Gerald Kane: [0:06] Digital heroes need to be both inspired and empowered and supported. If you can do both of those, at least 70 percent can be a digital hero. We can build them.

Dan Saks: [0:18] That's Gerald Kane, a renowned expert in the relationship between people, technology, and digital change. Jerry is a Professor of Information Systems at the Carroll School of Management at Boston College and has worked with companies such as Walmart, MetLife, Caterpillar, and Deloitte to put his insights about digital change into action.

[0:41] In 2019, he wrote a book called "The Technology Fallacy," a must read exploration of how successful companies drive digital transformation, based on surveys and interviews with over 20,000 executives around the world. As you're about to hear, Jerry is a firm believer in the idea that digital transformation is not a technology problem. It's a people problem.

[1:05] To create lasting change, you have to find people with the vision and the tenacity to push ahead. We call these people digital heroes. Jerry and I take a deep dive into who they are and how they work to drive change. This is Daniel Saks, Co CEO of AppDirect, and it's time to decode the digital hero.

[1:30] 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 changemakers to decode the trends that are transforming the way we work. Let's decode. Jerry, I'm so thrilled to have you on the show today.

Gerald: [1:55] Hey, I'm thrilled to be here. Thank you for having me.

Dan: [1:58] I recently read your book, The Technology Fallacy, and what stood out for me was this idea. When you digitally transform a company, it's not just the technology that matters. It's also the people. We found the same thing in our work at AppDirect.

[2:13] Digital transformation comes down to what we call digital heroes, people of the right characteristics, like curiosity, determination, vision, and influence to drive this change. That brings me to the first question. How did you come up with the idea to pursue this line of research, and what makes it so relevant today?

Gerald: [2:33] It's an idea that unfolded over time. This book is the result of a five year research project conducted in conjunction with "MIT Sloan Management Review" and Deloitte. I was leading up the team from the MIT side. We knew we wanted to look at how technology was influencing, how companies evolved, and was affecting companies in the here and now.

[2:57] We didn't know where we wanted to start. We started investigating, and we found that this human people talent strategy side was critically important, and yet it was largely overlooked in a lot of places where you focus on the shiny new tools of the technology and the stuff you can bring in and buy, and not enough thought was going into what you did with the technology once you had it.

[3:22] How it allowed you to do business differently? As we pursued this over that four to five year timeframe, we found that storyline to be one of the ones that rose up as being critically important, but under investigated, and this book was the culmination of that research.

Dan: [3:39] What are some of the biggest things that surprised you when you were researching the book?

Gerald: [3:44] There's all sorts of things and my favorite ones were things where I had a working hypothesis going in, and in fact, I found something completely different. One example was that I had a hypothesis that digitally mature companies, and that's the scale we used, whether a company is digitally mature and we categorized companies into early, developing, and maturing.

[4:07] I had this hypothesis that digitally maturing companies would have better leaders, and in fact, that's not by and large, what I found. In fact, over 50 percent of the most mature companies still said we need more and better leaders to be successful in a digital marketplace. What was different, however, is these digital maturing companies were doing something about it.

[4:28] They were far more likely to say we are developing the type of leaders we need to work in a digital world. It's not that these maturing companies had better leaders, but it's what they were doing about to get and grow these better leaders inside.

[4:42] Another great example is I had this working hypothesis that digitally maturing companies would experiment more with digital tools. In fact, that's not what we found. Everybody experiments. What's different is these most mature companies, when they do experiment and they are successful, they then use that success to drive change across the organization.

[5:02] Early staged companies are likely to experiment and they'd say, "Yay," pat themselves on the back, "Aren't we great for experimenting?" Whereas maturing companies, once they are successful, they use that to drive change across the whole organization and that's a big difference.

[5:16] There are a couple of more of those that just jumped out as, wow, that is not what I expected and it's not rocket science, but it was a bit counterintuitive findings.

Dan: [5:25] I assume five years ago, or seven years ago, when you're conducting the initial research, there was far less technology adoption. Can you tell me about the insights from the evolution over the five years of writing the book?

Gerald: [5:37] Absolutely. I'm going to break this into two different responses. The first was over the five years of that research and we have the data to prove this we definitely see a shift to more mature companies. Our quantitative data shows that about a 10 point shift away from people who say our company is in early stage to developing and maturing. This fits with anecdotal evidence.

