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You're very welcome to the iconic office, the Greenway on Dublin St. Stephen's Green. And I am joined on the innovation show by a very good friend and a collaborator and the author of his brand new book, digital business strategy, how to design, build, and future proof a business in the digital age. Garvan Callan, welcome to the show. Thank you, Aidan. Great to see you. Great to have you man so Garvan and I for full transparency collaborate.
We work in workshops with many companies from all over the world. It's always a pleasure. But he has just launched this little baby in the Business Book Awards as well in the UK. Yeah, finalists in the Business Book Awards. Yeah. So looking forward to that. Who knows? Yeah, you never know. Yeah, let's get straight into it. met years ago when I was working as head of digital for a media company.
And I was thinking of the origins of that and it wass digital transformation, but nobody knew what it was, including me, by the way. And I remember once being asked to wire a projector. And I was like, I think that's more IT, but is it my job? I'm not sure. And I, as I said, as you were like, that was the same for you. And you were a senior executive in a bank. Yeah. Yeah. So it's changing for us all the time. All of us, all the time.
And I think it's one of the things that's constantly getting redefined with the pace of technology change and innovation. And I'm sure we'll unpack that loads. But like you, I used to get calls as if I was the help desk. Yeah. My phone's not working. Or, I need a new SIM card. Can you guys sort that out? So yeah, that's how it goes. But like that, I think lots of people continuously try to unpack. And define digital. It's a really broad thing.
What digital means for them, their organization, their context, their market, their customers, their clients, their partners, and so on. And it's actually a really important departure point is getting that definition. The book is packed full of. Multiple frameworks for many different people. And the configuration of your organization really dictates what you need, because it depends on your maturity depends on if you're an incumbent. It depends if you're a startup.
Maybe we'll say a word on that, because digital does depend on you as an organization. Yeah one of the things that I find in that when I'm working with clients or we're going to board or when I'm teaching is starting with the definitions and starting with kind of just context setting and joining some dots and we in the book could talk a little bit about this what is digitization versus digitalization versus digital transformation?
And there's a fourth one, a digital business and they're all slightly different. So if I unpack them, digitization is when I take a small thing or a small moment. and virtualize it. Let's say I want to make a trade, an investment trade. And I apply online, there's an application form online and I submit my short amount of details, and I send it in. That's digitization.
As long as there's somebody on the receiving end, hits print on your application form, and then they scurry around, and they bring it back into a manual process, and then they're re keying, or they're on the phone, or they're doing some kind of, physical trade or a multiple number of steps in the background.
Digitalization is where I might make that same application to make a trade, but actually there's a digital mechanism, there's a digital framework, and ultimately it goes in as code and it's executed as code, end to end. So digitalizing something is different than digitizing something. And often where organizations start, people start around this, they start digitizing. . So they start digitizing that application form, or they digitize a touch point, or they digitize a moment in a process.
When that process is digital end to end, then it's digitalization and digital transformation is usually that step one and two. Digitizing things and then stitching digitized moments together to create digital end to end processes. And processes are really experiences. So then when you've digitally transformed, you've transformed your entire method and means of going to your market and engaging with your stakeholders and so on, virtually, so you're executing everything virtually.
But that's usually for those who've started pre digital or who are going on a digital journey. Then there are digital businesses. And that's where we see all the big brands that we talk about and see startups and so on, whatever sector we're talking about, they're just born digital, they give birth to their propositions and their organizations in code. So they don't have the pre digital to go through the digitization and digitalization.
One of the things that often crops up when you see this with leaders is they go, Oh, I just wish it could start all over again because of the legacy mindsets of people, the resistance to change. And I often think about the advantage of the Amazons that they were born into this digital world or thinking that this is the way things are going to go.
Netflix, by the very nature of the word, been on the internet versus it started off as a DVD business, but they always had an eye on where things were going. And they understood trends. And you talk about this as a deep capability that you need inside your organization. I'm jumping all over the book here, please. Because one of the things about becoming a digital business is you need the skills to be able to do that. Yeah. And that includes the leadership team.
Okay, so I'm going to come back to that a little bit. Okay, plant that seed. But you talk about digital dislocation. Where I outsourced the future of the business essentially without knowing it as a leadership team to some young punk, my company me in that this case, or you or your team.
whoever it is and it's like going you go and solve digital and this person goes this is really important and then they're not listening to them or they don't want to listen to that's a huge problem that you call digital dislocation yeah so experienced I think lots of us have experiences it's changing but where we've come from because digital is relatively new in as a term I think that the contributors of the ingredients you of the digital age,
call it the third and fourth industrial revolution and out to the fifth now. They've been around for a while but we've only really started to get to terms with it and build IP and build capability over the last couple of decades, maybe decade, maybe two decades, and I counted that around a period of time.
And I think a journey that we've gone through is, you Organizations, many years ago, where digital started, which was out of the engagement layer, right, where we touched the market, right, organizations said, Oh, we need a digital strategy, because iPhone internet platforms, the emergence of those things. Or the board told us we need one. Or the board seen these things because they had a talk and said, we need a digital strategy.
And then you see the formation of business, digital teams, or the formation of innovation teams. And that's exactly at the edge of the organization. I think thankfully we're starting to see the journey back into, there's no need to have a dislocation. In other words, we don't need a digital strategy anymore. We have a strategy. We need to evolve, calibrate, accelerate our strategic thinking, our strategic planning, our strategic execution.
