[00:00] Katie: Welcome back to the Focus B show. This is Katie Sudddhart here aka the focus b. And on this show, I interview high performers and leaders around the world to discover their secrets on peak performance, productivity, mindfulness, and leadership. So if you want to take your performance and your leadership to the next level, then you're in the right place. Listen up and connect with the magic.
[00:36] Katie: Such a joy to be on the show with Linka Pinco today. Linka is an expert in terms of digital transformational and enhancing organizational agility. So if you're curious about agile practices, business analysis, and overall digital transformation, tune in for today's episode. Wonderful to have you on the show today, Lenka. Thank you so much for joining.
[01:02] Lenka: Thanks for having me, Katie.
[01:04] Katie: I'm going to kick it straight off with your area of expertise, which is digital transformation. I think it's super interesting because I work a lot with transformational leadership. And so I'm curious to understand and know a bit more the world of digital transformation. So maybe you could start by saying what are the key steps that a company goes through when they go through a digital transformation?
[01:29] Lenka: That's a wonderful question and I think that we should maybe start with first talking what actually is the very essence of digital transformation? Because what I experienced and when we talk about transformation, people often imagine that transformation means a change that is a little bit more complex, little bit longer. But transformation in essence means, especially in digital space, that we need to understand how digital technology is influencing our business models. And then during the transformation, what happens is that these business models are redefined. And this has a huge impact because it's impacting not only our behavior towards customers, it's also impacting such thing. Like for instance, how do we design our motivation system? Because especially if now revenue go through digital platforms and before the revenue was coming through, for instance, sales via physical offices. Now we need to motivate people differently. We need to redefine these things. We need to work on many elements such as upskilling our employees so that they are able to keep up with the speed of digital transformation itself. Our customer behavior is changing, so we need to deploy different tools. How do we understand this new customer behavior? So it's many, many things which are happening in parallel.
[02:56] Katie: Interesting. So what you're really saying is redefining the relationship with all the digital aspects and how that influences both the employees but also the customers and everything within the organization. So if a company comes to you and they say, okay, we like the sound of this digital transformation, we think that what we're doing here is a bit bulky, how can we go about it? What would be your sort of four, five, I don't know how many key step process.
[03:23] Lenka: Right? So first thing is really need to spend enough time understanding how do we create value for the customer and how this value creation is influenced by the technology. And this is the step number one, the most important, because digital transformation is not at all about buying the technology, deploying it and then waiting if it brings anything good for us or for the customers. While the first step to understand how do we create value and how we can create more value or different value by technology, this is the hardest because it requires deep understanding of customer needs, deep understanding of potential of that technology. And then it also requires this ability to be visionary, to be a little bit more futuristic, to imagine. What is very interesting is that innovation by technology is not happening that much inside your own space. Because just to give you example, you say I have some processes, I do it manually, I can make it automated, I can digitize. Yes, you can. You improve your efficiency, but it's not really innovative. You basically do what you were doing before, only faster, better, less mistakes. But when you look at potential of technology, when you achieve true innovation is for instance, when you step into adjacent industry or where you take some concepts from different industry and bring it to your industry, this is how you start innovating, you take your existing capabilities, you add technology to that and then you develop new capabilities. But for that you need to combine a lot of different skills together. The business sense, the acumen, the understanding of market dynamics and again, going back to that understanding of customer. So this is the very, very first step. So once you know that, you can move to the second step. So that is like understanding, okay, so if this is my future, this is where I want to do, where I want to go, what everything I need to cover, improve, change inside the company so that I am able to move forward to that future. And for this I would definitely recommend to use some framework for that. Because these frameworks, they often serve as checklists. And as these changes are very complex, it's good to have some good quality checklist so that you don't forget something very important such as motivation system or you need to change your development plans for employees, you need to change your talent management. There are so many things that you need to change. So it's good to keep track of these. And then as a third step, think about your transformation leader. Who will be the person who will take care of this, who will orchestrate all the departments? Because what is again the difference between change management and transformation leadership is that in transformational leadership you often orchestrate work of different departments so that you all come to the final result. The reason for that is that in transformation the amount of changes is so large that it's not reasonable to expect that you will have a central team or even central person who will take care of it. It's way too much. And then this central team will become a bottleneck. So you rather need to work as empowering, orchestrating the other department so that they understand the nature of your transformation, they understand what needs to be done, and then they do that. And as a company, the whole company, you move forward.
