How to navigate the digital transformation journey

In this episode of the Better Innovation podcast, speakers discuss digital transformation strategy and AI's role in the journey.

Related topics

Step into the world of digital transformation strategy with our latest guest, David Rogers. As the Faculty Director of Executive Education Programs at Columbia Business School, David is a visionary in the realm of digital business strategy and transformation. He is the author of five books, including the The Digital Transformation Playbook, the book that put digital transformation on the map.

Join our host, EY Emerging Technology Strategy Leader, Jeff Saviano, as he and David – in keeping with our season’s focus – explore role of artificial intelligence (AI) in digital transformation, and the five biggest barriers to successful digital transformation, as explored in David's latest book, The Digital Transformation Roadmap. Plus, they debate a crucial question: does innovation always have to begin with the customer problem?

Tune in to find out.

Key takeaways:

The five biggest barriers to digital transformation are: defining a shared vision, choosing the priorities that matter most, validating new ventures through experimentation, managing growth at scale (governance), and growing technology and talent capabilities.
Digital transformation is a journey, not bound by definitive start and end dates. It's about continuous adaptation, agility and seizing new opportunities.
Innovation is about creating repeatable, scalable, profitable value, whether you are a startup or a legacy business.
Organizations must define the future landscape specific to their customers, market, and ecosystem, and ensure this understanding is shared throughout the organization.
You're never going to have everything you need to know or learn inside the walls of your organization.
While there are inherent risks in taking action, they are often outweighed by the risk of inaction.

For your convenience, full text transcript of this podcast is also available.

Jeff Saviano

Better innovation. It's Jeff we're going to keep with our focus on responsible A.I this season. We've got another great guest with us here in the studio to talk about AI and its role in digital transformation. Joining us today on the show is David Rogers. David is a globally recognized digital strategist. He's the faculty director of executive education programs on digital business strategy. And he helps lead digital transformation at Columbia Business School. David's also the author of five books. His previous, which was a landmark bestseller, was called The Digital Transformation Playbook. It was actually the first book written on digital transformation,
and it put the topic on the map. In today's discussion, we're going to explore the ideas and frameworks that are brought to life in David's newest book called The Digital Transformation Roadmap. We're going to get to the key questions that stem from certain ideologies that David puts forth in his book. We actually, we're going to start the show
with a bit of a debate about does innovation always have to begin with the customer problem? So, let's find out together. Here we go, without further ado. David Rogers.
David, welcome to Better Innovation.

David Rogers

Thanks so much, Jeff. Really happy to be here with you.

Jeff

Really appreciate you coming on the show with us today, David, and spending some time with our listening audience. I got to tell you, we love having authors on the show, especially, especially when we get advance copies of the book. I feel like we're in on a secret. And you wrote a wonderful book. We're going to talk about that today.
So, thank you. We really appreciate you trusting us with
that secret and allowing us to read it.

David

Very happy to have been able to get you the advance copy. And yeah, get a sort of a sneak peek before the rest of the world.

Jeff

And it helps us help you tell the story. And it's such a wonderful work. And we're excited to have you on today
to tell the story. David's book is called The Digital Transformation Roadmap. Our Crack Better Innovation
Team has formed a book club, so we appreciated the advance copy and we've been reading it together. Special thanks to Ryan Cooksey on our team. Ryan and I dove into the book and been looking forward to talking about it and many, many questions and take a deep dive into some of the ideas that you explore in the book.

David

Wonderful. Well, it's a pleasure to be on. And the book is really about the world we live in, which is as businesses, as organizations, which is a world of accelerating change.
Right. And every time we see, we think we've sort of started to even get our hands around the latest kind of wave of a new digital technological wave and sort of its impact in meeting on businesses and the economy and individuals and organizations. There seems to be another one just sort of the next wave starts to crest and build on top of that. So, really what I spent a lot of time both in my advising of senior leaders and executives and my teaching at Columbia Business School of Executives. That's the kind of teaching I do there. And then my research and writing draws on that, that this fundamental challenge that these established organizations, these companies are already here, many of them at scale, many of them, you know, maybe quite old, maybe only a couple decades old. But established businesses
are really struggling to keep up. And that was really what's kind of driven my work is to try to understand why, what are the challenges and what can we do about it? What can we learn from the companies who are doing a better job
of adapting to change?

Jeff

And these companies, in many cases, they are craving frameworks, they're craving help with their strategy. They need to innovate or they'll be left behind. And in many cases, what they're doing driving the current business model is exactly what the boards want them to do, and they feel as though they are fulfilling their duty to their shareholders by operating current business models. But in order to prepare for the future they need, they need to embrace digital transformation.

David:

They do. And let me just be clear, because I got a comment, a question about this. You know, very recently, and it's one
that keeps coming up, understandably. What do we mean by digital transformation? You know, I after my last book came out, which is actually the first book on the topic, I was, you know, traveling quite a bit. It's come out in many, many languages. I was in Italy, and I was introduced by, you know, the host of the event, and he welcomes me on stage and says, we're so happy to have David Rogers here to talk to us and specifically about digital transformation, because it's on the minds of everyone these days and all our businesses. And then he turned to me and he said, but digital transformation is, it's sort of like an empty suitcase.

