An Interview with the Author of Disrupting Digital Business, Published by Harvard Business Review Press: Ray Wang Interviews with Sity on the Future of Work and What CHRO’s Can Do About It
R “Ray” Wang is the Principal Analyst, Founder, and Chairman of Silicon Valley based Constellation Research, Inc. He’s also the author of the popular business strategy and technology blog “A Software Insider’s Point of View”. With viewership in the 10’s of millions of pageviews a year, his blog provides insight into how disruptive technologies and new business models such as digital transformation impact brands, enterprises, and organizations. Wang has held executive roles in product, marketing, strategy, and consulting at companies such as Forrester Research, Oracle, PeopleSoft, Deloitte, Ernst & Young, and Johns Hopkins Hospital.
His new best selling book Disrupting Digital Business, published by Harvard Business Review Press and globally available in Spring of 2015, provides insights on why 52% of the Fortune 500 have been merged, acquired, gone bankrupt, or fallen off the list since 2000. In fact, this impact of digital disruption is real. However, it’s not the technologies that drive this change. It’s a shift in how new business models are created.
Wang is a prominent and dynamic keynote speaker and business strategist working with clients on digital, innovation, business model design, engagement strategies, customer experience, matrix commerce, and big data. His Silicon Valley research firm, Constellation Research, Inc., advises Global 2000 companies on the future, business strategy, and disruptive technology adoption. Ray is a regular contributor to Harvard Business Review and well quoted in The Wall Street Journal, Forbes, Bloomberg, CNBC TV, Reuters, IDG News Service, and other global media outlets. Wang has thrice won the prestigious Institute of Industry Analyst Relations (IIAR) Analyst of the Year Award
Felicia (CEO at Sity): What is digital transformation?
R: When people talk about digital, digital transformation is really about shifting business models that leverage digital technology. What’s been happening, everywhere, is really disruptive business models are popping up, and people are saying, “How do we take advantage of that?” On one hand it’s how we price differently, how we sell differently, how we engage with customers differently, and on the other hand, “What cool and disruptive technologies are making those shifts?”
“Digital transformation is really about shifting business models that leverage digital technology.”
For the last five years it’s been social, mobile, cloud, big data played a big role, but we’re shifting to other things like internet of things, artificial intelligence, and blockchain distributed ledgers. We see these things popping up…the robotic era is pretty big, but the main point here is really that businesses are being disrupted not just because of the technologies which is what people really think what digital is about, but they’re also being disruptive because of the business model.
F: If we think about how digital transformation specifically affects the CHRO, or any VP of HR, what doe that look like?
R: It’s happening on a number of levels. It’s happening on the technology side because when you look at something as simple as recruiting or talent management, a lot of these capabilities have been put together in a way that, for example recruiting, we’ve discovered that it’s an inverse of marketing. Instead of marketing to people, you’re marketing for people to join you, which is really the same thing. On the talent management side it’s about the way we build relationships inside the organization, and we’re mapping that technology in a way we weren’t doing before because we’re studying patterns, or behaviors….we’re trying to understand what people really like, we’re trying to understand their innate abilities, and we’re trying to match them to work opportunities.
We’re starting to realize there’s a pattern here. The transactional systems we’ve had before in HR and these HR systems are now being used to understand the behaviors in between, not just among all the players that are involved, but in between people that are inside the organization, the type of work that they had, and the customers they deal with. However, they’re also studying that data to figure out what problems are going to happen, and when they would happen….that’s ultimately what they’re trying to get to.
“...HR systems are now being used to understand the behaviors in between, not just among all the players that are involved...”
F: What are the questions that come up that people are trying most to get an answer for? What are the biggest pain points that CHRO’s are trying to get answers to?
R: The biggest pain points that people are trying to ask are:
“Do I have the right team?”
“Are the people that I’m recruiting right for this organization?”
“Are they learning at the right rate? The right pace?”
“Do we have individuals that seem to be better managers than others?”
“Are there certain individuals that are much more customer oriented than others?”
“Are there certain individuals that are much more detail oriented for projects?”
What we’re really trying to do is solve the questions around the future of work - beyond where you work, when you work, how you work, it’s why we work. The thing about understanding why we work influences our ability to attract, retain, develop, grow individuals and bring them back into the network even after they leave the organization, and that becomes really important.
“...why we work influences our ability to attract, retain, develop, grow individuals...”
