To thrive in the digital landscape, all organizations, even the traditional ones, must become technology companies, to some degree. But what does that mean for the business leader of today? Mike Mason and Gary O' Brien from Thoughtworks, share the key tech concepts that every executive needs to know to achieve their business goals. If you are a business executive wanting to understand how to bring technology into your business strategy, this is the podcast for you.
- The term digital transformation is less relevant than what digital as an era has done to organizations. The massive (and continual) change in customer expectation means new demands for different access, realtime access etc.
- More and more businesses are realizing you need to understand enough about how the technology works in order to be able to fix the divide between business and IT
- It's really difficult to build a meaningful business strategy without really understanding enough about the technology that you would need to implement that business strategy. There are no business ideas that don't have technology at the core of them today.
- The technology ecosystem are getting better at being able to explain what they're doing in business terms. And I think business folks are getting better at understanding what technology can do for them in terms of outcomes.
- From a business exec point of view, it's not just about saying 'I have DevOps or I have a platform.' It's about what that means to the execution of how you operate the business, like the decision-making, the funding, the planning that has to happen.
- Leveraging tech accelerates your business strategy, to capitalize on the new opportunities existing in the market, which means that technology must have at least an equal seat at the table in the executive rooms and in the boardrooms.
Welcome to Pragmatism in Practice, a podcast from Thoughtworks, where we share stories of practical approaches to becoming a modern digital business. I'm your host, Tania Salarvand. To thrive in today's digital landscape, all organizations, even the traditional ones must become tech companies to some degree. But what does that actually mean for the business leader for today? This episode features Mike Mason and Gary O'Brien from Thoughtworks as they share the key tech concepts that every executive needs to know to achieve their business goals. Welcome Mike, welcome Gary, why don't we start off with you giving us some context. We hear the term digital transformation, obviously all around us quite often. Why do today's leaders need to know more about technology than ever before?
I think for me, the term digital transformation is less relevant than what digital as an era has done to organizations. So if you think about the massive change in customer expectation and the fact that that continues to change, and we've had that highlighted recently with COVID, like we'll never go back, there will always be this new expectation and this demand for different access, realtime access, all those kinds of things. So I think firstly, that's critical, the expectations are keeping up with expectations of customers. Secondly, speed, like the speed of change, the speed that you need to get to market, the speed of decision-making that's now required.
The third impact I think, is technology itself, just the plethora of tech that's available and understanding what tech to use, understanding how to take advantage of technology. That kind of real using tech to execute business outcomes is a really critical theme, I think. And then lastly, and the one that's become quite enormous now is resilience. So just the ability to respond very quickly to an unexpected event, whether that's scaling up or scaling down, whether that's all of a sudden having to manage distributed workforces. All of these things, so these kind of four challenges are solved by tech. I mean, this is what tech is for, it's also caused by a tech quite interestingly. So I think for a business exact now it's just unavoidable. You need to understand how technology can accelerate business strategy, how technology can increase responsiveness. It's just, I'm not sure how you could actually succeed in business without the knowledge.
And think more and more businesses are realizing that kind of the old days where there are strong lines between the business and the IT department has really been causing them problems. And everybody is looking at fixing that and no matter what flavor of bringing the two factions closer that you're thinking about doing, you need to understand enough about how the technology works in order to be able to fix that divide between the two groups.
And what would you say are maybe the consequences for organizations that are not well technically informed? I spoke to some board members who said having tech on a board of an organization is mandatory nowadays. It's something that must be considered in every decision that's made at the board level. How would you relate that to within the organization and what the consequences are of those that are not as technically informed?
I think it's really difficult to build a meaningful business strategy without really understanding enough about the technology that you would need to implement that business strategy. There are no business ideas that don't have technology at the core of them today. And as Gary already mentioned, technology is moving very, very fast. And so the things that you can do in terms of business models, accessing new markets, creating customers and creating demand for your organization, that's all built on technology. And if you're missing that tech-savvy in the boardroom, you're going to be producing significantly worse business strategy as a result.