Jeff

Hmm.

David

And there was a pause, and I thought, I wonder where this analogy is going. And he said, everyone is carrying it around, but no one knows what's inside it. And to me, it is, it's a term and it's a phrase and it's an idea that has sort of such currency that we hear it and see it in every context. But I think it's really important and valuable to step aside and step back and say, well, what do we mean by digital transformation? So, let me just offer my definition. That's in the book, the new book, the Roadmap, the digital transformation, is simply that it is the transformation of an established organization and to thrive in an era of constant digital change. Right. And there's a few ideas embedded in that. One is that digital transformation is about the business, right? It's not really about technology. Of course, you're going to use technology and any strategy we implement, but the transformation is in service of the business of your customers, of your employees. Second, this is about established organizations, right? This is all about
you have a business organization, maybe it's your public sector, but it's got people and processes and products and services in place and, you know, supply chain and partners
and distribution channels and org charts and brand reputation, all these things are already in place. And those are the things that provide inertia that you've got to sort of overcome and that you have to deal with. And making change happen, right, it’s totally different than if you're building a new, you know, startup from the ground up. And then the third part in this definition is that digital transformation is it is a continuous journey. Right. It does not. It's not a project. I see a lot of CEOs will come to me and say, okay, great, can you just tell me, is this a two-year project or a three-year project? Right.
Digital transformation doesn't have a start and end date. It is about continually becoming a more adaptive, more agile organization that is able to keep changing, growing, seizing new opportunities, responding to changes in the environment, and getting faster and faster because the change around us in the digital era is going to keep going. It's not going to slow down.
Jeff:
It is so interesting where I thought you were going the story and I love the story of the question
that you got in Italy is that I was just reading from a particular thought leader who was putting forth the argument that, well, I'll be really past what we were calling a digital revolution. And he was trying to coined the phrase
post digital. Aren't we in really a post digital world where if you haven't transformed by now, then by gosh, you probably missed the boa.t

David

I think that is so completely wrong. I couldn't say that would be more wrong. And I've heard that before. So, the reason why is that would presume that digital transformation is a response to a change in the environment that happened.
Right. And I could understand if maybe in the late nineties you thought that you saw like, oh my gosh, the web.
Right. The commercial internet has arrived.

Jeff

E-commerce.

David

Yeah, right, Right. And you think like, okay, we've got to figure this out. And it seemed like the difference was companies who sort of pre-dated that and companies had started after that. But guess what? That's not it didn't finish right?
It wasn't that the big change was once you figured out how to deal with e-commerce, we were done. Then we had streaming media, then we had social networks arrive next. Suddenly the web is no longer, you know, one too many.
It was many too many. Then we had the mobile computing
and all of a sudden connectivity was not something you had
when you were in the office or at a desk. It's with us continually. Of course, that opens up vast new business models in every industry. You know, then we've got, you know, waves keep coming. We've had the whole wave
of predictive artificial intelligence, which were already a good decade into. Now we have this next wave of generative
artificial intelligence. It's sort of just kicking off.
Guess what? That's not going to be the last one.
And so, companies that started five years ago are struggling to keep up and respond to the latest wave of change just as much as companies that started in the 1980s were struggling
to adapt to the arrival of the Web. So, this idea that you could have sort of done this, you know, five years ago and you spent some money and you install some new technology. So, we must be all set is a complete misunderstanding of the challenge.

Jeff

It's not as though we completely agree, David. It's not as though this is a book for the rest of 2023 and most of 2020 for that. You know, this that these are perpetual principles. And if you buy into the S-curve theory of growth when you're about at the top of the S-curve or as you're climbing that steep slope of the S-curve and you know that you'll get to the top and we head on. Wonderful thought leader and author Whitney Johnson was on the show talking about her,
her point of view of jumping S-curve and sort of go from S-curve to S-curve as digital technologies advance, as business problems change, business models emerge. And, so I think it's an important principle for us to get out early because the ideas in the book and the framework and the strategies that you learn will be necessary for ever. Like these are lasting principles. Is that fair?

David

Absolutely. You're going to need to keep and that's how I have written into tried to design is to have look at principles
that are fundamental across industry and across. You know, it's dealing with the challenge of 2023. What did or didn't help companies deal with the challenges of, you know, 2016
and what's going to help us deal with the challenges of 2032 and beyond.

