerability-based trust do they put themselves in a position to embrace the other four behaviors, the next of which is the mastery of conflict.

On mastering conflict:

Contrary to popular wisdom and behavior, conflict is not a bad thing for a team. In fact, the fear of conflict is almost always a sign of problems. Of course, the kind of conflict I’m referring to here is not the nasty kind that centers around people or personalities. Rather, it is what I call productive ideological conflict, the willingness to disagree, even passionately when necessary, around important issues and decisions that must be made. But this can only happen when there is trust…When leadership team members fail to disagree around issues, not only are they increasing the likelihood of losing respect for one another and encountering destructive conflict later when people start griping in the hallways, they’re also making bad decisions and letting down the people they’re supposed to be serving. And they do this all in the name of being “nice.”

On achieving commitment:

The reason that conflict is so important is that a team cannot achieve commitment without it. People will not actively commit to a decision if they have not had the opportunity to provide input, ask questions, and understand the rationale behind it. Another way to say this is, “If people don’t weigh in, they can’t buy in.”

On embracing accountability:

Even well-intentioned members of a team need to be held accountable if a team is going to stick to its decisions and accomplish its goals. In some cases, people will deviate from a plan or a decision knowingly, tempted to do something that is in their individual best interest but not that of the team. In other cases, people will stray without realizing it, getting distracted or caught up in the pushes and pulls of daily work. In either case, it’s the job of the team to call those people out and keep them in line…At its core, accountability is about having the courage to confront someone about their deficiencies and then to stand in the moment and deal with their reaction, which may not be pleasant. It is a selfless act, one rooted in a word that I don’t use lightly in a business book: love. To hold someone accountable is to care about them enough to risk having them blame you for pointing out their deficiencies.

On focusing on results:

The ultimate point of building greater trust, conflict, commitment, and accountability is one thing: the achievement of results. That certainly seems obvious, but as it turns out, one of the greatest challenges to team success is the inattention to results. What would members of an executive team be focused on if not the results of their organization? Well, for one, the results of their department. Too many leaders seem to have a greater affinity for and loyalty to the department they lead rather than the team they’re a member of and the organization they are supposed to be collectively serving. Other distractions include a concern for individual career development, budget allocations, status, and ego, all of them common distractions that prevent teams from being obsessed with achieving results…The only way for a team to really be a team and to maximize its output is to ensure that everyone is focused on the same priorities— rowing in the same direction, if you will.

The second discipline is about Creating Clarity:

The second requirement for building a healthy organization—creating clarity—is all about achieving alignment. This is a word that is used incessantly by leaders, consultants, and organizational theorists, and yet for all the attention it gets, real alignment remains frustratingly rare. Most executives who run organizations—and certainly the employees who work for them—will readily this.

This is done by answering six fundamental questions:

1. Why do we exist? 2. How do we behave? 3. What do we do? 4. How will we succeed? 5. What is most important, right now? 6. Who must do what?

On what do we do:

If an organization’s reason for existence answers the Question, Why?, then its business definition answers the question. What? It’s critical that it be clear and straightforward. It should not be crafted so that it also be used in marketing material. The point is just to make sure that the leadership team is crystal clear about, and can accurately describe, the nature of the organization’s business so that they don’t create confusion within the rest of the company or, for that matter, in the market. It’s as simple as that.

On how we will succeed:

We came to realize that the best way for an organization to make strategy practical is to boil it down to three strategic anchors that will be used to inform every decision the organization makes and provide the filter or lens through which decisions must be evaluated to ensure consistency. Strategic anchors provide the context for all decision making and help companies avoid the temptation to make purely pragmatic and opportunistic decisions that so often end up diminishing a company’s plan for success.

On who must do that:

There is not a great deal to be said about this particular question, aside from warning leadership teams not to take it for granted. Although there is often clarity among executives in most organizations about who does what on the team, making assumptions about that clarity can lead to surprising and unnecessary problems.

The third discipline is Overcommunicating Clarity:

What those leaders fail to realize is that employees understand the need for repetition. They know that messaging is not so much an Intellectual process as an emotional one. Employees are not analyzing what leaders are saying based solely on whether it is intellectually novel or compelling, but more than anything else on whether they believe the leaders are serious, authentic, and committed to what they are saying. Again, that means repetition is a must.

The fourth and last discipline is Reinforcing Clarity:

As important as overcommunication is, leaders of a healthy organization cannot always be around to remind employees about the company’s reason for existing, its values, and so on. In order to ensure that the answers to the six critical questions become embedded in the fabric of the organization, leaders must do everything they can to reinforce them structurally as well. The way to do that is to make sure that every human system every process that involves people—from hiring and people management to training and compensation, is designed to reinforce the answers to those questions. The challenge is to do this without adding too much structure.

A concluding reminder that success in creating healthy organization rests on the leaders of the organization:

There is just no escaping the fact that the single biggest factor determining whether an organization is going to get healthier—or not—is the genuine commitment and active involvement of the person in charge. For a company, that’s the CEO. For a small business, it’s the owner. For a school, it’s the principal. For a church, it’s the pastor. For a department within a company, it’s the department head. At every step in the process, the leader must be out front, not as a cheerleader or a figurehead, but as an active, tenacious driver.

