I interviewed Jon W. Hansen who discussed Cultural Impact on Digital Transformation. Jon is the chief editor of the Procurement Insights blog which has more than 25,000 followers.
Today we're speaking with Jon Hansen who is the chief editor of the Procurement Insights blog which has more than 25,000 followers. Today Jon is going to talk about understanding cultural impact on digital transformation, which comes from a discussion paper which he recently wrote.
What is digital transformation and what do you mean by "Culture"?
It's kind of interesting. That's a two-part question. I'll answer the first one by saying digital transformation. Recently, I had the opportunity to interview Microsoft's new president, Kevin Peesker, as well as the heads of Hewlett-Packard Enterprises and Cisco. And when we talk about digital transformation, we're talking about the impact of the emerging technologies on the way in which we do business. And that isn't just transactional. We're talking about the way in which we work together, the way we collaborate, and how it's transformed. And I've been in the high-tech field since '83. So when you think about technologies, early days of the PC, sitting on a desktop utilizing VisiCalc, which was an incredible spreadsheet program. It actually gave legitimacy to the PC, at least the first step towards that.
Now when we look at it... but that was confined, basically, to the office. And it didn't have as wide-ranging of an impact. Now today, with digital transformation, and, as Peesker says, "Either you transform or you'll be transformed," it permeates all areas of our lives and all things that we do — whether or not it's automated cars, whether or not it's Google Home... The fact remains. It's our entire society, unlike any other time before, it's transforming. It's transitioning the way in which we live, communicate, make a living, do business, all of those factors.
So digital transformation is very wide-ranging in that regard.
In terms of the cultural impact, we traditionally think of culture in a very narrow scope. But in creating or writing this discussion paper, I discovered four. And this is based on research over 15, 20 years. I discovered there's four real cultural impacts that will facilitate acceptance of digital and the emerging digital economy in everyday business.
The first, of course, is what I call the home culture. The second is generational culture. The third is gender culture, and the fourth is senior executive or management culture.
Now in the first instance — and we're in the procurement world, Dustin. And in the first sense, we can't underestimate the impact that being able to buy goods at home on our computer for our own personal use, has had a significant impact on our expectations of what a system should do with a work environment.
So ultimately, what happens is home experience, and we become more technologically savvy. We have bring-you-own-devices to work. Our expectations of what we can do at work and how it should mirror the home and the ease with which we're able to buy, that's been a major influence, and it's driven our industry from the days of the ERP era. Gartner called it the post-modern. We're entering now the post-modern ERP era where we have overarching sys— [audio cuts out 00:03:29] years and millions of dollars implemented [audio cuts out 00:03:38]......technologies that can be up in a matter of weeks, if not days, and start producing value.
So really, part of that trend was the fact is, is that as we began to understand how easy it is to leverage technology to do procurement [audio cuts out 00:03:54] in terms of digital transformation within the [audio cuts out 00:04:00]...any other time in history.
We have four. And some of you have even said in certain studies, five generations simultaneously employed within the same organization. That has an impact in how the digital transformation occurs within our own enterprise. Because if you look at it, it was a funny thing with the paper. A lot of people would think that the Millennials would be the most in tune to utilizing technology where older generations [audio cuts out 00:04:30] were reluctant to do this.
It's not that the Millennials and the younger generation are uncomfortable with technology, Dustin. What it's saying is that they prefer — the research shows — they prefer face-to-face communication and engagement. And ironically, it's the older generation... "Old" is a relative term, as I'm sure you can appreciate. It's the older generation — 40, 50, and beyond — who is more comfortable using technology. Now, granted, their use of technology is in different capacities. For example, job searches and other elements of it. But they're more comfortable interfacing through a computer system than we had thought previously. And the Millennial generation, the computer generation, the I've-got-an-iPhone-attached-to-my-hand — or whatever device they have — are the ones who actually, in learning environments, such as universities, prefer, again, classroom time.
So I think with the generational culture we're looking at is understanding how we all communicate and relate to each other across these generational divides is what's going to bring organizations together to come up with a coherent and cohesive plan of action in terms of how their organizations or the company is going to, again, embrace and implement digital transformation.
