Unlearning & Relearning.

Unlearning & Relearning.

By Deb Geyer | Chief Responsibility Officer, Stanley Black & Decker

The benefits of the Fourth Industrial Revolution (4IR) draw closer. They’re starting to feel real, almost within reach, promising greater value that extends across the business community and touches all levels of society. Which means we’re at the point where we could take them for granted and miss out entirely. Fully realizing the potential of 4IR will require a more inventive, inclusive approach to talent development, and some serious unlearning of outmoded ways, paired with learning contemporary methods. Today, even as 10 million global manufacturing jobs remain unfilled due to gaps in skills and education – gaps that will only widen as Industry 4.0 technologies advance – the 4IR future requires all of us to unlearn and relearn in order to create new paths forward.

As you think about the changes your organization will need to make to compete and grow in this shifting environment, here are a few insights based on our own journey.

Make unlearning and relearning part of your talent roadmap

Any upskilling roadmap today must build human capital through personalized learning and continual development. Learning needs to be ubiquitous, part of the job. In our case, the learning mix includes advanced vocational training, STEAM education, a certification programme specifically designed for our workforce, and new maker spaces – hands-on innovation environments that offer a wide range of equipment for training, upskilling and hackathons.

But we have found the paired “unlearning and relearning” opportunities we are creating are in some aspects more powerful, and are accelerating overall growth in unexpected ways. For example, at our Lighthouse Facility in Jackson, Tennessee, we are pairing people who are early in their career with experienced employees to accelerate mutual unlearning and relearning in areas such as human-machine interfaces, connecting digital and engineering disciplines across generations. It’s a collaborative model worthy of replication in the 4IR future.

The multiplier effect from such an intensified focus on development is clear. A shop-floor operator named Lana, who works in a different area of the Jackson facility, stands out in this regard. Lana not only embraced her training, she also began training the other operators in her area. She also took it upon herself to optimize the way all of the machines were set up.

Imagine collaborative co-mentoring models and employees like Lana emerging at scale, and you begin to see how an unlearning-inspired talent roadmap could empower 10 million makers and creators to thrive in the 2030 economy.

Align development efforts with next-generation curricula

As the pace of change accelerates, organizations will increasingly need to invest more learning and development resources not only in their own workforces but in the broader labour markets and surrounding communities – and do so for the long term. Partnerships with public and private organizations offer compelling solutions that both strengthen today’s workforce and reshape curricula for the next generation of students.

For example, Pathways in Technology Early College High School (P-TECH), a partnership model designed by IBM in 2011, provides local high school students with an opportunity to gain hands-on experience in a vocational field. Students graduate with both a high school degree, a no-cost, industry-recognized associate degree, and relevant experience they can immediately apply in a high-paying “new-collar” job.

By investing both in the current workforce and in tomorrow’s, organizations can ensure that we are strengthening the talent pipeline and our communities for the long run.

The coming decade will be a pivotal time for organizations to establish successful 4IR trajectories. This requires a willingness to unlearn, learn and relearn the concept of accountability.

The way we think about our own 4IR prospects is best expressed by our new 2030 corporate social responsibility (CSR) strategy, which specifically aligns with the UN Sustainable Development Goals and represents the most material issues for our organization.

Pursuing that strategy on a global enterprise scale has required us to develop a rigorous governance structure and process, and keep improving it. For the past two years, our CSR strategy has been supported by multiple levels of oversight across the company, all the way up to the executive steering committee, which includes the CEO, CFO and senior vice-president of HR; it is also championed by the corporate governance committee of the board of directors.

Now we’ve taken another step, adding an external advisory panel consisting of expert stakeholders who advise on CSR strategy. The enhanced governance structure provides board-level rigour and best-practice guidance to ensure that the company continues to meet its stated goals not only in terms of product and environment, but also from the standpoint of talent and governance. While we are in the early stages of rolling out this new structure, we believe that organizations will need to continue to raise the governance bar and take a more comprehensive approach to ensure accountability.

On the path to 2030

I sometimes think about this process of unlearning, learning and relearning as a kind of cook book – a living repository of successful recipes to transform business models in collaborative ways.

The ambitious goals of 2030, combined with the unmet societal needs we encounter every day, favour such an approach. You cannot progress and succeed in the 4IR without advancing the people who brought you there. The next decade, and the many innovations it holds, will come at us fast. We must be bold and seize this moment, both with a willingness to invest in talent and in our communities in completely novel ways, and with a recognition that greater governance is not a check on progress but a catalyst for positive change.

Yoga as a Remedy for Our Stressed, Sedentary Digital Age

Yoga as a Remedy for Our Stressed, Sedentary Digital Age

Most of us spend the majority of our days on our phones, computers, tablets, and in front of our TVs. We also spend the majority of our days sitting or reclining, whether in our cars, at our desks, or on our couches. Just as humans are not meant to be wired all the time, we are not meant to be sedentary for most of our days. It’s not a coincidence that we are restless, stressed, anxious, and suffer constant back and pains.

