Digital Transformation?

Andrew Pattinson

Who I am current role, old role Bit on Tesco Bank

What is a Digital Transformation?

In an economy, people essentially produce goods and services for people.

Esko Kilpi

Companies are just intermediary organisational forms that arrange the development, production and delivery processes

Some context…What are we, i think we need to understand what we are transforming First of all we are organisations so what is an organisation In an economy, people essentially produce goods and services for people. Companies are just intermediary organisational forms that arrange the development, production and delivery processes Esko Kilpi

(Esko Kilpi is founder and principal in Esko Kilpi Oy, a leading research and consultancy firm working with the challenges of knowledge work and digital work environments)

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Digital? What is it? I don’t know but I do know that a lot has happened in a very short period of time. By happened I mean some dramatic and fundamental changes to demographics, businesses models and technology. And that a lot continues to happen at an alarming pace…. Lets just have a look at a few of these ‘things’…

Benedict Evans, Mobile is eating the world, WSJ.D, 28th Oct 2014

Scale and reach. The growth of the internet is explosive and continues at a pace. Another 1BN online by 2020. A lot of this growth is due to smartphone growth - 80% of adults globally will have a Smartphone by 2020. Remember the Smartphone only really came to the marketplace in 2006! Source Benedict Evans, Partner Andresseen Horowitz, presentation to WSJ.D 28th October 2014.

Generation #hashtag: A new wave of content in the age of digital natives | Bain & Company, Inc.

There is a new generation who want or need to use our services.

Note: Percentage of Generation #hashtag is the percentage of the population aged 15 to 25, plus the percentage of migrants (those 26 and older using native media as their primary source of content for at least one media). Source: Bain consumer survey (n=7,098)

1 2 3 10 15147 11 134 5 126 8 9

Speed of change. Any idea what this represents? The X axis is the number of years. This is the number of years it took these products and services to hit 100 M users. eBay: 15 Linkedin: 8 Tumblr: 6 Twitter: 5 iPod: 5.5 Facebook: 4.5 iPhone: 4 iPad: 2.5 Instagram: 2 Google+: 1 Cost of data Price of 1 gigabyte of storage over time: 1981 $300,000 1987 $50,000 1990 $10,000 1994 $1,000 1997 $100 2000 $10 2004 $1 2012 $0.10

Another interesting stat - Last iPhone launch weekend Apple sold 25x transistor CPUs than were in all the computers in the world in 1995.

The competitive landscape is changing… Shifting competition - Facebook has a banking licence 13th April 2014 it was announced in the FT that Facebook are entering financial services with remittences and e-Money. They are seeking a licence in Ireland.

They are already involved. In 2013 they facilitated $2.1Bn of transactions

They move fast. If you look at their latest quarterly results

Revenue from advertising was $2.27 billion - Mobile advertising revenue represented approximately 59% of advertising revenue for the first quarter of 2014, up from approximately 30% of advertising revenue in the first quarter of 2013.

At IPO they didn’t earn that much money from mobile = they now do..

Benedict Evans, Mobile is eating the world, WSJ.D, 28th Oct 2014

The competitive landscape is changing… Shifting competition - Facebook has a banking licence 13th April 2014 it was announced in the FT that Facebook are entering financial services with remittences and e-Money. They are seeking a licence in Ireland.

They are already involved. In 2013 they facilitated $2.1Bn of transactions

They move fast. If you look at their latest quarterly results

Revenue from advertising was $2.27 billion - Mobile advertising revenue represented approximately 59% of advertising revenue for the first quarter of 2014, up from approximately 30% of advertising revenue in the first quarter of 2013.

At IPO they didn’t earn that much money from mobile = they now do..

Rise of Open Source - lots of tools, sharing of tools 53% of all websites run ApacheGoogle, Facebook, Twitter, Netflix ..... run exclusively on OS - when was the last time you tried to use Google and it didn’t workHow many high profile failures have involved OS?

