Show 105 – Digital Transformation
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The fourth episode produced in partnership with SAP UK, continues our conversations around topic areas that were due to be discussed at their Innovation X Conference that was unfortunately cancelled as a result of the Coronavirus pandemic.
In this episode we focussed on the area of Digital Transformation.
Our guests were:
- Alan Brown, Professor in Digital Economy, University of Exeter Business School
- Christine Ashton, a CXO advisor and Independent Non-Executive Director in FS and Critical National Infrastructure
- Sean Pilkington, SAP on Azure lead, Microsoft.
- Timo Elliott, Global Innovation Evangelist, SAP
Alan started off the panel discussion by setting the scene on where we currently are in terms of innovating in today’s digital world. He started with technologies, explaining how there has been a massive influx of new technologies which is having a big impact on speed, agility and flexibility that we have in delivering new kinds of solutions. He added that it is important to look at the balance of three things;
- The technology, what is feasible with that technology
- The viability of the business models. Alan explained that the kind of innovation that we are seeing now is an integration between what the technology is allowing us to for and what the business model is going to create as a viable way of generating money, value or something new for the stakeholders bringing us onto
- what is it that the people want? How do they want to consume it in our digital world? Our expectations of technology, our expectations of service delivery, our way of thinking about the products and services that we receive is quite different now than it was just a few weeks ago, different to what’s going on right now, but certainly from a few years ago.
Timo then shared with us why the topic of digital transformation is so important right now. He said that, whilst nobody ever thought that going digital was a bad idea in principle, the discussion has always been about when and how fast you do it and whether the costs were worth it. Right now, it’s clear that organisations that have already invested in digital have a big advantage, while some others are scrambling to even stay in operation. There are lots of organisations that have to rework how they provide their products and services, more or less in real time. Timo explained that digital transformation helps you be more agile, more flexible and provides more transparency throughout the organisation. He thinks that digital transformation is also about society as a whole, we can create win, win, win situations where organisations, can improve customer outcomes and cut costs and help make the world a better place.
Christine added that businesses have done a tremendous job through this period, but it is also important to be thoughtful about the fact that whatever your size of business, there are likely to be some holes in your P&L. She continued, many businesses have lost almost an entire quarter and they are going to have to think about how they plug that going forward just so that they remain viable and sustainable. She said that when she spoke to CEOs and C level execs, they praised the teams, they praised the CIO teams that have firstly enabled the health of their employees and families, by letting them work from the safety of their homes and many are very keen to retain some of these changes that have happened. What CEOs are also recognising, Christine added, is that while individual worker productivity has been maintained or even improved, many have experienced first-hand the brittleness of the business processes, particularly when they try to change them. She believes that one thing that’s going to come out of this is much more awareness about business process and stress testing that, becoming very aware of the fact that they have this process risk. She said that businesses perhaps didn’t understand the ecosystem of their suppliers and how they work together, they didn’t realize the impact of not having a supply of a specially machined part or perhaps skips not be emptied, for example, that has posed a threat to the operational continuity. The other thing is that CEOs have been saying, is that they now see automation as vital. Many wish they’d have had more of it because they have been so reliant on human glue, particularly in a decentralized environment, which is hard to do. So, they need to automate now, because what they now need to do is pivot some of their resources and business models potentially so that they can plug some of those P&L gaps.
Christine believes that you’re going to see everybody start to think about, not just digital transformation, how we knew it, but digital transformation that is in smaller cycles, better, faster and is more focused around business outcomes.
Sean explained that at Microsoft, their top concern is always the well-being of their employees and supporting their customers in dealing with the business impact of this current situation. So, as a company they’re operationalising a lot more front-line services, focusing on those companies, those people that are supplying the front line of this. So, working closely with first responder organisations and critical government agencies to ensure that they have the support and technology that they need to help combat this crisis. He added that there is also a balance that has to be struck, they are reaching out to organisations to see how they can help them, but you’ve got to be careful that you’re not selling or looking to sell. What they’re all about is helping and empowering them and helping them through this crisis. It’s an unprecedented time, customers are facing challenges. It’s not just companies, its industries that are on the brink. So, it’s how they can help them through that time, how they can accelerate their digital transformation to help them sustain that business model going forward.
