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Daniel Saks: [0:06] For digital heroes to thrive, they really need to be in an environment that is supportive of them. Create opportunities to find those people in your organization. Find the people who want to be part of this change.

Gerald Kane: [0:20] It does come back to the right mindset, the constant willingness to experiment and understand how digital innovations will impact the company.

Daniel: [0:34] Earlier this year, I sat down with Dr. Gerald Kane, professor at Boston College, an expert in how organizations respond to digital change. Since then, we've collaborated on a research report, "Digital Hero Mindset ‑‑ The Traits People Need to Innovate in a Technology Driven World."

[0:53] The report looks at the traits that define the people who are the most effective at driving digital transformation, or as we call them, digital heroes.

[1:04] On today's show, Gary and I are joined by Rich Nanda, principal at Deloitte Consultant to take a deep dive into the results of the report. We also talk about the related findings about digital leadership from their new book, the transformation myth, leading your organization through uncertain times.

[1:23] It's a wide ranging conversation that details why today's digital transformation is more difficult, why there's going to be an explosion of innovation over the next three to five years, and the traits that people need to navigate these changes affectively.

[1:38] This is Daniel Saks, Co‑CEO AppDirect. It's time to decode how to cultivate digital heroes.

[1:49] Welcome to "Decoding Digital," a podcast for innovators looking to thrive in the digital economy. I'm your host, Daniel Saks, and I'll sit down with other founders, CEOs, and change makers to decode the trends that are transforming the way we work. Let's decode.

[2:11] Gary, great to have you back on the show, and Rich, so excited to speak with you today. A lot of exciting things happened since we first chatted with Gary. We co‑developed a report called the "Digital Hero Mindset ‑‑ The Traits People Need to Innovate in a Technology Driven World."

[2:30] The collaboration provided so many insights that we wanted to have Gary back on the show today to speak to the report. We're also really grateful to have Rich with us today who's going to share his knowledge from his collaboration with Gary on their own book, "The Transformation Myth ‑‑ Leading Your Organization through Uncertain Times."

[2:52] With that, really excited to kick off this podcast.

[2:55] Gary, one of the things that was super interesting that we've seen is that regardless of what type of company you come from, whether it's a technology company, a legacy company, a fast grower, really transformational change comes down to people. We've identified certain characteristics of those people that increase the likelihood of them to be successful.

[3:16] Can you share some of the insights that you had from interviewing digital heroes for the report?

Gerald: [3:21] Absolutely. I think the first thing to point out is for digital heroes to thrive, they really need to be an environment that is supportive of them. What we found was that there was this recursive relationship where we call it the flywheel in many organizations between the individual characteristics of the digital heroes and the organizational environment.

[3:42] Then they feed off each other and gain momentum. A couple of things we found was first, having and communicating a vision really enabled two way transformation, like top down and bottom up. I'm going to quote from Patrick Pichette, who's the chair of Twitter, that these digital heroes can see the future and they believe that this future is better.

[4:01] When they can communicate that future to the people in the organization, people are willing to sort of get on board and help make this vision happen. The second thing we found was that curiosity of the digital heroes really leads to a healthy level of risk tolerance.

[4:17] When we talk about curiosity ‑‑ and I was reminded from the interview with Helene Barnekow, who's the CEO of Microsoft Sweden ‑‑ it's a disciplined curiosity because curiosity isn't enough because our day‑to‑day tasks will crush us with the things we need to do to keep our days going.

[4:34] Making sure we find time to be curious, and what happens is, as we find time to be curious and organizationally curious, it shifts our mindset from success or failure to what can we learn as a result of these experiments, and as a result of this curiosity.

[4:50] The growth mindset is a theme that ties together both the report we did and the book we did with Rich. Third, this passion for the mission turns the organization into a talent magnet. Dax Dasilva, the CEO of Lightspeed says that those who make the most change are those that are driven by passion. They make that change because they get other people excited about that change.