[06:52] Katie: Fascinating. I'm realizing that what you do is a bit what I do inside the head of people. You're doing it with processes, seeing where they are now, where they want to go, what are the processes in place, looking at how they're all connected and then actually putting it in place and managing it. And this is what I do about people's belief systems, the way they interact with others, the way they set their boundaries, et cetera. So I'm doing with the inner system, and you're doing all the outer digital system. Because I feel that the essence of transformation is really going from that first step that's maybe not as efficient or not serving you or the company and turning it into this new version that will be beneficial for the company in the case of a digital transformation and be beneficial for the leader, for the mindset, for the person that then impacts the company. So I really see that there's a way of combining both by both optimizing processes and the mind also. Yes. Anyway, that was a funny parallel, but I also loved what you said about how if we're doing things manually and we just automate them, that's not necessarily a transformation. That's just making the current system more efficient. But if the current system is flawed or not optimal, or not aligned with the values or not really serving the people, then that doesn't solve the problem. I'm also very curious about you keep talking about this motivation system, and I don't know what you mean by that. What do you mean in terms of the motivation system of a company?
[08:28] Lenka: Oh, right. So maybe it's just a terminology thing, but imagine that. So I recently work in banking environment, and traditionally, when you wanted to have a mortgage, for instance, the way how you did it, that you went to a branch, there were advisors, you talked with them about your needs, and then you signed a mortgage agreement. And then these advisors, they were motivated, financially motivated to close these agreements with you. So that's why there were money put in marketing, they were trained, et cetera, because this was the source of revenue for the bank, and therefore it was source of, let's say, some bonus structure for these employees. Now imagine that we are now able to provide you with mortgage in fully automated digital way. So you don't need to go to see the banker anymore. You do everything via your mobile app. But now, how do we change this motivation system, these KPIs for people who work on digital sales and who work on, let's call it like a physical sales, just for the sake of better word. So we need to rework this because if we don't, then they will go into competition. But the ratio of sales through the channels is changing. So this is what we need to reflect. And that's why then we come to upskilling and thinking completely rethinking the way how we developed our employees because we needed them for certain type of activity ten years ago. Then we progressed with digital technologies. We changed the business model, we changed the revenue streams. We still have the people, they have a lot of knowledge, but maybe we need them to do something different. In ideal world, they do something with more value added for the customer. Right? Because if you can automate anything, it means that there is a standard way how to execute it. So then you don't need a human being to explain over and over and over the standard way route because you can automate it. But there are still a lot of questions that people have. So you can train upskill these people to be able to give you more sophisticated advice, for instance, or to give you something more than just to guide you through standardized process.
[10:55] Katie: Okay, so it's linked to the KPI system and to the way people see financial rewards and yes, that makes sense. Yeah, I hadn't heard that terminology before, but you seem to know a lot of terminology in the business world. I was also reflecting that in order to do what you do in terms of digital transformation, you both need this visionary approach. Also a very thorough understanding of all the different aspects of business because it impacts all of them. So if you don't understand talent management or recruiting or one aspect, so that means you have a very complete overview of business.
[11:33] Lenka: Yeah, that's absolutely true. And this is also a challenge for any person who would like to be transformational leader because it literally requires you that you have some understanding of every single aspect of a company. You don't need to be expert on all of them, but you must be able to understand them, you must be able to connect the dots and you must be able to work with pretty much every leader, every manager in the company.
[12:01] Katie: Wow, what a skill, right? That's really good. And it's also satisfying, I think, when you get to that stage where you have this overview of the different sides of business. Because then you are able, like you mentioned, to connect the dots. And it's very satisfying, I think, when you do understand lots of domains and see how they impact each other and see how they're all intercoolated, because then you can also see how moving something here, time management and how that affects this side of KVN, how that affects and you sort of see it, all of it. And that's when you can really make a difference in the company. But I want to go to something that I'm curious about, which is what are some of the pitfalls? What are some of the common mistakes that you see people making when they want to go through a digital transformation?
[12:50] Lenka: Right? So maybe I would use something that you said just a minute ago, we were talking about connecting dots. So this is very interesting topic where people actually can make these mistakes. So if I share with you my secret, how do I do that? So, I work, I apply a lot something which is called business dynamics and one part of that is called system thinking. So it sounds like system thinking, right? We all think in systems, but actually there is a science behind it. There's some method behind it just to make it even more special. It's all based on cybernetics, computer sciences and it's essentially applied system science. In business thinking, what is it all about? It's a technique, a tool, a method that helps you to connect the dots and find these connections and have better estimate that if I change something here the impact, there will be this and there or you can also turn it if you want to achieve some impact here. What do I need to change? What do I need to do to create that impact? Because a lot of things in transformation you need to achieve by your impact. Sometimes it's hard to come and I don't know, it's not physical, right? So I say like I'm in a room and it's cold, so I come to the heater and I turn the heater and it will produce more heat. So it doesn't work like this in transformation. Because we work with people, we work in organization. We cannot just say that we want to have different culture. We want to have culture which is open, innovative, people are empowered. But how do I do that? I cannot just come and say and now you are all empowered, right? So the mistake, one mistake for me is when people underestimate the fact that organization is a system and that if I change something here, it will have impact in totally different part of organization. And I need to be able to see that. So that's one thing. The other thing is that if we approach transformations like way too technically because we say digital transformation, there's technology. But after all, it is all about people. And so we can never forget that people element culture can be a great driver for digital transformation or can completely kill it. So we need to be able to work with culture. But culture, it's not the mechanical thing. I cannot just turn the culture. These are two mistakes which I see. And then one third mistake that I would like to mention, it's not mistake which happens during the transformation, it's mistake which happens even before. And that is that sometimes we are way too much comfortable in our current state because we feel like this change doesn't bother me. I'm good, what I do is great. Customers are paying me for that, I'm fine. And yes, we see that things are happening around us, but they are not impacting us yet. And here comes the very difficult part for any leader, like to assess when to start reacting to that. Because if I react too soon, it might be that I invest money in something and it doesn't come to fruition because my customers are not yet ready for this new product. If I wait too long, it can be that someone will put me out of the game or I have to invest way more than I would have invested if I reacted sooner. So this is the trickiest part. So you can little bit lose, you can little bit gain by this if you react, but the worst thing is if you don't react at all.