Timo said that he believes we all can learn a lot from the organisations that are not for profits that deal with disaster response. By definition, these companies are used to dealing with completely unexpected events that can happen anywhere, so they have really been designed for flexibility from the start and they always have to work flexibly with ecosystems of other people, other organizations like themselves and governments. He continued, people like the Red Cross, use supply chains like SAP Ariba so they can quickly get the products they need to the places they need them. He added that there is a great organisation called Plan International, headquartered in the U.K, that helps protect children during natural disasters around the world. They use technologies such as SuccessFactors to help find the right staff with the right skills, knowledge of local culture and the right languages to get them on the ground as quickly as possible. He explained that these organizations typically swear by cloud technologies because it means their staff can work instantly from anywhere without having to set up servers
In the presentation that Alan was due to give at Innovation X, he highlighted that there were at least five critical dilemmas that must be addressed when delivering transformation;
- Productivity dilemma,
- Value dilemma
- Ethical dilemma
- Leadership dilemma
- Human dilemma
Alan began by explaining that it is really interesting that over the last few years we’ve introduced new automation, new digital technologies, and a lot of what we’ve been trying to do is increase efficiency and speed of delivery. He said that you would have thought that that would have a huge and positive impact on productivity at the individual level, at the team level, at the organizational level, and even at the economy level for the UK, for example. But if you look at the numbers, there’s actually some interesting challenges because in the UK, in particular, our numbers in productivity, look like they’re going down and the question is, why is that? How is it that the introduction of new digital technologies and automation actually has a negative impact on productivity? Alan added that there are a few thoughts around that that might be interesting. One is, perhaps, people are struggling to adopt new digital technologies. While it’s fairly obvious we can introduce automation around some manual processes to go from paper-based processes to online processes, perhaps the broader implications of us thinking, working and acting digitally is actually much harder than we thought. So, one potential thread that we could discuss is how difficult is it to move into a digital way of working? But perhaps also, there’s a broader sense of the digital world isn’t like the analogue world, he explained. It’s not like we’re moving from a way of thinking about and acting in a world that’s analogue to simply switching on a digital switch and in fact, maybe we’re measuring the wrong things. He said that maybe we don’t think about productivity in the same way in the digital world, maybe there’s a lag and we’ll see that productivity coming through longer term. He thinks that what we need right now is a sustainable recovery from what’s been going on.
Building on Alan’s points, Christine added that over the past few weeks, one of the things that we’ve seen is purpose driving action; we’ve seen companies achieve marvellous things because the workforce has been much more connected with the purpose. We don’t measure that, and we don’t have a way of really communicating that. She continued, if you look at some of the needs and desires of the latest generation of the workforce, they’re so keen to be better connected with strategy and better connected with purpose, so, maybe we have to start to think of some different ways to measure how people can directly see what they’re doing in our businesses as it connects to the outcomes and links to customers. She gave a quote by George Bernard Shaw, that said, “The true joy in life is being used for a purpose recognized by yourself as an almighty one”, which she believes is a great thought on what we’ve seen over the past few weeks. She gave an example of a company who said that they’ve achieved a three-year project in six weeks. So you could argue, what is it we’ve been measuring that meant we were happy to see something like that last three years when actually, if we pulled together and did it a different way, it could have been done and the outcome achieved in six weeks. She also said that another company had implemented a software as a service, SuccessFactors, to totally digitize the HR process. They have literally done it in weeks because they’ve better rated the activities, they’ve run 24×7 projects. Measure because that helps to influence behaviours, but also rethinking some of these measures is key going forward.
Christine said that one of the things we are going to see is the temptation to pull back on what we used to do, maybe from a budget point of view and just giving everybody a ‘haircut style’ budget. She added that what we’re alluding to is that we have to be a bit more sophisticated and maybe challenge ourselves and have differentiated budgets. We’ve got to really flex according to priorities, and she thinks that will take a different set of thinking as people start to come out a lot there.
Timo said that he believes they had touched on another solution to the paradox of productivity in that a lot of it’s about the flexibility and agility that we had been talking about. He said that this has been clearly shown in the current situation, the productivity advantages of technology have been immense. It’s allowed many of us to continue working at home. At SAP, for example, Timo said that they have been very lucky. They have over 100,000 employees all over the world, all their offices are shut, but they have been able to continue working at near 100 percent. He said that really is because of their investment in information technology. So, now more than ever, there are benefits of investment in digital transformation are becoming very clear.