Hierarchies have made way for flatter organisations 1/3 of the workforce are millennials (born after 1983) What do they want? They have different expectations of the workplace. Deloitte 2014 survey of millennials. society.resource scarcity (68 percent), climate change (65 percent) and income equality (64 percent). innovative. 78 percent of Millennials were influenced by how innovative a company was when deciding if they wanted to work there management attitude (63 percent), operational structures and procedures (61 percent), and employee skills, attitudes, and lack of diversity (39 percent).

leaders. one in four Millennials are ‘asking for a chance’ to show their leadership skills. Millennials are ready to go their own way. Roughly 70 percent of Millennials see themselves working independently at some point, They care about society. While most Millennials believe business is having a positive impact on society by generating jobs (48 percent) and increasing prosperity (71 percent), they think business can do much more to address society’s challenges in the areas of most concern: resource scarcity (68 percent), climate change (65 percent) and income equality (64 percent). Millennials want to be innovative. Millennials want to work for organizations that support innovation. In fact, 78 percent of Millennials were influenced by how innovative a company was when deciding if they wanted to work there, but most say their current employer does not do enough to encourage them to think creatively. They believe the biggest barriers to innovation are management attitude (63 percent), operational structures and procedures (61 percent), and employee skills, attitudes, and lack of diversity (39 percent).

Hierarchies have made way for flatter organisations 1/3 of the workforce are millennials (born after 1983) What do they want? They have different expectations of the workplace. Deloitte 2014 survey of millennials. society.resource scarcity (68 percent), climate change (65 percent) and income equality (64 percent). innovative. 78 percent of Millennials were influenced by how innovative a company was when deciding if they wanted to work there management attitude (63 percent), operational structures and procedures (61 percent), and employee skills, attitudes, and lack of diversity (39 percent).

leaders. one in four Millennials are ‘asking for a chance’ to show their leadership skills. Millennials are ready to go their own way. Roughly 70 percent of Millennials see themselves working independently at some point, They care about society. While most Millennials believe business is having a positive impact on society by generating jobs (48 percent) and increasing prosperity (71 percent), they think business can do much more to address society’s challenges in the areas of most concern: resource scarcity (68 percent), climate change (65 percent) and income equality (64 percent). Millennials want to be innovative. Millennials want to work for organizations that support innovation. In fact, 78 percent of Millennials were influenced by how innovative a company was when deciding if they wanted to work there, but most say their current employer does not do enough to encourage them to think creatively. They believe the biggest barriers to innovation are management attitude (63 percent), operational structures and procedures (61 percent), and employee skills, attitudes, and lack of diversity (39 percent).

Hierarchies have made way for flatter organisations 1/3 of the workforce are millennials (born after 1983) What do they want? They have different expectations of the workplace. Deloitte 2014 survey of millennials. society.resource scarcity (68 percent), climate change (65 percent) and income equality (64 percent). innovative. 78 percent of Millennials were influenced by how innovative a company was when deciding if they wanted to work there management attitude (63 percent), operational structures and procedures (61 percent), and employee skills, attitudes, and lack of diversity (39 percent).

leaders. one in four Millennials are ‘asking for a chance’ to show their leadership skills. Millennials are ready to go their own way. Roughly 70 percent of Millennials see themselves working independently at some point, They care about society. While most Millennials believe business is having a positive impact on society by generating jobs (48 percent) and increasing prosperity (71 percent), they think business can do much more to address society’s challenges in the areas of most concern: resource scarcity (68 percent), climate change (65 percent) and income equality (64 percent). Millennials want to be innovative. Millennials want to work for organizations that support innovation. In fact, 78 percent of Millennials were influenced by how innovative a company was when deciding if they wanted to work there, but most say their current employer does not do enough to encourage them to think creatively. They believe the biggest barriers to innovation are management attitude (63 percent), operational structures and procedures (61 percent), and employee skills, attitudes, and lack of diversity (39 percent).

