Kim Williams: lessons from the digital transformation frontline

By Kim Williams

Thursday September 24, 2015

The tensions in public policy formulation and program delivery are huge. The cultural challenge in delivering programs where there is a trite expectation, for partisan political purposes, that all should be fault free, is inhumanly unrealistic. The constant carping from a frequently ignorant and dogmatic media can also be extremely frustrating . The modern encumbrance of blame with associated finger pointing is often repulsive. And the application of political Teflon by governments on themselves so that it is all seen as “your fault” is infantile and cowardly.

It is a hard gig.

Many public sector reactions have seen reversion to extreme caution and risk aversion which serves the country poorly. We descend into a miasma where sanctity of process is worshipped at the expense of objective hard review as to the quality of performance and outcomes.

My contention is that in order to have a fit-for-purpose public sector — one which is enabled to perform in a time of startling competitive assault — requires cultural renewal and dramatic change in performance settings and rewards. It demands a new set of ethical underpinnings in the notion of the contract between the bureaucracy; the ministry it serves; the parliament to which it responds; and refreshed understandings with the community. Change won’t be easy. Ultimately it will be welcome because it is essential to a secure resilient national future.

We are all experiencing the huge confrontational components which follow from the velocity and pervasive nature of change in the 21st century. These elements invariably arise from radically changed behaviours and expectations which follow from the application of digital technologies. Digital processes demand adaptive ingenuity, agility and changed cultures ground up, in order to maintain core relevance in a ferociously competitive world.

“We have witnessed the largest power transfer in human history.”

Many of these issues were raised in my Melbourne University Press book from last year, Rules of Engagement. Digital DNA runs in the background through much of the book — a kind of invisible thread. I emphasised that as a result of many of the technology and allied behavioural changes we are all experiencing, effective leadership has changed markedly. These forces are not subtle, indeed they are immutable and have an almost “tectonic” force. I think Australia could manage the changes required very much better.

People often say the world is changing. This misses the point. The world is not changing — it has changed. Forever. We have witnessed the largest power transfer in human history. I refer here to the historically unprecedented transfer of power from producers to consumers. The significance of this shift is difficult to exaggerate and impossible to stop. It is reflected all too rarely in government decision making and most government service delivery, where frankly outside a few examples, service is an oxymoron.

We all need to understand that those who ignore the essential elements of these forces of change are destined to fail. Confronting these potent forces which demand reconfiguration in society, is not easy. Relevant responses with fresh approaches are essential in driving sustainable connected futures. The impact in the public and private sector are equally massive but in the public sector, notwithstanding the amazing tools at its disposition the aim to be relevant and connected needs much work.

Dramatic change is everywhere as reflected in utterly different commercial and social operating models. The game has clearly changed.

Behavioural change is compulsory

Take one striking example: there is no question that the whole basis for what once constituted print media journalism has been upended. It has been challenged by three key fundamentals.

First is the governing zeitgeist of consumer behavioural change that permeates the digital arena and has changed the manner of exchange, discourse, consumption and trust as between producers and consumers. It reflects that one constant: that transfer of power from producers to consumers, which is not going to change. Period.

Second, with newspapers particularly has been the collapse of a once solid revenue foundation with immensely valuable remarkably reliable display and classified advertising at its core that provided such a stable and profitable model on which print journalism’s business model was predicated. That change has been profound and permanent

Third has seen the slow, hubristic, determinedly ponderous response by established print media journalism companies to the gigantic evident changes in consumer behaviour and revenue value. This slow, often rejectionist response has challenged their very survival. There is a serious question mark hovering over whether many print media companies do indeed have the relevant capability to innovate and genuinely reinvent themselves.

The future for traditional journalism is far from clear. There are signs of a genuine incapacity in some to embrace the trends and respond in fresh ways which comprehend the nature of the forces at work. Internationally some have addressed themselves to wholesale reinvention. However, given the problem’s pervasiveness, such responses are surprisingly few in number. Similar forces affect many other aspects of publishing and entertainment delivery. Indeed, with many incumbent players in other industries the responses have been similar.