Sean continued the discussion and said that he thinks it’s fair to say we’re seeing the world change and the productivity, the value versus cost example is really good. He gave an example of Microsoft and the Smiths Group, he said that they’re doing some really good work at the moment with the ventilator challenge in the UK, they’ve changed production to help make them and fulfil that need. But they’re really going to help share with Microsoft their digitalisation of their information process. Sean explained that it was a very manually driven process, taking five to seven days to make these reports and to get information to their front-line people who really needed it. So, through an iterative process, they went through and fully digitalised this, SAP was key in that to make it a real time data solution. Yes, it did help reduce cost, but it’s the value not only from the data that they’re able now to transform and to change, but the value for their people. So obviously, the ones that were taking five, seven days to manually compile these reports, their time and efforts can be redistributed to help the business to make better processes. Also, the front line that can be more proactive for their customers, they’re not being reactive to a situation that they can highlight situations that have occurred in the production line, in the manufacturing before that impacts the customer.
Timo then said that it was important to mention artificial intelligence, he said that it really is an amazing opportunity for increased productivity. Things like machine learning are helping to automate the kinds of complex, repetitive decisions that make up to 70 percent of some business processes like finance and logistics. He then gave an example of one of their customers, Hartmann Health, a world leader in bandages, they help heal over 64 million wounds a year. They realised that in hospitals, doctors and nurses were wasting a lot of time manually keeping track of their products, so they decided to automate it for them. They used sensors and the Internet of Things to automatically detect when new bandages are delivered, it keeps track of what’s being used, and then it uses predictive analytics, machine learning to automatically order just the bandages that are needed when they’re needed. So, there’s always enough bandages for patients, there’s no manual work for the doctors and nurses, it saves time, saves money and allows more hospital space to be used for patients rather than warehousing the products that they might need.
Alan began by saying that we have started to move towards this idea of value and where the value lies. He said that this relationship between productivity and value is a particularly interesting one, we see value in different ways than we did before. A very obvious example that we’re seeing more and more is that we’re seeing value in use as opposed to value in exchange. This means that if we start to put digital technologies around and inside physical artefacts, then we can begin to get streams of information about their use; how people are using them, when they’re using them, how much they’re using them and other sorts of ideas about the environment in which they’re being used. So, Alan gave the example ‘if I’ve got some physical device instead of me charging a price for me to give it to you and you give me some money for it, I actually start to learn about what you’re doing and which outcome you’re achieving as a result of using it and therefore, we can begin to participate in value sharing in different ways’, which is why we get to things like subscription based pricing, outcome based pricing and usage based pricing because we can start to differentiate who’s using products when and how they’re using it. That gets us into a very different conversation about how we work with clients and stakeholders to use products and services from other parties. He said that that’s a much richer conversation all about how we get there, how we think about value and what value means to us is the big dilemma.
Timo related this back to the productivity dilemma, he said that, ultimately businesses everywhere have been steadily climbing the value pyramid and providing more extra value. But it’s hard to get human happiness and fulfilment to show up on productivity figures. So, he thinks organisations, are doing a better job of filling the needs of their customers. He added that it’s also a great time right now for organisations to take a step back and figure out what their purpose really is, what problems can help with what, how can they add extra value to their customers and how can they help in general.
Christine built upon this, she said that this stepping back is super important and it’s about doing it in a way that starts to explore what customers and suppliers now need, because people and companies will come out of this really uncertain about what they need. She believes that it gives us an opportunity to start new ways of working, to consider ways of collaborating with not just customers and our customers, but the customers of our customers and potentially our suppliers and their suppliers. And actually take that much more end to end view because, as the other points talked about earlier on state, that will help us in terms of thinking about resilience, robustness, and also help us to think more about how we can change what options we might have. Christine believes that it will really bring more creativity, not less to the marketplace.
Alan explained that the difficulty with that is, as we look at organisations, particularly large established organizations, the current business model is very focused around “sell more stuff”. So, the challenge we face is how we can move from a sales organisation that’s focused around the selling of more product to deliver to an organisation so that the salespeople are compensated on selling more, more often rather than them realising that what they need to do is sell less, but sell things that are used more intensively and the value may be given downstream when that’s being used more, in new and more profitable ways. And the company gets recognised for that as a result of that use. That switch, that movement is very difficult for organisations, for many organisational structural business reasons.