Yoga can alleviate the stress, anxiety, and aches and pains that come with the digital age, says Peter Mico, a yoga leader and studio owner in Idaho. One of his specialties is training and teaching students with chronic pain. He is also the operator of Blue Earth Yoga, an institute for yoga, health, and longevity which holds retreats around the world that include Blue Zones principles and education. Some of these retreats are also held in blue zones regions. We recently talked with Peter about yoga, the Blue Zones lifestyle, and the yoga moves you can do anywhere, even at work.

How do you see yoga and Blue Zones research intersecting?

PETER MICO: Yoga is more than just a good workout. Just like some of the daily schedules and habits of the elder inhabitants in blue zones, yoga combines movement and stress relief. It’s about being mindful, being in the body, and being in the moment. In my experiences in the blue zones, the older generation is wonderfully grounded and present. So the practice of yoga helps brings us to a place that these cultures have achieved through their way of life, and one that is very different from our own modern lifestyles of constant distraction and stress.

In our society, it’s common for older people to fall and break a hip. Not so often in the blue zones regions. As Dan Buettner has showed us, centenarians in the world’s blue zones are gardening, weeding, and doing yard work well into their 90’s and 100’s. They haven’t spent their lives sitting in cars and desks, they’re regularly getting up and down from the ground. In this way, it’s as if they are practicing yoga all day and every day, promoting good muscle tone and strong bones with full-body movement.

Also, even though yoga is not a religion, it can be a spiritual practice. Even the practice of learning to breathe slowly and deeply from your diaphragm as you do in yoga is like meditation, besides being invigorating and helping to relieve stress. Blue Zones centenarians had spiritual lives even though they came from different religions, and reaped the benefits of regular prayer, meditation, and spiritual rituals.

Besides stress relief and learning to breathe properly, what are some of the other benefits of yoga?

PM: Driving in cars, sitting in the lounge chair watching TV, or hunched over a computer all day creates multiple problems for the spine. That’s a big reason why probably 80% of Americans suffer from lower back pain. Yoga can be very helpful to people with lower back problems, and as a preventive measure so you don’t develop back problems. Its emphasis on posture and alignment, particularly in the sacral complex, is the perfect remedy for these ailments of pain and discomfort. People come to us with major maladies of herniated disks, scoliosis and chronic muscular pain, and find relief after a steady practice of yoga.

The same is true of ‘mouse arm’ and the effects on the cervical spine, which is a big deal.  Allowing the head to hang forward toward the screen, then tilting to look up, then extending the mouse arm forward, and then holding the pose for hours is a recipe for disaster for the cervical spine, especially the C4, C5, and C6 vertebrae. Yoga is a powerful practice for promoting healthy neck care.

 

Office, Desk, or Cubicle Yoga: 4 Essential Moves to Reverse “Computer Crouch” and “Mouse Arm”

For a typical office job of answering telephones and working at a computer, there are a couple of poses that you should do often.

Every 15 Minutes, Sitting Moves:

1. Elbow Hold:

Put your arms up over your head and hold your opposite elbows. Then move your held elbows in four directions: forward and backwards, from side to side, and in small back and forward bends. Do this for 20-30 seconds every 15 minutes.

 

 

 

2. Arm Twists:

Put your arms straight out to the sides with your thumbs up. Rotate our arms forward and then backwards so your thumbs are moving in a circular motion. Do this 10 times. Then repeat with your arms rotating in opposite directions from each other. Do this 10 times as well.

 

30 Minutes, Standing Moves:

1. Baby Backbends: Stand up and clasp your hands behind your back. Arch backwards gently as you open your chest and roll your shoulders back and behind you. Then turn your head side to side, 5 times. Then bend your ear towards your shoulder, 5 times on each side.

 

2.Arm Circles: Put your right hand on your right shoulder. Extend your left arm straight out to the side and bend your wrists so your fingers point towards the floor. Move your left arm around in a circle about 5 times each way. Then repeat this on your right side.

 

What are some yoga myths that you want to debunk for our readers?

 

PM: One is that yoga is just for women. Many women have flexibility and come to yoga for strength. Often men come to the studio with some strength, but are seeking or needing flexibility. People seem to think they shouldn’t come to class unless they are flexible. But class is where you get flexible. It would be like saying you won’t go to the gym because you don’t have muscles.

Another myth is that yoga means contortionism. I don’t believe in celebrating just the big crazy poses or the yoga competitiveness of this body-centric society we live in. I once overheard Richard Freeman (a master yogi) tell another teacher that the most beautiful pose he ever saw was an 80-year-old man doing a backbend. No airs, just a simple backbend with mindfulness. Beautiful.

 

 

 

 

 

 

 

Diversity of Thought

Diversity of Thought

Preparing your organization for Digital Transformation

During the last 20 years, companies around the world had started the conversation about diversity. In the 90s, it was about gender and race, mostly. In more recent years, the buzz added inclusion, as we started to talk about diversity and inclusion (D&I) and extended its realm to host sexual orientation and preferences.