[5:59] When I first interviewed Walmart, for instance, I was like, "What on earth are we doing interviewing this antiquated behemoth? They're never going to be able to digitally transform." Then I talked to them and they were doing some amazing stuff internally so that over the five years of the research, we definitely saw a progress towards greater digital transformation, greater digital maturity.

[6:22] Now I've been working on book number two over the last year because probably the growth that most companies have seen over the past year in response to the COVID disruption, has been more than the last 5 or 10 years put together. Put simply, truly forced companies to accelerate digital plans that they wouldn't have accelerated as aggressively.

[6:45] We spent the last year interviewing another 50 executives on their digital maturity and their digital plans, so much in the technology fallacy still applies to what we've been dealing with in a hyper compressed accelerated format. It was shocking to me is the number of executives in charge of digital transformation that we talked to that said this was a real opportunity for their company.

[7:12] That there are these plans they've had in place, they've been pushing and dragging and kicking and screaming their companies into a digital world, and COVID has been that motivating factor that has allowed them to push these transformations through.

[7:25] Many have said we've gone through 10 years of transformation in the past year with none of the typical people resistance that we would normally get because frankly, we haven't had a choice. If there's a silver lining to COVID, it's going to be twofold. One is that it has moved companies forward than they were already behind a year ago. Now, this has gotten them up to the present.

[7:48] My hope is a lot of digital transformation, you can get momentum and the hardest part is getting started. My hope is this recognition that you can do it and it's possible to make these changes is going to kick in that momentum that when we come out of this pandemic, whenever that may be, you're going to see even more innovation and more digital experimentation because we've proven we can do it.

[8:11] I'm hopeful that not only has the last year, but the next three to five years are going to be some of the most innovative we've seen in history, in some ways, because the opportunities there from the technology that are untapped at this point by organizations are massive. I'm hoping this is the catalyst that gets some of these things moving forward.

Dan: [8:32] I remember in the beginning of COVID, there was a little multiple choice cartoon that went around LinkedIn, which was, "What's the biggest driver of digital transformation? Your CEO, your CIO, your transformation officer, or COVID 19.?" I was the animist that it was COVID 19.

Gerald: [8:48] [laughs] Check.

[8:48] [laughter]

Dan: [8:49] Check. Exactly. One of the things though that struck me about The Technology Fallacy is this concept that digitally mature companies invest in digital leadership. One of the things you spoke about as being surprised was also the fact that digital literacy is a requirement.

[9:06] When you look at a lot of traditional companies or companies with many employees, that can be the blocker. Can you talk to me about that observation, and how companies can overcome it?

Gerald: [9:17] We asked one of our open ended questions, which was, "What are the most important leadership skills for leaders to have in a digital environment?" Number one was being forward looking. Number two is being change oriented. Number three was having technological understanding.

[9:34] The point is when you looked into the actual responses as far as technological understanding, it was more about this digital literacy. This basic working knowledge of how AI and machine learning works, and why it's important. This basic working understanding of what blockchain is and what opportunities that might have for your business.

[9:57] This is not people going out and becoming AI developers. It's making, so it's not magic. You can make intelligent decisions regarding it. I've often said it's a lot easier for me to teach the average manager, the technology they need than it is for me to teach the technology leader, the management and the strategy and the business knowledge they need.

[10:18] All of this is within the grasp, I would say, of your average executive. That's what technological understanding represented. If you think about being forward looking and being change oriented, how can you possibly have those traits in this world if you don't have digital literacy.

[10:36] In some ways, although digital literacy was number three on the list, it also incorporates all of these other things because how do you be forward looking if you don't know what the promise of AI, machine learning, blockchain and all this other stuff is to make intelligent business decisions and when the right time is to move and invest, etc.

[10:56] I really think this technological literacy and...Gosh, technology scares so many people, largely because and this is not to do with disservice of my co authors, who are all consultants largely because consultants like people to be scared of these technologies, because then they have to hire consultants.

[11:12] I would argue that most of this stuff is not rocket science. It's well within the grasp of the average manager. If your average manager has not updated their technological knowledge, their technological literacy in the last five years, that they're behind.