I just want to digress for a moment because it's kind of interesting because a McKinsey study found that while everyone is talking about digital transformation — and their study of 1600+ incumbent companies, only 20% of them actually had a digital strategy, and only 2% of those had a supply chain strategy with regards to going digital.
So we still have a long ways to go, even though, as McKinsey put it, organizations such as theirs and other studies indicate that if they don't get on the digital — and I won't call it the bandwagon because it's not a fan —but if they don't get on a digital track to transform their business, these companies are going to be in trouble in a few years. So that's where the generational culture comes in is the ability to understand and bring those different generations together to be able to come up with a cohesive strategy.
Then there is what's known as the gender culture. It's very interesting. Again, Kevin Peesker, when I talked to him (see link to interview here), he indicated that Microsoft, 75% of their executives, his executives, are female. But that is the exception to the rule. And he went on to say so boldly that if we don't get more women involved in STEM, which is science, technology, engineering, and mathematics, digital transformation will not happen. We're not talking about just attracting women to these fields. We're talking about attracting and developing women to take over senior roles and leadership positions.
Now, you might look at that and say, "That's an interesting concept..." But if you look at studies that have been done and comments by Peter Drucker, who is a name from the past but all are familiar with — and even Warren Buffet --they call talk about the fact that companies who have a greater number of women who are in senior executives positions tend to do much better financially, tend to not run into financial difficulties or become bankrupt, so to speak. So there is a history going back even before this digital revolution of where the impact of women on business has been positive. But more so now, we must have women in the STEM fields. And that's a lot of focus of these experts who I interview. Again, from Cisco, from Hewlitt-Packard Enterprises, from Microsoft and other organizations. They must be able to recognize that and bring them in.
And there's another practical reason for this focus, Dustin. It's the fact that studies show that approximately 236,000 job gaps — and I'm just using Canada for one example, which is where I'm from... There's a growing job gap between what's required in terms of expertise and the skilled labor and the people who have the necessary skills to make digital transformation happen. And so if you look at where we are now — and I think Buffet said it so well. He said, what's interesting is after the second World War, we put half of our workforce out of business by returning women to the kitchen, so to speak. He said, "Women are the key to the future of our economy." Not just the new economy but the economy overall. So that is an important area of focus.
Again, finally, the senior executive culture is very key. What kind of senior leadership? What does your leadership talk about when they look at digital transformation? And going back to that McKinsey study, despite the fact that all indication are that if you do not become part of the digital revolution, you do not transform your business with the various technologies that are available, what is going to happen is you're going to fall behind. Interestingly enough, when McKinsey said only 20% of incumbent companies... When they talk about incumbent companies, they're talking about established, global companies have a clear-cut strategy for digital transformation and, more specific to our industry, only 2% have a strategy for supply chain. That is a problem that has to turn around because we are now living in a global economy, an environment where communication, technology and all that it brings to the table must be leveraged to maintain a competitive edge.
So those four cultures — and I call them the cultural elements of digital transformation — are key. And again, it's culture because of the influence of our experiences at home. I don't think you could look at it and say there is a hard divide there anymore. What we learn and use at home, we tend to learn and use, even if it's more complex in the workplace, we tend to use that in the workplace more easily, more readily. When you look at generational culture, you have to look at it and say, how do we, with this first time in history with multi-generations within an organization create a communication and collaborative environment that helps to deliver value and deliver these projects to success?
The third area is the gender, as I touched on, which we must have more women in STEM. And finally again, to reiterate, senior leadership must answer the call and take the lead in terms of driving digital transformation within their organizations.
I think you touched on some of this. How does culture impact the digital transformation?
In those areas, for example, if you don't have senior management or leadership who is — and much like that McKinsey study I indicated, and they're certainly not alone — who is willing to embrace digital transformation, you're not going to be able to leverage technology and the emerging technological capabilities effectively.
