Chapter 5
Disruption Empowerment
Digital transformation is hard even at the Siloed level of Stage 2. It involves going against the grain of several things that have historically made the enterprise successful. The change is massive, and the change leaders will need an unprecedentedly broad mandate along with top-down and some bottom-up support. This is logical, and most leaders understand this. The challenge is in getting precise on what “support” means.
In this chapter, I develop the discipline of how to provide this support in more detail. This includes setting up an inspirational vision, or a massive transformative purpose (MTP), that rallies the entire organization. The second element is to provide very tangible “air cover” (i.e., support from higher up) for the change leaders to take the necessary risks. The third element is to create informal leadership motivation by announcing personal skin in the game for the change, and the final move is to overcome initial inertia by selecting a feeder pipeline of areas that can immediately show progress.
These four elements of support aren’t random. They showed up as major factors for success in NGS and keep popping up in the case studies on why digital transformations fail. They are common to both digital transformation failures as well as nondigital. To illustrate this, I start with a couple of such examples. The first is the failed attempt to convert to the metric system in the United States.
Why the Effort to Introduce the Metric System in the United States Failed
Ever wonder why the US still hasn’t adopted the metric system just like the rest of the world? It has not been for want of trying. There were several efforts, including those led by the National Bureau of Standards in the 1960s, an act from the US Congress in the late ’60s, and even a law passed under the Metric Conversion Act of 1975 declaring the metric system the “preferred system of weights and measures for United States trade and commerce.”
The failure of that last determined effort in the ’70s and ’80s is a good case study on the effect of fuzzy support from sponsors on major transformations. The execution almost immediately ran into indifference and resistance. In 1981, the United States Metric Board (USMB), which had been previously created to drive the transition to metric, reported to Congress that it would need a clear congressional mandate to accomplish its mission. They didn’t get it. Finally, in 1982 the Reagan administration disbanded the USMB due to a combination of factors, including its lack of results as well as a push to cut government spending.
The fact that the USMB had to ask for a congressional mandate to lead the change is a clear sign that they were not empowered to execute the conversion. Contrast this outcome with the many successful digital transformations led by the Singapore government. It’s a good lesson on the importance of empowering change.
It may be tempting to write off this episode to the proverbial lack of consistent government priorities and professional execution. The fact is, this isn’t very different from the tug-of-war and second-guessing that occurs during transformations in most corporations. There was no clear common purpose that could rally the country or the change leaders. Interestingly, there was a financial case for change, but it was hard to understand. The USMB, which led the change in this case, had no air cover from Congress, who were in theory the sponsors of this change. Neither Congress nor the president had any particular skin in the game.
Most digital transformation efforts end up looking remarkably similar to the US metrics project. Let’s contrast that with an example of a more successful transformation from recent history.
The Turnaround of the Washington Post
Under the surface of the Washington Post’s recent turnaround is successful use of technology, driven by the ownership of Amazon founder and CEO Jeff Bezos. The Washington Post was in deep trouble in 2013. Revenues were down 7 percent to $581 million in 2012. The paper had just booked a loss of $54 million, up from $21 million in the previous year. Print ad revenue continued to decline. It had dropped by 14 percent in 2012. Circulation of the print edition had also declined 2 percent. They weren’t alone; similar iconic newspapers and magazines were also suffering. The Boston Globe had just been sold for $70 million. Newsweek had been sold for a mere $1 (although with it came the magazine’s accumulated financial liabilities). When Jeff Bezos accepted the offer to buy the Washington Post for $250 million, opinion was divided on whether this was just a goodwill donation to a storied institution or a smart business decision that was simply not apparent to others.
Fast-forward to 2017. The Post announced plans to hire more than sixty journalists after years of layoffs and hiring freezes. The Post is privately held, so financial results are not openly published; however Forbes reported publisher Fred Ryan sharing with employees that the paper is now “profitable and growing.” Subscriptions were reported to have grown 75 percent, and digital subscription revenues doubled. Online web visits surpassed those at the New York Times for the first time.