That was until Millennials took charge of the work environment. For them, D&I is a given, not a policy. They expect diversity, are used to it and reclaim it as a societal norm. And for them -and progressively for all of us in the worldwide workforce- D&I goes well beyond race, gender, age, origin and sexual orientation: diversity is diversity of thought.

For any company embarked in a digital transformation journey, embracing diversity of thought as a core cultural trait is of the utmost importance: innovation requires a good chunk of divergence of viewpoints to avoid group-thinking and tap into unchartered ideas and paradigms. Variety of thought, ideas, perspectives and points of view is supported by a multigenerational workforce, that welcomes all generations (from baby-boomers to Gen Z, and the occasional silent generation representative), as well as different upbringings and journeys of life, to unlock the power of crowdsourcing.

The wisdom of the crowd, as the ultimate catalyst to try the unknown, embrace failure and its consequent learning, push limits and cross-over from one field of experience to the another, constitutes the bedrock to design and deliver a remarkable and memorable client experience with your brand.

Companies shall include a roadmap to attract and retain a diverse workforce as part of their People Strategy. This will, in turn, require leaders capable to deal with the potential friction of the different, and provide a way out for teams to unlock the power of the divergent and new.

This organizational capability is key to ensure business continuity and sustainability, as companies successful ride the wave of digital transformation.

by Helena Herrero (2018)

A winning operating model for digital strategy

A winning operating model for digital strategy

Digital is driving major changes in how companies set and execute strategy. New survey results point to four elements that top performers include in their digital-strategy operating model.

For many companies, the process of building and executing strategy in the digital age seems to generate more questions than answers.

Despite digital’s dramatic effects on global business—the disruptions that have upended industries and the radically increasing speed at which business is done—the latest McKinsey Global Survey on the topic suggests that companies are making little progress in their efforts to digitalize the business model.

1.The online survey was in the field from May 15 to May 25, 2018, and garnered responses from 1,542 C-level executives and senior managers representing the full range of regions, industries, company sizes, and functional specialties. Respondents who participated in this year’s and last year’s surveys report a roughly equal degree of digitalization as they did one year ago.

2. As measured by the shares of the organization’s sales from products, services, or both sold through digital channels; of core products, services, or both that are digital in nature (for instance, virtualized or digitally enhanced); and of core operations that are automated, digitized, or both, as well as the volume in the organization’s supply chain that is digitized or moves through digital interactions with suppliers.

The previous survey was in the field from June 20 to July 10, 2017, and garnered responses from 1,619 C-level executives and senior managers representing the full range of regions, industries, company sizes, and functional specialties. Of those who completed the survey in 2017, 345 also completed the 2018 survey.  suggesting that companies are getting stuck in their efforts to digitally transform their business.

The need for an agile digital strategy is clear, yet it eludes many—and there are plenty of pitfalls that we know result in failure. We have looked at how some companies are reinventing themselves in response to digital, not only to avoid failure but also to thrive. In this survey, we explored which specific practices organizations must have in place to shape a winning strategy for digital—in essence, what the operating model looks like for a successful digital strategy of reinvention. Based on the responses, there are four areas of marked difference in how companies with the best economic performance approach digital strategy.

3.We define a top economic performer as one that has, according to respondents, a top-decile rate of organic revenue growth (that is, of 25 percent or more in the past three years), relative to other respondents.

We also looked at respondents in the top decile for growth in earnings before interest and taxes (EBIT) and have made note of any practices for which the top-decile revenue and top-decile EBIT results correspond or differ. compared with all others:

Findings

  • The best performers have increased the agility of their digital-strategy practices, which enables first-mover opportunities.
  • They have taken advantage of digital platforms to access broader ecosystems and to innovate new digital products and business models.
  • They have used M&A to build new digital capabilities and digital businesses.
  • They have invested ahead of their peers in digital talent.

Increase the agility of creating, executing, and adjusting strategy

One of the biggest factors that differentiate the top economic performers from others is how quick and adaptable they are in setting, executing, and adjusting their digital strategies—in other words, the velocity and adaptability of their operating models for digital strategy. Both are necessary for companies to achieve first-mover (or very-fast-follower) status, which we know to be a source of significant economic advantage.

So how do they do it? We looked at the frequency with which companies follow 11 operational practices of digital strategy. With the exception of M&A—which typically requires a much longer time frame than the other ten, often due to regulatory reasons—respondents in the top revenue decile say their companies carry out each one more frequently than their peers (Exhibit 1). The link between frequency and performance also holds up when looking at earnings before interest and taxes (EBIT).