[11:29] In fact, when I teach my students these topics, I tell them anything I can possibly teach you in this classroom is going to be obsolete in the next five years. I'm not going to focus on teaching you specific things. I'm going to teach you how to teach yourself.

[11:44] We're in the golden age of learning. Whether it's TED talks, whether it's online learning platforms, whether it's Twitter, all of these things. The amount of capability for learning out there is just massive. What I try to do is inspire people to keep up with this stuff on their own because once you get started, it's easy to follow along and update your knowledge as you go.

Dan: [12:08] What I observed in 2009, we'd have boards of European countries and American companies coming to Silicon Valley to understand what was different. If I were to break it down, what was the secret source in terms of the difference in operations? It was this embracing of lean startup, of agile principles, of new frameworks like objectives and key results. All of that had to do with this constant iteration.

[12:31] What we saw is that majority of larger incumbent businesses, many that you interviewed for your book, like a Walmart or larger industrial manufacturing brands, they may have been operating in the opposite of agile. The reason's because they wanted to protect their product when there was a big launch. They wanted to make sure that they're testing things. It might take many years to do a secret launch.

[12:55] It's almost the opposite. What I observed is that it often started by an innovation unit on the side that was almost disrupting the core business to try to compete. When those innovation units had success through this new methodology, then those folks would transfer into other business units to try to transform the methodologies of those business units.

[13:17] In organizations where they actually try these tests and those tests failed early, it would set that company back by several years on their transformation roadmap. Is that something that you saw as well?

Gerald: [13:29] Yeah. There's a lot to unpack there. One is risk tolerance, is one of those things that all companies struggle with, particularly large ones. You need to have a certain amount of tolerance for failure and risk. That can be hard to do in a number of different ways. You can't just say fail early, fail fast, fail often.

[13:47] Failing's easy to do. Productively failing, learning from that failure, failing the right amount of time in non mission critical areas, failing in the right way is a lot more challenging than just failing. Getting that right, risk tolerance is really critical. We see that's the biggest thing that many of our companies wrestle with.

[14:08] Second, I would say that I'm a huge proponent of agile. The Technology Fallacy is all about there's a lot of similarities to Eric Ries's work and agile and such like that. First, disclaimer, big fan. We go beyond that in the new book and introduce a term called nimbleness, which yeah, it's related to agility. I would say all agile is nimble but not all nimble is agile.

[14:32] What we've seen is particularly with the right digital infrastructure, if you have this digital infrastructure in place, even these massive organizations can make extremely rapid pivots. A great example, one that I geeked out on...I'll give you two. One is Hilton. Massive company. 90 percent decrease in demand as COVID strikes. How, as a manager, do you react to a 90 percent drop in demand?

[15:01] They knew they were going to lay people off. Broke their hearts. How do we do this in the right way? They reached out to Amazons and to the grocery stores, and to all of these companies that had the opposite experience where their demand ramped up and they were struggling to find employees.

[15:18] What Hilton did was they took their recruiting platform and reversed it so that companies like Amazon, grocery stores, etc., could post jobs for laid off Hilton employees to apply for. They got preferential status because they knew these were high quality employees and Hilton would vouch for them.

[15:40] It created this reversed pipeline out of Hilton of its employees into productive jobs that allowed them to land on their feet. When demand started coming back the other way, these employees were ready and eager to return because Hilton had treated them so well.

[15:56] It's because they had this digital infrastructure in place. They had this digital recruiting platform in place. They just flipped the switch and turned it around. That's not agile. It's not experimental. It's not short bursts. It's being able to move the organization on a dime to make this happen. I just thought that was really interesting, inspirational, and creative.

[16:18] Another great example is Hitachi. There's a longer name for the actual company. Hitachi Vantara or something like that. They had worked on digitizing their factories. They had all these cameras, all these sensors to monitor the flows of products through the factories.

[16:37] COVID shuts down, they shut down the factories. As they start moving back, they do a hackathon and repurpose these sensors to be able to do social distance monitoring, temperature and monitoring of employees, and basically turn it into a social distancing monitoring platform that they can give feedback to employees. It took them two weeks to do this.