“Reports that say that something hasn't happened are always interesting to me, because as we know, there are known knowns; there are things we know we know. We also know there are known unknowns; that is to say we know there are some things we do not know. But there are also unknown unknowns -- the ones we don't know we don't know. And if one looks throughout the history of our country and other free countries, it is the latter category that tend to be the difficult ones.” Or put simply it is a Homer Simpson WTF!!

“Reports that say that something hasn't happened are always interesting to me, because as we know, there are known knowns; there are things we know we know. We also know there are known unknowns; that is to say we know there are some things we do not know. But there are also unknown unknowns -- the ones we don't know we don't know. And if one looks throughout the history of our country and other free countries, it is the latter category that tend to be the difficult ones.” Or put simply it is a Homer Simpson WTF!!

WTF

“Reports that say that something hasn't happened are always interesting to me, because as we know, there are known knowns; there are things we know we know. We also know there are known unknowns; that is to say we know there are some things we do not know. But there are also unknown unknowns -- the ones we don't know we don't know. And if one looks throughout the history of our country and other free countries, it is the latter category that tend to be the difficult ones.” Or put simply it is a Homer Simpson WTF!!

Vector Graphics by VectorOpenStock.com

We cannot plan for things we don’t know and history shows us many organisations have fallen by the wayside… Of the companies listed on the Fortune 500 in 1955, nearly 87 percent of them have either gone bankrupt, merged, reverted to private ownership, or lost enough gross revenue to be delisted. A study of the S&P 500, which ranks companies by market cap, found the average age of a business on the list was 61 years in 1958 but only 18 years in 2012. In the past, being big was in itself a defensible position. Now it’s not.

We want to aim for adaption rather than anticipation  (anticipation is Early planning, big design upfront, testing after, signed handoffs, early complete requirements  Adaptation - real time planning, emergent design, integrated testing, collaborative discussions, just in time/ just enough requirements) After all adaption is how we evolve. If its good enough for nature then I am sure its good enough for organisations.

Vector Graphics by VectorOpenStock.com

We cannot plan for things we don’t know and history shows us many organisations have fallen by the wayside… Of the companies listed on the Fortune 500 in 1955, nearly 87 percent of them have either gone bankrupt, merged, reverted to private ownership, or lost enough gross revenue to be delisted. A study of the S&P 500, which ranks companies by market cap, found the average age of a business on the list was 61 years in 1958 but only 18 years in 2012. In the past, being big was in itself a defensible position. Now it’s not.

We want to aim for adaption rather than anticipation  (anticipation is Early planning, big design upfront, testing after, signed handoffs, early complete requirements  Adaptation - real time planning, emergent design, integrated testing, collaborative discussions, just in time/ just enough requirements) After all adaption is how we evolve. If its good enough for nature then I am sure its good enough for organisations.

?Sounds like being an evolutionary organisation is the only way forward? Could it be that organisations that have the attributes that enable them to recognise the need and make evolutionary change are those that we currently refer to as Digital organisations? I think it is shorthand for organisations that have a hope of navigating the huge obstacles and opportunities in today’s world. So what are these attributes and how do we transform to enable them in our organisations?

Structured Predictable Hierarchical

Planned Control Top Down

Scientific Management Architected

Built Processes

Foundations

Pre-Digital

Dave Clarke - Gartner

(Taylor)

Digital

(Hock)

What are the attributes of a Digital organisation? Dave Clarke

Structured Charordic Predictable Emergent Hierarchical Collaborative Planned Iterative Control Agile Top down People Scientific management Adaptive Architected Non-linear Built Creative Processes Speed Foundations Discover

How do we get teams like this?