Timo believes that a big part of it is the traditional business metrics like revenue and profit are not very good at capturing customer value. There’s really only one way to know what customer value is about, what people are really appreciating about your products, and that’s to ask them. So, we’re now seeing a rise of experienced management tools where you do a lot more active listening of what the customers want, and that helps you align your business resources with what the customers ultimately need.
Sean added that rather than being transactional based, cost based, value based, it’s about looking at the whole relationship and seeing that end to end, seeing how that information is now being used. He continued with the Smiths Group example, and how they are now becoming a data driven organisation and how that data can then drive them, how they can utilize that data. He said that they found that, with other customers as well, once they start to open this and start to remove these data silos, the insights they get, they realise that perhaps the business models and business processes they’ve been using, the way they’ve been engaging their customers is wrong, because it’s a point in time basis it is, ‘oh, we want to sell you this’, and then it’s moved away. That review cycle, that relationship, suddenly becomes a lot more focussed for them, so, they’re starting to look at how they can empower their customers, how they can raise that value to them in their marketplace.
Alan said that we’re becoming more and more understanding about the challenges that it faces, and if we take a follow on from just the previous example where we’re starting, to put more devices in the home and we’re starting to use those devices to understand people’s behaviour in the home, we end up with some really interesting dilemmas and questions; how do we use that information? When do people feel supported? When do they feel like they’re getting customized service that adds extra value? When do they feel like they’re being exploited? When did they feel like they’re being manipulated? When do they feel like they’re being put upon by the organisation around them? Alan added that we all recognize that there is a fine balance here, and in fact, that balance is significantly moving. For example, talking about tracking and tracing, people are looking at that as a really positive way for us to understand the challenges that we face during the current crisis. So, will people, as a result of that, change their view on having devices in the home that monitor their use of entertainment or how often they turn the kettle on to make a cup of tea or anything else? We don’t know what the implications of that will be and where people will sit on this ethical dilemma of personalization, privacy.
Christine said that things to also consider is our attitudes to things like data and how we collect data, because historically, we wanted to collect lots of data, and what we’ve perhaps not exploited is the whole theory of exception reporting and edge principles. She gave the example of when she put in the countdown system in London to track where the buses were, she said that what they didn’t do was track every bus. They tracked the exceptions; which bus was actually running late? She thinks that we have to change the way we think about data, we have to think about what we leave at the edge and what we bring to the centre. To the point about the ethics, there’s lots of people that have been furloughed and they’ve got great skills, they’re going to come back into the potential workplace, but they need to be redirected to a different spot. Christine thinks that as businesses, we could do more to make the workplaces more accessible. Maybe we have to rethink single sign on a different way, for example, if I’m a worker and I work for lots of different companies, maybe they single sign on to me, not the other way around.
Timo added that this all shows very clearly the importance of society and elected officials and laws. Businesses and governments are actually designed to make those tough decisions and trade-offs between competing interests across different parts of society. It’s messy and imperfect and frankly, infuriating sometimes, but as Churchill once said, “democracy is the worst form of government, apart from all the others”’ He said that it’s very clearly a role for our society as a whole to make sure that we come up with the best possible answers to these questions, which will never please everyone.
Sean said that fundamental to that is the trust, because a lot of that comes down to not the data that is being shared, but who you trust that data with and the organisation. It’s whether you trust the people who are using that data, trust them to use that data effectively. We’ve seen it at the moment all over the debate, around the app tracking for the for the virus in various different lights. And it does come down to that trust.
Alan agreed and said that, that is a really key part of this. He thinks our own understanding and education about data and the use of data is getting really interesting. A few years ago, lots of people were talking about hoarding data as much as they could, and as Christine said, people were saying, let’s collect data, we’ll find a good use for it. But now, more people are coming back saying, ‘wow, that data stuff, there’s a real liability without owning and managing data isn’t there?’ Alan explained all the issues that may come with owning and managing data; from the issue of data going out of date, to quality issues, to who you can share it with and what will people’s attitudes of it be.
Timo added that people often say that data is the new oil and that summarises Alan’s point up in that data is very valuable, but it’s also very toxic if it’s mismanaged.