We now need to put digital at work in order to execute on strategy in the digital age. Because We've passed the point of an if and above. We are in the digital age, in the digital era, where most things are virtualized, not everything. But most things have the opportunity to be virtualized even to support our physical experiences.
And therefore, what you've seen is the dislocated digital team a lot of time have transversed into the organization to become strategists or at least strategy executioners. in the organization, because it's about putting technology to work. To create value unearth, or extract value that's already latent within a business, or to create that new value. And I think that's important, there are three different things. And the fourth one I would say is also protecting value.
Because there's such a competitive world out there now, we've got these start ups, we've got these new players, so protecting value, unlocking value, or unearthing value, protecting value. As well as creating your value, there's kind of those spheres. Some of the myths, so we've talked about some of the problems or some of the challenges.
There's Not so much a myth, but a belief that perhaps I need to have a digital product to be a digital business or I need to be a platform business or something like that, but you debunked that and you give some great examples, Ikea, Audi, for example, maybe you'll share that with our audience. Yeah, of course, the most physical products there are, furniture, cars. I love the Audi experience most car manufacturers are going that way now. We talk about it.
If you go into some of the marquee Audi stores in some of the most prestigious locations around the world, you go into a, a car showroom that doesn't have any cars. And this is really important. You don't therefore go to speak to a car sales. Person matter or woman because they're not there to show you the car that's in the showroom and convince you that this is the car for you. It's an inverse experience, really subtle.
And these organizations, the Audis, are saying, let's welcome the customer into our premises and let's have a conversation with them about them. This is the essence of customer centricity. and really, we talk about digital, digital equals customer centricity. So when you go into an Audi showroom, they bring you in, they say, Hey, Aidan, tell me a bit about yourself. And we always like to say, we like to talk about ourselves a little bit.
Once we're disarmed, accordingly, and they prepare themselves very well to do that. And Aidan might say, well, look, I've got my own business, I run a show, great family, got some dogs we like to get out and get the fresh air, and you start telling a story. And all of a sudden, in the Audi showroom, on digital banks and screens, with digital consoles, they start pulling up and presenting really subtly behind you, ah, what the Audi.
a six estate with the leather interior, with the pet kit, because you've just told, the person, level you're working at etc, right? And all of a sudden, you look behind you and you get a simple question like, what's your favorite color, Aidan? And Aidan says, I like black. And it's black. And when, do you like, what color interior do you like? Ah, stinking red. Whatever it is, right? I know, you know how it is. And all of a sudden.
The car that you had in your mind that meets your lifestyle, your aspiration, but that emotionally connects with you, starts to appear. That's not the car that they have down the back and so on and so forth. With skilled, dexterity and with a focus on you as a person, as an individual, who you are, what you are, what makes you tick. They start to create the product of you. And that for me is the defining things, the starting point of being a digital business.
And, embarking upon building a digital strategy. A key is the same. There's loads of examples. Walt Disney. I'd love to talk more about those as well. But it's that idea of starting with customatricity and building your vision around you and then working back the product towards you. When you leave the Audi showroom, they say to you, Would you like to, would you like to have a little run around at the weekend with that car? That one? That one? That one?
We'll pop it up to the house, we'll get you there. Conversion rates, sales ratios, conversion rates, through the roof, extraordinary experiences. The power of you. And building around you is the starting point, the essence of of digital strategy. There's a Greek myth about this guy, he was called Procrustes tortured people he'd invite visitors to sleep in the bed for the night. And he had this famous bed, and the bed was a certain size. And if you were too tall, he'd chop off your limbs.
If you were too short, he'd stretch it. Sounds right. And I always think about it from What happened and still happens unfortunately in the digital world where people have, it's almost like digitization where they cram in their existing product into a digital world or stretch it to try and work for them without actually introducing a whole set of capabilities or as you said, dislocating the digital team away in sector 7g away from the company.
Yeah, and there's no. way for them to upskill or share information. So it's one of the reasons I got into the education part of this, because it's so important to educate a team and help them realize, cause if you tell somebody what to do, they'll resist you. But if they go, Oh, I really get this now. And I remember writing an article about this years ago, and I called it the death of the salesman or saleswoman. And the whole idea was that a digital world changes how you sell.
So to your point about the Audi salesperson. They have to present that in a totally different way. They have to read cues in this, not the way they used to. Because one of the things we all hated was being sold to. Yeah. And you talked about this in one of the workshops we ran where , you said that Once we set the bar to a certain level, that's the new bar. It's almost like the Netflix effect. You're an indigenous player trying to fight against Netflix. of going, not anymore.
This is the bar or Amazon with next day delivery. And some poor incumbents going, now we have to deliver in the next day. That's the new bar. That's what digital does. . And if you liken that showroom experience to digitization of the car buying experience When they created that, that's 12 more years old now, that experience. So, it's been around for a little while. That, that created what I term is the E plus one, right? So that's the new experience, the plus one experience.
But we all know what happens once we get over the hump of having the E plus one experience, it becomes the norm. Yeah. So one of the things that's driving commerce, that's driving business, that's actually driving the pace of change, and we all feel this tumultuous pace of change in the world around us. It's this, there's a supply and demand aspect to this, because the more we E plus one, by using digital to create a better, emotionally, Connected experience.
The more we do that, the more that becomes the norm. And the more that becomes the norm, the more we have to do it for it to set new norms and increase the flywheel. So Audi, for instance, goes a step further. So, you purchase your car. So you see the car, you can visit the car, you can track when the car is coming to you. You can track when it's getting back. You bring the car in for service.
