According to a McKinsey report, only 16% of digital transformation projects are successful. This is often because companies are limited in the way they look at solutions, basing their decisions on the experiences they have had up to this point and not on future trends and opportunities. Many businesses still employ an industrial-age style of management, where they manage people by place and time – employee contracts dictate the place and the duration of an employee’s work day and the company’s processes for collaboration and communication rely almost completely on geographic proximity. However, as remote working becomes the new norm due to COVID-19 and distributed teams work from their preferred workspace, team leaders will need to shift their focus and manage their employees differently.
This requires a shift from an office-bound to a remote mindset, the key to which, is an internal cultural transformation. The most successful digital agendas are driven by engaging with people and culture first, and then employing technology. Listen to what Nevo Hadas, Partner at dY/dX, has to say in this interview on ChaiFM.
I’m reading from your press release and it says that digital-first processes not only eradicate the problem and challenges we had before, but they also eradicate the ineffective solutions we had come up with for these for those problems, making teams more productive and focused on the actual work. Please flesh it out a little bit more as to what that means practically.
Fundamentally, we approach problems from the environment that we understand them in today. So, if you look at Amazon, for example, in 1996, and you looked at it as a bookshop – we would have said it’s a terrible bookshop. With Amazon, you can’t go and browse through or smell the books, you can’t ask the nerdy guy behind the counter about his favourite science fiction book – it’s terrible, who would want to do this? But we’re judging this on the basis of the experience that you have in a bookshop. If you change your mind and asked something like, well, is it more effective at selling books? The answer would be undoubtedly, yes. Amazon is much better and much more effective. And in truth, the science fiction recommendation from the geeky guy behind the counter isn’t as good as 10,000 people’s science fiction recommendation. So what that really speaks to is the fact that we are often limited in the way we look at solutions today, based on what we’ve experienced up to now. And our current construct actually limits our ability to see the future or to see how we could implement solutions which are future-focused.
This ties back into dY/dX. The name actually comes from calculus. It’s the formula for the rate of change – the change in y over the change in x; delta y over delta x. The whole business is about helping companies with digital transformation. We first look at where they are today and then look at where this digital future could lead them to, and we focus on three things. The first one is new products and services – so how could they develop something that is future-focused, that has new revenue opportunities or new service opportunities for their customers, and helps them gain market share or additional profitability in the future. The second one focuses on how digital transformation will impact them as a company – so looking at your processes and saying if I change how I work, and I utilize technology more efficiently and more effectively, how do I change my profitability and my ability to please customers? The final one is looking at the sales funnel and digitizing their sales funnel – looking at how they optimize that flow from a lead to a converted customer, automate marketing and those kinds of processes? The interesting thing that all these three have in common is actually not IT. At the core of dY/dX, we’re actually a human-centred design business. It’s really about understanding people. If you can understand people, you can actually solve a lot of problems in very different ways, which don’t always require very complicated IT.
Digital transformation is interesting because so many of these projects fail. You know, it’s something like a 17% success rate, according to McKinsey, for digital transformation projects. But the thing that makes successful projects is when they actually focus on the culture and the people first, and the technology second. That for us is the key concept – how do you help people understand the problem, reframe it and take it from a different perspective; then it’s easy to solve the challenges that you have.
I think what a lot of people are waiting for us to discuss is how is COVID-19 and the whole global shutdown will affect business moving forward? My experience has been threefold. Number one, there are those that don’t even know that there’s an epidemic going on – they’ve had to change a bit and they’re wearing masks, but life goes on, business goes on and it’s great. Then you’ve got the other extreme, where you’ve got the guy who woke up on that Friday morning with zero income, zero potential, business shut down, debt, and business overheads that have to be paid. And then there are the guys in the middle, hustling their way through it. But the common thread amongst all three of those people is that the needs to be a way forward – there definitely has been a change. In your experience, what size companies have adapted the easiest to this change?