You’ll notice that people do a really good job with alumni, and it’s because they built that kind of culture. When they leave, people say, “Look, I had a great time, I learned a lot from this organization, and it’s my network.” It’s something that they bring with them that’s much more intangible than people realize.
F: What percent of companies do you think have a great hold on this, what percent is just getting started, and what percent still has no clue about this type of work?
We see the extremes. Very young companies like startups that are successful, they get that. They inherently do this - there’s no methodology, it’s not in a process, they just inherently get that. The problem is when they become larger companies, they have to scale that out, they have to build out bigger areas, expand to different geographies, new people come in that they’ve never worked with before…all that changes because they don’t have that process, they haven’t mapped out the intelligence there to be successful.
Then what happens is you have these very large companies that are trying to re-build themselves…then they finally get it. They understand what they have to do, they try to put that into processes and a methodology to be successful, and that’s how they build upon that. The challenge is, “What do you do with the folks in the middle?” So to answer your question, I’d say look, honestly there is about 10-15% of companies that actually get this and do it well. They tend to be on the extreme end on very established companies who have re-discovered themselves, or some of these are early adopters, and that’s what we typically see.
“...there is about 10-15% of companies that actually get this and do it well. They tend to be on the extreme end on very established companies who have re-discovered themselves, or some of these are early adopters…”
The challenge is, “How do we make this possible for everyone else?” I think it starts with the management team that believes in their people that say, “Hey, we care about our people, we think it’s important.” If that’s in place, and there’s a belief that we need to develop those folks, then yes, those organizations are starting to do that. They might be doing it manually, they might be looking for systems to help them get there, they might be learning from their existing systems to be successful, but all that is part of that process.
F: Focusing on the companies that get it and are doing well, you say they might be early adopters. How does a company become an early adopter? What does an early adopter program look like?
I think there are many. One you might start out with a really young team, another you might start out with a very mature team that’s highly developed and highly set into their process. I think the lesson you learn here is that people do it in small groups and small pilots just to see if it fits their culture, and then they build from there. Very few companies try to do a big bang approach to make that happen.
F: That makes sense. What is the typical length of a pilot program? Six months? A year? How long does it take to be successful?
R: These are three to six-month pilots to get started. Unfortunately, once people know the pilot is in, they think they’re done. That doesn’t work. This is something that is engrained, that’s part of the DNA of the company if they want to be successful. What they’ve realized is that you get it, you start at the first pilot, you learn from all the different kinds, you keep refining it every year. Some people refine it every half a year, but the more you’re able to refine it, learn from those lessons, learn what works, get feedback on the system, and feedback from your methodology is when you really have the ability to be successful.
“Unfortunately, once people know the pilot is in, they think they’re done. That doesn’t work.”
F: If an organization knows they need some type of transformation, how do you get leaders in alignment to take on this new transformation?
R: I’m going to start by saying that you’re not going to get everybody in alignment. You have go back and look at your comp plan. I don’t care what people say. You could have a dynamic leader. They could be leading everyone, but you have to get the comp plan. Once you get that and set those in place, then everything else follows.
F: What else is on your mind? Is there anything that you think needs to be said?
R: We’re about to enter this next era where techniques around artificial intelligence and machine learning are going to play big. What we have to realize is that the robots are not taking over. What we’re really doing is augmenting humanity, making it possible for everyone in the organization to make better decisions, or have the data to make better decisions. We’re learning and building feedback loops from our actions so that we understand how we can be better in terms of identifying not only things today, but also what we call anticipatory analytics. Anticipatory analytics allow you to skate to where the puck’s going to be. If you can skate to where the puck’s going to be, you can keep an issue from happening before it happens.
For example, you may not realize that you have an attrition issue in your organization because they’re not achieving their learning goals. You have a group of people that came in, a couple factors, maybe they’ve all been there for three years, they’ve all been promoted once, but there’s something missing. You might discover it has to do with self learning, it has to do with being challenged, it has to do with being put on the right project, some people want to manage people, some don’t want to manage people….all that comes into play. Being able to know what those factors are - that ’s the difference between having an organization that’s performing and continuing to grow, versus having an organization that’s going to stand still in anguish. That’s really where we’re trying to get to.
“Being able to know what those factors are - that ’s the difference between having an organization that’s performing and continuing to grow, versus having an organization that’s going to stand still in anguish.”
This is where we’re going to use AI, to augment humanity, to augment decisions. We’re not using it so that robots can take over, we’re not replacing people…what we’re trying to do is get people to make the right set of decisions.