5.In our analysis, we looked at the relationship between frequency and economic performance in multiple ways. The results indicate that when these digital strategy practices are carried out more frequently, revenue and earnings before interest and taxes (EBIT) are greater. The inverse also is true: when companies carry out these practices more slowly, their revenue and EBIT performance is worse. 5.In our analysis, we looked at the relationship between frequency and economic performance in multiple ways. The results indicate that when these digital strategy practices are carried out more frequently, revenue and earnings before interest and taxes (EBIT) are greater. The inverse also is true: when companies carry out these practices more slowly, their revenue and EBIT performance is worse.Exhibit 1

That speed in strategy links with financial outperformance is not surprising and is consistent with our other work on strategy planning.

As the pace of digital-related changes continues to accelerate, companies are required to make larger bets and to reallocate capital and people more quickly. These tactical changes to the creation, execution, and continuous modification of digital strategy enables companies to apply a “fail fast” mentality and become better at both spotting emerging opportunities and cutting their losses in obsolescent ones, which enables greater profitability and higher revenue growth.

Invest in ecosystems, digital products, and operating models

The companies that outperform on revenue and EBIT also differ from the rest in their embrace of the economic changes that digital technologies have wrought. Based on the results, they have done so in three specific ways: taking advantage of new digital ecosystems, focusing product-development efforts on brand-new digital offerings, and innovating the business model.

We know that digital platforms have enabled the creation of new marketplaces, the sharing of data, and the benefits of network effects at a scale that was impossible just a few years ago. As these factors have converged, the digital ecosystems created by these platforms are blurring industry boundaries and changing the ways that companies evaluate the economics of their business models, their customers’ needs, and who their competitors—and partners—are.

The top EBIT performers are taking better advantage of these ecosystem-based dynamics than other companies—namely, by using digital platforms much more often to access new partners and customers. Respondents at these companies are 39 percent more likely than others are to say they do so. And while the share of global sales that move through these ecosystems is still less than 10 percent, other McKinsey research predicts that this share will grow to nearly 30 percent by 2025, making platforms an ever more critical element of digital strategy.

The needs of customers become broader and more integrated in an ecosystem-based world, and the companies that are already active in their respective ecosystems are better positioned to understand these needs and meet them (either on their own or with partners) before their peers do. It makes sense, then, that the top performers seem to be developing much more innovative offerings than their peers.

On average, companies’ digital innovations most often involve adjustments to existing products. Yet respondents at the top-performing companies say they focus on creating brand-new digital offerings (Exhibit 2). What’s more, these respondents are about 60 percent more likely than others are to agree that they are more advanced than peers in adopting digital technologies to help them do so.

This result is consistent with our previous findings that first movers and early adopters of digital technologies and innovations also outperform their peers.

Last, innovation of the business model is more common at the top-performing companies. In our past survey, only 8 percent of respondents said their companies’ current business models would remain economically viable without making any further digital-based changes. In the newest survey, we see that the companies that have embraced digital are well ahead of their peers in their preparation for digital’s new economic realities.

At the top performers, respondents say they have invested more of their digital capital in new digital businesses, compared with all other respondents.

Our research also shows that companies overall invested a greater share in new digital businesses as the overall digital maturity of their sectors increased. The more successful companies appear to be the ones that made these moves earlier than their peers, rather than being forced into making such investments late in the game.

At the top performers, respondents say they have invested more of their digital capital in new digital businesses, compared with all other respondents (Exhibit 3). Our research also shows that companies overall invested a greater share in new digital businesses as the overall digital maturity of their sectors increased.

The more successful companies appear to be the ones that made these moves earlier than their peers, rather than being forced into making such investments late in the game.

Use M&A to build digital capabilities and businesses

According to the results, M&A is another differentiator between the top-performing companies and everyone else. Not only are they spending more than others on M&A, but they are also investing in different types of M&A activities.

At the winners, respondents report spending more than twice as much on M&A, as a share of annual revenue, as their counterparts elsewhere.7 7.Includes only respondents working at privately owned companies, n = 767. Respondents working at publicly owned companies (n = 318) were asked how much their organizations invested in M&A as a percentage of market capitalization over the past three years. The same is true of respondents reporting top-decile EBIT growth, relative to respondents at other organizations.

Given the pace of digital-related changes and the challenges companies face to match that speed through organic growth alone, this isn’t so surprising. What is surprising, however, is that top economic performers take a different approach to their M&A activities.

While top performers and their peers have used some part of their overall digital investments to acquire new digital businesses in recent years, the top performers are investing more in acquiring both new digital businesses and new capabilities.

By contrast, other respondents say their companies focus most of their M&A spending on nondigital ventures—an area where lower-performing companies seem to be doubling down.Exhibit 5

By contrast, other respondents say their companies focus most of their M&A spending on nondigital ventures—an area where lower-performing companies seem to be doubling down.Exhibit 5

Invest ahead of peers in digital talent

From earlier work, we know that getting the right digital talent is a key enabler for digital success—a point that our latest findings only reinforce. Talent is also a major pain point: qualified digital talent is a scarce commodity, as the pace of digital still outstrips the supply of people who can deliver it.