[16:58] They completely repurposed their factory sensors and their factory infrastructure to a socially distant environment because they already had the digital infrastructure in place. Again, not agile in the way we usually think of it as running experiments and minimal viable products, but very nimble and being able to change the entire factory on a dime.

[17:19] Agile, I'm all proponent for it. Digital platforms also enable nimbleness, which is a little bit different than agile, and what we've seen is thriving in this COVID environment where companies have had to take major shifts. Probably the most interesting and inspirational thing about the book have been all the stories of leadership.

[17:40] In fact, we have a series in the "Wall Street Journal" doing profiles of these leaders we've seen. Whether it's Beam Suntory, the premium spirits distiller and their process of pivoting to make hand sanitizer. It was very inspirational.

[17:54] We interviewed Invision Health, which had many of their physicians in the New York and New Jersey ERs, and how they were turning basically tablets into electronic PPE, like iPads. They hacked them to be able to monitor patients and machine.

[18:11] Some real inspirational stories of creative leadership, and we have lived through one of the most inspirational periods of business leadership that I've seen in my lifetime. It's been exciting to be on the frontlines to be a part of that.

[18:25] I like your term digital heroes because that's exactly what I would refer to all these people, is how do you think outside the box to be able to address these unprecedented challenges that your company is dealing with.

Dan: [18:36] It's powerful. We had a couple of customers, one being Honeywell, obviously a large PPE player. They pivoted their digital marketplace in a matter of weeks in order to transform to adopt PPE.

[18:47] We also had Vodafone on a global basis, leverage our platform to launch in a marketplace for emergency workers in order to be able to deliver technologies that they needed in an essential way. You see how critical people providing our technology merchants are to this current economy, and they're really the lifeblood, helping businesses.

[19:08] Going back to your Hilton example, does it take CEO to shift the whole company, or can any leader within the business drive nimble transformation?

Gerald: [19:16] Now we're getting back into agile. It's a both end. It's going to be tough to do if you don't have senior leadership support, because those take bold decisions, and the leaders who are making the decision needs to know the C suite backs their play and supports them and encourages them to make this decision.

[19:35] At the same time, it can't just be the CEO. They don't have enough bandwidth. They don't have enough visibility into the company. It's really about pushing leadership down into the organization and empowering lower level leaders to make the types of bold decisions that they need to make.

[19:54] At the same time, it's about this is another interesting thing that our data showed whom we asked who were more likely to be the inhibitors of change. It tended to be middle management, because they were, at least, according to our data, but it's backed up anecdotally, as well.

[20:12] Senior leadership was willing to push decision making down into the organization. More middle level managers were less willing to step up and make these decisions because it comes with a level of risk that they're not necessarily experienced with, or they're not necessarily comfortable with.

[20:28] I just finished the book "Team of Teams" by Stanley McChrystal, which is I think a great leadership book. He talks about, as a senior leader, the gardening metaphor of leadership.

[20:40] You can't just force it. You can't just make it happen. You have to cultivate the environment, where these leaders can grow and learn to make these bold decisions that are mission critical. His point when fighting ISIS was by the time, we got up to him to approve something, the situation had already unfolded so fast.

[20:59] As we move into a digital world, where speed of decision making is critically important that the ability to push leadership down and inspire lower level middle managers to step up and make the bold decisions that they need to make is really a strong competency.

[21:16] Now, digital platforms help this because they provide data. They provide the ability to communicate, etc., but if you don't have that culture of risk tolerance and that culture of supporting those decision making, those leaders can't step up.

[21:30] It's really incumbent on the C suite leaders to create the environment, to garden, to cultivate that environment where leaderships are empowered and able to act, that it's the responsibility of the lower level leaders to step up, so it's really that both end.

Dan: [21:45] What have you observed in organizations, how they can minimize the dependency on one, let's say, technology forward person, and how can they get better at ensuring that if they're putting people in transformational roles that those people are pre trained to embrace technology?

Gerald: [22:02] I'll answer, but I'm going to ask back to you first. Your concept of digital heroes, do you see them as being born or made? Can you teach digital heroness to people?

Dan: [22:14] What I would say is that anyone can be a digital hero, but not everyone can be a digital hero. What I mean by that is that in order to be a digital hero you need to have the motivation to be able to learn.