Structured Predictable Hierarchical

Planned Control Top Down

Scientific Management Architected

Built Processes

Foundations

Pre-Digital

Dave Clarke - Gartner

(Taylor)

Digital

Chaordic Emergent

Collaborative Iterative

Agile People

Adaptive Non-linear

Creative Speed

Discover

(Hock)

What are the attributes of a Digital organisation? Dave Clarke

Structured Charordic Predictable Emergent Hierarchical Collaborative Planned Iterative Control Agile Top down People Scientific management Adaptive Architected Non-linear Built Creative Processes Speed Foundations Discover

How do we get teams like this?

Agile manifesto Start talking about this. Very useful reference point. Let is be your guide. Individuals and interactions over processes and tools Working software over comprehensive documentation Customer collaboration over contract negotiation Responding to change over following a plan Amazing how many people don’t use this as a guide? Use pragmatically as a framework for your approach…

Netflix and Spotify have some great freely available resources that eloquently represent their positions and approach.Netflix talks about Values are what we value - actual values - the behaviours and skills of the people hired (judgement, communication, impact, curiosity, innovation, courage, passion, honesty, selflessness)High performance - some people value job security and stabilityFreedom and control - responsible people thrive on freedom, remove processContext not control - Don’t want planning and process more valued than outputHighly aligned, loosely coupled - as opposed to silo’s or tightly coupledPay top of the marketPromotions and development

Also remember that development is a highly creative endeavour.

Delivery/methodology What about delivery you will need to deliver, once you start to attract these people and continue to attract them. Scrum is useful and is something we use but unless you have the engineering practices that underpin this you will have an unhappy period of just standing up a lot.. Be pragmatic with the agile. Engineering practices are much more important. XP is a good reference point Small releases, continual planning, refactoring (replaces a lot of upfront design), TDD Pairing (15% increase in overall time - lower defects, less code, problems solved more quickly, more people understand the code, job satisfaction),Working a sustainable pace, Collective ownership, coding standards, simple design, metaphor, continuous integration, customer onsiteValuesCommunication, simplicity, feedback, courageKent Beck 2000 XP practices

Tools

Firstly you will need to provide your teams with open machines and access to the internet. You need to trust them. You need to enable them to use the same tools as the wider development community - your developers should not be handicapped because they work for a large corporate or government organisation.

Give the teams the right tools so firstly they can build an automated build pipeline and secondly they can display it.. Displaying the ongoing status of the build pipeline is a very good way of inculcating a zero defects culture.

Planning Remember the word ‘chaordic’ in the previous slide - this is the very essence of chaordic. Gant charts - probably you should stop them Planning ahead is ok but only if you are planning - don’t be tempted to lay down a very detailed plan that you will then execute. ‘Plans never survive first contact with the enemy’ ensure you are continually planning. A good way to ensure this is to stop treating plans as secret things that you can only discuss in tightly controlled and regulated meetings - the world is more dynamic than this -make your plans highly visible, use visual prompts when discussing plans and if you need to discuss something with somebody go and discuss it with them.

Training is essential. We don’t mean the training that you sign up to months in advance, go on a day or residential course, with high hopes of changing your career or your organisation. I mean - Continually developing your skills - there are a lot of resources - not least the internet. If you have the right culture you will have people in your organisation who want

to continually develop themselves - These types of people also want to share their skills/what they have learnt … it doesn’t need to be exclusively about Digital - Go to conferences - these can be small local affairs - or even organise your own. This is all about opening yourself to wider and different influences

Think Lean - remove as much process as you can. Reflecting back on the first slide - an organisation is essentially something that sits between somebody producing goods and services and somebody that wants to consume those goods and services - I.e., of limited value I like to think of developers as the people who deliver value and the other roles in the team are their to support them and the further these roles are away from writing code the more suspicion I treat them with. Map out what it takes in your organisation to develop some code and see if you think that all roles add value. Also, if you want to encourage bright and capable to leave then make sure you smother them in process…

Have one of these. What is one of these, you ask? My boss - I was interviewed by this guy and the CIO for my current role. These guys wanted to do an agile transformation. You need their support and understanding. ‘catalyst ….has violent and unexpected consequences’

Have we been successful?

did it work?

Q & A