Tony Saldanha: Forward Focused Episode 12

By October 2, 2019 October 7th, 2019 Pypestream Digital Labs

Evan Kohn

Welcome back listeners to Forward Focused brought to you by Pypestream Digital Labs, a thought series on customer experience, artificial intelligence, and enterprise automation. I’m Evan Kohn from Pypestream and I’m talking with Tony Saldanha. Tony is the president of Transformant and is an expert and thought leader in Global Business Services (GBS) and information technology. He ran Procter and Gamble’s famed, multi-billion dollar GBS and IT operations in every region across the world during a 27 year career there. Tony’s also been named on Computer World’s Premier 100 IT Professionals List.

Tony, great to have you with us!

Tony Saldanha

Thank you, Evan. Always a pleasure to speak with you.

Evan Kohn

Now, Tony, congrats on your new book out this month, it’s called Why Digital Transformations Fail: The Surprising Disciplines of How to Take Off and Stay Ahead, in fact, it’s number one on Amazon’s hot new releases list, very exciting Tony. And this is a topic we’ve discussed with a number of guests on this show, exploring both the social and technical complexities of enterprise scale transformations. So Tony, the title of the book, Why Digital Transformations Fail, is a huge question for any executive these days. What were some of the themes you wanted to emphasize as you wrote this?

Tony Saldanha

Yeah, so the subtitle, which is The Surprising Disciplines, actually has the answer. Here’s what I found over a career that spanned, you know, three decades and, you know, in every part of the world. Any kind of digital transformation, so, a complete change in the model, usually suffers and fails not because of technology and not because of innovation. It fails because it doesn’t follow the right disciplines, the discipline of being extremely clear about, you know, what are the goals, and what are the objectives, and what are you trying to do, and the disciplines of actually following the right methodology. More specifically, there is so much hype and there’s so much misunderstanding on what are the goals of digital transformation, everything from a new piece of technology to, you know, your latest blockchain models. And the reality is that the only appropriate goal of digital transformation should be to get ready and to actually win in the Fourth Industrial Revolution. And that’s obviously a huge change, that’s not just a change in technology, but organization and business models and sustainability as well. And then the processes that are necessary to actually execute that aren’t the typical IT project management disciplines, they are closer to HR management discipline than they are to technology project management. And the book gets into more details and checklists of how to actually accomplish that.

Evan Kohn

In chapter five, you talk about disruption empowerment and highlight the story of the US considering moving to the metric system and how that failed. Now you wrote quote, “Most digital transformation efforts end up looking remarkably similar to the US metrics project” end quote. So Tony, how is that?

Tony Saldanha

Yeah. So, you know, a little bit of context on that particular story, the US along with two other countries in the world, Myanmar and Liberia are the only countries that actually don’t have the metric system, and to be fair to the US actually, I mean, we do use the metric system in parts of what we do but it’s not everything, right. So this has always been a question in my mind on why not? And what I discovered was that, you know, right from the days of Benjamin Franklin, there’s been a push in the US government and certain agencies to try and get to the metric system, right. And the closest that we came was in the 1970’s where Congress actually authorized a group to drive that conversion and, you know, as you mentioned that effort failed partly because Congress while it was happy to let this party do whatever it wanted to do, wasn’t really invested because they really didn’t understand what this was all about, and why this was important, right. And when I say that, this is not too different from what happens in digital transformations in many companies, unfortunately that’s true. You know, board of directors and CEOs have all heard about the Fourth Industrial Revolution and the importance of technology and they go ahead and get their groups together and say, “Hey, you know, we have to go digital”. But the depth of understanding of what that is, what digital transformation is, is not too dissimilar from Congress saying, “Yeah, I know you got to do some metric stuff, but we’re not quite sure what we want you to do but just get it done” right. And I know that sound facetious but, you know, in reality that’s uncomfortably close to the truth in what happens in most companies in the world and that is a big problem.

Evan Kohn

Well, that’s a fascinating story. You also talk about this notion of air cover, that is, air cover from leadership for employees to take risks. What are some cultural elements that leaders can encourage in order to provide air cover?