While there is a considerable effort involved, there is also a substantial reward:

At the end of the day, at the end of our careers, when we look back at the many initiatives that we poured ourselves into, few other activities will seem more worthy of our effort and more impactful on the lives of others, than making our organizations healthy.

A recommended read in the area of organizational leadership and management. If you have not read The Five Dysfunctions of a Team, I highly recommend you read that one first.

 

Ten Lessons From Great People Decisions

I recently finished reading Great People Decisions – Why they matter so much, Why they are so hard, and How you can master them – by Claudio Fernandez Araoz.

The book’s main premise is that “Making great people decisions is a craft, and it can be taught and learned”. Here are ten lessons I learned and excerpted from reading Great People Decisions:

Lesson 1: People Decisions Are Vitally Important to You and Your Organization

“If you prove to be skilled at solving “people puzzles,” your career prospects will almost certainly get brighter. Conversely, if you repeatedly fail to  get the right person in the job your career will suffer(…)Mastering great people decisions will do both. It will enhance and improve your personal relationships, and increase your professional satisfaction.”

Lesson 2: The Success Formula

“…The formula for career success includes at least four other factors (besides luck). They are: 1) Genetics, 2) Development, 3) Career decisions, and 4) People decisions. I am convinced that these factors reinforce and build upon each other, and create a multiplier effect. I also believe these different factors have different weights in our life.”

Lesson 3: People Decisions Are Hard

“Collectively, these factors  help explain why making people decisions is so damnably difficult: 1) Statistical Odds 2) Difficult Assessments a) Impact of assessment errors b) Unique jobs c) Changing jobs d) Intangible traits e) Inaccessible candidates 3) Psychological Biases a) Procrastination b) Overrating capability c) Snap judgement d) branding e) Evaluating people in absolute terms f) Seeking confirmatory information g) Saving face h) Sticking with the familiar i) Emotional anchoring j) Herding 4) Wrong Incentives a) Candidate circumstances b) Political pressures.”

Lesson 4: The Great Paradox

The majority of us are not equipped with the right tools to make great people decisions – “…we get little formal training in making the right people choices, both because of a lack of initial awareness about its importance and because of the false belief that this skill is not learnable. Then, when we’re in a position to learn from experience, we often can’t learn from experience. And to top it all off, we think we’re far better at people choices than we really are(…) And great people decisions need active management. They are less like a physical infrastructure, and more like money: They achieve their true potential only if you figure out how to deploy them effectively.”

Lesson 5: Knowing When a Change Is Needed

“In order to successfully implement a strategy, not only do the right leaders need to be chosen, but those leaders need to be aligned across the different hierarchical levels of an organization(…)Even when people changes are justified, it’s usually very difficult to implement them…your goal should be to define your decision-making process in advance, so that it will be as disciplined and objective as possible.”

Lesson 6: What to Look For

“1) Knowing what to look for is important because a) Some characteristics are better predictors of success. b) You need to focus youefforts. c) You will avoid discrimination. d) You will be faced with difficult tradeoffs among real candidates. 2) All of the following characteristics are important a) IQ (although most candidates for senior positions already have high levels b) Relevant experience, particularly for senior positions c) Emotional intelligence-based competencies, particularly for senior positions d) Potential, particularly for junior to middle-management levels e) Values, in all cases 3) A highly disciplined process must be followed a) Confirming the managerial priorities b) Identifying the key competencies required c) Clearly defining them in behavioral terms d) Agreeing on the required levels and relative weight for each key competence.”

Lesson 7: Where to Look: Inside and Out

“Large companies should continually invest in succession plans and inventories of talent and key competencies. In addition, special internal and external efforts should be made for specific needs, particularly at the top. Despite the proliferation of advertising options and the promise of the Internet, direct contacts continue to be extremely powerful. Clever sourcing is both an extremely effective and efficient way to identify highly qualified real candidates. In many cases you can generate most candidates on your own. Professional help can be useful for senior positions, new jobs, when you need to cast a wide net, or for confidentiality reasons.”

Lesson 8: How to Appraise People

“You can significantly increase your organizational capability in this critical area by: a) Selecting the right assessors b) Training them following proven practices c) Reviewing assessments before confirming the hiring or promotion decision d) Following up over time the results of these decisions, for individual as well as organizational feedback purposes.”

Lesson 9: How to Attract and Motivate the Best People

“Best practices for attracting and motivating the best people include a) First, understanding the candidate’s motivation, concerns, and alternatives b) Sharing your passion about the opportunity c) Paying competitively for the relevant market, without overdoing it d) Setting up the right incentives, with great care in their design e) Properly dealing with any special risks f) Having enough courage to do exceptional things in exceptional cases.”

Lesson 10: How to Integrate the Best People

” a) Companies can do several things to support integration: 1) Being proactive at internal communication and candidate preparation 2) Properly preparing the ground within the organization 3) Closely following up the process at regular intervals, monitoring the level of organizational support, relationship building, working of the business model, and setting the stage for early wins. b) Candidates should also take charge of their successful integration: 1) Ensuring the right sponsor 2) Realizing that the integration work is harder than expected 3) Asking up front for the type of organizational support required 4) Focusing on a few key areas 5) Properly managing expectations 6) Confirming the new team 7) Spending enough personal time with all relevant stakeholders.”

What are some lessons you have personally learned with regards to making recruitment and hiring decisions?

Regards,

Omar Halabieh

Great People Decisions