[5:13] That could be positive passion, where you see a vision and you're excited to make that happen, or Jim McKelvey at Square said that can also be driven by negative passion. I'm really upset about something I see happening out there and injustice in the world. We want to work to make the world a better place as a result.

[5:29] Last but not least, we found that [inaudible] of the digital heroes creates a bias towards action and iteration. Lee Lestadi, for instance, said, we're going to keep believing there's a better way to do something. The path isn't going to be straight enough into the right. It's going to be zigzag. It's going to be hard.

[5:46] These digital heroes keep at it. They don't spend time thinking about what next, they spend time doing and then reflecting on what works so they can do something else, and that action orientation. It's these characteristics between the digital hero and the organizational environment that they're bedded in that gets this flying wheel of change going, gets the momentum going that really enables the transformation in companies.

Daniel: [6:12] Rich, you work with companies all the time that are really trying to uncover this transformation, I know you wrote about it in your book. What examples have you seen of leaders that have driven these characteristics to drive transformational change?

Rich Nanda: [6:24] Look, I like to characterize a lot of what Gary was talking about. There is a growth versus a fixed mindset. Really understanding that change creates upside, innovation creates new lanes to play in.

[6:40] Leaders that bring that growth mindset, they're going to create experimentation. They're going to allow for higher degrees of risk. They're going to find that flywheel that starts to turn. Positivity in that creates more opportunities and it sort of snowballs on itself.

[6:58] One leader that we spoke with as part of the book, Rajeev Ronanki at Anthem, he was brought in as their chief digital officer. This is a very traditional old health plan company that effectively tries to help patients and providers connect to each other. The information flow about how appointment gets done, the financial flows.

[7:19] It doesn't get more legacy than oiling the US healthcare system. Rajeev came in and he had this idea that they needed to be a data and an intelligence company. If they did that, they would be able to provide better care to patients, and they would be able to match providers with great patients, and make those providers' life more efficient and more profitable.

[7:44] Sure enough, it paid off. Years ahead of the pandemic, they started to actually invest in their data, invest in artificial intelligence to help manage and understand that data. When the pandemic came, one of the first things that happened, there was this phenomenon where patients that needed care, they weren't going in to providers because of fear of the virus of the pandemic, and they were missing out on really important care.

[8:09] Anthem was able to use AI to go find those patients and nudge them to say, "Hey, you got to go in and get this care. Here's places you can go that are safe. Here's telemedicine options that are safe. It's only because Rajeev had that vision of being a data‑driven company, and getting ahead of that digital transformation was that growth mindset that was able to get care to those patients in a very impactful way during a difficult time.

Daniel: [8:37] That's a great example. One of the things that we found when looking at the report around the Digital Hero Mindset is beyond the traits that people may have and beyond their ability to be really successful. There's also organizational factors that would influence their ability to drive this change.

[8:55] Gary, what did we find about really the culture that can enable people to drive this change and ultimately become an amazing digital hero?

Gerald: [9:04] The way you make this happen is first to find the digital heroes of your organization. I guarantee, every organization has people who have that growth mindset who see that future, that Patrick Pichette talks about, and believes that it can be better. It wants to be part of an effort like that.

[9:21] The first thing is create opportunities to find those people in your organization, whether it's through an internal innovation incubator, whether it's through hackathons, whether it's whatever format it comes, find the people who want to be part of this change.

[9:37] Then the second thing is protect those people from the organizations. Jim McKelvey has something interesting. He talked about one organization he was working with. He encouraged them to give their innovators a one get‑out‑of‑jail free card, where I'm going to break organizational rule for the effort of innovation.

[9:55] You get a little bit of that, not a free pass, but the opportunity to change things, because your organization does want to kill innovators. That's just every organization is built that way. How do you create an environment where we can protect them?

[10:09] Third is it really need to start small. Starting small innovation teams. Start with small groups of people who want to make this happen in short bursts, six‑ to eight‑week initiatives, to try to move the needle in some small way that matters for your organization.