Jeff

If we were here talking a year ago, then perhaps the metaverse would have slipped into our conversation. And we were just talking about that internally. Somebody was joking, saying something to the effect of, well, thank goodness we didn't name our team with the metaverse inside of it, because, yes, if you buy into the Gartner hype cycle, we were at the about the pretty top of the initial hype and it fell into what they'll call the trough of disillusionment. And we'll see that same cycle happen again and again. And it's the principles in the book.
So, I mentioned the book club. We loved our book club.
And one of the ideas that really stood out to us, David, was the challenge of proximity that you explain in the book in chapter two, describe how managing innovation outside the core business and the importance of that. Some really powerful examples of how digital businesses have thrived by innovating beyond their core. And we'd love to hear you talk about what do you mean by this challenge of proximity,
why it's been so difficult for companies?

David:

Sure, it is inherently difficult for companies to pursue new growth opportunities that are far from their core. And what do I mean by that? These are typically opportunities that may serve different customers than your current customer base. They may have a different revenue model than your current revenue model. They may require different capabilities and partners, different cost structure. Those are sort of some of the key indicators. And the more of these are true, the harder it is going to be for any established business to go after this because of that sort of center of gravity you have and what you've sort of already built the organization around. Right. Challenging proximity has no is not an issue whatsoever for a startup. This is about why innovation is hard or certain kinds of innovation are very hard for established businesses.
And it's not because they're dumb, it's not because they were taught the wrong things even in business school.
And believe me, many things have been taught wrong in our business. Goes back as a professor. But it's actually structural, right? It is inherently more difficult, right? Not impossible, but more difficult for a few reasons.
One, some of the reasons have to do with process, right?
Because. So, it's hard for an established business to go after New growth opportunity with, say, a different customer base and different revenue model, etc., because their organizational structure is not set up for it.
Right? Where's it going to fit within the business units? There's great history of sort of technology innovation written about by Tim Harford and like why certain military technologies were adopted quickly because they could be slotted into an existing sort of division of the military structure.
And others sort of struggled for years because it wasn't clear. Is this cavalry or infantry the really that simple?
You have metrics in place that are established for the core business and they will not be effective in judging, evaluating and developing a growth opportunity beyond it.
You have resource allocation that is typically designed,
you know, those who create the resources get to choose where to spend them to some extent. So, resourcing will often be held hostage. So those are sort of process problems. There is also mindset problems like fear of cannibalization is sort of a classic reason, mindset, reason why companies are having hard, find it hard to go beyond the core focus on their current customers. Right? We all talk about customer centricity. It's sort of a double-edged sword. Yes, we want to be focused on the customers, but if you have people in your organization whose whole job is to be laser focused on the needs of your current customers, that's fine.
But you're actually going to need different people to go
after these opportunities beyond the core, because otherwise you're going to say, Well, our current customers
don't care about that, right? We're supposed to care
about what they care about, right? Clayton Christensen famously wrote about this. And of course, the third
and the most fundamental sort of mindset barrier is
what Ted Leavitt called marketing myopia. Right.
Which is that over time, any successful company, it isn't the nature of success that if you are successful,
that success will wilt. Sorry. What he said was, as Ted Leavitt said, any company that is successful over time will tend to focus more and more on the products of the past, defining its future in terms of the products it has built and that it has brought to the market rather than thinking of them in terms of what are the customer needs that we have solved and how are those changing into the future.

Jeff

And if you buy into the three-horizon theory of Horizon, which I do, what is okay, well, that's I love to I love to understand why I was going to use it in the context of simply the horizon one. What are the customer problems that are here? Here today? So you could simplify it, call it something that we look a lot to. David is the horizon. One is I need to take care of the customer problems that my customers have today versus a combination of Horizon two and three, maybe like what's coming around the corner and having those skills to be able to look and see trends coming from around the corner. Reason what made me think about it is there was a great line in your book, something to the effect of how every business needs to place bets on innovation ventures that fall outside of the core if it hopes to achieve long range growth. And to me, that may not be meeting the demands of a Horizon one view. That's something that's around the corner and that's an important element of what companies need to focus on that.
So that was the concept. But I love to understand what about the three horizons do you feel is not particularly helpful?

David

So, the problem of the Three Horizons model fundamentally is that it conflates three things that are not equivalent and don't move together, and that is proximity to the core. I call the challenge of proximity, uncertainty and timing. And so, the three Horizons model is based on the idea that there's one group of innovations, Horizon one that are close to the core-low proximity and need to be done and need to be done soon. Right? And then there's Horizon two is a little further out from the core, what they call adjacent, and there's a bit more uncertainty. And they it's a little longer time frame, time horizon.
That's where the horizon comes from, time horizon. And then the third is problems that are or opportunities
that are further from the core entirely. I have greater on the greatest uncertainty and are the longest time horizon.
Right? So those are all factors. You have to think about proximity, uncertainty, time horizon. I would take off the table. So, this is the first fundamental problem
is you cannot predict the time horizon. But the second point is those three do not move together. And so, you have opportunities and threats beyond the core, which are not going to take years to emerge. They haven't may have already emerged right now and they're going to hit you over the head if you don't respond. There are what I would call path one opportunities that are low uncertainty in your core business.
Very clear what you need to do, not a lot of uncertainty about it. And yet they're going to take years to implement. Right. So, whenever I tried to actually; I mean, it sounds great on a PowerPoint slide, whenever I actually tried to implement the three horizons in discussion with the company, it just broke down because the actual strategic approaches don't fit within that.