What did Bezos do to revive the Post? He set the vision to turn it into a great national and global paper. He supported and provided a high degree of freedom to the editorial side of the business, while dramatically transforming the digital and consumer-centric parts of the newspaper. He put real skin in the game in terms of investments, and he personally participated in much of the technology transformation. The sidebar provides more details on Bezos’s actions. In the rest of this chapter, I codify the actions that define systemic support and empowerment on digital transformations.
The Discipline of Disruption Empowerment
There is a common thread across the metric system and Washington Post stories in that both were disruptive visions. However, only one of them had the MTP, air cover, skin in the game, and a feeder pipeline of initial projects. The disciplined execution of these four items is what I call “disruption empowerment” (see figure 10). It creates the conditions for the change leaders to execute hard transformations. Let’s take a deeper look at these four elements.
Massive Transformative Purpose (MTP)
A massive transformative purpose, or MTP, is the higher aspirational purpose of the organization. It differs from traditional vision statements not just in its pithy format but also in the sheer magnitude of the transformation that it declares. The book Exponential Organizations by Salim Ismail makes a strong case that this isn’t just a Silicon Valley fad. Most exponential organizations appear to have one:
Google: Organizing the world’s information
XPRIZE: Making the impossible possible
Microsoft: A computer in every home and on every desk
Tesla: To accelerate the world’s transition to sustainable transport
What’s different about the MTP is its ability to generate a pull and to motivate a community to do the nearly impossible. There’s almost a sense of manifest destiny that can result from a strong MTP that pulls together the change drivers, voluntary community members, and those affected by the change.
That’s why it’s important to set up at least a trial MTP at the initial stage of chartering your digital transformation. It’s important to capture the hearts and minds and imagination of not just the central team driving the disruption but the larger community and crowd that will be participating. The Washington Post employees are no doubt motivated by the goal to go from being a great local paper to a great global paper.
Figure 10 The elements of disruption empowerment
In contrast, in our example of the metric system conversion, there wasn’t a similar aspirational goal that captured the imagination of all the stakeholders.
On P&G’s Next Generation Services initiative, we set up an exercise at the initiation of the team where we brainstormed through various options for an MTP. We settled on two options: “Free up the employee, for free” and “Disrupt the shared services industry.” We chose the latter because we felt that it had a more exciting and larger scope of work that went beyond transforming employee capabilities.
Air Cover to Take Risks and to Fail Forward
Let’s put ourselves in the shoes of the transformation leaders for a moment. They have just been picked to work on an exciting but risky venture. Other than the senior executive sponsoring the change, everyone else views their work with a degree of suspicion and fear. The prevailing reward systems and culture are also likely to be headwinds. How do they continue to face this without getting bogged down or incurring unwarranted career risk?
It’s the role of the sponsor to not just legitimize their work but to provide them the custom-designed support to smooth potential reactions from the corporate immune system (more on that in chapter 7). The best way to accomplish this is by proactively addressing this with the transformation leaders, anyone affected by the change, and ancillary stakeholders.
The transformation leaders need to understand not just the success criteria but also the principles and behaviors that will be expected of them. Here’s an example of what was chosen for the NGS team:
Speed is more valued than perfection.
We expect that only 10 percent of the experiments (projects) will be successful and that the team will fail fast for learning purposes on the rest.
They have free rein to drive change within certain predefined boundaries, and they will be rewarded for taking smart risks.
There will be a fast escalation and support mechanism to help shield them against noise generated by corporate immune system reactions.
The people affected by the change would also need to understand how they are going to be taken care of through the change. Examples of the types of questions that need to be answered include:
What are we changing to, and how is this going to be in their best interests (or, at a minimum, have a neutral effect on their interests)?
What is the role they need to play during the change?
How will their reward systems be tweaked to support the transformation?