The parallels between government and print journalism are strikingly real. Both tend to embrace highly hierarchical models of management which are remarkably slow to respond to or embrace, change. They often disempower bright capable creative people who have a restlessness to innovate. They are disinclined to initiate change experiments resolutely. They have an over-arching motivation for directed, controlled outcomes. These approaches are misconceived when dramatic change is everywhere as reflected in utterly different commercial models and personal behaviours. The game has changed.

Innovation: an ecosystem for managing change

The central subject, as it has been over the internet’s twenty year life core to digital disruption, is innovation.

Innovation is something we talk a lot about in Australia, and spend a lot of money on — well over $1000 per person on research and development. There is now an added imperative. Innovation is central to responding capably to the effects of change in all sectors of the economy. Managed programs of innovation in Australia have an uneven history in effectiveness. It is often process obsessive but outcome poor, regrettably providing a reflection of too much in modern Australian life.

In today’s world disintermediation is the name of the game. Disintermediation is a long word with a simple meaning. It means the reduction in the use of intermediaries in transactions between producers and consumers. Technology is driving disintermediation in all things — the possibilities are endless whether in delivering goods and services commercially, in education and not-for-profits, or in the processes and culture of government.

Future directions

Time doesn’t permit me to enumerate all the patterns and elements in future directions from digital disruption. The key elements are well known as seen in: the ubiquity of connectivity; the relentless centrality of mobile devices; the pervasive strength of social media; distributed cloud computing systems; and the continuing fragmentation which characterises all domains and disciplines.

What I would emphasis is that the cost of innovation has never been lower and will continue to decline. With so few barriers to entry in a digital world, the cost of failure has never been lower. This is truly significant, representing a massive change especially for incumbent operators and traditional approaches.

“… the cost of innovation has never been lower and will continue to decline.”

Ubiquitous software and highly flexible stacked approaches to organisational design, and program execution are creating entirely new operating models. The applications by large digitally literate corporates and international software players who innovate for a living are profound. They offer a stunningly wide, growing range of products and services, increasingly through worldwide distribution management where geographic separation is becoming ever less relevant. Nations and their legal frameworks over time will be substantially bypassed. The impact of such huge disintermediation has not yet been clearly understood.

The nature of work is changing profoundly. Automation will increase. Fresh collaborative models are emerging with cross border alliances and previously uncontemplated talent interchanges reflecting a never ending imperative to adapt and adopt new modalities. In this connected world societies which don’t achieve consistent productivity improvement will experience unusually harsh declines in living standards. Competitive advantage will evaporate. Governments are often isolated outliers in the chemistry of these trends.

Cities will continue to grow depending on the quality of their technology sophistication and application to maintain amenity for efficient work and social harmony central to competitive advantage.

Education which has to date been one of the slowest respondents to digital change, will be revolutionised. Parents will demand new performance and efficient delivery standards in primary and secondary levels. The flow of talent and teaching around the world will quicken as will tough comparative assessment. Tertiary institutions will be judged ruthlessly across geographies with striking force by students, employers and commentators equally. Without determined action by government cohorts of education advantage and disadvantage will expand with severe social consequences as to equity, aspiration and direction.

The digital divide will be very real and will expand with the fresh irony that the wonder of all that is available will also see a new information “dark age” for many who will be locked out.

All of this means that the turbulence and speed of change, the disruption and break-up central to digital life is going to be with the public and private sectors for a long time. Upheaval and all its, in many ways, messy impacts has only just begun. This will require innovation as never before to succeed.

Change and the ‘new normal’

Let me turn to the overarching themes which command our attention and the lessons I would observe are central to the experience. They reflect the phenomenon of what I would term “the new normal” demanding reimagined cultural settings.

The notion of periods of stability and static movement followed by modest incremental change or bursts of invention have vanished. The evidence of this business and consumer revolution is everywhere. Incrementalism is an historical facet of 20th century culture — not of now!