I think the other thing that we see in a lot of organizations is that they can end up feeling like they're held hostage to technology. So either held hostage by their own tech department that is underperforming and not delivering at the speed that they would like it to, or even held hostage by a third party. One of the things that's tricky about the tech landscape is it moves very quickly. And there's a huge breadth to the amount of technology things that you could need to know about as an organization. So lots of people turn to partners and working with others in the industry. But if you don't retain enough technology savvy yourself, you're kind of beholden to those others that you're working with. And sometimes we've seen people get taken for a ride.
I actually strongly believe it's playing out in front of us right now, too. Like with COVID lockdowns happening all across the world, what you've seen is some organizations thrive and some organizations crash and a bit in the middle. And I like to talk to the bit in the middle because I think those that are thriving were probably digitally-native anyway, and had business models and strategies in place that were already resilient to this kind of disruption.
So these other two categories to me, those that were tech-savvy were able to scramble to limit the impact of shutdown. And what I mean by that is they were able to set up remote working with very little change in the way they operate today. They're able to keep things going. They were able to change product lines, to be more suited to what people needed in this environment. Whereas those who were just rigid just couldn't do anything but shut down. And so we saw that in front of our face, but I think the next stage is going to be the same again, which is as we come out of it and opportunities have changed. You come out and there'll be things in your marketplace. It'll be completely different forever.
The companies who are better prepared to chase value will thrive again. And I kind of worry about the companies who aren't tech-savvy or have leadership groups that aren't tech-ready because they'll fail to be able to capitalize on what will come out of this at the same time.
And I think there's probably companies in the middle there who have managed to just about respond to the COVID crisis, sort of through sheer will. Not through really being adaptable internally, but just by kind of forcing something through in a time of crisis. The question for them is going to be, are they then stuck when the next change comes along and the next change? Have they pressured, have they backed themselves into a corner responding just today?
One thing that reminds me of is just what we mentioned early on about every organization becoming more tech-savvy or a tech company to a certain degree. And what you're mentioning now is that, especially now with everything that's happened, there is a transition, maybe a re-prioritization of focus because everyone is more digital. What is the depth of understanding you think that's needed or how far digital or technical does an organization have to go where they can survive through what's happening today?
If I really think hard about it, there's like a simplification that says to whatever extent that allows you to see technology as a strategic investment, because for most people at the moment, it's a cost center. So whatever it takes for you to understand, that's the depth, whatever that depth is for you I think that might be varied. But for me, it's like, there are so many examples in the tech space of difficulty in funding stuff, because people don't see it as cool, or it's not directly impacting the customer or whatever, but it's so critical to your ability to build resilience and responsiveness and agility in your organization.
Getting funding for it for the IT department can be really difficult. So again, so the depth of understanding is whatever helps you as an executive see that, so that you find other ways to invest in those things that are really critical. So I think that's one kind of depth. It's like an empathy that you need to build into it.
I think building on that, I would say that understanding the outcomes that you're expecting from any technology thing that you're doing is a key part of that. And nobody would invest if they didn't understand what the outcomes were that they thought they were going to get. And I feel like in a lot of cases in technology, there'll be tech buzzwords floating around and people doing things with big technology labels on them. But without very clear out understanding of the outcomes that you're really expecting from doing that kind of stuff.
So if you're doing microservices or DevOps or whatever, pick a buzzword, I hope you've really clear about the outcomes that you're expecting to achieve from that, because I do think technology outcomes should be explainable and understandable by business people who are advocating for those technology outcomes. And that is something that I think the technology ecosystem are getting better at being able to explain what they're doing in business terms. And I think business folks are getting better at understanding what technology can do for them in terms of outcomes.