[22:29] Going back to your student example of saying, "I can't teach you today's concepts because they're gonna be obsolete in a few years but I can teach you how to figure it out." That's what I've found is that these digital heroes have this passion they have this exploratory area.

[22:41] Most of the transformation, frankly, is not about their business life it's about them transforming themselves, breaking through their fears, thinking about their peak performance to be able to keep this passion and maintain. I totally believe that anyone can be a digital hero.

[22:57] If you're not willing to learn the characteristics and put in the time and frankly, it's a lot of time not everyone will be a digital hero. What do you think?

Gerald: [23:06] I, 100 percent agree, and I'll put it into this framework. There's a lot of research backing this up, which I won't bore you with here, but we covered some of it in The Technology Fallacy. I would argue that there are three types of people in most organizations. I'll use your terms of digital hero because that's what we're talking about.

[23:24] First, there are people that are always going to be digital heroes, and that's about 30 percent. These people are wired to think outside the box. They're wired to be entrepreneurial. They're going to be a pain in the ass if you don't put them in a role because they're going to be seeking to do this.

[23:38] You're going to have 30 percent of the people that will never be digital heroes. That are always going to play it safe, that they want the checkboxes and the rules. They want stability. They want their paycheck. They don't want any surprises. There's 40 percent in the middle that can go either way and are going to respond to the culture and respond to the signals from senior leadership.

[24:00] The challenge there is that 40 percent. If you can convert that 40 percent to digital heroness, you're well on your way to digital maturity. If you discouraged that 40 percent, you're never going to be able to do enough.

[24:13] It's about getting the right culture in place where those people who are, how shall we say, reluctant digital heroes can step forward and be recognized, have the opportunity to continue to develop their skill set.

[24:26] Our research basically says that 90 percent of people say they need to update their skill set at least yearly. 45 percent say they need to update it continually. Yet, when asked, to what extent is your organization providing you the opportunities to develop your skills, it never gets above 50 percent in the most advanced industries, and it hovers right around 33 percent.

[24:53] Most companies are not giving their employees the right opportunities to continue to develop those skill sets. You need to inspire those reluctant digital heroes and then give them the tools to develop the skills so they can be that way. Now, keep in mind, there may be some response bias in our study because we're doing it through MIT, so we got more technologically savvy people.

[25:17] Most people report they want to work for digitally maturing companies or a digital leader. Most people report that they are willing to leave their company. 30 percent said I would plan to leave in a year if I'm working for an early stage company.

[25:31] Yet, if you begin to offer them the opportunities to develop their skill sets, that number drops back almost to no different whatsoever. It becomes 15 times less likely to want to leave their organization if they're provided the opportunity to grow their skill set because everybody knows the world is changing.

[25:48] Everybody knows digital is transforming industries, and people want to be in a position where they can continue to develop their skillset where they can be at least 70 percent digital heroes at least to some form or fashion. It's about unleashing those people and then supporting them, so they can get the skills they need to work effectively in a digital world.

[26:10] Again, going back to the silver lining of COVID, we've seen a rapid uptick in people learning digital skills. I work with a company called Skillsoft, and they saw 300 percent increase in the use of their platform. My son in seventh grade has picked up Python in the downturn instead of playing Xbox because he wanted to do something productive.

[26:30] I do think, at least, huge portion of it, digital heroes need to be both inspired and empowered and supported. If you can do both of those, at least 70 percent can be a digital hero. We can build them.

Dan: [26:45] Powerful. One other thought on digital heroes. I recently interviewed the co founder of Square, and his co founder is Jack Dorsey, in my mind, one of the preeminent heroes in the tech space.

Gerald: [26:56] Absolutely.

Dan: [26:57] You have Elon Musk, and we have a culture where media puts these heroes on a pedestal. Jim's feedback was the concept of the hero is a fallacy in its own right because everyone's human.

[27:07] He works with Jack. Jack has issues, just like everyone else does. However, Jim's perspective, which was interesting was, "Look, I've met some of the world's most successful people and they're human just like us." How do you respond to that?

Gerald: [27:20] One of the classes I teach at Boston College is called Tech Track. I teach my students for six weeks and then we take them for either week in San Francisco or four days in New York to tour tech startups. Obviously, we're doing things a little differently now, but it's been good with Zooms with entrepreneurs, and I was at Square.