Jeff

It's better that you say that because as it breaks down and I and we're going to talk about AI and it's hard to have any conversation about digital transformation as we sit here in September of 2023 and not talk about AI. But we're finding to the good point that you're raising, David, is that the Horizon two opportunities that may be emanating from a general AI application that may not be six months to a year away.

David

I’m just going to say, I can't have a conversation with our horizon one, two or three because the whole model is broken. So, unless we want to make the whole episode about why it's broken, why I can't respond to a question without saying Horizon two makes no sense. And I can do a whole different disquisition on yeah, okay, we can come off issues.
Yeah, I think proximity, if we bring it back to proximity.
Okay, I can totally agree that there is such a thing as like thinking about and I think it's really critical to opportunities from generative AI or anything else that are in your core
business versus further from the core.

Jeff

Gotcha.

David

Okay. Well, let's match the time. It doesn't actually match the uncertainty because you have highly uncertain
questions in your core.
Yeah. Just as much as you have outside the core.
I see. Okay. Appreciate your point of view.

Jeff

So, let's let's, let's come off of it.
So no, to get sidetracked. Yeah. No, let's pretend we have so much other to go through. I'm going to bring it back. Okay.
Let me try to bring it back and then you talk. Then we'll see if this works. Okay. Well, David, so interesting. What this also makes me think of. We had one of our guests on the show,
Steve Sasson. Steve Sasson invented the digital camera.

David

Oh, yeah.

Jeff

When he was at Kodak. And he's such a great storyteller. And he joins Kodak fresh out of school as a newly minted engineer. And he had the ability to tinker. They let him tinker at the company, sort of like a Bell Labs model. And one of the early 20% models were, I think it was maybe even higher percent. But, you know, take some of your time
and we recognize the value of tinkering. And he did that. And that is how the digital camera came together, sort of taking his different experiences and different technology capabilities. And he came on the air and told the story of over a decade plus trying to convince the company to extend
beyond its core, which was not digital. But, you know, the core was what was so interesting about Kodak is that they own the whole value chain from not just the cameras,
but the film and the processing. And so is that a good example of the difficulty that a company may have extending beyond the poor?

David

Absolutely. I even mentioned Kodak. It's a well-known example, but it's one of the companies I mentioned in the book talking about this challenge and what it and the other companies I point to all show is that these companies are able to come up with great ideas. They have people in them were able to identify really important growth opportunities, people like Steve Sasson. The challenge is they struggle to bring those ideas to market, to commercialize them at scale.
That's what happens, right? They can come up with ideas.
They cannot bring them to scale and really capture the value. Now, let me say it can be done. It's very hard. But Amazon Web Services is of course, an amazing example of this, where Amazon had, you know, originally a white paper written by Benjamin Black and coauthored with his boss, Chris Pinkham, which was part of their general effort looking at how they were going to upgrade their entire IT architecture for the business because they had this monolithic architecture that was struggling under the weight of the expansion of the company from what was originally a bookselling company to much more diversified, but at least into this technical paper which talked about, you know, how do we build a much more modular, scalable, flexible, you know, IT infrastructure, what we would now call modular computing in the cloud. There was sort of this last little note was like, hey, you know, if we did this right, we could probably sell this as a service to other businesses, right? And they kept that in the white paper and sent it up the path and Jeff Bezos got to look at it and said, That's a really interesting idea. The point is they manage that opportunity differently than most companies do, put resources behind it, brought in, put together an initial team of people who are mostly from outside Amazon. Right? Amazon at this point was a pure consumer retail business. We're talking about going into an enterprise business, selling IT services, totally different market, different customers, different ecosystem of partners. Everything was going to be different. They brought in different people, gave them a separate team, kept it small. I mean, the first one of the first products was built by Chris Pynchon's team, a handful of people.
He took them to South Africa because he was having trouble with his green card. They said, Great, go to Cape Town
for a year, work on building a product that's about as far from Seattle as you can get.
So, it's like separation, giving them resources, not cutting them off from the main mother ship, but giving them
sort of insulation from it. There are series of things you can do. Amazon did, right?
Of course, Amazon Web Services went on to become not just a success, but the most profitable part of the company. But I see this in other examples. Companies like the New York Times, companies like Walmart, companies like MasterCard, right, legacy businesses who are now successfully standing up pursuing growing new digital business models that are distinct and outside of their core business. So, it can be done. You just have to manage it
very differently and another reason why we love the book
is that you don't just raise that this is challenging for companies, but to unpack is you give examples just now how companies have faced that proximity challenge and how there are specific devices and strategies that they can use.
You've mentioned a few. One of them also that I was really struck by is your focus on problems that play to your strengths as you explain it in the book and you use the example about Alibaba moving into digital payments because the customers need it, they discover it as part of their core business that they found a new customer problem and it happened to fit a strength that they had. So that was it was also interesting. I suppose it's about managing risks and so you'll reduce the risk of failure if you focus on problems whereas an organization you have strengths. But it was another element too. And you mentioned this about the example of going to Cape Town is that and as you describe in the book, making it independent, separate from the core. Amongst the best advice that I've received as an innovation leader within EY, was we setting up ventures in this context to keep it separate but not isolated? Is this advice that we've received and how important and it's served us so well David, you have to separateness is important, but if you isolate it, it makes reentry impossible. Yeah. Is that there's a fair way to say it?