Maybe there's a test coming up in that product, which is, understanding which things to switch back on and understanding which things not to switch back on. You don't want an organization that because of scarcity at the moment only focuses on market-facing things. Like now is the time to double down on the things that are going to enable that resilience in your business. So I think there'll be a test like that coming up. I also think there's probably some practice that they can go through. Like I often think to myself about an executive meeting and what are you doing on that agenda. Like, could you take five minutes and ask one of the business execs to describe a current technology trend and the impact it's going to have on their business. That would be a really cool way just to get people to think through in a different fashion and to share knowledge with each other.
I think when we started this conversation and talked about even the term digital transformation, being a bit of a business tech buzzword, but some of the things that were mentioned early on, I think by you, Gary, around speed to market availability, resilience, flexibility, adaptability, access, are those outcomes that I think a lot of business executives and tech executives are looking at in terms of what they'd like to achieve, especially as there's a shift in the way that we behave, consumers behave and the work that we're doing.
So if you had to prioritize the areas where execs focus their learning on, now what are the tech concepts you believe are most crucial to have knowledge about? Some level of knowledge. Of course, the depth to your point is varying. And why those concepts?
So this is always a tricky question because there's a really long list and you need to pick a few that are most important. I think at the top of the list, I would say that technology excellence matters. So how well you're implementing your technology is actually important. For a long time, because IT has been seen as a cost center, everybody is looking at lowest hourly rates for developers and people to do the work. But unlike traditional manufacturing, if you create a higher quality technology product, it actually can become cheaper over time to have created that thing because developers spend a lot of time changing stuff that exists, making enhancements. The work of building software systems is actually really one of learning the business problem that you're trying to solve, and then expressing that well in software and then going and working with your teammates.
So really I think the fact that a high-quality system can enable you to be so much more flexible and to move faster is a key thing that execs need to start thinking about and start understanding. Related to that is sort of the importance of technology talent in an organization.
So I think there's a growing trend of traditional organizations hiring kind of ex-Silicon Valley execs to come and run their technology team to inject some pizazz and some flare into the technology career, right, and actually building a tech team that the company can be proud of, where people want to join and work on stuff.
We did a lot of work with a Canadian telco called Telus in digital platform building. And what's super interesting about that is that they've used the digital platform that they built as a way to market themselves to technologists who they're looking to hire. So there's a whole thing on their website about all the great stuff that they built and how they can take a code change to production in 15 minutes and all of these techy things. But they're using that as a way to compete in the war for talent, which I think is hugely interesting that something that somebody built is now being advertised on the website in that way.
I think continuous delivery and DevOps are things that are, those are words that get thrown around. I think every organization has some sort of DevOps initiative going on. Both of those things are really easy to get wrong. So I think leaders really need to understand the outcomes that they're looking for from something like DevOps, what are you really trying to do with it? You're trying to bring developers and operations folk closer together. So you are solving the last mile of getting software into production. I think that's an important concept for everybody to understand.
And then I think I would finish with two that are kind of related, that's digital platforms and API ecosystems. So again, platform is a word that's a bit similar to digital transformation. It can mean a lot of different things to different people. And the way we use platform here at Thoughtworks, we talk about platform thinking and a platform is something that you build to accelerate the delivery of something else. And with digital platforms, you can build stuff that really helps you take software into production a lot faster, it can help you scale that in a way where not every developer in the organization needs to be a professional or building web scale software. You can have regular mere mortal developers working on that stuff, but then you have a digital platform team who are able to build that platform for you.
And associated with that is API ecosystems. And so the point of having an API ecosystem is that you can encapsulate business functionality into these easily reusable APIs within your organization so that you can build new things quicker. That's really the whole point of it. And so the list of specific technology stuff that folks would need to know about is going to vary over time, but I would emphasize understanding the why and the outcomes rather than diving too much into the details of the what.
It's interesting listening to you say all that, Mike, because as you talk through those things, the thing that goes through my head as from a business exit point of view is the environment you therefore would need to build to enable those things to happen, the nontechnical environment. So the tools that you give that talent to make it attractive to be there, I liked the way you kind of brought that out. So it's not just about what they do or how much you pay them. It's the environment that they're working in that's going to really appeal to them. Even when you think about DevOps and platforms, it's like, Hey, create the right funding model for those things to be able to take place. How do you bring the right skills of people together to make that take place? Like that real disappearing, not blurring anymore, the disappearing of boundary between business and IT. Cats and dogs living together, that kind of stuff is really what we're talking about here rather.