The dreaded moment when, we all had the car service in, leave it in at nine in the morning, mine's in today, for instance, and I'm saying, I just dread, I dread the pickup in the evening and the big bill because I left it in for an oil change and, there's, there's about 15 things, lights, belts, whatever goes on, right, and Audi then recognized that An E plus one for them wasn't about making the initial experience better.
They did that, but they need to go down the chain, purchase chain, and actually down into the service chain, right, to win the right to purchase again. And they've started to do that. Digitalize that end to end experience. So when you leave your car in, they will call you at 11 o'clock and they'll say, and they'll tell you they're going to call you at mechanic's going to call you at 11 o'clock, be by your phone, you get a call on your mobile at 11 o'clock, you get a FaceTime.
So the mechanic's there, and he's walking around the car, you And he's FaceTiming you through and he said, Now I know you wanted to get the oil filter. I want to show you what we think we need to change. But we're not going to change it until we show it to you. And it's, anyway, they walk you, 10 minutes, walk around the car, need to look at this, there's a belt here etc. And then, when you finish the call, because you say to the mechanic how much is that going to cost us?
And they say, well it's going to be this, that and the other. You're you're relieved. You're thinking, Audi are here to look out for me. So they've brought the car and the, and not just the showroom, but they've brought the mechanics room back into me, wherever I am. They've given me relief that these are the things I need to do. I'm okay now, because I'm getting a care experience and I need to care for this car because Audi are caring for me and I need to care back for them and on it goes.
So that's another E plus one and that's the flywheel. So what does digital allow us to do? Using technologies to create these better experiences. But here's the thing. Once it starts, you've got to keep going. Because if you're not doing it, those around you are doing it. And that's why we see the Netflix wars and the other blockbuster wars and all those kind of things. E plus one. If you're not plus one, you're minus one. There's only two speeds. Let's get onto the digital 360.
Yeah. So there's a diagram from the book I'm going to show up on the screen here. I'd love you to take us through it because this diagram just shows you in a very simple diagram how not simple it is to actually get here. So you've gone through digitalization. You're not a digital business. So your ambition is to be. But this is actually how you need to look at the world. This is the way to break your organization down and start thinking about.
Okay, how can I apply digitization, digitalization, and how can I digitally transform my organization to get on that flywheel to create E plus one experiences? So at the very top, naturally, it's where we meet the market, right? And that's typically where a lot of people start. And that's at the engagement layer. And that's thinking about where are people today, and because they're physically places and digitally places, right?
So how do I make sure that I'm present for them physically, if I need to be physically, if I have a physical product, car, or if I'm digitally money is a kind of, today is a digital thing, where do I need to be digitally? And oftentimes we need to be both physically and digitally there. So, right out of the engagement layer, you're starting to think about where's the client, where do I need to meet them, what's the job that they're trying to do? And if it's, Physical and digital.
How do I combine those and blend those so people can get the processes they want done? Like the car journey, physical, digital, interchangeable. And that's where it often starts. Right behind that is what we call the proposition layer. So that's what's your products and services. And that's the idea of, your application form. or you're straight through processing.
Starting to think about how can we reimagine how we'll help somebody to get their job done and how will we amalgamate products and services at the engagement layer to help them achieve their goal. Because it's all about achieving the customer's goal. But the fattest layer, in the 360 is the process layer. And I did it on a globe on that basis. Because that's where the value is for most organisations. Yes, of course there's value in giving people options to come to you.
And re bundling and revitalising your propositions, your products and services by being able to deliver them through digital means and methods. But actually the jam organisationally is around using digital technologies to create a digital footprint and the full end to end virtualization of the, of delivering, that buying experience or ultimately the service experience. So it's the top half, right? And what an organization needs to do is look at that and say, okay, well, where do we start?
Do we start at the engagement layer? Because maybe you have to because of competitive factors. Maybe you have to because that's your opportunity to get ahead. If we think of banks, created a digital access experience quite early. Because they believe that with the virtualization of money that they could offer that with the, the take up of mobile, that they should offer that and adoption rates. But actually, what it was a significant driver. of that motivation was right down at the process layer.
Because we mostly, we, all had to troop into branches. So we had to get onto the contact center and wait to talk to somebody in order to transact our money. So, this is where the double whammy comes in. You can potentially increase, put your product and service at the client's or the customer's fingertips through digital. Doesn't mean you're going to stop them coming into a branch, right? You can, they can still do that as well. You can do both.
But actually by the shift to virtual service, you can create incredible efficiencies at that process layer. Now you can't do that unless you enable your organization with the humanware. The people and you create the workplace that's a digital workplace because you can't either build or deliver that and serve it unless you have, that unless you work through the human factor and of course human needs to be able to leverage digital and data and all the technologies and the operations.
to be able to virtualize the processes, the products, and the propositions in the engagement layer. The last one we have around it is the marketplace. Because organizations are shifting now to saying, okay, how can we integrate our products and services into other people's domains and products and services? And the platform era has driven a lot of that.
So the kind of the sixth one in the wraparound is, how can we think about plugging in our engagement, our proposition, and Enabling our processes or our people or our technology through integrating with third party services and that's the idea of platformization. Most people have a view. that platforms are all about the social platforms. They are, of course, but it's one definition of platforms. Again, we cover a little bit of that in the book.