David

Absolutely. I agree for a couple of reasons. I mean, the metaphor I picked up from Chris Reed, who was now at MasterCard, was tasked in a previous company, Tesco, you know, retailer, to really pursue a big outside the core opportunity. But Chris Reed uses the metaphor of an umbilical cord. Yeah.
So, you're sort of way of separate but you've got this because a biblical cord carries, you know, nutrients, resources. So, there's kind of two reasons. One is you don't want to cut that independent team off from any of the assets or capabilities. You know, maybe it's data, maybe it's being able to test an early MVP with a segment of your existing customers. It's like, oh, access to them, you know, certain things that are going to really help them because, I mean, if you're not going to give them any of that help, they might as well just be an independent startup and get VC.
Yeah, right. They're going to move faster that way. So, it's like you want to give them the stuff that's going to most help them. You want to give them access to certain key resources and the others to your point about reentry, you do not know when you start with something that is initially beyond the core, what is the future going to look like? And sometimes these ideas, as they evolve and they develop and they become real businesses and they grow, they start to get closer to the core business. And the question of can we run this separately, should we run this separately starts to look a little different in the light of day, after a couple of years, three years, four years in the market. So, we saw that retail as a sector where you had this early on, this split where you started creating separate teams to pursue e-commerce.
This is in legacy retailers. And then at a certain point
it became clear, the market's matured. We need an omni channel strategy. We've got to bring them back and integrate them. Right. Other cases, it's like a AWS in Amazon and other examples. We can see where something grows and it really sort of makes more sense to become its own business unit. Stand-alone once it gets to scale.
You don't know at the start. So absolutely, that's another key reason why you don't want it. You want it to be independent but not isolated and great way of putting it. And then also one of the other features you talk about in the book is, is to plan where it will land. So, as you articulated the challenges a few minutes ago, that if the current organization structure doesn't have a particular business unit where it fits, then start to plan what may the new organization structure or the future look like for that particular business and there's another recurring idea we could pivot a bit, David, that was recurring throughout the book and it's that innovation journeys should start with a customer problem, and it's now it's hard to argue with that and starting with the customer problem rather than, let's say a technology itself. And it's sort of this hammer looking for a nail. And I wanted to make sure we had some time today to talk about this because I feel like where we sit now, the world has a hammer looking for a nail. That hammer is artificial intelligence. And the point was made a few different times in the book of how, again, this importance of starting with the customer problem. Love to hear you articulate why that's so important to you. And do you see value at time, starting with this hammer looking for a nail?

David

Yeah. So, this is, as you said, one of the critical sort of central themes of the book is that innovation and growth has to start with what I would call strategy, right? I see a lot of cases, companies who have invested in innovation and felt this is important and we want to give resources and we need to have some different people. We want to give them some independence. But innovation is allowed to sort of go off on its own path, divorced from corporate strategy, and it never achieves results that matter at scale to an established business If you do that, innovation has to be in the service of creating value. So, when you start with a technology first
and you say, Wow, there's this great shiny new Bible, there's this new tool, let's go figure out what to do with it.
What that tends to lead to is a particular kind of what Steve
Blank calls innovation theater. So rather than saying,
Oh, look, we're doing cool stuff with start-ups, or we've created an innovation lab, it's look, we're using chat GPT, Isn't that exciting, right?
And it was sort of pats himself on the back and they create lots of demos and so forth. Innovation is all about creating repeatable, scalable, profitable value. That is true
whether you are a startup, right, or whether you are innovating inside a legacy business. So, this is why we have to start there. Now, the point here you asked is it have to start with a customer problem? The point is that we need to focus on outcome. That's right. Any innovation effort has to be rooted in what is the outcome that we are seeking. Right. And one of the great ways that cause a lens to think about your business and innovation and strategy is what I call the problem lens. So, looking for customer problems to be solved. This is such a classic sort of mindset and approach to organizing and rooting innovation in desired outcomes. What's a customer's current problem that we can make better? There are other pieces, though, where it may be a business problem, right? That is also a perfectly valid starting point. Think about every division in your company. What are the things they are struggling with? What are the things that are hardest for them right now? How can you innovate on that? That's where a lot of innovation happens, right? Sometimes these two are linked. Are SaaS large? A very large tech company. I know that among other things,
was selling a as a new SaaS software as a service into the market had a business problem. This is you know former
student of mine was working on this and he confessed He said look, the problem was poor customer retention. Our sales force was really good. It was a really impressive new tool. Our sales force was doing a great job selling it, but we had a poor retention rate. So that was a business problem to solve. We've got to figure out how do we how do we keep this, you know, churn from dropping off? Well, as they dug into it, to understand why are people like not sticking with this after the third or fourth or fifth or six months? It turned out they were having trouble using it.
It was too complex to use. They loved the premise.
They saw the relevance to their company. They signed up in practice. They were having difficulty. The real problem was they needed more sort of training, more kind of onboarding.
And the company effort had been really organized around A, we built this amazing thing. B, We're going to sell the hell out of it, right? And that was great. But it turned out to, to really solve the customer problem that would ultimately solve their business process. You had to do a third leg of that stool, which is like, okay, this is the kind of product that actually does need some kind of careful onboarding training.
So, customer problems, business problems. There's also I talk about in the book an opportunity lens, thinking about you know, how do we where opportunity is there to not to solve a current problem the customer knows about, but to delight the customer with some unexpected value that they weren't even anticipating and their business opportunities.
These are all different sort of lenses, but it's again, it's all about finding an outcome you're trying to achieve, and that is the starting point for any effective innovation.