Ancillary stakeholders also play a key role in enabling the transformation. They need to understand where they need to help and where to stay away by providing answers to these questions:
What is the transformation, and why it is critical?
What is the role they need to play, and where are they likely to be called in to help?
What are the enabling signals they need to send to their organizations to support the transformation?
Addressing these questions with the change leaders, the change-affected, and the ancillary stakeholders sets up the necessary reward systems for success. P&G’s Global Business Services leadership was very deliberate in enabling this.
The second way in which air cover can be provided is to openly commit to it as an important strategy and to communicate it openly. GBS president Julio Nemeth took on this role enthusiastically. The freedom afforded by such air cover goes a long way to delivering fast and effective transformation. Those entrusted with the US metric conversion project continued to be under attack from some of the members of the same Congress that had chartered them to lead the work. That’s the opposite of air cover!
Leadership Skin in the Game
As they say, leadership skin in the game is the difference between being involved and being committed, which is like ham and eggs—the chicken was involved, but the pig was committed.
Warren Buffett usually uses the concept in the context of company leaders investing in the companies that they run, and the term is therefore often incorrectly attributed to him. The analogy is perfect for digital change leaders. For enterprise-wide change, the executive leadership, from the owner/leader/CEO downward, needs to have true skin in the game. The difference in skin in the game in the examples of the metric system failure and the Washington Post turnaround was clear. Congress had very little skin in the game for the metric system change. And even the little commitment that was there was fully eroded after the change of administrations. By contrast, Bezos has his own money invested at the Washington Post, although skin in the game doesn’t have to be monetary alone. Personal time investment is equally important. At P&G, the GBS leadership was completely open with their time for the NGS work. I worked out of the same open-office desks as the rest of the team to enable informal meetings and fast decisions. Julio spent several hours each month on the floor. Every GBS sponsor provided weekly input on their projects.
Skin in the game can also come in other ways. It can be an open declaration of commitment to business outcomes. So for instance, in converting advertising to digital platforms instead of the traditional print or TV media, a combination of both dollar amount committed to digital media as well as a commitment to outcomes in hitting certain thresholds in each of the business units will drive the conversion faster than just an overall corporate-level goal.
Feeder Pipeline for Starting Disruption
One of the hardest problems facing the transformation leader is to get momentum going. During the initial days, speed matters a lot. Like crime solving, where the probability of an arrest falls dramatically after the first few days, the lack of momentum can kill digital transformation. The best way to build momentum is to get a quick win. Experienced sponsors know how to prime the pump with a good starter project, something that will generate a quick win and help build momentum. At NGS, we handpicked highly credible operational senior executives from each of the GBS service lines to work full-time in NGS. They were able to identify and seed the first few efforts to transform their previous operations rapidly. Of the batch of four experiments (projects) that were started in the summer of 2015, we were certain that at least one would deliver major quick-win results within three months.
Chapter Summary
Digital transformation is a hard change. Underinvesting in empowering the transformation leaders is a mistake that often comes back to derail progress.
The metric conversion effort of 1975 in the US fizzled out in a few years because the change leaders (the United States Metric Board) were not empowered sufficiently by Congress to drive the change.
In contrast, the editorial board and the technology leaders of the Washington Post have witnessed strong commitment and empowerment from owner Jeff Bezos in driving digital transformation.
To codify disruption empowerment, four elements were identified:
Massive transformative purpose (MTP)—articulating an ambitious higher-order purpose that motivates and pulls in people to the goal.
Air cover to take risks and to fail fast—providing the transformation team with the freedom to be a “learn by doing” team.
Leadership skin in the game—clearly lining up your personal success to the success of the change via a visible level of personal commitment.
Feeder pipeline for starting disruption—helping the flywheel of transformation get moving by seeding the effort with a quick-win choice of pilot.
Your Disciplines Checklist
Evaluate your digital transformation against the questions in figure 11 to follow a disciplined approach to each step in Digital Transformation 5.0.
Figure 11 Your disciplines checklist for disruption empowerment