Let's talk Leadership - Leading Digital Transformation & Innovation (English)

Sabine Hoffmann completes 2018 on a high note with a certification in "Leading Digital Transformation & Innovation" given by the HPI Potsdam and the chair of entrepreneurship in Stanford. With that she rings in 2019 as the year of digitalisation! After all this year is all about the survival of your own business (model) in the digital age.

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Transformation means change and integration

From the known, safe business model into the new, uncharted, digital age. Between the two models reigns a phase of great complexity in which both coexist: process and structure alongside creative, cross-functional working methods.

How does transformation succeed? Through human-centred (re-)design of the digital transformation and leadership experience:

In the beginning there is purpose:

Even against their better judgement humans are subject to the so-called action-bias, which describes their need to be active without knowing the purpose or what value they wish to generate eventually. The same goes for digital transformation. Every change needs a purpose if it should be sustainable. Purpose – it is so easy to say, but what does it really mean to be “purposeful” for everyone involved? It requires equal involvement of the strengths and passions from the team, as well as the needs of the target group in question.

Let's make that clearer with a real-life example from AirBnb.

AirBnb addresses the need of all travellers, to feel at home among locals abroad. The Airbnb team are notable for being passionate about simplification with attention to detail, while also being creative entrepreneurs seeking adventures. This then merges into "anyone can belong anywhere" – the purpose of their business, which as we know is now the biggest "hotel" in the world!

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Empathy for the needs of people that undergo change is the key:

By placing oneself in the shoes of the person in question, mentally and physically, through observing and even immersing oneself in their lives, listening, being curious and asking questions.

It is always possible to find inspiration for totally new approaches from "extreme users" such as new mums who know all about the topic of transformation. But do take time to think carefully about who the target group is that you wish to get closer to in order to understand their transformation.

Systematic change:

When it's about digital transformation, the entire system of transformation must be included in the thought processes. Employees on all levels, partners, customers and external stakeholders, as well as, for instance, the personal surroundings of the employees must be part of the big picture. It is, after all, about transforming the entire organisation in order to secure its survival in the digital age.

Sharing:

The exchange of experience for the sake of learning – this is the greatest weakness of industrial, work-divided organisational structures that build and hoard their experience and knowledge selectively in different departments! Agile Working Practice could be the answer to this issue: installing a system where every single employee knows exactly where and how to contribute, thanks to full transparency and visualisation of work that has been completed, is ongoing, and is yet to do and by simultaneously clearing out obstacles (management) or completing tasks, also when these are not 100% within one's own field of expertise – keyword: T-shaped people. This then facilitates the organization to reach their shared goal.

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Coopetition:

It's been proven that people perform better when they are part of and evaluated as a team. This leadership method is called "project-based learning" which releases the full brain power of a team because it promotes the WE-Q (Prof. Ulrich Weinberg) over the I-Q (individual performance). The reason for this phenomenon is that it lowers the individual fear of making mistakes and possibly getting chastised. This fear is what blocks us as social beings the most.

This is particularly so in (still) successful organisations where making mistakes is a major taboo! And on a side note: this is exactly what killed off Nokia. The individual's fear (also in management) of reporting mistakes.

Company culture eats strategy for breakfast:

Anyone who has ever tried to implement change or innovation in existing organisations is familiar with the so-called "immune-effect" of organisations, which is especially true for transformation processes. Those affected by the change then automatically retreat into old, familiar patterns. In these times of uncertainty, humans tend to return to their deep-seated faith in old tried and tested methods of success. Most likely this can be averted by creating artefacts for new and desirable behaviours, which can be specific implementations in the form of prototypes, specific projects or even "workarounds" that can be used as leverage for a change in the internal business culture.

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Only 30% of all transformations are successful, hence my urgent appeal to all leaders to experiment with their own leadership style:

  • Listen to everyone (see Herbert Demel, former Audi manager) and then make the decision about what you think is appropriate and relevant for the present phase of your transformation process. You should also make it clear and transparent that you have listened and considered everyone's ideas, but that not everything can or should be implemented.
  • Talk to people who you once lead. What about your leadership style was hindering, and what helped the individual to open up and develop?
  • Beware of your impact as a leader. Observe how people behave after an interaction with you – do the leave with more or less energy and happiness than before?