Jeff:

We really did think a lot about it and it was it was part of, again, back to this book club, we found that that we kept coming back to this notion and we started thinking of examples where there is a new technology breakthrough that and the more that we looked at those examples that sometimes it takes new technology capabilities for us to reexamine a customer problem in a different way. And I think that's where we were kind of some examples that we were kicking around the 1950s lasers were invented
and very quickly they figured out that they could be used in surgeries or in telecom or for barcodes, and you could even make an argument around the World Wide Web. And what Tim Berners-Lee did back in 1989, started for academic data sharing. And of course, there's been an explosion. But is it a fair way to look at it that because, again, we have the entire planet is looking at the AI hammer right now. But, you know, as we work with companies and as we're seeing companies examine what generative AI in particular could do, I'm finding that it's this customer problem, reexamination that's allowing them to look at a problem differently
because of new technology capabilities. And isn't that healthy?

David

Absolutely. Absolutely.
So, what I would hope companies would do, what I would most recommend as a new capability is emerging as coming on to coming online, as we're certainly seeing with the whole latest wave of large language models and what's broadly being called generative AI. It's an incredible new set of capabilities. They're moving very quickly. So, what I would love to see is when a company says we've got some exciting new capabilities, let's look at, we've already done the work, we have identified some of the problems that matter most to our business, right?
We're doing that ongoing process of strategy, thinking about problems to solve, opportunities to pursue. Let's go back
and look at every single one of them and say, look,
these are the things we've decided, matter most to our business and it's success and growth and ability create value. Which of these do we think, hmm, this could be a good fit for generative AI. Now the more we start to see applications in other industries, that'll help us kind of see that matching.
At the very beginning it's hard, right? It's so we're looking in principle, we're looking at, well, there are certain things seem to be good at and there are certain things they seem to be really bad at sometimes at the same time. So that gives us some sort of grounding of thinking about maybe which we want to try to apply this to first. But this is very different than what I see right now. And a lot of companies
still is the kind of AI, what I would call demos. Cycles to a demonstrate version of the technology that's kind of wow is kind of the outcome we're looking for. Look, CHatGPT past the bar exam, right?
Classic example I was excited about that. Whose problem is that? Solving it? Do we have a problem passing the bar exam? I'm not sure that there's a problem there right now. Could generate. Could ChatGPT replace a lawyer? Right. That would be solving a problem or even become a powerful tool to support the lawyer in court. Right. Because they have a tremendous amount of preparation to do before they go into court. Right. That would be a problem to solve. Guess what? Early efforts to do that were disastrous and can get you disbarred because they had a lawyer who came in citing a bunch of cases that didn't even exist because they came out of hallucinations from that large language model. And the lawyer had no idea. Contrasting Khan Academy right. In the education sector, they've been trying to apply generative AI and chat models to the existing known problem of tutoring. So, there's been data for years and years that shows in education the biggest single thing you can do to improve the outcomes of young learners is to give them in addition to whatever kind of set up they have the classroom, the teacher, the textbooks, all these
things are kind of variable, right?
The single thing that would make the most impact is in addition to the classroom. If they have a tutor who can just go over there, work with them one on one, kind of look at what you did, post questions. Well, why did you do that? Okay, you see this MarkWest math question was marked wrong? Can you find, you know, what point did you which step did you go off this sort of iterative back and forth process that a good tutor does? Right. That's been proven for years to be the most powerful educational sort of, you know added you can get the problem is very expensive so no can afford to just say oh great well I have private tutors for every, you know, primary school student in New York City.
Right. So that's the problem. And they're saying, can we use a very tailored, very constrained particular version of a large language model chat bot that's designed to be a tutor in certain kind of classes for some kinds of students. And they're training it over and over and we're refining it for that particular application.
They're calling it Conmigo. That is in service of a real problem with a real customer, with real outcomes that you can measure. Is this helping or not? And what are sort of, you know, side effects that you want to measure that it could, you know, potential errors you don't want to bring in while solving the original problem. That kind of work is much harder to do. You don't do it overnight like getting ChatGPT to pass the bar exam. Right. But that's real innovation.