We see it in the changing consumption and interaction habits, driven by digital technology. Think of how you graze the world and buy things now compared with your parents. I am sure you will all have your own examples but I think few would disagree that disruption is upon us like a hurricane. Here are a few observations as to key lessons:

Lesson 1: the old paradigms are breaking down

The paradigm shifts are obvious to many of you. The models with which I am most familiar, the technological and consumer distinctions between television, radio and print have broken down, driven by the internet with astounding advances in connectivity and mobility. Consumers now demand their information and entertainment be delivered across multiple devices — in a way that is tailored. There are instant customer feedback loops. Barriers to new entrants have tumbled so that new competitors emerge daily – and often do not look like traditional competitors.

The same is true in all arenas. At a minimum this paradigm shift requires enterprises to become more agile in applying technology; approaching customers; and changing business and management models.

The need for reinvented thinking by government — first to address the concept of customer and second to wholly reverse the process of management from a developed input based framework to one which is focused on outcomes and empowerment, requires huge commitment.

They need to measure outputs rather than being input control obsessive. They need to look to the renewal in analysis of core purpose not to the vast prescriptive issuing of rules, mired in expensive inefficiency. Government has to confront enabling workforce empowerment within a framework of purpose and outcome.

Connected successful enterprises are now open to new modes of work. They accept that they have neither a monopoly on wisdom or talent. They understand they must test, listen and learn. They understand the imperative to adopt collaborative models. The reinvention needed requires a move away from centralised direction and control.

The necessity of cultural transparency must also be respected because the possibility of failure rises exponentially if the trust and confidence of workforces and, above all, customers is not held high. And that is because there are two major currencies in the “new normal” — time and trust. We need not to waste customers’ time and we better ensure that there is an umbilical cord of trust on which they can rely. The importance of those dual currencies is in my view absolute. As I said the old paradigms are either breaking or have been broken. Time to reinvent!

Lesson 2: data trumps intuition

Let’s start with a business we all know — advertising agencies — and Sterling-Cooper from Mad Men.

Let’s go back to the end of series six, where we reached 1968. You may have noticed that no one then had a mobile device — the first having been invented in 1973. And no PCs appeared on anyone’s desks yet — they followed in 1977. There’s not even a mainframe computer in the basement crunching the numbers on who likes Hershey bars.

In the absence of data, Sterling-Cooper relies heavily on one thing: Don Draper’s increasingly shaky consumer intuition, lubricated by a daily bottle of Canadian Club. We can already see that he’s on a downward slope. But imagine if the series continued to 2013. It’s certain Don’s intuition would be replaced by forensically insightful data produced by statisticians — likely 20-somethings wearing flat caps and sporting impressive Ned Kelly-style beards.

The advances in analysis by statisticians in recent times have been astounding. Developments in data collection, storage and analysis — known collectively as “big data” — have and are transforming business and consumer horizons. The best known use of big data is in search.

The application of search in all things from jokes to physics; real estate to recipes; employment to games mean that we all now think differently. After all, algorithm has now become a common place piece of vocabulary in daily language.

Governments on the political side seem to be about the last to really understand just how significant big data is as a core tool to modern thinking. The challenge for the bureaucracy in getting politicians not to get lost in superficial digital shadows or shallows, is obviously one of the less palatable ones in this era.

Lesson 3: follow the trend line, not just the headlines

This may sound strange coming from a former CEO of a media company — where great headlines naturally play a central role in digital, print and broadcast products. A great headline can brilliantly capture the essence of a story, enticing immediate consumer engagement. But trend lines are much more important.

I am thinking, for instance, about Nate Silver. You’ve probably heard of him. He is the guy who predicted the outcome in 49 states in the 2008 United States presidential election. And in the 2012 presidential election he correctly predicted the outcome in 50 states beating a huge number of professional political pundits — especially those who were driven more from partisan perspectives than analytical rigour.

He did it by rejecting the notion of exclusive reliance on intuition, gut feel and political partisanship — replacing it with hard analysis of huge data sets on actual voting intentions. He applied informed, disciplined judgement to the data he was assessing being concerned to follow the data. I warmly recommend his book The Signal and the Noise.

Data and understanding data trends is every bit as much a central aspect of infrastructure today as any number of physical built things. Never underestimate its importance to national competitive advantage. The key trends are our friends in policy planning and design.