But very simply, there's platforms at the front, which are ways that you can think about creating a platform for buyers and sellers. So, lots of the trading platforms are like that. Or placing ourselves into platforms such as social, so we can be there in the conversation where it's happening. But platforms, more and more, have actually become more important down here because lots of organizations, old and new, don't have time to build the technology anymore, right?
They want to use the technology to to be on the E plus one wave, and that's getting faster and faster. So, smart organizations, Microsoft, the sales forces, and so on and so forth, are down here at the bottom creating platforms to enable organizations to go faster at the top layer. And on that piece, right? So the last piece about the platforms so a bank, hundreds of years old, these organizations, and in the 70s, perhaps they started to build IT infrastructure.
So big, massive rooms, servers etc. And there's a huge technical debt of that. Where the organization doesn't want to let go of that investment. So you've some cost policy, the CFO but we've spent so much on it. And then you have the digital team, hopefully not dislocated or the new CTO that's been hired or the old CTO who realizes this is no longer fit for purpose. Yeah. And they go, we got to get rid of all this, but then you have all these risks.
And I see this all the time and I feel so, so sorry, particularly for people working as CTOs. Yeah. And they're trying to build the new and manage the old, including the skill sets needed to manage the old. And there's huge, not only technical debt, but there's a psychological debt behind that debt. Well, there's a connection, there's a connectivity, right? So there's the cannibalistic. Fact that, many CTOs are trying to unbundle, unpack, de dupe, retire old to, to build the new.
But one of the things that's really interesting, and again we cover it in the book, we, we call it, talk about the one to many effect or the spin out syndrome. We take banking but I see it in technology organizations, I see it in retail organizations, I see it in media organizations, I see it everywhere, in all the sectors I work across. And here's the thing, we were doing business pre digital for a long period of time in, in physical ways.
And we have to remember that this virtualization of things is less than 100 years old. And let's put banking in, in, in context here. In the 70s, 60s, 70s, we started to see the emergence of the phone. If you think of it as a virtual way to, replace the physical engagement of going in, right? So we've seen the phone, then we've seen the ATM, right? So in the 70s and 80s, we went from one way to doing business, to two to three ways of doing business, right?
But then very quickly that followed with online and then followed with the mobile and then that followed with social and now we have to do it on Alexa. Now those changes, right, 70s, 80s, 90s, noughties, in 40 years, We exploded from one way to two, to three, to four, to many ways. And here's the thing, because of the E plus one factor, you can't not do what you already did. You've got to explode. And business, and so that's just ways of contacts, the engagement layer at the very tin.
If you think about all the products and services. Movement to propositions. Then if we think about all the technology that's been, that's required, all the data that needs to be managed. And then if you think about the capabilities you need to have, all the skills you need to have in the organization. And then there's a constant push to be more efficient. So, you're trying to do this process layer all at the same time. And we've gone to one to two to many.
So the spin out syndrome is actually exponentialism in an organizational sense. For a long time, one way to do business. Now many ways to do business. And to do all those new ways to do business, you need to rethink your proposition. You need to rethink your people and your capability and your culture. You need to rethink your technology. So, it's not just The CTO, they're in the center. Absolutely. It's your CPO. It's your CEO. It's your CMO. It's your CCO, your commercial, I could go on.
It's everybody needs to rethink in very short periods of time now, how can we get on this curve, go E plus one so we're not E minus one. And actually, it's about undoing cultures. It's about undoing propositions. It's about undoing hierarchical kind of thoughts and mindsets, as well as all that technology. So I think it's more, it's not just, it's more. Peter Drucker famously said, if you want to do something new, you have to stop doing something old.
And that piece, the endowment effect, of stuff you've built, just like with technology. I was thinking about this that, for example, you mentioned Netflix. So Netflix and Blockbuster, the story goes that Netflix tried to sell to Blockbuster, they got laughed out of the room. But John Antioco, who is the CEO of Netflix, had actually got a better product than Netflix on the go.
He wanted to apportion millions to it, was made go to market, and basically he got ousted by Carl Icahn, the investor who came in. But one of the things he wanted to get rid of was late fees. And this is often lost in the story of the Netflix Blockbuster story. But Blockbuster wanted to get rid of late fees. But because of that, he was met with huge resistance by his colleagues. Particularly because they were making money off of late fees.
I say that to say, you see this a lot, not only in banking, but many organizations have built up an old product that still throws off a profit, but it's actually getting in the way of them building in the future. How do you deal with that? Yeah, well, so, I totally agree. The, in the book and in my philosophy, and just from my experiences, right? I've been around this for a long time. The first centricity that I talked about.
That just 180. We don't think and go to market with a product that we have to sell. We go to the market and see what's the job the customer is trying to do. Then we try and assemble using digital tools and data and all that kind of things. All the, the treasure chest that technology gives to us, right? But immediately you're hitting a red light. Because you've got complexity, because of the spin out syndrome. And because you've got your mindset, your culture, all those kind of things.
And you've got this innate connection with how you did things before. We all, you, I've seen you use this slide, it's a brilliant slide, hands up, who wants to innovate? And then, hands up, who wants to change? so changing is really hard. So the second step, people find this a little bit unusual, but it is fundamentally, you cannot actually depart from that. on building strategy today without eliminating and putting to bed the old ways.
So, I talk about in here, but efficiency in the second building block of building a digital business, particularly for organizations who are, transitioning from and into and trying to fully digital transform. And you practice efficiency and simplification for the following reasons. The first is you've got to stem the tide of the spin out syndrome because you can't keep building because it's not, we're not finite. We're, we, we're not infinite, we're finite.