Alan said that there’s a lot of opportunity in many areas, policing and many others. He is mostly in the education area, and a good question about online education is how early on in somebody’s use of online learning can you predict they’re going to fail? The answer, according to Alan, is it’s actually pretty early on. He said that you can look at their behaviours and you can say after about 20, 25 percent of the course, we know if you’re going to pass or not. Now, what do we do about that? And the answer, of course, is positive intervention, trying to work out how we can encourage and support and say what would help you to work differently, to think differently, to try to buddy up with somebody who’s perhaps in a different place in their learning journey. Alan said that is the predictiveness of data, intelligence and A.I. will give us the opportunities to intervene earlier, to try to help people earlier and to try to encourage and support. However, his worry is whenever we talk about that predictive nature, it’s always a negative. It’s always, you’ll get arrested before you’ve even done the crime and he thinks that’s possible, but he’s much more hopeful that we’ll use these in positive ways.
Sean said that the Hollywood, glamorous way of looking at it [in films like Minority Report as discussed in Show 14] has fuelled that speculation that you will be punished beforehand, rather looking at that data as a way to prevent and educate the person. So, he posed the question; looking at crime hotspots, are we going to be looking to arrest the person before the crime or eliminate that crime altogether by educating the person and therefore avoiding the crime? Looking at what the social area or aspects for those hotspots are, what the data is behind it, that’s looking at it as a way to educate and eradicate rather than punish.
Timo said that there is clearly so much value we can get out of these amazing new predictive technologies that it would be unethical not to use them as well. But we do have to be cautious. He thinks one way of thinking about it is that algorithms are basically sociopaths; they can be very powerful and useful, but they have no understanding of human nature or what they’re really doing. So, we have to keep them very firmly under human control at all times. And initially, at least, the best place to use them is in automating those repetitive decisions and things like supply chain and finance, things that don’t touch on the human condition and then over time, hopefully, we’ll learn how to use these to improve more human situations, like helping people proactively with their learning, but in ways that ensure that we don’t fall into the inherent problems of diet bias in the underlying data.
Christine added that it’s also about thinking about track and trace for good and also using some of this data for the purposes we never intended, for example, before COVID. She said that another thing that’s going to be quite interesting is tracking touch and engineering the no touch. So, maybe we start to track, how many times a package was touched by somebody or we start to think about our processes; how do we engineer touch out of them? And how do we track and trace not just touch, but CO2, plastic, miles? She said that there’s a whole sphere of things that actually the world and businesses are going to demand. But at the moment, what’s interesting is she doesn’t think that we’ve got the space to do it because we’re spending so much time on our business backbones and on our operational processes. She believes that that’s where Timo’s evangelism about AI and RPA is so crucial because unless we can cut down the amount of time we spend, and for some companies it can be as high as, maybe 80 percent of their time they’re spending on just routine processes. So, until you can cut that down and then do ‘steering looking through the windscreen instead of the rear screen’, then businesses may often argue they have neither the time nor the resources to tackle some other things that they need to tackle in the way that we’re talking about.
Timo said that we’re seeing a lot of organisations, right now, using technologies like robotic process automation that allows you to record a series of actions across multiple systems and then play it back because people are finding themselves at home and having to sort of reinvent processes on the fly. So, these kinds of technologies are a great stopgap until you can do sort of the proper integration between your systems.
Alan said that the expectation is raising the bar quite significantly, organisations may be at more risk because they can’t act on things, they should be able to know and do. For example, if I’m an education organisation like a university and I have information about students, about the what they’re learning, what classes they go to, the accommodation they stay in and what they’re looking at online, and they have some sort of challenge with mental health or physical health or learning, and they fail the course, the question comes back, who’s at fault? Is it the individual or is it the university, who knew or could have known or could have intervened early on and didn’t? He added that in fact, you are seeing universities being sued because somebody failed and said “it’s not my fault, I’m a good A student, it’s your fault because you didn’t support me to be successful”. Now, that’s a really interesting shift in who’s responsible for what, whether you call out the nanny state or anything else. He said that we are moving to that situation where who’s responsible for what and what you do with information is changing. And that’s a really interesting place we’re at right now.