Tony Saldanha

Air cover has got to show up in several forms, both in terms of, you know, setting up the right reward structures for your risk takers, all the way through actual physical demonstration of covering for the disrupters. You know, I’ll give you an example of what that looks like: in most IT organizations, and I specifically mean IT, you know, project management is all about how you make your project successful and the whole idea that there are certain types of projects, highly disruptive projects, which is really where digital transformation resides, where, you know, you might actually go through 3 or 4 or 5 ideas and have, you know, two-thirds of those be failures but then kind of hit on the one big home run is completely foreign in most cultures. Now can you think in terms of IT professionals being able to say “Oh! I started that project and I killed it”. I mean, that’s a recipe for being given the pink slip in many organizations. So, it’s actually fascinating that even the entire performance management system have got to undergo change and many companies are walking away from the traditional annual performance review. Google is a good example of where, what they have discovered is that instead of the annual process, they do quarterly, and then, you know, instead of having people set up their goals and then ensure that they hit them, they actually allow people to setup extremely stretching goals and they have figured out that their best performers that really stretching goals and only achieve about 70% of those, right. So, that’s very different culture than what happens in, you know, Corporate America or corporate anywhere in the world. And so what you need leadership to do is for a certain type of a highly disruptive idea, allow that kind of risk taking to set up different reward systems. So while I ran the Next Generation Services group at Procter & Gamble, I basically got amnesty from the Chief HR officer of the company to say, you know, “for this group we’re actually going to do performance review separately, it’s going to be more like what Google does and less likely in what Corporate America does”. And then you know, we allowed much more risk taking and therefore much bigger wins coming out of that.

Evan Kohn

And in your own experience at Procter and Gamble, you oversaw many digital initiatives, another detail in the book that stood out to me was, when you wrote about how P&G stood up that NGS, that Next Generation Services group a transformation leading organization, and did so at the company’s headquarters in Cincinnati instead of in Silicon Valley you called it a brilliant move because quote “digital transformation is less about technical capabilities and more about systemically changing people’s thinking”. What do you think executives can learn from that experience?

Tony Saldanha

I think one of the biggest mistakes that companies or leaders make around digital transformation is focusing too much on the first part of that term digital and not enough on the second part which is transformation. Here’s an example of what might happen: boards and CEOs are all aware that, you know, their business models have to change. They do a good job of essentially reading up and chasing these stories all the way to Silicon Valley, where, you know, you might have leaders visit and see what’s happening at start-ups and, you know, visit the tech companies and, you know, so on and so forth. And coming out of that is a well intentioned effort to set up a disruptive innovation group and usually the tendency is to kind of base that in Silicon Valley, right. The only problem with that approach is, you’re then making a statement to the rest of your organization that, “you guys don’t have to worry about all that disruptive stuff, right, you know, we have a separate group that’s playing in that area”, and that really sets up a conflict, a dynamic of conflict, where the people that run their day to day business, you know, kind of get disconnected from the fact that their business has got to change. So, at P&G, what we did was, we decided to go the other way. So, what we said was, “Hey, you know, instead of staffing up this disruptive group with innovators, we’re going to staff them up, staff it up with people that are very credible leaders at their operations roles”. Because what you want to happen is that, you know, when the rest of the organization says, “Hey, I trust Jim there, you know, he runs operations, he’s very good at it”. And if Jim steps up and says, “Hey, I can find a way, I have found a way to disrupt is to do this 10 times better.” You want the organization to follow, right. So, all the way from staffing the disruptive organization with, you know, credible people and then using very clear disciplines and methodologies to actually train them how to disrupt. So that’s step one.
Step two is then, and therefore don’t base that organization, you know, out of sight, out of mind, base it at the headquarters, or base it at the place where the operations are run, because you want to infect the rest of the company on how to do things in a very disruptive manner.

Evan Kohn

And beyond P&G, curious what other companies have inspired you Tony? You wrote about Netflix disrupting its own business model multiple times. Any other companies that stand out to you as a solid benchmark for having a leading aptitude for digital transformation?

Tony Saldanha

Oh! There’s tons of them. I think the, I mean, the tech companies are the easy ones and I include Netflix in the tech bucket as well, because they all started with a digital platform as the foundation and then built their business model around them. But, you know, if I may go, kind of, outside of the typical, you know, tech world, I’m a big fan of the Virgin Group, I also talk about them in the book, I think they are a great example of agility and about leveraging technology and, you know, entrepreneurship across the entire group to drive very different business models. Another example that I like to talk about a lot is the fashion retailer Zara. They are able to go from designing a new piece of fashion, to actually having that fashion available to be sold in the retail stores in two weeks, right. And obviously that means, you know, a lot of work is done through digital processes on digital platforms. There are tones of these. Many of them are obviously, you know, relatively new start-ups. But there’s also very very big established companies that, you know, constantly reinvent themselves using technology.

Evan Kohn

In many of the companies you just mentioned are known for leveraging different design thinking methodologies. I think our listeners would be interested in hearing your thoughts on the evolution of design thinking especially, what you might say to an executive who doesn’t yet consider design thinking as part of that critical path to a successful transformation.