Let's go back to the history of things. And maybe this is reflective of a trend that's always been there. When the PC first came out, the IT department and leadership looked at it as nothing more than a passing fad or a tool that would never replace huge rooms of mainframes. Look what's happened with that. It was that initial resistance. But we can't look back now and say that the PC hasn't had an impact on our lives, especially in the business world.
Then when there was the movement to the cloud — and I remember doing a research paper on the United States' government move to the cloud. Vivek Kundra, I think was the name of the CIO. I may stand corrected on his last name there, but it was called the Cloud First strategy. And what was ironic is even though everyone knew you had to move to the cloud, senior executives, CIOs and those in a leadership position within government were afraid of the cloud. And so they were reluctant to embrace it.
Let's look at it logically here. Does the cloud exist? Is it real? Remember when Larry Ellison said, "There's no such thing as the cloud" — from Oracle? And of course, now he's changed his tone. But a lot of times what you have is that the inevitably of what's happening... Can you imagine now trying to do business in a non-cloud environment? I'm not saying that the cloud is excluded. You, again, have public clouds. You have closed clouds. You have no clouds. There are multiple environments that have to be navigated. But, Dustin, can you honestly say that an organization, a company there in the world, could operate without the cloud?
So that's what we talk about. Senior manager culture. The fact is that when you look at the emerging digital transformation, all that entails, you have a resistance that existed previously with the PC, previously with the cloud,but the inevitably of the digital era means that senior culture has to change their thinking and start embracing the reality of how we're going to make this happen. And that's just that example in terms of culture. Does that answer your question?
Where have you seen some success stories or good examples?
It's kind of interesting, but at this stage... How do I say this? We're still in the very early stages. So when you look at it, one example that comes to mind is a small city in southwestern Ontario called Guelph. And I interviewed the mayor from Guelph who was part of the Activate Guelph 2018 conference. What was interesting is he talked about civic tech and being able to, again, utilize technology. For example, being able to have the capability of alerting when there is an unusual spike in water usage in someone's home, maybe indicating that there is a problem there and being able to respond to that problem as it happens.
So Guelph is an interesting city because, out of all of North America, it was highlighted as one of the top three for Millennials to live in. And it's got a great university. So they are focused on utilizing technology, very practical, to save taxpayers money and offer increased services. They're on the right track. And they have a balanced strategy.
It was interesting when I talked with Cam Guthrie. He's the mayor of Guelph. He was talking about, we look at the new digital era, and we look at the new digital economy. But we also include the traditional industries like agriculture, and within that region, agriculture has leveraged digital technology. There was one article written regarding the ability to use technology to track the growth of corn and predicting the health of the crop overall.
So those are things we're seeing in pockets. Is there an overall general wave of success? I'll go back to that one study by McKinsey saying that out of 1600-plus incumbent companies, only 20% actually have a digital strategy in place. I would say we're very early. So the successes, like the Guelph example, while I believe that they're going to grow over time, I think we have to still get over that hurdle that we had that I referred to earlier with senior executives, as well as the other hurdles.
Thanks, Jon. Can you also tell us about yourself and your blog?
Procurement Insights, I started that in May 2007. Like anyone else starting a blog, it was more by chance than anything else, because I writing for different publications and magazines. And it was suggested that I, instead of dealing with multiple editors and deadlines, create a blog and people would then be able to gain access to it. So it started out as very humble beginnings. That was back in 2007, and now I've written more than 3,000 articles and blogs. It grew to more than 25,000 followers. And it, ultimately, in 2009, spun off my radio show on Blog Talk Radio called the PI Window on the World, which is coming close to airing 900 segments and itself has 15,000, on average [inaudible 00:16:43] downloads or listens every months.
My history is certainly in the area of covering the industry and covering the marketplace through both the blog and the radio, and, of course, I do some TV as well as that. But [audio cuts out00:16:58] cover public policy, for example, and other developments in high tech and social media world.
I'd love to stay in touch and do further discussions in the future.
Absolutely, Dustin. I thank you for reaching out. Like I said, I've got a new paper that will be coming out very shortly on asking the question: "Is change management still relevant in the digital era?" So I'll be sure to send you a copy of that.
About Jon W. Hansen
Jon W. Hansen