So from a business exec point of view, it's not just about saying I have DevOps or I have a platform. It's what does that mean to the very execution of how we operate the business, like the decision-making, the funding, the planning that has to happen. And you can't do a three-year plan, you can't do annual planning. It's like every quarter you're going to change. And so those things that you talked about enable that to happen, but actually the thinking and the cadence that goes on behind it must change as well.
Along those lines, Gary, I'm reminded of an organization I worked with that did put together a seven-year tech plan. And at the time, especially for the size and where they were in their tech journey, it made sense. It's how they planned everything with a seven-year transformation as they called it at the time. Obviously things have changed. However, some enterprises still plan that way. I'm just curious, based on the experiences you've had, what is the advice that you give to an organization that is still thinking and planning in that way when it comes to a tech strategy? And again, mentioning that integration between tech and business, obviously, if there is no end user and the business is not leveraging it, your strategy can be worthless. How do you create those synergies across those organizations?
I think we've got to not react, not have a visceral reaction to when people say stop planning for three years. Of course, you can have the visibility of what you're intending to do. Like of course, you're going to have a long live strategy and long-lived outcomes. It's the cadence inside of it and the preparedness to change, the ability to change it. You can't have an annual plan or set an annual plan and then just blindly implement it for the next 12 months, managing completion or measuring completion and measuring that people are doing what they said they were going to 12 months ago. It's the behaviors that it creates that have to change. If you want to have a three-year strategy, because you want to look forward that far, no problem, do that. But don't execute three-year strategy, right? Execute these smaller cadences. So it's about implementing some of those really small things.
I mean, for me, the thing that's resonating at the moment when I talk to executives is I talk about these four buckets of running a business, right? So bucket one is a business model, which is the markets you're operating, your growth strategies, all those kind of things sit in there. The second one is like your P&L. So it's like which lines arms you're trying to get to go up and which lines arms you need them to come down. The third one is strategy, what differentiates you in the marketplace, how you intend to fight. And then the last one is operations. It's your supply chains. It's your keeping the lights on. It's all kind of things.
So when I think about those four buckets, and I'm like that's what consumes the minds of the executive group a lot. And you overlay tech into that, what's changed is technology has created new business models. Technology has created new ways in which to alter that p&l, but the scary part is if organizations keep seeing technology as a cost center in that p&l, they will always put the pressure downwards on how much it is. So they're not taking advantage. It's not strategic thinking. Differentiation, tech creates amazing differentiation opportunities. And then in operation supply chain, man, if we haven't seen over the last six months, the impact that that tech can have on improving operations or putting with Zen center operations.
A great example to make it really, and we've talked to these two organizations who I won't name, but one of them is constrained by their, what have I call it? The delivery mechanism, their supply chain. The other one's constrained by scale. And the impact that has happened to both of those in this time has been amplifying that situation. Whereas one site can't deliver their goods so they are an online marketplace. They're getting all these orders coming in because of everyone's sitting at home doing online purchasing, and they literally can't deliver the goods. So they have a problem in that context. So their problem was exacerbated.
The other organization that was having scale problems had to put a waiting room on their website. So literally people would go to their website and be told, thanks for waiting. It's almost like an RVR, we'll be with you in one minute when the next available operator. Literally a website where people are trying to buy stuff from them, there's a waiting room. So there are two very, very real examples.
Mike, one thing that you mentioned earlier, but we didn't dive into yet is measuring, measuring what our tech and or digital transformation means. And we all know, of course it's important to have dashboards and metrics and measure. However, I think fundamentally not very many organizations are good at it. I'm curious, based on your experience and what you've seen or maybe not seen, what are some of the things that come to mind when it relates to how to encourage and or educate or support executives in thinking about what things to measure, how to measure, how to even view ROI of digital transformation?