Innovation is creativity and implementation

And often also a new combination of existing solutions!

The "Medici effect":

Creativity arises at the junction of different disciplines and cultures to jointly unravel users' behavioural patterns. When collectively viewed from several angles, ideas for new solutions emerge along design thinking processes. What that means for leadership? First and foremost, to live a full and varied life yourself in order to serve as an inspirator for innovation teams and processes. For instance, working in an open space together with start-ups can provide inspiration and new impulses. Or observing the desired attitudes and processes in another industry – for the same reason H. Demel had his innovation team study the sale of luxury jewellery that cost as much as the later introduced Audi TT.

Empathy as a process:

In order to understand people who are different to ourselves: field dependent thinking.

It’s best to discuss ideas around a specific “object”. A good starting point could be the so-called "experience prototyping" which puts the existing situation regularly to a test in order to learn and draw conclusions from it. This is not to be confused with "rapid experimentation" – experiments that aim to trigger certain behaviour in order to ideally reveal new needs.

Why experiment?

Because they yield more valid data than interviews with experts (ego bias!) as they, unlike interviews, identify new needs and, unlike focus groups, take place in the relevant context and also prevent the group-effect (I want to conform to the group). The user decides where the focus lies and what s/he speaks about.

In short: experiments as a strategy to minimise risk and maximise opportunities.

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Innovation work is like running a marathon. It requires stamina to create the one good idea and bring it to commercial success. IDEO, for example, generated 4.000 ideas, of which 226 prototypes were build, of which only 12 where sold, and eventually only two became commercially successful.

Two from 4000. That is 0,05%. This is why people who are keen on innovation have to be supported and encouraged by organisation and management, because only when these people feel confident and dare to make mistakes it is possible to create things that are truly new and revolutionary. Only this way you can avoid the "Kodak moment" for your organisation.

What happens to people who make mistakes in your organisation?

They are forgiven in order to provide psychological security and space to learn.

Psychological security has been scientifically proven to be the number one factor to release the innovative power of teams. As a leader you provide this necessary safe zone, by collectively formulating learning experiences (rather than specifications) and by modelling the way towards these experiences through asking the right questions and providing openness for mistakes – for instance by actually killing off their own favourite projects if they don't bring anything radically new.

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Artefacts, behaviours & narratives:

In order to create something new we have to leave old paths and lose ourselves a little, in protected environments. This could be applied for programming. Today, everyone is a developer and can create new solutions with the help of publicly shared Open Source Code applications.

Innovation also means sales! Ideally you run innovation as a duo: One creates, and the other promotes interest both internally and externally. This latter role has also given rise to a new profile: the so-called "narratologist" who is specialised in presenting new products in captivating ways.

Innovation is a social process:

The right team is decisive for the success or failure of innovative projects. As a leader, team composition [no superstars but rather team players, no pessimists or experts (that know too much) or total newbies (that don't know enough) – diversity is a must!)], the clarification of values (that are not negotiable) and smart goals are paramount.

Consider what kind of team you need to reach your goal. For creative processes you need familial teams that resemble a community: for these teams, cooperation and being there for each other is what counts.

Never underestimate your own impact as a leader. One negative experience can reduce productivity with up to a third, and it takes up to five positive interactions, with that employee to make up for that. What can help prevent you from giving in to the temptation to judge someone's behaviour would be to ask yourself: "What is it that makes this person behave in this way in this particular situation?" This is to lead the team to excellence – step by step.

Promote creative conflict with these rules – and live by example!

  • Fight for your ideas as if you are right!
  • Listen to others as if you are wrong!

If you are now asking yourself how you are to implement all of this in your daily business, I have the following advice and tips for you:

  • Experiment. Execute low cost experiments, but with great variation. Based on your hypotheses – learn with "baby steps". This to prepare for the big step of innovation.
  • Don't ask for permission. Instead, ask for forgiveness afterwards if it doesn't work out.
  • Engage a personal coach. S/he will guide you through the process of transformation with love and consistency to soften the fall-back into old patterns, or to prevent it altogether.

And in this spirit, I wish you all an energetic start into the new year – the year of digitalisation! Leaders who are ready to be serious about digitalisation can book their team kick-off for creating an agile roadmap for 2019!