Caterpillars into butterflies: leading with a digital mindset
Sharon Toye
(10-minute read)
“When digital transformation is done right, it’s like a caterpillar turning into a butterfly, but when done wrong, all you have is a really fast caterpillar”
George Westerman, MIT Sloan Initiative on the Digital Economy, 25 June 2020.
Key strategic moves increasingly employed by organisations in the pursuit of cost control, growth and market domination include digitisation, leveraging systems and data architecture, using the cloud and blockchain, creating or partnering with tech start-ups, building a digital business and driving growth through machine learning insights, AI and big data. The number of organisations that are reimagining themselves as digital companies is huge and every industry is represented.
One key industry illustrating the huge amount of change impacting every one of us is the insurance industry. Three examples provide insight into this fast-changing world:
Swiss-Re – the second-largest reinsurance business in the world has launched a pioneering micro-insurance service that automatically reimburses airline passengers for delayed flights. Customers buy insurance for a flight using a mobile app. behind which sits a pricing engine used daily to calculate the delay probability of over 80,000 flights.
Greater Than – claim that their AI system, trained with data on driving since 2004, predicts accidents before they happen. As a result, they can predict future claims and real-time risk, leading to a 40% reduction in claims frequency and 17% CO2 savings.
Technology companies are also making a play for the $6 trillion insurance market. GAFA (Google, Amazon, Facebook and Apple) have initially focused on health insurance offerings through the increased use of wearables. Their interest in life and personal lines insurance is now ramping up.
There is plenty of commentary, research and opinion about why and how the success of these organisational shifts can be frustrated and limited. This is particularly true for organisations on the transformation journey from large traditional legacy companies to survivors and thrivers in the digital age.
Many organisations, for example, have fallen into the trap of assuming that all things ‘digital’ can and should be left in the hands of the Chief Technology Officer (or the Chief Transformation Officer or the Chief Information Officer) while the rest of us get on with today’s pressing needs. This doesn’t work because it perpetuates groups of leaders who don’t think the digital transformation is coming, and don’t think bots and AI will change their organisation or their area of the business. Of course, you need a CTO or CIO to help lead the development of a digital strategy, hiring and building technical capabilities, and investing in systems and joint ventures. But it is a mistake to shift all the responsibility to them.
More and more studies have revealed that success is far less about the actual technology than you might initially think. Rethinking leadership is critical (Kane et al 2019).
At Leadership Mindset Partners, we support leaders across industries as they confront the twin challenges of both navigating digital disruption and delivering digital transformation. The ask of leaders – the majority of whom are Baby Boomers and Generation X who have not grown up as digital natives – should not be underestimated. Here’s a flavour of five of those asks:
“Dial up empathy”
Going digital isn’t done for its own sake – it’s a means to an end and that means is to improve customer experience. Stepping into a customer’s shoes is critical and customer research isn’t a one-off activity. Adopting regular ‘rituals’ that enable customer understanding is a key step. Entire organisations need to become less aligned along traditional lines that often lose sight of the customer and should instead be organised more around customers and customer cohorts.
“Move from certainty to curiosity”
Our old leadership model rewards leaders for being certain and making fast decisions. These skills are clearly still valuable in some circumstances. However, in a disruptive, rapidly changing, digital world leaders now need to question their own certainty, dial up their curiosity, get comfortable with not knowing the answer and collaborate with others to find it. Leaders also need to build psychological safety and skills that enable others to challenge them and to be critical thinkers.
“Test and learn”
Shift from assumptions to hypotheses, test small and gather data. Reduce the cost and risk of experiments while increasing their frequency. Experiment faster, extract learning, iterate and favour ‘test and learn’ over detailed plans and multiple sign-offs. Leaders need to create a learning environment where their people are willing to take risks and be vulnerable and where it is better to fail than not try.
“Ensure facts and data triumph over opinion”
Help turn the organisation into an Insight Driven Organisation (IDO). Embed AI, analytics, and robust data into decision-making processes. Facilitate conversations about the data. Build digital and data literacy and the capability to get to the heart of insights from the data. Initiate conversations and ask questions such as, “What is the data telling us?” and “How do we answer the ‘so what?’ from our audience?”
“Reduce unnecessary control and embrace empowerment”
To be successful in a digital world requires a behavioural shift to empowerment and increased trust in ideas coming from the front line. There needs to be much faster decision-making and less governance and assurance. Today, in many large, complex organisations, when ideas are passed up the line, they flip from being an idea/opportunity to a problem someone has to deal with. Instead, unblock and join the dots, loosen the hierarchy, empower those you lead, coach, support, prioritise and get out of the way.
Build a digital mindset
The ability of leaders to thrive in a digital world and deliver on these asks won’t be built by accident or occur through some mysterious form of osmosis. A critical first step is to help leaders build a digital mindset. This mindset is established when living digital becomes an accepted part of front-line business roles and the management of products. How leaders talk about digital is an essential indicator of a digital mindset. It is often talked about as a system or platform. Instead, leaders need to understand the value of the systems they have today and those that are coming. Embrace and embed them, not just as a process but as a business tool, and build awareness of how going digital can bring new growth opportunities.
Leading with a digital mindset is looking at your organisation through a digital lens – always!
How to build a digital mindset
Whether delivered through a development programme or a play-book of self-study steps key components of building a digital mindset need to include:
Developing an understanding of what really matters in the digital world
Building insight into what is happening in a transformed digital world
Experimenting with digital
Transforming your organisation
To take advantage of these exciting digital opportunities, most of us need to change how we think and behave. Developing digital butterflies, rather than fast caterpillars, will only happen if leaders create dissatisfaction with what is happening right now, develop a positive vision of the future, provide clarity about the steps to get there and generate the belief that it is possible – all of which flow from the four steps outlined above.
Bibliography
CBInsights.com (2020) How Google, Amazon, Facebook and Apple are targeting the $6T Insurance Market. 29.09.2020
Frankiewicz, B. and Chamon-Premuzic (2020) Digital Transformation is about talent not technology. HBR, May 06, 2020
Kane, G. et al. (2019) The Technology Fantasy – People are the real key to digital transformation. MIT Press 2019
The Economist Intelligence Unit (2018) Intelligent Economies: AI’s transformation of industries and society
Smith, L. (2020) Transformation Mindset, Laurence Smith