Timo mentioned two examples of how digital transformation is impacting the environment. First, is ACA, the Asociación de Cooperativas Argentinas. It’s a cooperative of cooperatives that represents the 150 agricultural cooperatives that in turn represent over 50,000 individual farmers across Argentina. They’ve implemented a program to use machine learning to help farmers move from subsistence farming to sustainable farming. So, it gathers data from lots of different sources in the cloud, using things like satellite images of fields across the country and data from the farmers machinery and it brings it all together using the machine learning model and then provides proactive advice back to the farmers. So, for example, it might say, ‘hey, there’s a warning, there’s a part of your field has got a discoloration maybe it’s been affected, you need to go and treat it’, or ‘there’s storm coming, you should do your harvest now rather than later’. The net result is that the farmers get more out of the crops with less resources. So, it’s good for the farmers, good for the planet and good for all of us as a whole. The second example that Timo gave was, Farmers Cut Today. Fresh greens actually have a pretty bad carbon footprint, on average, for example, a lettuce may have travelled over 2000 kilometres to get from where it’s grown to where you are eating it. Farmers Cut have created a series of urban farms that use what they call dryponics technology, which is a controlled environment, so they use 90 percent less water, 60 percent less fertilizer, no pesticides. The products are actually still growing as they’re delivered to your home, so they keep all of their nutrients right up to the last second. Another nice example of using the latest technologies, they use machine learning to make sure that each crop gets exactly the sunlight and water it needs at the right moment in the growing process and so on. To help the customer experience, cut costs and help the world be more sustainable.
Alan added that he is fascinated by this idea of what it means for us to have a sustainable recovery. He said that if we think about the challenges we’re going through, from shutdown to lock down, to slow down. We’re wondering what’s going to happen as we go through slowdown and what what’s coming out the other side. This idea of sustainability is really important from the point of view of financial sustainability and from a business model point of view, from the idea of our people. He said that Christine was pointing out that we’ve got an interesting challenge about furloughed people and retraining people, we’ve also got an interesting challenge from our people who are in work, suffering mental health issues and stress issues and trying to work from home and balancing many constraints. He added that we’ve also got broader sustainability issues; how are we going to look at society and business as a whole as we move forward where we’ve clearly seen a world that’s going to look very different downstream? Borders are going to be looked at differently, silos of who’s working with whom, the kind of way in which an organization looks at the way it creates money, creates value and who gains that value. Alan thinks that we’ve got lots of things right now that are in this ethical area which have to do with sustainability and the in the classic sense of sustainable food production and so on. But sustainability and a much broader view, that’s going to be one of the big things coming out of the current crisis.
Christine looks back to the 2008 financial crisis, she said that the thing that the government did after that was, they did the stress tests with the banks, balance sheet stress tests. She wanted to know whether that would be something we might start to see come in, sustainability stress tests? If you are a big provider in society, for example, the big supermarkets that we rely on, maybe the government should be asking some of these organizations to demonstrate that they’ve stress tested some of the processes. She thinks that it’s not the government will interfere more, because maybe none of us want to see that, but that actually, government might ask for more assurance from businesses. And maybe that won’t be a bad thing.
Alan posed the question; what’s the role of a leader? He said that if we’re in a more diverse environment, if we’re in something where the data tells us what to do more, if we’re in a situation where there’s much more volatility, then maybe the fact that he has experience from 25 years ago isn’t as relevant to us right now as it perhaps was in the past. There’s this idea of the rear-view mirror versus looking out of the front windscreen comes to mind, so what is the role of leadership? How does one lead from the front? Lead from the back? Support my organization? He added that we’ve been looking at that challenge over the last few years, but the last few weeks has really accelerated our view of what does it mean to lead?
Alan continued by saying that we’ve probably all seen people who’ve been acting in a very responsible way, looking after their people, checking in and making sure that their own personal circumstances are right, encouraging a kind of flexibility that’s needed right now, but also demonstrating in a personal way their commitment to the people, to the organisation, to the environment in which they’re working. He said that he has seen that in many organizations, and one of the most positive things he’s seen over the difficult times we’ve been going through, is some real people stepping up and showing what leadership means in these difficult times.
Timo added that he believes that active listening to what your employees are experiencing right now is absolutely an essential part of leadership. So, employees that feel like they’re listened to, the higher satisfaction, greater engagement, greater efficiency, lower turnover, lower costs, every indicator is correlated with high employee satisfaction, leading to higher customer satisfaction. One of the things that they did was roll out SAP Qualtrics Pulse check. Timo explained that it’s a free service that allows organisations to keep track of where their employees are in terms of mental health and stress, and do they have what they need? So, whether it’s employees in offices or it could be nurses or teachers making sure that people know what they need to provide to help those people be successful.