But the top economic performers are making a greater effort to solve this problem. Compared with others, these respondents say their companies are dedicating much more of their workforce to digital initiatives. It’s not just the degree of investment that distinguishes top performers, though.

They are also much nimbler in their use of digital talent, reallocating these employees across the organization nearly twice as frequently as their peers do. This agility enables more rapid movement of resources to the highest-value digital efforts—or to clearing out a backlog of digital work—and a better alignment between resources and strategies.

Looking ahead

  • Make your strategy process more dynamic. By definition, a digital strategy must adapt to the digital-driven changes happening outside the company, as well as within it. Given the breakneck pace of these changes, such a strategy must keep up with the pace of digital and enable first-mover opportunities by being revisited, iterated upon, and adjusted much more frequently than strategies have been in the past. Companies need their digital strategies to act as a road map for ongoing transformation—a living organism that evolves along with the business landscape. In other work, we laid out the four main fights that companies must win to build truly dynamic digital strategies.
  • Organizations must educate their business leaders on digital and foster an attacker’s perspective, so people are more likely to look at their business, industry, and the role of digital through the eyes of new competitors. They must galvanize senior executives to action by building top-team-effectiveness programs. Organizations also must leverage data-driven insights to test and learn—and correct course—quickly. And they must fight the diffusion of their efforts and resources—a constant challenge, given the simultaneous need to digitalize their core business and innovate with new business models. These steps will put companies in a better position to move first in delivering new products and meeting customers’ and partners’ evolving needs in the new ecosystems that platforms are creating.
  • Invest in talent and capabilities early and aggressively. Talent is already known as one of the hardest issues to solve as companies transform themselves in their pursuit of digitalization. The results confirm that companies need to embrace this reality and then look at how they can solve it best, whether through smarter, more dynamic allocation of these resources or the use of M&A to accelerate the building of new digital capabilities.
  • Digital is driving an ever-faster pace of innovation, and companies can take advantage of the potential benefits only if they have the capabilities to harness it. For the survey’s top performers, one way forward is leveraging M&A to help build their digital capabilities, rather than trying to build them through a slower, organic approach. These companies are also getting the most from their digital capabilities and investments by deploying them in much more agile ways and creating a more flexible, responsive operating model.
  • Redefine how you measure success. The digital era requires that companies move nimbly in order to succeed. Yet many are still measuring performance with the same metrics they used previously—which were designed for a slower pace of business and a rigid strategy-setting process. Companies must move away from old metrics (market share, for example) that are no longer meaningful indicators of economic success.
  • With markets becoming ill-defined due to shifts in industry boundaries and shrinking economic pies within a given sector, market share is no longer a gold-standard metric or even relevant. Companies need to hold themselves to new standards that will indicate whether or not they are truly leading the pack on innovation, productivity, and the adoption of digital technologies. In our experience, outcomes such as being first to market with innovations, leading on productivity, and working with other businesses in the ecosystem (that is, moving from an “us versus them” mind-set on digital to one of partnership) are better indicators of future digital success.

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About the author(s)

The survey content and analysis were developed by Jacques Bughin, a director of the McKinsey Global Institute and senior partner in McKinsey’s Brussels office; Tanguy Catlin, a senior partner in the Boston office; and Laura LaBerge, a senior expert in the Stamford office.They wish to thank Soyoko Um

Avoiding Traps for Digital Implementation | Curated Thoughts for Founders & CEOs

Avoiding Traps for Digital Implementation | Curated Thoughts for Founders & CEOs

Curated Thoughts for Founders & CEOs | By Helena M. Herrero L.

Article by Arun Arora, Peter Dahlström, Pierce Groover, and Florian Wunderlich.

Business leaders are in a high-stakes game. Many have embarked on programs to reinvent their businesses. The rewards for success are enormous, while the consequences of failure are drastic, even lethal.

They could do worse than look to a quote from one of the most successful race-car drivers in history, Mario Andretti: “If everything seems under control, you’re not going fast enough.”

While Andretti’s guidance might seem unnerving at first, it is appropriate for leaders navigating the digital world. No race—or transformation—is risk free, of course, but having the courage to make decisions that push the limits of the organization is a necessity.

A clear understanding of what really matters to the success of a change program and what doesn’t, however, can make all the difference. For this reason, we analyzed dozens of both successful and less successful digital transformations to get at the root causes of where they go wrong. This analysis has yielded ten important traps that businesses frequently fall into during a digital transformation. Often overlooked or misunderstood, these traps boil down to culture, discipline, and mind-set issues. Here is what CEOs can do to overcome them and de-risk their programs so that businesses can capture the full benefits of digital.

Ten traps of a digital transformation

1. Excessive caution

Paradoxical though it may sound, we believe companies need to take more risk, not less. Many senior executives look back on their transformation programs and wish they’d been bolder. In today’s environment, making incremental changes is like rearranging the deck chairs on the Titanic.