Lesson 4: leadership demands behavioural change

First and foremost, leadership today is really a sophisticated team sport. If you think of all the complexity and change around us, then review the daily rise of new competitors; the wide dispersion of skills and talent across the world; the speed of change; and relentless rise of new software and commercial models then it is simply impossible for a leader to be anything other than the leader of an empowered team. The allied adoption of co-operative problem solving and agile development models indicates that leadership needs close teamwork.

The “lone ranger” style of leadership — with its hierarchical dictates — simply does not work with large educated work forces today. It can’t respond to the velocity of the change we are all experiencing. It lacks requisite attributes of comprehensive knowledge and all important flexibility and agility. Technology demands new modular approaches to management be applied and understood. On any dispassionate review the old ways just don’t work. They can’t keep up.

“The ‘lone ranger’ style of leadership … simply does not work with large educated work forces today.”

I would make an observation that this is inherently against the rise of the notion of universal managerialism in the public sector, where subject matter expertise and authority is often underrated. On the contrary, to be competitively fit for purpose; to arrive at solutions efficiently and to stay ahead of the game; you need a range of disciplined experts who have real knowledge authority and leadership capacity. This requires I suggest, real changes in the performance direction of government in workforce recruitment, training and reward. Government rarely competes intellectually any longer.

An aligned leadership behavioural requirement is that one must not only speak clearly, but also listen — even more clearly. Close listening is fundamental to working effectively. The whole fabric of success personally or in enterprise reflects the need to listen — closely and well.

Clarity in open communication; careful listening with built in feedback loops; and diligent responses are central to modern leadership. As is transparency which is an increasingly welcome aspect of a new order in commercial and public life — think of New Zealand and its splendid approach to government openness and a true national conversation. It is exhilarating! Australia has much to learn in this regard

Lesson 5: getting the regulation right is central to success

Renewal in regulatory thinking is central to government effectiveness. I have to say that when I look at all the change that I have experienced and then look at what politicians and bureaucrats are doing in Canberra, the states, municipalities and any number of authorities, I fear that we are often living in parallel universes. I really worry that there exist today, to paraphrase the wonderful thinker CP Snow, two cultures: those of us who work in commerce and those who work in government.

I don’t want to be melodramatic about it — but things have reached a serious divide. It is driven by different experiences, different perspectives, different ideas about problem solving, different views on effectiveness with conflicting incentives. Ideology often gets in the way also. It all too often creates a policy muddle and severe misalignment. This harms Australia’s competitive skill-set and compromises an already challenging competitive outlook.

On the one hand, and at its worst, government seemingly wants to regulate for every eventuality, in response to matters about which there is some public fuss. It is self-evident that legislation is slow to respond to feedback, decisions are often driven by knee jerk reactions, and/or simplistic ideology, pet hates, or a concern to get square with perceived opponents.

Moreover, on the regulatory side it can be ponderously slow, frequently “gaming the system” against proponents. Regulators often disrespect the time cost of money and the need to be a competitively responsive and informed player as a core part of national and international competition settings

Above all the crushing impact of increased regulation on Australian businesses and the energy field of our society is not sufficiently taken into account often it demonstrating an incapacity to deliver creative, thoughtful, even courageous responses.

I would not want you to think I am saying commerce is uniquely virtuous or government uniquely challenged. Recent examples of errant behaviours on both sides emphasise the need for caution. But I am saying our regulatory cultural style is from another time often sapping the economy of the energy we need to apply in this changed landscape. We need to speak frankly about this.

Society’s energy resource in management effort is as rare as capital and all too finite. We only have so much energy and governments and regulators need to respect the resource and comprehend how debilitating the increase of often mindless process can be when compared to a managed approach focused on productive outcomes — seen, for example, in many of our Asian neighbours.

We are a small population in a vast land in a region which is the crucible of economic and talent growth in world affairs. And we speak English — which is either a virtue or a curse; liberating possibilities or condemning us to irrelevance. As English speakers we are either advantaged or potentially disabled as a result almost entirely of the quality of public policy settings and the outcomes they reflect.