So we've got to find the capacity to do the new by retiring the old. So that's good. Quite logical, right? So people will go, Oh yeah, okay that's fine. Try and do it, try and do it. Go into the organisation, look at, your tens, your hundreds, maybe even thousands of products. And the technology companies themselves have been a really interesting case study. So, SAPs, Microsoft, all the, and they're all, like, thriving now.
And they've all had to go through this simplification journey, which is you need to do less in order to do more. And that's actually a spiritual and a cultural journey for organizations. Because you've got to say to yourself, I've got this ambition and I've got this opportunity over here or I've got this necessity, meaning some creating value dislodging value or protecting value. So, I've got all that and I no need to do it.
Can't do any more and this is the, this is the great crux that everybody's in. Budgets, capacity, resourcing and so on and so forth. The only way to solve that is look at what you do and start to apply the Pareto. The 80 percent equals the 20%. So start looking at the 20 percent of your value that takes up 80 percent of the quantum of activity in your organization.
And then of that 80%, go 80 20 again, and go 80 20 again, and 80 20 again, and start taking away either the one or two products, or the one or two segments, the one or two channels, distributors, whatever it is, or just steps in the process that gives you some room to maneuver And start building new capability, new process, new engagement, new proposition. And that's an incredibly important but liberating thing to, to do.
The other thing that's really important about doing that is, I, again, we talk about the nine risks, nine soft risks. First one I think I have up is don't code the old. Because there's always an opportunity to spring clean. Whether it's to take steps out of a process. Whether it's to, just make the experience better. Don't ask for the client's date of birth three times. Ask for it once. Don't ask for, I was doing a process myself this morning. I filled in my address three times. I'm going.
Why am I doing that today? That's a waste of my time. It's actually a waste of the organization's time gathering it, putting it in a data store, trying to manage that data store, that server space, that cyber threat, it's all those things magnified. So simplify. To accelerate. So that idea of efficiency is it wins you the right. I talk about winning the right.
And I think that idea of you need to win the right and the way to win the right is spiritually, emotionally, retire, some waste, spring clean, clear the decks, build capacity, and then you can get on with the hard stuff rather than trying to do it all and then some. I always think about that where, the idea of the Phoenix willingly walks into the flames, burns itself up and the Phoenix is like gone. , one more drink, just one more drink.
And that's what it's like, that resistance to people who are like, they've built up that capability over decades in some cases, maybe it's what they're known for. And they're so embroiled in, that's who they are in the organization. There's a term you used a few times, spin out syndrome, one of the terms I love, that and the Walter effect, I'd love to share these.
On the screen, I'm going to show the spin out syndrome because I think for those people who are watching us on YouTube, it's very important to see this to understand what you're talking about because it's not spin out as in I spin out part of my organization. It's actually the idea of a web spinning out, which I love. Yeah. And it's, it's the whole idea of it is the spider, the humble spider and the humble spider starts. by building their organization, which is their web, right?
So that's how they go to market, that's how they capture value, and that's how they survive. And what happens is that spider, as they spin their first, layers, threads they gotta get to minimum, level, right? So let's say five or six threads. And then hopefully they catch a fly and then they eat the fly. And of course they get a bit bigger once they eat the first fly. And this is what creates the flywheel and the spinheads. So, over time they need to build a bigger and bigger web.
The web becomes more delicate. Because of the nature of, it's less firmer, it's, it's a broader ground. They're getting bigger, all those kind of things. Therefore, they have to catch more and so on. So, it's very similar to the external E plus one. It's the E plus one on the inside, the effort plus one to build out all of this. But as I say, it's not just around channels. And it's the point I just said a few seconds ago.
It's about, down here in the data, so the more you try and do things, the more data you have to try and capture. And the more you try and do things, the more technology you have to try and capture. Now, this is what everybody I see is dealing with, even startups. Yeah. So, even startups, like one year in, two years in, like they're already building legacy. Yeah. Because technology around them. Customer expectations around them.
You see it all the time, so this necessitates a new way of thinking about strategy, actually, which is really what the book is all about. That point about the startup things that once they get to scale up level or they've, they're there, they've made it. Yeah, but because of the speed of change, that is never over that journey. And I think that happens. That a lot with scale ups that they go. Yeah. Oh, yeah, but we're not like some legacy incumbent. We're better than them.
But they quickly forget that they've got certain skill sets that may no longer be relevant. Also, technology has changed. And I think this is the big challenge that we face as a society, and particularly in businesses. Those loops of change are just more and more rapid. It's verticalization of the S-curve. That's right. Yeah, all the time. So I sit on a couple of boards and they're really brilliant scale up businesses. And I advise and quite a number of similar, right, and again, across sectors.
And it's funny is it is, it's a dichotomy. It's, organizations that are ambitious. are driving hard and fast. They're picking their point on the horizon now. They're North Stars. They're picking their technologies. They're picking their way of organizing. They're picking their leaders, really importantly. And they're executing. And once they execute, and get to a point, in a matter of, months and years, in fairly short cycles, they're finding that they need to think about recalibrating.
Because, either the technology is being rejuvenated, Generative AI. For the last couple of years, it's just people have had to rethink their data and analytics strategies, the ways of working agile and the adaptable organization has been actually one of the biggest, most difficult things that organizations are trying to do, because when you're building your organization, you're building the patterns of work, particularly for star, for scale ups, right?