[27:38] One of my students asked, "How does Jack lead two companies? How do you be CEO for Square and Twitter?" The response was, he has amazing lieutenants. That Jack is great, but also that next tier of leadership is also amazing and empowered, and that goes all the way down.

[27:54] The more you can empower that next level of leadership, the more the senior folks look better. Jack wouldn't be Jack if it weren't for the people at Square stepping up and taking more active leadership roles, and frankly, Jack being OK with that. Then you have different ones.

[28:13] Steve Jobs was notoriously a very different leader, and Apple is a very different kind of tech company. I'm not saying you can't lead that way, but you have to find the right way to empower your organization. There may be very different ways of doing that. Finding ways to inspire and empower that next level of leadership is essential for digital heroness.

[28:35] I would go so far to say is the real digital heroes are the ones that do create those environments where people can step up, learn, and lead.

Dan: [28:43] What a great conversation. Appreciate your passion and your insights. I feel in some ways you're preaching. I figured before we wrap up, I want to let you share how you got where you are today, and I know used to be in a different profession. You were a minister.

Gerald: [28:56] Yes.

Dan: [28:57] How did you go from being a minister to being a professor?

Gerald: [29:02] It's a good question. There are different ways I can tell this story that are more sensational or not. Basically, for 10 years I was a United Methodist minister at a large church in Atlanta, really loved my time there and made lifelong friends. I was able to be with people both highs and lows in their lives. It was a great community and a great experience.

[29:23] I always wanted to be a college professor and many of the same skills apply. You're working with people. I had a large educational role in that. In fact, some of the people, it was an affluent area of Atlanta, and many of the parishioners there were college professors that I still work with and keep in touch with.

[29:42] It was one of those things where I've always had a passion for learning new things. I've always had a passion for investigating emerging phenomena, and I've always been a bit of a tech geek. I started in something called Quantum Link in 1986, I believe, for the Commodore 64 when Quantum Link became a little company called America Online later which drove Internet 1..

[30:11] I've always had a passion for that, and I decided it was a much easier transition. Frankly, that background of preaching and working with people has informed how I approached this problem. I do see it as a fundamentally people oriented problem and getting the people inspired and engaged and changing their mindsets. OK, you're going to get me preaching again.

[30:37] In some ways, digital transformation is a lot like evangelism because you're trying to convince people of a world that doesn't quite yet exist, but you believe can come to be. In preaching, you're doing it for the afterlife or what can be after, but here you're saying this future is attainable by us, and you have to inspire them.

[30:55] I do get preaching at times because I fundamentally do believe that when managed well, technology can be a force for good. It can be a force for equity. It can be a force for more just society, and can drive real business value, drives me crazy.

[31:12] Ultimately, what drives me crazy about the church a lot of times and in a lot of traditional organizations, it can be run so much more efficiently. [laughs] There's so many things that don't need to be done and this is any corporation. That's one of my pet peeves. It's like, "If we can do it better, let's do it better."

[31:27] I've loved my time in the church, and I love even more of my time as a college professor because I get to work with amazing young students, amazing MBA students, cutting edge executives that are doing really cool things.

[31:40] I get to put them in touch with each other. I get to tell their stories. I get to engage in a lifetime of learning, which I have a ball with. I love being on this journey wherever it's going to take me.

Dan: [31:51] I'm so inspired by your passion. You can feel it on the other side of the mic. Appreciate you taking the time, Jerry, as always. I hope to get the chance to collaborate in the future and dig deeper on what leadership means and how to inspire the next generation of digital heroes.

[32:04] [background music]

Gerald: [32:05] Absolutely. Thank you for the time.

Dan: [32:07] Thank you, Jerry. Take care.

Gerald: [32:08] Bye bye.

Dan: [32:12] On the next episode of Decoding Digital.

Brad Garlinghouse: [32:15] It's not about the speculation and that price speculation of where's the price of Bitcoin going. It's about how do we use these technologies to solve real problems for real customers. To the extent that is delivering utility, and there is value in those underlying technologies and underlying assets.

Dan: [32:33] CEO of Ripple and former exec at Yahoo and AOL, Brad Garlinghouse. 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.

Transcription by CastingWords