[16:37] Katie: Wow. Amazing. I just love this. I'm processing everything you said. So many golden nuggets. I love what you just said right now, which is about the timing. I think in general, that's absolutely key. But as you said, the worst is not to react at all and to just stay in the comfort zone. Again, I'm constantly doing parallels in my mind with someone, a person. As you said, the company is a system, but a person is also a combination of inner systems of their own psychology, their culture, their background, their experience, their memories. So again, it's all sort of mixed, so to speak. And as you said, the worst is just to be aware that some things may be not quite right, but hey, it's comfortable. I can still work and function and go through life like this. And then there's a midlife crisis when they're 40. Again, if I take the analogy of a person and I really like what you shared about cybernetics. Also I have the big book of conferences of the cybernetics book. That's huge. I haven't read all of it, but I've dived in and out of it. And this is where we can really see the intersection between what we do. Because for those listening who don't know cybernetics, it's very niche. So it's novel if you don't. And it really is this system thinking approach that was applied to science, to computer science, to physics, to math, but also to psychology and sort of all put together in a system way of thinking. It's quite complex. Every time I hear someone that knows cybernetics or works with it, I think, okay, this person's smart because from having read bits and pieces, it's pretty dense. Yeah.
[18:15] Lenka: There's behind me is my little library. And you probably cannot see that much detail, but there is like book thick like this about business dynamics, which explains everything. And I know that this is not a reading before you go to bed, but if you are serious about transformation job, you should read it because it absolutely can save you know, I'm teaching as a guest lecturer at Vienna University as part of their MBA program. Way shorter version how you apply system dynamics and system thinking in innovation and strategy. So even if you understand that a little bit, even that is enormously helpful.
[18:57] Katie: Absolutely. Really interesting topics in general and through what you work at, what you've done. So you've mentioned some of the pitfalls that you've seen and some of the mistakes and what are some of the common patterns that you see? So you mentioned it in the mistake side of things, but just in general, some common patterns that you keep seeing when it comes to doing a digital transformation.
[19:20] Lenka: You mean the positive ones, not the mistakes, right?
[19:23] Katie: Yes, let's look at the positive patterns.
[19:25] Lenka: Yes, right. So where I'm very happy and what is absolutely happening and we see it not only in companies, but we see a lot of that also in research which goes cross companies, cross regions really on the global level and that is increase of agile way of working, especially in software product development. And this is great because this is all about fully embracing the fact that we cannot fight the change, but we need to embrace the change. Because one of the essential things about Agile way of working, especially in software development, is that we don't work with work breakdown structures. Kind of like trying to figure out upfront what we need to do. But we work with backlogs and we revise these backlogs every week, every two weeks, sometimes even every day. And we constantly prioritize by which of these items in the backlog will give bigger value for the customer. And then the teams, the teams that work in the system, we call them end to end teams, cross functional teams. Again, it's all about not to lose time, but to be able to execute a change to your product quickly. So we put together experts from different parts of the company who in idle work even sit together. But nowadays we don't sit together anymore. At least we have digital tools, right? So we virtually sit together and then they can address any issue, anything way faster than we did it before. I mean, like 2010, years ago, where we have people divided into specialist team and when I had a question I need to reach out outside of my team and wait for the answer. Now, the thing is that with digital products which are developed as software, we need to be very fast, we need to deploy quite sophisticated tools how to understand customer behavior and we need to continuously improve our ability to adjust to customer behavior to still deliver that value. So this is one of the very positive trends I was reading recently some research, for instance, state of the Agile, where we see that and I think the number was around 70, 80% of companies who already apply agile to their internal software development, which is a big jump from a couple of years ago where the numbers were about 30 40%. I was also recently reading very interesting report from McKinsey about how this internal software velocity impacts your ability to innovate and again be financially successful in your market. So there's this research behind this which is supporting this idea. I have experience with that. From a practical standpoint, I can say it's really working. I actually enjoy that a lot.