Jeff

And that's not, it's real innovation.
That's not the innovation theater. Steve It's been on my show a few times and he would tell the story I love stories about. We'll talk a bit about experimentation and how we learn a lot from Steve Blank and this theory of experimentation and Lean Startup. But this idea of the importance of to the conversation that we're having now about innovation theater is that you've got a grounded in a real problem to solve. So perhaps that's a lesson for literally the thousands of companies that are experimenting with AI right now is that it's not about the pizza and cake parties and you know, that element of innovation theater, but you've got to link it to a real problem to solve.
And so maybe that's the way to round out this discussion, is that when there is a new breakthrough technology capability like this, great to recognize it, to reevaluate a customer problem statement, but get right to the problem statement as soon as you can. Fair enough?

David:
That should be your job. Go on the hunt for important problems where this capability could suddenly give you a different way to try to crack that. Not a different entry point to try to solve that. You don't know which ones are going to work, but ones where there's some relevance and it looks like this could potentially be and then you start that process of experimentation.

Jeff

I think this a great segway into want to take maybe a step back and look at some of the steps and frameworks
that you describe in the book. Let's just start with. Yeah, at the highest level that you identified, there are five key steps for digital transformation that you outline in the book. Let's just do a quick run through and then we're going to highlight one or two of them that I think are particular.
We're still going to tease the audience. David Let them go by the book to learn about the other three or four.
But if you could just start with what are the five steps that you highlight for digital transformation?

David:

Sure. And these five steps, I call that the digital transformation roadmap. And each step you're going to apply somewhat differently in every individual business.
But this is what I've learned. We've seen now we've got a track record of, you know, thousands of companies who have attempted some kind of digital transformation, clear evidence that the large majority are struggling or not really seeing much to show for their effort. But a sizable minority who are really creating value driving growth.
So, what distinguishes them? And what I found in my research looking across industries is that there's five things
those that are succeeding are doing. Every single one of them is doing this. The first is to define a shared vision,
right? Getting a really clear statement of where we are going as a company and why and why us.
Right. Second, picking the problems that matter most. This is everything we've been talking about. This is strategy in terms of defining which of the things we need to solve that are most important to our company.
If you don't have that rigor of picking a few things to focus on and saying no to all the other tempting, exciting, tantalizing opportunities that are floating around you, your digital efforts will go shooting in a thousand directions. You've got to pick the problems that matter most. Third, once you've identified the problems you're going to try to solve, now is where you experiment what I call validating new ventures. So really learning that skill of
how do you rapidly validate and test and learn what's going to work and how and what. Fourth step, once you start to learn to do that, typically at a team level, we'll talk about maybe of the process and frameworks for doing that experimentation.
If you're an established business, it's not enough to have one team that knows how to do that, right? It's not a startup.
How do you do that scale? How do you manage a portfolio of different efforts that are going on simultaneously pursuing different opportunities and tradeoffs of resource allocation? How do you move people around? There's all these kind of governance questions.
So, that's what I call managing growth at scale, right? That's the fourth step. And then the fifth step is about really investing in the capabilities you need for the long haul
to keep this whole engine moving. And that's what I call
growing technology, talent and culture. Those are the five steps and they're going to look different. How you, how it plays out in every single company. But I have found every business that is really succeeding in transformation. They are doing all five of these things.

Jeff

So helpful and so practical for our listening audience as they tackle their digital transformation. Let's just jump into a few of them and we're really stuck. We were really struck by where you began with defining a shared vision. And in this section of the book, pretty early in the book, we were drawn to the importance of understanding what described the future landscape and defining that future landscape when you're identifying what that shared vision is. Could you elaborate on that? David.

David

Sure. Well, this is kind of a simple idea before you decide where you want to go in terms of, you know, your strategy as a business at future looking strategy, you need to have an informed point of view of where your world is going. So, that's that future landscape.
What do we envision as where our world is going to be in the, you know, near and maybe not so near future? Now this couple of things are key here. One, this needs to be unique, right? It has to be unique to your organization, specific to your industry and your own history, even as an individual or organization. I see so often companies start this process and they're thinking about the future and they write and collect a lot of sort of very generic ideas, case studies from other industries. And well, we don't want to be Kodak. Right. Great case.
But if all you do is you're talking about Kodak and Blockbuster and this and that, and you're not bringing it down to the level of, look, we are an advertising agency in Southeast Asia supporting our small businesses. We are a energy extraction firm in Latin America. We are a, you know, Canadian small tech firm that works with supports health care services. Right. You've got to define the landscape specific to your customers, your market, your world. It's got to be unique to you. And the other thing, it has to be is shared, right? Has to be shared by everyone inside the organization.
This point of view, this understanding of where your world is going and what position you hope to occupy in it is something that everyone has to know and be aligned around. Getting there requires a lot of, you know, synthesizing a lot of data a lot of inputs, learning continually, bringing in outside voices as well as ideas and perspectives and learning from the front lines at every level of the organization.
So, it's not a one and done. It's a continuous learning process. And this vision is going to continue to evolve and sort of be refined. But putting that work in is essential as a starting point.