That's a great question. There's an entire art to measuring and asking good questions about how are we going to measure that because you get what you measure. And that's actually the really tricky thing, especially in IT is if you measure the wrong thing, then you can get people gaming the system and measuring exactly that. I think the ROI on any initiative is usually a complex calculation. So a good example is some work we're doing around platform building. So we have an offering in North America, we call it digital platform strategy. We've been building digital platforms for our clients for years now and building a platform like that is a significant investment.
And there are times when you can kind of, you realize that you're in a bit of a state internally, technically, and you kind of, you're happy to make an investment on faith that a new thing is going to be much better than wherever you're at today. Like that's one mechanism for sort of saying yes to an investment. The other thing though is we're building cost justifications, value spreadsheets where you can look at not just the cost of building a platform, but also the savings you're likely to get from it. So those are like hard savings around developer hours.
And you can make some very conservative estimates about what a digital platform might gain you. And then when you multiply that up through hundreds of folks in your tech organization that can actually pay for itself really quickly, but then there's also intangible value created by technology choices that you make. So the ability to be faster to market in future, because you have built digital asset, that's worth something. I'm not one of the people who can do the calculation, but I believe you can do calculations on these kinds of things and make projections about the future value of being able to do something faster, more reliably, being able to flex to new business models and new ideas.
I think it's a critical piece in that too, Mike, which is the size of work. So organizations that really, really struggle with measurement it's mainly because they're obsessed with counting something. And the way most businesses function today that is near or impossible so they just can't anyway, because counting is what gets you money. And so really what we're talking about in the digital space is the size of work shrinks dramatically. Again, we're not saying you can't have this kind of big program of work, but the size of the work inside it is incremental on autonomous so that there are many more stoppable points from which you can measure.
And when you've got many little things it's much easier to measure, and it's much easier to capture leading indicators to know that you're heading in the right direction. And of course it then becomes much easier to change that direction because you're working smaller as well. So from a business point of view, really kind of understanding the need to work smaller and the implication of trying to work smaller on technology, on technology staff, on architecture, on decision-making, on funding, all those things again, that make it just so critical that the execs get their heads in that space.
That's really helpful. And I think just along those lines, as more and more organizations embark on a digital journey of some sorts, regardless of where they are today and where they anticipate being, knowing what those customer needs are both internal and external, as you've both mentioned, understanding those business outcomes, having clarity up front of what we are investing into and what we expect to come out of it. As we've talked about, you mentioned our digital platform strategy. There were instances where people said, well, we will build it and they will come. So how do you make sure that they actually do come?
And they do leverage those capabilities is quite critical because ultimately there is an investment there and you want to make sure that it's being leveraged in the right ways, which I think is very important, but it also leads to just a thought that I'd like for you to reflect on as we talk a lot about digital transformation, however, it's really about evolution, would you say, or what are your thoughts on when people say we're transformed? Are we ever transformed? When do I turn that light switch on?
I hate the word, I just hate the word. So that was very eloquent, right? It's not transformation in the context of there's a beginning and an end. It is changing your organization into a learning organization, capable of sensing and responding to much weaker signals all of the time, which means you'll constantly be evolving the business that will constantly be moving. And they've all the things that we've talked about become critical, because if you're constantly changing, you have this ambiguity, you can't predict the future. You can't plan too far ahead. You can't have big monolithic architectures. You can't ignore technology and the impact of it. I think all of those things are just so, so critical.
And what it means is as executives, you've got to have courage, you've got to have, I often talk about this is not difficult to understand. Actually what you need to do is not hard to realize. The difficulty is it's daunting, it is overwhelming to consider the changes that you know you need to make. It is daunting to think about that. You must have the courage to make the changes. And one example I give is, if an opportunity presented itself for your organization and you wanted to go after it, could you take money from one bucket and move it to the bucket that enables you to go after that? Could you take headcount from one area and move it to another in order for you to go after it? Does your business have the courage and capability to make that kind of change?