So they're building patterns of work, and as they build patterns of work, and they, and they see, and patterns of work are really about building competencies, and putting competencies side by side, so that they can get the work done. So they're building up finance functions, or they're building up HR functions, because they're scaling, and they're going from 50 to 100 to 200 and 400 people. And all of a sudden, okay, well, we need a HR function. So they create a HR function.
And then they realize, the H. O. are stopping everything. I'm not saying the H. O. stop everything, they don't, of course they don't, right? They slow it down, but they have to, that's their job. But so does finance, so does regulation and compliance, so, so does product, so does technology. As you get bigger, you start to feel the binds.
And. And that's because most organizations, most of us have come from schools and particularly business leaders who are a little bit more mature have come from schools where we organize ourselves in capabilities and organizations on that path up or big organizations are finding it really different, really difficult to construct a different type of way.
of doing business, which is the move to the adaptable and the agile organization for lots of reasons, two of them that, that kind of beam out, right? So when you, pocket responsibility. It means you have to hand responsibility over, and that's the silos in organizations. And when you're spinning up and scaling up and you're creating those capabilities, if you build them in the silos, you're already creating fault lines in your organization.
And I use fault lines on purpose, because they're the intersection of the friction and the fault in the organization, because all of a sudden people build up a competency here, And it's a slightly different view of what we need over here. They don't build like that. They build like, like that, right? So, so you have to undo that, right? And how do you start to organize your organization around your flows, around your value chains, and around actually your customer journey?
Because most people are building their organization around competencies, which again is the inside out way of looking at the world. Whereas the smart organizations are building around. The customer and the experience and they're saying let's have a team who are focused on the very first moment where they see our brand. So they're organizing brand teams in a nutshell, the way they're organizing, the first engagement.
And organizations are learning now, either when they're growing up or they're unbundling to repackage their organization around organizing around the customer or around the moments. Now, that's probably one of the most difficult things for an organization to do because everyone has the view, everyone can get it. But try and ask people to undo their organization, particularly in, in the hierarchical organization.
It's just very difficult because the people at the top are the most ambitious people. They got to where they got to and they want to go further. And how can I go further if I'm going to be less responsible? That just creates that, that friction and that fault line.
So, for me, as I'm working with organisations, whether it's on a board level, advisory level, I think that's probably one of the hardest shifts that organizations are doing because it's a bit like the efficiency and the simplification. You're asking them to undo what they've been successful doing for many years. And that's hard. It's hard to unlearn. And that's what this new world is asking us to do all the time. It's asking us to unlearn how we think about going to the market.
Not your product, start from the customer. Unlearn by simplification. Unlearn by undoing your organisation so you don't have the, you're not creating the spin out syndrome. And creating that complexity. And the other one that's that's really difficult and it's on the top of the apex of the seven core competencies, this idea of open.
So, so many organizations have been successful because they've looked at the market, they've matched a product, they've built the product, and they've got this vertical kind of, even though the organization is structured in its functions, they've got this vertical integration from market right through to technology, all up to the supply chains and so on.
That and this idea, and this is where the really successful accelerant organizations have made the step change, that have made the big difference, is they're saying, we don't need to build a vertical integration, we just need to come in and do something very different and something very unique in that value chain and recreate the market. So, Amazon, decided when they entered the market. We don't need to produce anything. We just need to put the buyers and sellers together.
And let's build, and so many organizations have done that. How do we build, a core capability around being an open business? And so many closed, legacy businesses are really struggling to say, maybe we don't need to go to market ourselves. Maybe we need to be where the customers are, because the customers are on Netflix, or the customers are on Amazon, or the customers are, they're just on their mobiles, all day, every day.
And how do we, Place ourselves in there and maybe say we don't need to own the channel. Now, that creates incredible tension in a strategic conversation in an organisation. Because there's this, inherent desire. to own value chain, and equally at the back when I say about technology, and it's happening at the back more than the front and the 360, organizations the technologists, the CTOs, the CIOs now are saying, we've got to adopt cloud, we've got to adopt SaaS and PaaS and so on and so forth.
We can't build the technology any more as quick as you folks in the business want it. We've got to be able to ingest technology and use technology, but it's happening much faster at the back, right? It has yet to the fight, the friction at the front for ownership is critical. And again, I think, technology organizations and banking, some of them have done it. There are some banks that have just put their hands up and said, you know what?
We wanna be a global business and we can't build a global bank. Yeah. So what we're gonna do is we're gonna build a tech stack and we're gonna build a culture and we're gonna help the other people go on the journey. And that's a very open. Mindset. Now that's at the very edge of the philosophical chain. So what am I saying in all of this? Yeah, it's about using technology to create value or defend value or unlock value, but actually it's not really about technology.
Yeah. It's all about your stance and all about thinking about what is your business? What market are you in? What proposition are you trying to, deliver to create what value for who? And how do we need to think very differently about leveraging technology? and constructing things in a different way so that we accelerate and create E plus one as a starting point. But how do we engineer our organization so that we can perpetually, E plus, because that's where the jam is.
Not in the first move, it's in the second, it's in the 10th move, it's in the 50th move. And again, you see the Titans. of experience, the apples and so on. They just keep, creating a better experience. Now, they're running out of product, right? But the experience is where they've differentiated. Constantly they're moving the dial on, which allows them to charge for premium. Yeah. Allows them to dislocate. There's a thing called competitive disadvantage.