[10:26] Then the trick is repeat. So many companies do a six‑ to eight‑week innovation, do a hackathon, they pat themselves on the back and say, "Look at how we're innovating. Aren't we doing great?"

[10:37] Those small changes aren't going to lead to transformation unless they can get that flywheel going and finding that the next set of digital heroes who want to be a part of that, building momentum through those small wins and through those successes, publicizing them, sharing them, celebrating them and get more people on board to making that happen.

[11:00] That's how you sort of get that momentum going for transformation to really happen within their companies.

Daniel: [11:06] Attracting talent seems really core to that. One of the things we've seen in the industry as of late is the great attrition, so many organization losing talent for a variety of different reasons. Gary, what can companies do to better attract and retain their digital heroes?

Gerald: [11:23] I think we are at an unprecedented juncture and I'm sure we've heard the term unprecedented a zillion times over the last 18 months. We sort of have a timeline of when business will be going "back to normal," or when that opportunity will be.

[11:39] When we published our book, we thought that was going to be September of 2021. Now it's looking like it might be closer to January 2022. The exact timing doesn't matter. We have a couple of months to a year to decide what we want our organizations to look like. What level of hydrant work, what level of in‑person, what types of tasks are appropriate for virtual and what types aren't.

[12:03] This is something we deal with in the book. For the organizations to take a step back and say, what type of working environment do they want? More importantly, what type of working environment do the employees we want to attract want to have?

[12:17] Because we've seen the virtual environment has enabled, particularly tech companies, the ability to attract much more diverse talents because they're not limited to talent on Silicon Valley.

[12:28] Or an unprecedented opportunity to strategically think about what type of organization you want to build that's going to be able to attract the type of talent you want to get. That's going to be appealing to the type of customers you want to attract.

[12:42] You have the opportunity now to think through and intentionally craft that organization without the level of resistance that you would have at any other time. I hope leaders, don't just say, "OK, we're just going to wait until January 2022 and then life will be back to normal. I think that that's a real mistake.

[13:00] I actually think because of these changes, the more significant disruptions are still in our future. I think the next three to five years is going to be amongst the most exciting and amongst the most disruptive of any of our lifetimes as companies who have learned to innovate, who have developed new capabilities are rethinking the workplace are then unleashed with these new competitive capabilities.

[13:22] I think we haven't seen nothing yet to quote phrase.

Daniel: [13:26] We've gone through this unprecedented disruption, so transformation and growth mindset and change is super critical. Your title of the book is the transformation myth. Rich, what were some of the myths that you found?

Rich: [13:39] The overarching myth is that transformation is a one and done, it's a project, it's an event that has a start and finish. What we hope the readers of the book appreciate is that transformation is actually an ongoing capability. It's how innovation happens in the company.

[14:00] They have to position themselves, their mindset, their talent for this continuous state of transformation. That's always been the case to some degree, but it's especially the case in an uncertain and fast changing environment, which is what we have now for decades ahead is what I would guess.

[14:19] Then there's some other myths that we try and debunk in the book. The first is that technology is some kind of silver bullet, and by buying fancy technology, partnering with the cool tech companies, all of a sudden change is going to happen, and good benefits are going to accrue to the company.

[14:41] None of that's possible without the right purpose and vision for where the company's going, without the right articulation of strategy and how technology opens up new strategies or fortifies existing strategies, or without people, customers, colleagues that are adopting and using that technology in a different way. That's another myth is that it's all about the technology.

[15:05] Another favorite of mine is that digital transformation is the CIO or the CTO's job. This is ultimately the CEO's job, but the whole C‑suite and their teams have to rally around digital transformation. There has to be tech fluency.

[15:21] There has to be an understanding that how we grow, how we compete in a digital world requires technology. We can't ask one executive in one function to own that on behalf of the company. Those are a few that are my favorites from the research that we like to talk to clients about.