Sean highlighted that Microsoft have been really good in this area, it’s all about the workforce. He said that they put situations in place and one of the easiest things to do in these situations is to say ‘I’m there for you. You let me know what you need.’ The onus is on the person, whereas Microsoft have really been on the front foot. There’s a lot of wellbeing, a lot of mental health that they’re promoting, even down to individual managers having check ins on a regular basis with their employees having some kind of downtime. He continued, blocking time in your diary to meet as a team and not discuss work to have the leisure time, like a water cooler chat that you get in a natural ebb and flow of the office, quizzes, team building exercises, just to have that break. He said that it is really to be on the front foot and to be more positive than just, you let me know when you’re feeling bad.
Christine said that one thing that has emerged out of this is just the importance of leadership communication, not as something to do, but as a just a vital tool. We are still in crisis leadership at the moment and then a leadership style where workers have had to deal with not just 24 by seven working, but they’ve had to deal with putting in more capacity, She spoke to one firm where their capacity had gone from X to 10 X, whereas another firm, their capacity went from X to zero. She said that people have had to deal with these very different situations, but at some stage, as we release lockdown, we have to come out of this crisis mode. She believes that that’s where the real new leadership style will be needed, she hopes that some of the skills and behaviours we’ve seen on platforms like Zoom, which has been more inclusive, giving more people chance to speak, will prevail. She also added that we’ve perhaps started to learn to operate in probably a bit more of a non-hierarchical way, and that will be something really important. As we think about automating processes and doing processes differently, there is a big job for leadership as we come out of lockdown to have people think differently about businesses and maybe help them to think about what they’ve got permission to do, which may well be different than when we went in. Helping to change authorities, also to close down some pet projects and to rethink about priorities. That will be hard and some might say, well, leadership was always thus. But Christine thinks, what’s important now is we’ve been to the edge and we’ve seen what catastrophe could look like, and now maybe as we come back and start thinking forward, having more purpose and a more engaging way of communicating purpose is just going to get us to a different place.
Alan added that what’s going to be critical right now as well is, which data do you rely on as you’re moving forward? What do you use as input for that next period? Because there’s an obvious question which is, which of the things that have gone before still matter today? And there’s extremes; people say, well, yeah, we’ve had a bit of a crisis, but nothing’s really changed and what you relied on before and did before, you will do again. There’s others which say, no, no, for me, everything has changed my environment, who I work with, who the suppliers are, how people value me, who my workforce is, where they are, and therefore I can’t operate in the same way and the data I used in order to decide what my strategy is, is no longer relevant. And of course, there’s everything in between. He believes that that’s going to be another major dilemma for leadership; where do I get that data? Who do I rely on? What do I build on? How do I create the flexibility I need to learn from what I’m doing?
Alan said that there are a couple of different things that we are facing with the human dilemma. The first one he wanted to highlight is, we’ve always had that challenge as humans, the technology dehumanizes. It’s not something that supports what we do, creativity, builds our confidence and helps us to work as individuals and as teams, it’s actually something that has the effect of replacing us, of alienating us, of removing us and, if we’re not careful, of homogenising what goes on. And we’ve always had that challenge. He thinks with digital technologies such as AI machine learning, people have feared that more with the fear of job losses and everything else, but what we’re seeing right now is an interesting blend because of what’s happened over the last few weeks. People are beginning to see that these technologies are necessary. In fact, we couldn’t operate without them. It’s helped us in ways that we hadn’t expected, so people are starting to look at that a little differently. On the individual level, what it’s also done is meant that people are starting to perhaps not switch off. Perhaps they’ve been connected in the kitchens as much as when they’re at work during the day. They’ve been unable to separate different parts of their lives. The stress and mental health issues at all levels, both in the workforce and at the student level, has never been at the levels we’ve seen it right now. Many people are connecting that with the increase of technology. So, we’ve got a real challenge that we face.
Timo added that we’re talking about increased stress from technology, but at the same time can you imagine how much more awful lockdown would have been without technology. No Skype calls with the grandparents, no Netflix, no online shopping. He said he has seen an explosion of creativity from his daughter’s digital art all through to the Tiktok videos he’s been watching, which he said he recommend if you haven’t checked it out. It’s a very positive feel good place to go and visit right now. More technology is clearly never going to be a panacea, but Timo believes that it’s better than the alternatives.