And this is about how can we be competitively disadvantageous, i. e. create enough room between us and the competitors Not by what we do, but how we keep doing it and how we keep driving and how we keep evolving and changing by smelling and understanding what the customer is saying when we introduce it. And if the customer doesn't like it, we'll stop. Yeah. If the customer likes it, we'll double down, we'll go after that because of value. But why do we buy things? Because it solves jobs.
So we can find the best way to solve the job. But do it perpetually and recalibrate. That I believe buys us the the, not just the opportunity, but the actually this competitive disadvantage. I want to come back to a couple of things. There was a lot in there around touching on culture.
You think about that idea of a liquid or fluid organization, a shape shifting organization versus the old hierarchy and banks in particular, because they're so old as an institutional shape, very hierarchical based on religion and war, that shape of the triangle. Now they're more, as you say, project based. And that means if you have a legacy organization, And I go, okay, I need Mary from this team, John from that team. You can picture what happens. They're going where are you going?
Oh, I have to go. I have to go and do this for Garvan for Aman Sikandman for two. And it's it's like the way a consultancy would work and you're in housed into an organization, but that is met with massive resistance, right? So that, that's one thing I wanted to share. And then there was the flip side of this, where if you're using more and more cloud based. SAS products, and you're trying to configure a stack. That's agile with that comes risk.
And if you think about one of the, I feel so sorry for my financial organizations, particular because of always. There's this massive internal guilt and fear around risk and then there's like cyber security coming at this end and you've all these different challenges. I think you're so right. OHS banking, but like most industries have been through some shape and form of crisis now, but very particularly cyber. If you've touched on it, it's really holding.
People to a sense of fear and I think so true in terms of risk. And most people historically, if they, when they don't understand it, Aidan when they come and look at digital ways of working, they think it's riskier, many ways because they don't understand it.
They think it's riskier, because potentially we don't start with a project plan that's going to stretch out for two years where we believe we've got certainty around how long it's going to take, how much it's going to spend, who's going to be involved, what technologies they're going to use, and this is the waterfall to IBM. And actually if you stand back and you peel back from it and say, oh what is this adaptable, fluid, agile way of working? It's actually a way to de risk, not add risk.
So what you do is you get the right people, You put them in a room, give them the right problem statement, and they start thinking about, in two, three, four week cycles, how do they take a really big problem and actually slice it and dice it down into the most important problem to start solving, expend a couple of weeks effort. At the end of that couple of weeks, say, how did we do? How did that go? Okay, that went okay, that didn't go okay, that needs to go better, et cetera, et cetera.
Let's start again. And again, into the flywheels let's start again. Let's do it again or let's do more of it, or let's do something different now 'cause that's boxed off. Compare that to starting a project year one and not seeing the outcome of that project until year two. That's you've entirely expended all the resource, all the money to find out at the end of year two. Oh, nobody wants this. Maybe nobody wants it. Maybe we built it on the wrong technology.
Maybe we just didn't calculate it right, because you typically don't start those projects by looking at the end customer. You start looking at internal requirements, documents, BRDs and so on and so forth. So again, it's a flip about how we think about working, but actually it's a de risk.
That's really hard, I find, for some leaders to make a shift to, and some organizations to make a shift to, but I call it leaders specifically, right, because the higher up you go, the more is at stake, the more important budgets are, the more pressure points that come along. So there's a greater desire for certainty.
So in financial services, in med, in all the regulators, yeah, but just in leadership in generally, there's a greater need for certainty because you're putting your big bets on as a leader to let go. And to say to your organization, you go figure, listen to your customer, let them guide you and tell you that's a difficult departure point again, for the more senior, maybe more mature leaders, it's easier for, for younger leaders who are building their businesses to, to start from.
And that's a very significant mindset shift that I see, I observe all the time. I know you do too. Well, I want to come to the culture and I want to end on culture and the ice, I wear a pin for those people who follow the show that reflects the show each week. And this is the cultural iceberg that I'm going to share on the screen in a moment. But before I mentioned the Walser effect and people give out to me for not coming back to that.
So the Walser effect really sums up the challenge I mentioned about that verticalization of the S curve. But the challenge of the speed of change and I'd love you to share this one. Yeah. Yeah. So it's, it's, for me, I think it's critical that we break things down into very consumable ways because it's complex. We've seen that earlier on. So for me, I always find that when I'm with a team or with a room of students or whatever it is, we break things down and understand them pretty simply.
And I try to say to people, look, there's a couple of fundamental technologies That have created this digital age. So the Internet's 40 years old. It went through multiple phases, by the way and GAR covers them in the book. So each of those phase, yeah, so we go through different stages. So this, there's the internet, and then the internet was liberated by mobile and then that gave rise to platforms. And then once we start to see digitization, digitalization, and digital transformation, we see.
Datazization. So we've seen data created footprint which brought analytics out of its winter. It had several of them and now we've seen the flourish in artificial intelligence, which is You know, but putting data to work for faster than we as humans can do it. And then we've seen this blossoming of cloud computer, cloud computing. And they're called the IMPACT. So, Internet, Mobile, Platforms, Analytics and Cloud Signals. I'll show them quickly on the screen here for you.
So, they have all come together. Now, This is the third Fort industrial revolution. Right. Computer science enabled the, so the blur effect from third to fourth, but it was sim similar in the second and the first industrial revolutions and right back to our agrarian society and right back to hunting society. Here's the thing, it's never one technology. It's the amalgamation. It's the combination of technologies that creates the force.
on opportunity and the power of the change that we experience. So I put it like the Wolster Effect. So the Wolster, if anybody has been on one, you can go into the fairgrounds, thanks, in Ireland and the UK where they were born. And it was originally just the carousel, the horse and the carousel that you have the kids on. And it's just, it's a one dimensional experience. Very slow. It's very nice. And the clever engineers behind the Wolster Effect said, Let's mix things up a little bit.