I believe it is essential that we respect our duty of intergenerational care and acknowledge the need for national ground up policy and regulatory review to ensure a healthy, dynamic national landscape. We are underperforming presently and the performance gap will grow unless we respond differently to the change tsunami upon us.

Lesson 6: digital citizenship is fundamental in a modern society

An essential missing element of so much in the digital domain is a sense of refashioned contemporary citizenship; digital citizenship. It is a complex topic with many strands. At core I would suggest is the need to reinvest the value and need for the community’s relationship with humanity’s achievements and a devotion to history, creativity and discovery. This is central to cultural renewal and outlook. It relates to a sense of personal and national value in a global age.

It needs for government to better define purpose in an Aristotelian sense, in heartland social policy settings with clear national information priorities. We must wrestle with the question what does being a citizen in a digital world mean personally, professionally, at the community, national and global level?

The dimension of the policy leadership challenge in a digital era is vast. The public has many distractions not the least of which is the self-obsession of many — especially where evidence from various studies reveals really substantial increases in personal assertiveness, self-importance and narcissism.

There is a clear current cultural shift focusing on the self to the detriment of community. A compelling recent book on this subject was Anne Manne’s The Life of I: The New Culture of Narcissism. Or read Nick Carr’s salutary The Shallows: What the Internet Is Doing to Our Brains and ponder the impact technology is having on the way in which we read, concentrate and think.

“In my view the winners — public or private — will establish ‘digital DNA’ in their organisations.”

Notions of identity are changing and appropriate responses are needed from a variety of cultural touchpoints. Another challenge reposes where virtually everyone now has digital footprint — small or large — with huge implications from genomics to privacy and personal security. Government and the community need to think through what digital citizenship policy actions are required in education, communication and regulation.

It means that for healthy social connection and deep thinking to survive new resourceful skillsets are required in a context where there are so many often increasingly fuzzy and diffuse signals.

Digital chemistry and personality permeates all communication, documentation, and engagement in the 21st century. It provides a central methodology for information access and sharing. Change is demanded to ensure we manage the journey liberated in using new digital tools, well.

It needs a new toolkit. One embracing different approaches to research, planning, teaching, and communication to develop capable citizens. How we ensure intellectual discipline and not unquestioning Australian romantic surrender to technology determinism is vital.

I might add, I don’t think it can be observed often enough that in this connected world, a whisper can often be much louder than a shout. Think of social media and the impact as but one of many examples of the phenomenon of what I might term “whisper power”. Numerous examples abound — take the “Twitterverse” and too many others in social media to detail.

It is a complex matter with many good and also equally troubling aspects. However, notions of central control, supervised outcomes, resistance to FoI applications and frustration of unwelcome inquiries simply won’t work. They are alien behaviours to digital citizenship. Transparency is a pre-requisite.

New behavioural and legislative respect and allied training to address the rampant digital IP theft, so corrosive of society’s ethical heart, is also long overdue for concentrated, dedicated, corrective attention.

The inevitability of major disruption requires management bandwidth and attitudinal commitment to focus on reinvention and innovation. It can provide a genuine operational and cultural dilemma.

In my view the winners — public or private — will establish “digital DNA” in their organisations. Success requires many actions; from reviewing skillsets and competitive advantage; through agenda priorities in governance and executive teams; moving to ensuring the capacity to embrace agile development models.

It demands a willingness to replace outdated ways of planning and execution in order to manage rapid, transformative renewal. Reviewing the strategic planning process in all enterprises will provide a key question — is planning and execution adaptive and responsive to often confusing signals? Do we have the right people? Is our organisational frame work right? Do we understand the data?

A simple reminder: the net has no respect for the establishment in and of itself. Incumbency counts for little in the digital era. The internet is a furiously strong levelling agent. New paradigms in all things are becoming commonplace.

We live in an age of conundrums. It is said that volatility, uncertainty, complexity and ambiguity are the bywords for this era where it isn’t easy and will probably only get harder.

For government there is much catching up to do — fundamental cultural change is overdue.

This is an edited speech delivered by Kim Williams at the event Public Leadership in the Digital Age, an executive leadership program run by IBM and The Mandarin.

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