Daniel: [15:39] It seems like risk always comes to play. When you're a large organization with an incumbent brand and a lot of revenue and an incumbent customer base, taking the risk to drive these transformations can sometimes be hard for the company to embrace and, therefore, the culture tries to spend more time protecting what's there versus building for the future.

[15:58] What examples of good leadership have you seen that have balanced both the protect the core mantra from find the next thing that's going to drive the transformation?

Rich: [16:08] Fortunately, and Gary I'd love your thoughts here too, we had a bunch of good ones that we were able to include in the book from Fortune 500 companies to...We had McDonalds in our book, which is again, a very longstanding company with a franchise business model that has served them very well over time.

[16:29] They're looking to apply technology into the customer facing aspects of the restaurants in a very different way, and to get not only the corporate team on board that we have to have AI in our restaurants. We have to have differentiated customer experiences.

[16:46] Then to get the franchisees, a whole different set of owners and stakeholders on board. Yeah. That's a lot of change and alignment that has to happen. The stick‑to‑itiveness that we learned about from the McDonalds story was so impressive.

[17:02] What they never lost was the purpose, which is we have to keep providing quality experiences to guests, regardless of the circumstances. Our guests now are accustomed to things like online ordering, click and collect, getting quality food delivered to home, just as much as it is in the store.

[17:23] That requires a different level of customer interaction and operational interaction. I would look at that McDonalds story from the research as a pretty interesting one.

Gerald: [17:34] Yeah. I have a couple of others because I think, Dan, what was really interesting and a silver lining of the COVID is, innovating sometimes was required to protect the core business. Nothing motivates companies like to protect that core.

[17:48] Another great example is Marriott. Marriott experienced a 90 percent drop in demand. Their core was shattered. What do they do? They pivoted their entire call center to support the state of New York processing the hundred X increase in unemployment claims.

[18:06] They just basically took this resource they had and repurposed it to solve a problem and to keep the people employed. They could do that because they had the digital infrastructure to make it happen.

[18:18] The last example that I geeked out on from the book was Hitachi Ventura. They basically had created a factory system by which they had sensors in place to monitor the production in factories. Over the course of two weeks, they were able to use AI to develop new software, to then turn that sensor network into social distance monitoring, to monitor the temperature of their employees so they could get back to work on the factory floor in a much faster way.

[18:47] As you digitally transform, it creates what we call some digital superpowers of scalability, optionality, nimbleness, and stability that really enables these organizations to have some new strategic capabilities that they can leverage in the marketplace.

[19:05] It's not the technology alone, but it's about the capabilities of the superpowers that these technologies enable.

Daniel: [19:12] One of the common themes of the research that we've found is that transformation is not a technology problem. It's a people problem. How do we educate the next generation of these transformative people with a growth mindset and really enable a broad generation of digital heroes.

Gerald: [19:28] That's a great question. I think the hope is as we create more digitally mature organizations, that they will be immersed in environments where they can begin to learn these skills. If you are an environment that encourages a growth mindset rather than tries to crush it, I think that people are going to be able to sort of recognize opportunities for innovation.

[19:53] In our research, we asked how you learn things and how do you keep your skills up to date? 90 percent of people, this was pre‑pandemic, said we need to keep our skills up‑to‑date at least yearly, and 50 percent said continually to stay relevant to the digital world.

[20:09] We asked how you did that, and training was actually a very small portion of that. It was more about creating a work environment that enabled you to develop new skills and new capabilities and put you in to new challenges.

[20:22] Rather than sort of the steady step up the organization where you've climbed the ladder, we've seen some companies move to a tour of duty model, where employees will spend three years in a particular job and then move to something else entirely within the company to begin to round out those skill sets, to bring a beginner's mind and a fresh eye to new problems.

[20:43] I think skills and classes are great, but creating a learning organization is really what's key. That again is starting from the top, from the CEOs that really push this growth mindset, but then create an environment where that mindset can flourish.

Rich: [20:58] Especially in this kind of great resignation era then, once you get those people in the door and you can attract them because you have the growth mindset you're going to allow for innovation, they have to be empowered.