And I know that sounds really simple, but I know there'll be a lot of people listening to that and go, what? How can I move money from one budget to another budget? Somebody's bonus is going to get impacted. What about the KPIs? But I've already committed to doing that. We've already started that work. All those things have to come up and I'm like, well, that's the kind of courage you're going to have to face into because this thing's actually quite simple, but you need to have the courage to make the decisions that are going to be presenting themselves.
And in some ways I think organizations have been forced to do that, whether they have the courage or not, as it relates to COVID because you've had to make adjustments to what you thought was a perfect plan. On that note though, Mike, on more of a practical level, how can executives continue to stay ahead of these tech concepts and what do they need to know? How can they educate themselves? And again, to the point of the depth, does it need to be too deep at certain levels, however, enough that you know you can have the conversations and understand what it means to move in that direction?
It's funny, you're asking me that today actually because tomorrow I'm doing a briefing on microservices and platform building for the CEO of an extremely large CPG company. And that CEO is taking the opportunity of traveling last during a global pandemic to spend time getting briefings from external parties, plus internal company people on topics that are interesting to him. So he's had briefings on cyber security, agile development, blockchain. We're going to be doing microservices and platform building.
And so that's actually one way is to simply ask. Most people and most technologists will be happy to talk about stuff that's going on in their world. It's very good practice, frankly, for technologists to need to be able to express themselves in a way that is useful to business execs. And they ought to appreciate that opportunity. And then of course, I would say, stay very plugged into your social network, your LinkedIn. Find the sources of information that you trust that are giving you stuff at a level that is suitable for you.
Great. And maybe as we reflect on that, are there any specific resources that you recommend, or I don't know, any books out there one could read?
Oh, there's a great book out there. There's a great book. Mike and I wrote a book, so yeah. So that's the obvious one. I mean, we've got the Digital Transformation Game Plan that we put out there as a book really for individuals to read. So it's really aimed at an individual exec who wants to kind of challenge themselves and understand what this is really like with the kind of decisions you're going to have to face into. That was the thinking when we were writing the book.
So I think that's definitely a great resource, but also just LinkedIn Learning and podcasts. And there's just things out there I think, like I said before, just that challenging yourselves to give a five-minute talk to each other in an executive meeting about a current tech topic and the impact that might have on your business. I think doing small things like that, really forcing yourself into the mindset of looking for these trends and informing yourself as to whether or not they're going to have any impact on your business or whether it's something for you to capitalize on is really important.
Great. Anything that you want to leave us with? Any thoughts or closing observations, tips or things for folks to think about?
I think from my perspective, I think that the message is that technology is no longer somebody else's problem. Everybody in the world, frankly, not just business leaders needs to understand a bit more about what technology can do for them, what the issues are. We haven't even touched on any of the potential negative sides of technology privacy concerns, all of those kinds of things. All of that stuff is prevalent within tech as a topic. And I think everybody needs to increase their curiosity around it and their engagement with it.
And for me, there are two sides to tech that an exec needs to be really paying attention to. There is the tech for tech side of things, which I think what Mike is referring to there around things like security and DevOps and these kinds of things, where we're using technology to enable other things to take place. And then there is just the pure fact that the way technology is changing society and driving business outcomes. So leveraging tech becomes the other side of that coin to accelerate your business strategy, to capitalize on the new opportunities existing in the market, which means the bottom line technology must have at least an equal seat at the table in the executive rooms and in the boardrooms. It has to become part of the vernacular of people creating business strategies and business outcomes.
Well, thank you, Mike and Gary for joining us today, we really appreciate your thoughts, insights, of course experiences. And for anyone who wants to see and hear similar podcasts, please join us at thoughtworks.com/podcast. And of course, if you'd like to get a copy of the book, Digital Transformation Game Plan, you can find it on Amazon or thoughtworks.com/books. Thank you.