Data tell the same story. Recent McKinsey research reveals that the companies that do best follow bold and disruptive strategies.They make big bets on new technologies and business models, champion a test-and-learn culture where every failure is an opportunity to improve, and launch change programs that transform their whole business.

But taking on more risk doesn’t mean being more risky. Making reckless moves, ignoring common sense, and losing sight of where the value is can undo bold initiatives.

2. Fear of the unknown

When information is in short supply, people fall back on experience and gut feeling. Though there’s no such thing as cast-iron certainty in a digital transformation, developing a comprehensive fact base can do much to dispel people’s understandable fears.

The best companies start by identifying where value is created and destroyed, and they don’t confine their analysis to their own sector and competitors. This external analysis should be matched with a deep and comprehensive internal assessment. That starts with a thorough evaluation of a company’s assets—brands, capital, data, customers, products, people—and capability gaps. The best companies then also develop an objective picture of their digital quotient, the elements of their business that add the most value, and the structural disadvantages they face.

Dispelling the unknown extends as well to painting a compelling picture for the entire business of what the future could look like. Experimenting with hackathons and war gaming also helps not only to develop innovative new models but also to make them more tangible, so that leadership can align around them.

This extends to use of the overused term “digital transformation,” which is often not well understood by leadership or employees. Leaders can address this by thoroughly defining and explaining what the digital transformation really means—for example, improving customer experience to become the number-one service in the category or r

3. Lack of focus

Many companies have adopted a “let a hundred flowers bloom” philosophy that encourages broad experimentation. Such an approach generates excitement and learning, but it can also be self-defeating if not carefully managed. Running too many competing initiatives dissipates management focus and starves promising ideas of the resources they need for a successful scale-up.

We have a rule of thumb that a successful scaled-up digital initiative at a company with more than $5 billion in revenues needs funding to the tune of $10 million to $30 million per year, and a major digital transformation across multiple business units at a global company might cost as much $100 million. To avoid spreading their efforts too thin, smart digital leaders prune their portfolios regularly and ruthlessly. Subscale investment is no way to compete against venture-fund-backed companies.

Focusing on the right kind of initiatives is equally important. Too often, businesses pour resources into programs that yield short-term gains but can’t be scaled, aren’t sustainable, and don’t add value. To avoid this wasted energy, any digital transformation should start with understanding customer needs and build out solutions that not only address them but have the potential to generate the most impact.

4. Running out of money

Some digital transformations run into difficulties because costs rocket while savings or revenue growth take longer than expected. Leading companies start by targeting quick wins to unlock value so that the effort funds itself, often within the first three months. In fact, this approach can be so effective that the most successful companies generate more savings or revenues than are needed to fund a transformation.

Banking these savings and revenues can often happen using the tools and data already to hand coupled with a willingness to do things differently. Take the three-person team that carried out a microsegmentation of the customer base at a US telecom company. Their effort improved the efficiency of the company’s targeting by more than 40 percent while halving its digital-marketing spend. Similarly, an online retailer upped conversion rates by 35 percent simply by having one person optimize page-loading times again and again until they shrank from 16 seconds to six.

Often these opportunities can be identified as early as a week into a project. Evaluating the customer decision journey is a good place to start. In consumer sectors like banking and telecoms, the joining and onboarding processes for new customers often offer plenty of opportunities for significant improvement

5. Lack of talent

Most companies embarking on digital transformations underestimate how long it takes to build capabilities. They know they need digital talent, but not what kind or how much. A digital transformation at a large company can require as many as 150 full-time employees in the first year. Hiring a chief digital officer is a good start but is not enough.

Any effective talent search should begin with identifying the problems that need to be solved. This helps clarify the skill sets you need. After a preliminary analysis, for example, one company determined that it needed 11 people with specific skill sets—“leaders” and “doers”—to complete a core project as part of a transformation. It found the right people at a leading tech company and paid a 100 percent premium to hire them. Later in the transformation, the next 50 people came at just a 20 percent premium because they were eager to work with the first hires. In less than nine months, the team generated $1.4 billion in incremental annualized revenues, a massive payoff for what had originally seemed a disproportionate investment.

Creating a start-up-like working environment with informal spaces where people can gather and share ideas can help attract the right talent. Developing a mechanism for integrating these external hires is also crucial. We’ve seen some large companies hire lots of digital talent, put them in a start-up environment, and then more or less forget about them. Left to their own devices, new people will start to work on their stuff, not yours.

6. Lack of discipline

Agility and speed are second nature to a digital organization, but energy can turn to chaos if it isn’t channeled purposefully. Leaders need to be systematic about identifying and capturing business value, which begins with creating transparency into, and useful metrics to track, the progress of digital initiatives.

Many companies focus on output-based KPIs such as EBITDA growth, digital revenues as a percentage of total revenues, or reduction in capex. But such broad metrics don’t isolate the factors that contribute to a given result. It’s more productive to develop a set of simple input metrics tracking elements such as SEO conversion and app traffic, while making it clear who owns each item and is accountable for the result.