[21:11] Suffocating those people or frustrating them by not empowering them to experiment and grow, or by having overbearing management systems that boggling down. We're seeing it quite a bit in this era right now, where employees are feeling very empowered and what has to be something where they're seeing the reward, the fruits of their labor impactful and paying off.

Daniel: [21:37] What I find most encouraging and exciting about all this research is that truly anyone can be a digital hero and people can take the lessons to be able to succeed. That makes our organization's diversity stronger and more important and the importance of having an inclusive culture now much more important.

[21:56] It's incredible that we're working to a world where people will have equal opportunity and equal access to what they need in order to thrive. Therefore, it's really on the individual to be able to build this mindset and these skill sets to be able to drive transformational change.

[22:12] I'm super optimistic about the future, but maybe just in closing, Gary, what are you worried about 10 and 20 years out in terms of technology's ability to impact society?

Gerald: [22:25] I think we're dealing with a couple of questions right now. I've interviewed one CEO of a large insurance company. I always conclude my interviews with, is there anything I should have asked, but didn't?

[22:36] He said, I think the thing you should've asked, but didn't is, are we really thinking about what the world we want to create will look like? It's like we've seen digital technologies create massive inequalities and create a lot of problems in society.

[22:50] Facebook is right now on the chopping block for all sorts of things. Some of it's fair and I think some of it's not fair. I think some more we can think about what is the role that we want technology to play? What type of society do we want to build with these technologies?

[23:06] Not just sort of a race to say, "Who can get the most money? Who can get the most eyeballs? Who can get the most...?" And really get down to a small number of winner takes all, can we take a step back and use this opportunity?

[23:18] I do think it's a real opportunity to say, over the next 3, 5, 10 years, as business leaders, and as we did the book, I was so inspired by the leaders we spoke to and how they were called the golden age of corporate leadership. Because I think we really saw corporate leaders do some remarkable things over the last 18 months.

[23:37] Actually we had a series and the "Wall Street Journal" profiling a number of the people we did interview, because we just couldn't fit it all into the book. That's available on my website, and then Deloitte has a landing page that I assume we'll put it up there so people can access it.

[23:53] It's spending the time. What is the role we want to create in 10 to 20 years using these technologies? I think we have the chance to make those decisions now. I think if we wait too long, if we wait the five years, we may end up with a world that's really cool with shiny technologies, but not one that's really great to live in.

Daniel: [24:12] As we conclude, is there anything I should have asked but didn't?

[24:15] [laughter]

Rich: [24:17] Look, I've really liked this last topic on things to worry about. I do think thinking about responsibility and ethics. We're in an environment right now where we talked about purpose around vision and why, but purpose connected to ESG, kind of how companies are going to be a source for good, responsible outcomes, ethical outcomes.

[24:39] It's tough to think about the second, third, and fourth derivative of decisions we make today about technology and what might happen. That's another discipline companies have to really instill. I think if Facebook knew where the third, fourth, and fifth derivative of the social media platform they created, they might've made some different decisions a few years ago.

[25:01] How do we start to forecast those derivatives of decisions we make today? That I think is maybe a topic for a whole separate podcast and maybe a book, Gary.

Gerald: [25:13] Hmm. [laughs]

Daniel: [25:13] I'll take you up on that, Rich. As always, this was an incredible conversation, really inspiring just to know that the research validates that truly anyone who wants to develop and has these certain set of characteristics can be a digital hero and can make transformational impact on their organizations and the world.

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Daniel: [25:31] Thanks to both of you for joining.

Rich: [25:32] Thank you, Dan. Thanks for having us.

Daniel: [25:38] To learn more about the findings from the Digital Hero Mindset report, visit decodingdigital.com/report.

[25:49] Thanks for listening to Decoding Digital. Make sure you never miss an episode by subscribing to the show in your favorite podcast player. To learn more, visit decodingdigital.com. Until next time.