It’s been less about the size of a company and more about the industry a company is in. Any consumer-facing businesses, like the restaurants and Airbnbs, have had massive issues, no matter the size of the business. We’ve had clients from Tsogo Sun down to much smaller manufacturing businesses that have all been impacted. I think that’s been the primary indicator of impact. The second factor really speaks to resilience, and how well they’ve been able to adapt to things. We’ve seen everyone adapt really well – we’ve actually done an online assessment. About 500 different people have taken this assessment and even teams of companies have taken the assessment – which is really interesting to see how a team evaluates each other – and what we’ve seen is that most people are actually coping with the change. But there’s a lot of issues with how effectively they’re working. And a lot of issues which we can see coming down the line – that there will be in burnout, where people don’t understand how to separate their work and life environments.
Has COVID made a big change in these businesses? Yes, it has definitely accelerated a lot of change that we wouldn’t have had to face or that we otherwise might have had to face over a longer period of time. Working at home and the effectiveness of companies being able to work this way has been moving forward at a slow and steady rate for quite a while. Laptops and data have enabled people to take work home, and now people are actually working from home. There’s been a big transition from taking work home to working from home.
One thing that I’ve found fascinating is the discussion around how what people were trying to do before, they are now doing and it’s here to stay. Are you working from home or have you got an office that’s up and running?
We’ve actually been a remote-first company for about five years. So we’ve got team members in Cape Town, Joburg, London, Netherlands and recently just added people in Zurich. So we’ve been working this way for a long time and we’re very familiar with this process. The interesting thing for most companies going through this experience, as you said, is that it is here to stay. Right now, everyone is in lockdown, at their homes and at their desks for extended periods of time – this won’t last. What will start happening is that you’ll get more hybrid or distributed teams, where some people will be at the office and some people will choose to be at home. And what we find then in those environments is a change in management – how do you grow, how do you engage these distributed teams effectively – this changes dramatically for businesses, whether they are small or big. They need to start thinking through the next stages of evolution of remote working.
You’ve made such a fascinating point about management because that’s something that I’ve found that I’ve never really had to do before. Everyone was here, you walked in, you could physically see people, you might look over their shoulders to see what they’re doing. But now when you call and speak to a person, you get kids yelling in the background and you get told, “Oh, I’m just receiving delivery of this or just getting that.” As management, you almost need to have broad shoulders and appreciate that it’s not business as usual, there are other distractions. How do you roll with the punches but at the same time keep the reins tight, but not strangling, so that the worker gets things done?
I think it’s an Industrial Age concept of management – that we manage by place and time. What you find happens very quickly, as you get more into this remote working and distributed teams approach, is you focus more on outcomes. With our team, I don’t know what people do every day and it doesn’t make a difference. I’m sure they do yoga in the afternoons or do stuff with their kids. And it’s great. As long as the job is done and is of high quality, right? That’s all we care about. There are lots of leading global companies with thousands of employees that are all working remotely, which have consistently shown higher effectiveness measures than traditional companies who are office-bound or geographically bound.
What you’ll find as you migrate is that there’s a lot of advantages. You can have more Flexitime workers, no one needs to work five days a week, they could choose four days a week – sometimes it goes up and sometimes it goes down – you’ll find that it changes your employment contracts. This is something that hasn’t hit lots of big companies here yet or hasn’t really hit South Africa, but your employment agreements are going to change because all the employment agreements are: be here at nine, leave at five, and everything is built around your attendance. Now it’s not about attendance. You could be attending for three hours a day and be you know, outworking somebody that is there for 10 hours. So you get all these big cultural and social shifts which companies really need to grapple with, and most importantly managers need to grapple with. The tools that used to work before – when everyone was around, you could see them, you could ask them what’s happening with a certain project – those don’t exist anymore. So how do you restructure your time and processes and not over-communicate?
The first mistake lots of people make is that they want to over-communicate – they do daily check-ins and stand-ups. Stand-ups come from agile, which is a development methodology. When agile started, it did stand-ups to make everyone uncomfortable so that they’d get out of that meeting really quickly – that’s why it’s called a stand-up, you’re not allowed to sit down… But now we’re all sitting down at our computers. So I think there’s a lot of maturity and transformation that needs to occur with how companies approach the way they do work because that really helps your business go to the next level. So you go from an office-bound mindset to a remote working mindset.