Christine agreed with Timo, and believes that we have to think about automation, for good. She added that Alan raised some good points, now people have got more things to do, more things to think about all the time. So, we have to use technology to stop some things, to make some things exception and we have to start to reskill workforces; strategy skills, analytical skills, predictive analytics, and change the idea that you come to work to work on a process. A lot of the young people are coming into the workplace and they want to know, how do I help this business grow? How do I do different things? And that is going to take a different set of thinking, but we have got this campaign of automation for good and we need to really think about how it’s not just going to change businesses but make them more successful.
Sean agreed that there have been positives around situation that technology has brought, but there’s also dangers. He said that the human element that we rely on, that human interaction, by putting a digital screen in there has increased people’s stress levels because they can’t switch or change these personas. The only interaction with family, friends, leisure time and work are on the same screen. He believes that it would have been a lot harder, especially in the UK, if we’d had worse weather. People have been able to get out, enjoy the outdoors more. It’s quite interesting. Some of the activities, some of the challenges that the government had during the lockdown is the isolation, the social distancing outside. Technology is great and we felt the benefits of that through those streaming services, but we can’t ignore that human element, that need for us to have that human interaction.
Alan added that a big thing we’re going to face is what people are going to do now. Referring to the ‘new normal’, he said that we don’t know really how we’re going to evolve over the coming weeks as lockdown eases up. Will people start to interact more on a human level? Will people rebel against the technology in place? Or will they say, “man, it’s amazing what we could do with our technology”? He said that he isn’t sure we need to be together as much or when we are together, we use that in a much more productive way. It’s possible we’ll get into a really creative phase right now, that’s a different blend of technology, automation and human creativity.
Looking to the future
Sean said that we can look at it as an opportunity, to look at this time, perhaps think, rethink your business models, to re-evaluate your use of technology. We’ve seen great leaps when technology becomes consumerised and we’ve seen a lot more with the collaboration also. We’re not forgetting the human element, organisations and companies are made up of people. Essentially, it’s the people that are most valuable and really embrace those things and look for new positive new future.
Christine said that we should plan for six months to 18 months maybe, introduce processes that really allow you to critically evaluate some of the processes you’re already running and really think about the things previously discussed on the podcast, every 30, 60 days, really evaluating the efficacy of some of the things that you’re doing. She also echoed what Sean said, to look for opportunities to openly collaborate with customers and their suppliers and focus on real opportunities to commoditise. She added that maybe when you’re asking a supplier to supply you with something, you don’t have to have extra special things for your company, maybe the commodity version is good enough, and really think through, where can you commoditise and where do you need to differentiate. The third thing is, consider what they call ‘blue ocean approaches’ to strategy. She gave the example of Barbour and how they were creating high fashion, next, they were making gowns for the NHS. They pivoted and they looked to intersections, So, the machine’s capability was cloth, so why couldn’t they make gowns for the NHS. She said to really think through how you’re planning and rather than just planning on consumption by your customers, think through how you can plan based on consumption and usability, and that might help you to see products that are not moving and also help to inform how you might pivot or adopt, what they call a blue ocean strategy.
Timo said that there’s really only one thing that we can be certain about in the future, and that is that it’s going to be different from whatever we expect today. This means that organisations, need to make change and innovation truly a core competency, that’s all about people. It’s about fully leveraging the power of human intelligence. Too often today, people are treated like passive users of technology. But nothing could be further from the truth. Every time somebody touches and interprets data, they’re adding value. Human beings are without a doubt the most intelligent technology in your organisation. He believes that over the next few years we’ll see strides in leveraging that technology to get more value first by using artificial intelligence to augment human intelligence to free people up from more mundane tasks so they can spend time on more strategic and important work. Ultimately, only people can understand the full context of a business process, what’s going wrong and what can be improved. The most important thing in business is knowing what’s important and thankfully, that’s something that people will always be able to do better than machine.
Alan reiterated that people are going through very, very difficult times right now. He doesn’t know any organisations that aren’t, there are a few that are having a good crisis, but the vast majority are struggling mightily. He said that we need to help people in these difficult times, we need to help to support people who are furloughed, people who will be or who have lost their jobs, we need to be helping managers who are struggling, trying to help their people through these difficult times and leaders who have very difficult choices ahead of them. Alan believes that all of that will have an impact that we will have to deal with, an emotional impact, mental health impact and a skills impact. It’s all of our responsibilities to try to be supportive and empathetic to those kinds of challenges as individuals, as people who work in businesses and as a society. There’s going to be a lot of need for support, tolerance and an emotional resilience that will be incredibly important coming out of this crisis.
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