Gerald Kane is the author of "The Technology Myth: How People Are the Real Key to Digital Transformation", published by MIT Press. He is also the Faculty Director of the Edmund H. Shea Jr. Center for Entrepreneurship and a Professor of Information Systems at the Carroll School of Management at Boston College. He is a senior editor at MIS Quarterly, the most prestigious academic journal on information systems.
For "The Technology Fallacy" , he surveyed over 20,000 executives worldwide and interviewed over 100 executive and thought leaders to determine the key factors associated with digitally mature companies. He concluded that an organization's response to digital disruption should focus on people and processes and not necessarily on technology.
We talk about disruption and how people are the real key to digital disruption, as well as the importance of maintaining the momentum of the incredibly rapid innovation that has taken place during the COVID lockdowns.
Disruption is not just about transforming your organization once and then you're done. It's a continual process of responding to a turbulent environment. Environmental turbulence isn’t going to go away, say when COVID is over; it's a much deeper condition of our times, and leaders need to learn how to deal with this ongoing disruption.
There’s acute and chronic disruption. Acute disruption was COVID. It comes on very quickly, it's very sudden, you have no choice but to deal with it. Whereas chronic disruption is much more subtle and happens over a longer period of time, and that causes disruption that has been going on for 20 years as companies seek to adapt to digital change.
Most of the data that we're seeing now suggests that about 10 years worth of digital change has happened over the last 18 months. Organizations are not in the same place as they were. This leads us to the fundamental hypothesis of the book, which is that disruption is not going to end once COVID is over. In fact, we expect it to accelerate, as companies have built up these new innovation capabilities as they build out their digital infrastructure. They're going to be more competitive coming out of the pandemic than they were going into it. And the companies that are going to succeed and thrive in the new environment, are going to be those that don't try to go back to the way things were in January of 2020.
A great example in the book is Hitachi Vantara. They outfitted a plant with sensors, so that they could better monitor the production facility. Well, once COVID hit, they were able to use AI to change that sensor infrastructure to begin to monitor for social distancing. They use their thermal imaging to begin to monitor for employees if they had a temperature (fever). So they were able to take this infrastructure and adapt it very quickly because of the software that is now embedded in it and the sensors that are now embedded in it, and really shift the factory to deal with this new crisis in a very short period of time.
Of course, that's what we're seeing with Tesla cars. It is a physical good, but because it's so driven by software, you can really change the car on a moment's notice, to adapt to new situations.
The downside of digitalization is you open yourself up to security concerns, and there’s a whole chapter in the book about the need for effective cybersecurity. It doesn't do you any good if you get all these digital capabilities to be more nimble and adaptable, if you open yourself to increase vulnerabilities as well. And so security goes hand in hand with the need for digital acceleration and innovation and change.
Data is critically important, but you need to combine it with intelligence and intuition for informed decision making.
Most companies err on the side of overexploiting. They need to make their numbers and to keep the lights on. And businesses are really built to exploit. But when you do so, you risk missing changes in the environment. A little innovation goes a long way. As little as five to 10% of your time is sufficient for real gains and exploration. But unless companies are doing that intentionally, it's not going to happen. Because when you tack on the 5 to 10%, on top of somebody’s job, the exploitation just takes over.
Even Google's famed 20% time where employees got 20% of their time to innovate, in practice didn't work because employees found that there was always something else that got in the way to make that happen. There are several ways, however, to build in that discipline of innovation. Whether it be an internal incubator, whether it be a hackathon, whether it be a separate time that the company comes together and says we are going to stop things, and we're going to try to innovate here. Unless you set aside that time, it just doesn't happen.
Jerry’s biggest concern about COVID is that while companies have developed so many new capabilities over the last 18 months, is everybody's going to say, whew, it's over. We can go back to the way things were. Many companies are going to do themselves a disservice if they don't lock in some of these innovative changes, if they don’t take what we learned about during COVID and innovations in remote work and new digitalization.
Leaders must critically consider one of the drawbacks of remote work in digitalization. For example, it's not great for innovation. It’s not great for serendipitous connections. It's not great for building one's relationships and networking, it's not great for mentoring and supporting junior employees.
Executives need to take a step back, think about the best of both worlds, and how do we combine it for the workplace going forward. The next four to six months are an unprecedented time to enact organizational change with remarkably low resistance, with remarkable opportunity to make changes. This could be the golden age of organizations. But it’s also potentially an existential crisis. Organizations that do not step up may stop existing - and but the trajectory will be set in the next three to five years.
Mindset is key. Companies that aren't far along digitally, they always talk about these things in terms of fixed mindset. “Oh, we're not a technology company.” Or, “Oh, we're not a digital company. We're legacy. I'm not a technology person.” Those are all fixed mindset characteristics. Whereas those who thrive in a digital world say, yeah, I don't know what the future is. But I feel like we can learn how to cope, we can learn the skills we need to thrive.
In disruption, the normal processes break down entirely. When that happens, you have to go back to the purpose, the mission and values of the organization. Your North star.
You don't want to be researching options for the first time when you're in crisis. So doing periodic reviews of the tech landscape to know what capabilities and functions are out there so that you can add them on when needed is really key. Being aware of what is the ecosystem, creating those options for you for future actions - that’s really important.
The average manager needs to increase their data and digital literacy. They don't need to know how to build AI. But they should be able to have enough knowledge to talk to the people who build AI, and have a moderately intelligent conversation with them to know what its capabilities are, and know what its drawbacks are.
If you have the data, and you can experiment, you can create this entire experimental mindset in the organization because you can measure it, you can tap hypotheses, you can test those hypotheses and improve your organization as a result.
“This could be the golden age of organizations. But it’s also potentially an existential crisis. Organizations that do not step up may stop existing - and but the trajectory will be set in the next three to five years.” - Gerald Kane.
“Leaders must critically consider one of the drawbacks of remote work in digitalization. For example, it's not great for innovation. It’s not great for serendipitous connections. It's not great for building one's relationships and networking, it's not great for mentoring and supporting junior employees.” - Gerald Kane.
“The average manager needs to increase their data and digital literacy. They don't need to know how to build AI - but they should be able to have enough knowledge to talk to the people who build AI, and have a moderately intelligent conversation with them to know what its capabilities and drawbacks are.” - Gerald Kane
The Transformation Myth - New book by Gerald Kane et al.