Another way to inject discipline is to invest like a venture-capital firm. Hold frequent check-ins with explicit expectations and clear governance; don’t release the next tranche of finance until the project reaches milestones or meets KPIs; and show no mercy in killing off underperforming efforts. The best companies ensure that simple governance, escalation, and response procedures are in place, as well as mechanisms to allow course correction when experiments miss the mark (which many of them inevitably do).

Discipline should not be confused with rigidity. Having a flexible resourcing model to move people and funds, for example, to promising developments and address key issues quickly is necessary.

7. Failure to learn

A surefire way to sink a transformation is to stop learning. Successful companies reward experimentation because learning from mistakes helps a company get it right the next time, which in turn fosters more creativity.

Effective learning, however, doesn’t just happen on its own. Companies need to invest in systems to capture lessons and learn from them. Amazon has invested in systems designed to make learning as transparent as possible, with dashboards showing what tests are running, who is doing them, and how customers are responding. The best-performing and longest-running tests are crowned “King of the Hill.”

Where tech is concerned, some companies are keeping tested and approved code in a software-development repository like GitHub, which enables later developers to learn from others, capitalize on their successes, and put code into new solutions without further testing.

Organizations that embrace learning typically develop inexpensive prototypes, test them with customers, and repeatedly refine them until they reach a minimum viable product (MVP). They seek feedback on new features from small groups of customers through simple surveys or by gauging their responses to specific elements such as the wording or layout of a web page. One business that used to have conversion rates of 22 percent has now hit 29 percent—yielding growth of 5 percent—through this kind of test-and-learn process.

8. Change fatigue

Companies can often summon the resources and energy to pull off a few experiments with new approaches. But sustaining the momentum of a major change effort against the gravitational pull of the legacy organization is a challenge of a different order. No transformation is immune to change fatigue, but certain steps can help stave it off.

Teams can become overwhelmed by the sheer scale and complexity of the change. Effective leaders, therefore, design small projects with frequent milestones so that teams feel a sense of accomplishment. They also focus on keeping things simple, for example by limiting the number of KPIs. One consumer business chose three: amount and source of traffic to digital assets, quality of traffic, and conversion rates.

Business leaders can “grease the skids” of the process by sequencing tasks thoughtfully to build on one another. Some businesses, for example, develop “horizontal” components such as business-process management layers or central administration platforms that can be shared across multiple initiatives to accelerate future projects.

Leaders should also address turnover in their senior ranks. This effect undermines continuity and leads to cynicism among workers on the ground. While senior-level turnover is a fact of life for most businesses, companies have managed to create continuity in their change programs by recruiting a dozen or so influential middle managers as evangelists for change. By elevating their profiles in the business, giving them real responsibilities, such as leading agile teams, and rewarding them generously for their efforts, leaders can build continuity at the level of the business where the work gets done.

9. Going it alone

If the old world was about keeping things proprietary and closed off, the new world is about engaging with an ecosystem of partners and vendors. This approach can help accelerate access to markets, talent, capabilities, and technologies. Agile businesses build digital capacity at speed by using existing resources, such as open-source software, that can be customized to their needs. Working thoughtfully with vendors or partners to access new capabilities can jumpstart activity, and help businesses get smart quickly about how to “do digital.”

In this new world of ecosystems, success relies on having a detailed understanding of the capabilities and advantages you already have and the ones you need. Investing in a strategy around APIs (the links that allow disparate systems to “talk” to each other) is crucial so that businesses develop the means to integrate with many different partners, vendors, and platforms. Leading companies are also building out ecosystem relationship-management capabilities, from negotiating teams who track potential partners to people dedicated to managing partner and developer communities.

10 . Going too slowly

However quickly you think you are going, chances are it isn’t fast enough. Speed is of the essence when it comes to reacting to market changes and capturing revenue opportunities before competitors do.

One way to gain speed is to automate time-consuming processes and tasks. For instance, adopting “test-driven development”—writing automated tests for code before writing the code itself—can greatly accelerate development. One international hotel company consolidated its sales and catering systems by moving to a single version-control repository, integrating code twice a day, and insisting that developers write automated tests for new changes in their code. As a result, the company reduced its time to market with new software by 25 percent.

With speed in mind, a team of developers at another company adopted a collaborative tool to track performance across sales, apps, and service. Every ten minutes the tool spits out new metrics—sales, cash or credit, numbers engaged, size of basket—and the team can see at a glance how the system is performing. An alert channel enables project leaders to identify whether an issue is new or known, big or small, so that they can plan how best to deal with it. The focus is on reacting quickly rather than making sure everything is “perfect.”

The most effective businesses ingrain speed by making agile a way of life. They use short development cycles to address specific needs, try out rough-and-ready fixes repeatedly with customers, and produce “good enough” solutions. In marketing, for example, agile organizations can test multiple new ideas and run hundreds of campaigns simultaneously and get ideas into the field in days rather than weeks or months.