[22:09] Katie: Amazing. So one of the key aspects that you see, one of the positive patterns is this agile sort of application to business, especially, you said, in software development. Yes, I definitely see that as a train. I know that as a coach, very often what comes up is are you an agile coach? They're really looking for agile coaches to do that, which is a very different type of coaching. I think it really is looking at the processes, looking like you said, the digital transformation, the processes, software, how everything is run internally and making it more lean, more efficient, more purposeful, which is interesting, I think, to see as a coach. I definitely would like working side by side, an agile coach, see how they do it. I'm really interested in the people and the psychology and that. And I think both of them are agile and lean. If you've got a very positive ownership mindset and great leadership skills and then fantastic sort of agile processes in place, then definitely the company has all the tools in hand to succeed.
[23:08] Lenka: Yeah, it's very hard to actually be a good agile coach exactly for the reasons that you say, because you need to combine different types of skills, you need to be able to combine coaching skills and you need to be able to combine technical skills and really understand software development. So it's a lot of things together to expect to be delivered by one person. So that's why agile coaching is quite hard discipline.
[23:36] Katie: I would say that makes sense. I mean, I think in general what you do, which obviously includes some agile aspects, it's pretty complex because you've got the business side, as we said, understanding all the business side, but then also taking into account the culture aspect of things, which is a part of the business, but it's different to the process and system. And obviously in the culture side of the things, it's understanding the psychology of the people, the dynamics, the values, the leadership skills and the leadership relationships and how hierarchical it is, all of that. So it's really looking at all sorts of aspects and even things like stress management and workload that might not be front of mind at the beginning when you're looking at the processes. Obviously, if everyone is overworked, this is going to impact everything. So it's really all nicely tied together and you have to pick out all the strings and make it all function.
[24:34] Lenka: That's why and I guess that people who are listening to this podcast, they of course were not present at our previous conversation before we jumped on recording. And it was like, how are you Lenka? Crazy busy. And it's like, why are you crazy busy? So I think that now we actually tap the answer for that.
[24:50] Katie: Yes, because everything is so intertwined amazing. Well, the podcast has flown by. I really enjoyed it. I love seeing, at least for myself, the links between this sort of digital transformation and inner transformation. Also what it entails, what are some of the common pitfalls, what are some of the positive patterns you see and what would be the last words that you would say for someone who might be listening and wants to start applying it to their company? What would maybe be a last piece of advice that you haven't mentioned yet?
[25:19] Lenka: Yeah, so let's make it even a little bit more complicated. So transformation the way how we talked about that on this podcast. So we touched the technical side, we touched the side of technology, we touched the side of leadership, of working with culture. But then there is one very important element which we didn't mention yet, and that is resilience. And resilience not only on individual level, but also resilience on the level of a company. And I work with one really experienced lady, maybe you can invite her for Next podcast. And she has a company, she really works on understanding resilience, doing a lot of research. And she describes resilience as capacity for change. And this is very interesting because during transformation we do not stay in constant world, we transform, which takes years. But the world around us is changing and it's pushing us to do different changes, which has nothing to do with our transformation. And all of that is kind of like eating up our capacity for change. And on the individual level, on team level, on organization level. So this is something that you constantly need to have on your radar. You need to know when to slow down, when to speed up. You need to watch your team closely, your coworkers, colleagues, managers, you need to understand if they are getting overworked or not because these transformations are hard. It's more like a marathon, like a long run. So you really need to learn how to work well with your energy and how to recharge. For instance, celebrate successes, be open for mistake, invite your customers, let them tell you what they like on your latest changes. We need to be able to take care of ourselves when we are running such a long marathon. So that would be my last advice, really, not to underestimate ourselves, our energy, our capacity for change, but rather learn how to work with that.
[27:25] Katie: Amazing. Love it. Absolutely love it. I think resilience so important, both company level and individual level. And such a great note to finish on. And I think in the way you spoke about resilience, you sort of spoke indirectly about compassion. And I think compassion resilience, as you said, celebrating the successes, et cetera. Absolutely fundamental when you're going through a strong period of change or transformation or you don't make it there. So I think it's really important note to finish on. Thank you so much for being on the show today, Lenka. I know you're crazy busy and now we understand why, given all the areas you're working on. Really enjoyed our conversation. Thank you so much for being here today.
[28:08] Lenka: Thank you for having me.
[28:13] Katie: Thank you so much for tuning in today to the Focus B show. I would absolutely love to hear your feedback. So let me know in an Apple review or YouTube comment what was most valuable for you, and feel free to share this episode with a friend or a family member. Wishing you a wonderful, magical and focused day ahead.