Let's combine some forces. Right, so they had a circular carousel and then they put an undulating floor on it. So that created a second effect, a second factor. Then they put rotating cars on an undulating floor on a rotating carousel. So that was the third force. And then they started to ramp up the speed. But the really important difference with the Walster effect is what they call the operator.
So that's the girl or the guy who comes open just at that perfect moment, gets at the back of the car, On the decline and gives the spinning car just that little word that moves it into G forces. So people on the Wall Street come off in, pretty rough states. Green and all kinds of things going on. It's only a carousel. Moving at, a couple of miles an hour. So what's the story? And the story is the same as the Wright Brothers.
When they, made that step change on flight, and indeed, DaVinci and many others before that, they combined technologies. So the Wright Brothers, it was perfect timing. Aerodynamics was understood for many years. And they actually wrote to the Smithsonian Library and they gathered up all the artifacts and knowledge of aerodynamics, right back to da Vinci. And they studied that. But then they were able to put that together with fabric science and also able to put that together with light.
steel and wood manufacturing techniques. But the big thing they got to do was they had the engine. Because what stopped everybody before that, so Rudolf Diesel was over there with the engine. Smithsonian Science, Institute was over there with all. Point is, it's never one technology. It's the combination of multiple technologies. in order to achieve something big and great.
In many ways, I think that's what's defining around leaders and organisations that are able to embrace and build digital businesses by thinking about their strategies through this lens. And you talked about culture, so this feels like we should maybe, yeah. Yeah, let's show the iceberg because people won't be able to see my pen here. So we'll try to open the screen. So again I want to dedupe, I think it's our job.
to simplify the world and Hall Andrew T. Hall, I think, I hope I have the right name brought to life the idea of talking about the culture as an iceberg. And if I'm, thinking about how I might explain this to a class or at home culture is really the description of how we do things around here. And we can only see the things that we do around here They're the habits that we have the formats that we work in and so on and so forth.
So when we're describing culture, we have to remember that culture, as we think about it, is a description of what we see that we do. But Hall talked about the iceberg and said That's only really 10 percent of what's going on. The 90 percent sits below the waterline that you can't see.
And that's crystallized by the values, the beliefs, the culture, the stuff, that psychological, those shifts that I talked about earlier on, this idea of continuous discontentment, for instance, and I'll touch on that in a second, but it's the idea of Leaders who are harnessing, those pioneers, whether it's the rights or whether it's the Tim Cooks or the Jobs and whoever it is, right, that they're thinking differently about their market, how to build,
deconstructible strategies in order to gain that competitive disadvantage and they're embracing and harnessing them. Setting out those stalls in their organizations. They're bestowing their beliefs. And that's why we talk about culture and that's why we talk about purpose today. Purpose is very, is purpose been run forever, but we talk about it now in the corporate boardroom, right? Everyone has a purpose.
Now we're all still trying to figure out what a purpose is as well, and we can go back to that, but it's this idea of leading with purpose, leading with intent, and organizing your organization around. So. The culture iceberg is about a new culture, a new philosophy, a new way of thinking about creating value, defending value or unlocking value. But very importantly on the waterline, which is where I add to what Hall had, it's the structures and the customs of the organization.
So it's about rewiring the organization in terms of its structures, where people sit, what work they do. And even the customs, and by customs I mean as a leader not coming down and telling the organization where to go. It's saying, asking the organization, what does the customer want? That's a custom, that's very different than before.
So when we have this belief that we need to build value around our markets, We have the structures that people are working in agile ways and we have the custom of the leaders coming down and saying, tell us where we should go, folks. Then we see different behaviors. and then we see different skills being built, and then we'd see very different patterns of work emerge around us.
So, for me, culture is breaking it down into those three layers, starting at the bottom, setting out that belief system, organizing in new ways to tap new capability, or build new capability, which is all technology enabled, but not only, and then going to work in different ways, pointing towards the value in the market, and unlocking the value in the market, established. Rather than trying to unlock the value in your product. It's very difficult. Brilliant.
And in the book as well, Garvan, you share the strategy house, and you share your own company 101, to actually show , how that worked. I'm going to leave that to our audience. It's in there. There's so, so much in the book. You've done a huge amount of work here. Very comprehensive. Everything's covered. There's no excuse for audience to not become a digital business. Where can people find you to find out more about your work?
hire you as a consultant, board director, whatever they're interested in reaching out for. The HR system of the world is LinkedIn these days, Aidan, so you know, check me out on LinkedIn, come visit me at www. onezero1. ie, so it's an O N E Z E R O and the number one. Bit of a twist or Just hit your book seller your favorite platform. You can check us, you can check it out with me online or go to where you buy your books. Do please have the interest. Love to hear from anybody.
But Aidan thank you and thanks to Iconic for having us here in in their offices today. And it's it's great to be with you on the Innovation Show. So thanks, yeah, to our hosts here, Iconic on the Iconic offices on Stephen's screen here at the Greenway, beautiful cinema that we're in here, brilliant book and always a pleasure talking to you and working with you, author of the digital business strategy, Garvan Cullen. Thanks for joining us. Thank you, Aidan.