Tony Saldanha

Yeah! Now that’s a very good question, Evan. Design thinking has a very critical role to play in disruptive innovations. You know, I’d like to distinguish between three different types of work. One is day to day operations and 70% of most organization capacity should be there, 20% should be continuous improvement, right, where you kind of get the 5 or 10% improvement. But then, you know, I recommend that most people carve out some capacity to do the third bucket which is, you know, disrupt yourselves, right, which is really where design thinking is most useful. So, you know, I’ll give you some examples, right. So, I mean, let’s take the very mundane process that exists in about every organization, let’s take travel and expenses, right. So the typical approach to improving travel and expenses would be to process map it and say, “Hey, you know, you have the employee, they want to go on a trip”. They go, you know, to the official travel agency, they book, you know, tickets there, and then, you know, let’s figure out how we can improve those processes, right. So, improve the interface with the agency, get the data from the agency, back electronically to the company, you know, get the receipts and the expense tool all automated, you know, let’s have the back office, which validates the three way receipt matching between the transaction and the physical documents, let’s figure out how we can improve that. And that’s really where Six Sigma and, you know, process mapping and improvement really comes in. And I think that’s a fair tool for continuous improvement that will give you your next 5 or 10 or 20% improvement, right. Design thinking takes a very different approach, and I think you need to do both in parallel, right. Now let’s take the case of travel and expenses in many start-up companies including by the way, not so small start up companies like Adobe and Google. In many of these companies, if you want to travel, let’s say from London to New York, rather than go to your travel agency, you go into a system and then the system actually spits out a project, it says, you know, “Evan, you have $10,000 for your London trip”, right. And then at that point of time you are free to go book wherever you want, stay wherever you want, with a friend of yours, so on and so forth. If you need to spend the company’s money, use the corporate card and then all of the transactions and then categories are there and, you know, all of the data is there – do some kind of validation in the back end. So you don’t even have to write an expense report, right. And in our study of that, in our test at P&G, we actually found that if you freed up the employees and use data instead of a process, you not only actually improve employee satisfaction but employees under spend by anywhere from 15 to 30% of the total budget, right. Now the point on design thinking here is that, process mapping isn’t going to give you that kind of a solution, right. Design thinking forces you to say, “Hey, what’s the goal” and the goal here is travel, right. It’s not running the back office with a three way expense receipt matching. And that’s the importance of design thinking and completely reimagining what process is.

Evan Kohn

And when it comes to digital transformation, you had said lots of focus on the digital part sometimes not enough on the transformation piece. But the digital part is still fun to talk about. Tony, for digital technologies, which are some of that you’re tracking that you’re most excited about in terms of their impact on both businesses and consumers?

Tony Saldanha

There are several and just to kind of dwell on your question a little bit, I want to clarify that real disruption comes when you actually bring together three things, right: exponential technologies, exponential ways of imagining processes, design thinking is one of them, and then using the broader ecosystem of suppliers and customers and putting it all together. So technology does play a very critical role. To your specific question, I am obviously a big follower of, you know, all of the latest disruptive technologies out there including, of course, AI, and actually, you know, this is one of those areas where, while I was at P&G, I had a lot of experience working with Pypestream, because I found that while there are a lot of chatbot companies, the ability to do that at scale, and the ability to do that at incredible speed and transformative manner, there’s very few companies that I come across that did that. So, this isn’t just about pure AI, it’s about applied AI, the stuff that you can do in weeks not months, right. So, clearly, you know, that’s one area. I’m also a big, big fan of blockchain. There are very specific narrow cases, where blockchain is ready and available and you can do stuff today, right. But in addition to that, I think that there are also lots of other architectural changes that are coming through, that are very interesting. I think, moving away from the typical legacy monolithic architecture into a platform plus microservices architecture is another very interesting field, right. Well, I think companies are more and more starting to become flexible in how they build systems. So, you know, that’s just a quick overview.

Evan Kohn

Tony Saldanha, thank you for joining us today and congrats again on your new book – Why Digital Transformations Fail, listeners can get it on Amazon. Tony, where can our listeners find you?

Tony Saldanha

I’m available at my website which is www.tonysaldanha.com and my company’s called Transformant.io but that’s like the word transform and the insect ant, all one word dot io.

Evan Kohn

Thank you again, Tony. Listeners, thank you for tuning in, you can access more Pypestream Digital Labs content at pypestream.com/insights. We hope you join us for the next Forward Focused podcast.

 

Listen to the last Forward Focused episode where Donna Peeples sat down with Scarlett Sieber.

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