To build real value, business leaders need to take risks. But those who succeed will be the ones who understand how to manage the risks that matter and avoid the traps that can scuttle a transformation—all while pushing their organizations to the limit.

Why Tomorrow’s Customers Won’t Shop at Today’s Retailers

Why Tomorrow’s Customers Won’t Shop at Today’s Retailers

Oct 18, 2017: Weekly Curated Thought-Sharing on Digital Disruption, Applied Neuroscience and Other Interesting Related Matters.

By Dan Clay

Curated by Helena M. Herrero Lamuedra

Meet Dawn. Her T-shirt is connected to the internet, and her tattoo unlocks her car door. She’s never gone shopping, but she gets a package on her doorstep every week. She’s never been lost or late, and she’s never once waited in line. She never goes anywhere without visiting in VR first, and she doesn’t buy anything that wasn’t made just for her.

Dawn is an average 25-year-old in the not-so-distant future. She craves mobility, flexibility, and uniqueness; she spends more on experience than she does on products; she demands speed, transparency, and control; and she has enough choice to avoid any company that doesn’t give her what she wants. We’re in the midst of remarkable change not seen since the Industrial Revolution, and a noticeable gap is growing between what Dawn wants and what traditional retailers provide.

In 2005 Amazon launched free two-day shipping. In 2014 it launched free two-hour shipping. It’s hard to get faster than “Now,” and once immediacy becomes table stakes, competition will move to prediction. By intelligently applying data from our connected devices, smart digital assistants will be able to deliver products before we even acknowledge the need: Imagine a pharmacy that knows you’re about to get sick; an electronics retailer that knows you forgot your charger; an online merchant that knows you’re out of toilet paper; and a subscription service that knows you have a wedding coming up, have a little extra in your bank account, and that you look good in blue. Near-perfect predictions are the future of retail, and it’s up to CX and UX designers to ensure that they are greeted as miraculous time-savers rather than creepy intrusions.

Every product is personalized

While consumers are increasingly wary about how much of their personal data is being tracked, they’re also increasingly willing to trade privacy for more tangible benefits. It then falls on companies to ensure those benefits justify the exchange. In the retail space this increasingly means perfectly tailored products and a more personally relevant experience. Etsy recently acquired an AI startup to make its search experience more relevant and tailored. HelloAva provides customers with personalized skincare product recommendations based on machine learning combined with a few texts and a selfie. Amazon, constantly at the forefront of customer needs, recently acquired a patent for a custom clothing manufacturing system.

Market to the machines

Dawn, our customer of the future, won’t need to customize all of her purchases; for many of her needs, she’ll give her intelligent, IoT-enabled agent (think Alexa with a master’s degree) personalized filters so the agent can buy on her behalf. When Siri is choosing which shoes to rent, the robot almost becomes the customer, and retailers must win over smart AI assistants before they even reach end customers. Netflix already has a team of people working on this new realm of marketing to machines. As CEO Reed Hastings quipped at this year’s Mobile World Congress, “I’m not sure if in 20 to 50 years we are going to be entertaining you, or entertaining AIs.”

Branded, immersive experiences matter more than ever

As online shopping and automation increase, physical retail spaces will have to deliver much more than just a good shopping experience to compel people to visit. This could be through added education (like the expert stylists at Nordstrom’s store without any merchandise) or heightened service personalization (like Asics on-site 3D foot mapping and gait cycle analysis) or constantly evolving entertainment (like Gentle Monster’s Seoul flagship store’s monthly changing “exhibition“).

In this context, brand is becoming more than a value proposition or signifier—it’s the essential ingredient preventing companies from becoming commoditized by an on-demand, automated world where your car picks its own motor oil. Brands have a vital responsibility to create a community for customers to belong to and believe in.

A mobile world that feels like a single channel experience

Dawn will be increasingly mobile, and she’ll expect retailers to move along with her. She may research dresses on her phone and expect the store associate to know what she’s looked at. It’s no secret that mobile shopping is continuing to grow, but retailers need to think less about developing separate strategies for their channels and more about maintaining a continuous flow with the one channel that matters: the customer channel.

WeChat, for example, China’s largest social media channel, is used for everything from online shopping and paying at supermarkets to ordering a taxi and getting flight updates, creating a seamless “single channel” experience across all interactions. Snapchat’s new Context Cards, allowing users to read location-based reviews, business information and hail rides all within the app, builds towards a similar, single channel experience.

The future promises profound change. Yet perhaps the most pressing challenge for retailers is keeping up with customers’ expectations for immediacy, personalization, innovative experiences, and the other myriad ways technological and societal changes are making Dawn the most demanding customer the retail industry has ever seen. The future is daunting, but it’s also full of opportunity, and the retailers that can anticipate the needs of the customer of the future are well-poised for success in the years to come.