Jeff

This resonated for us because of how important it is and, and in our client work, the difficulty that we see many companies grappling with is how hard is it? We had actually one of your colleagues as a guest on the show, Rita McGrath, and her book Seeing around Corners. And it was I think, really helpful for our audience to learn some skills of how do you look around the corner, how do you see what's coming next? And, you know, we learned from Rita that that these are learned behaviors and that there's certain skills that you can develop to help you become more proficient there.

David

Rita has done great work in this area. And, you know, it's a lot of her work points to the idea that as much as we see the importance of sort of turning, you know, inflection points where there's a kind of a big kind of turn or a shift in industry, all of these big shifts are years
in the making. Right. And so, you know, she really lays out how do you look for those signals of a trend that's kind of been manifesting in the early stage for some time and that it's starting to actually sort of creep up and get momentum And maybe there's also skills you can learn now.

Jeff

Maybe there's also a connection back to we've mentioned Steve Blank a few times and his famous response of getting out of the building and leveraging your ecosystems and bringing others in because no single organization has all the answers. Nobody has all that expertise. And we find we're finding that now the important sense of building and leveraging ecosystems to de-risk your organization and to help with innovation, whether it's academic labs, it could be from start-ups or from even venture capital firms. And we're finding that that there are very few companies that have proactive and systematically built an ecosystem
to leverage for this purpose.
And I've been dying to ask you this question, the importance of leveraging an ecosystem to do this thoughtful scanning. How important do you think that is?

David

I think it's critical. And obviously, you see, you know, large firms, particularly firms who are focused on, you know, being a partner to other companies, providing additional services may really invest in this. And they've kind of built
a very sophisticated ecosystem. But I've worked with, you know, a CEO of a midsize, highly innovative but not top tier insurance firm in the US. Right.
They're not operating in all 50 states. And their CEO has been laser focused on continuous learning, bringing in outside voices. They have all kinds of on their own version, their own scale of processes and events and speakers and content and constant dissemination and bringing up of ideas. So, the companies who do this effectively, they make it up, they make it a series of processes. It's about bringing ideas up from every lovely organization and very much
from outside the organization. And it's about building that kind of network of folks and partners outside the company. You're never going to have everything you need to know or learn inside the walls of your company itself. And that's again, back to the mantra - get out of the building. That's as true for big companies as it is for the startup, where, you know, Steve saying, you know, don't spend your time all just putting post-its on the wall. You know, get out and talk to the customer. Guess what? That's just as true when you're a company of 20,000 people as a company of two people.

Jeff

There are so many great examples of some, you know, practical advice. And I think it was in readers book example of a CEO where every Friday morning the CEO would bring in one or two startups every week without exception, would do it every Friday. And I'm sure nine times out of ten, that may be nonsense. Perhaps there's nothing tangible but one more times out of ten, something will pop, you'll learn something. It'll be a different perspective.

David

That startup does not have to be something that's ultimately going to be a successful scale business in ten years for you to gain real important learning from seeing where they're at today. Right? That's your goal. So absolutely, it's a great learning to use it properly.

Jeff

There are so many great principles. Again, in this we wanted to focus a bit on defining a shared vision. There was a quote I had never heard this quote before, but we deal with this problem quite a bit. And I just wanted to translate the quote by John F Kennedy that you have in the book. Quote, there are risks and costs to action, but they are far less than the long range risks of comfortable inaction, end quote.
Could you elaborate on that idea? David?

David

Yeah, This is a well-known cognitive bias. Yeah. So again, this is sort of an inherent problem, not that someone is being foolish, but it's the way our brains work. Psychologists have studied it and given a series of names, a mission bias and others that all lead us to be more aware of and more cognizant of the risks of an action we are considering taking rather than the risks of inaction of staying the course of the default. Right. Phil Bob at Columbia Law School calls this
the Parmenides fallacy, named after the Greek philosopher
who at one point I guess, argued that change was an illusion.
Well, guess what change isn’t an illusion, right?
Heraclitus was right, not Parmenides. And what Babbit means by that is it's the fallacy is.
When you compare a course of action you're considering, you say, what do we do about this? And what are the risks and the cost of the opportunity. And when you add the problem is it's often an unstated comparison. You don't even actually articulate this, but you are comparing it versus a baseline, which would be to continue with the present state.
And that is as if the future would look like the same as today
if you don't do anything. And Babbitt's point was you always have to ask the second question, okay, here's the risks and opportunities of this course of action. Now, what's our best estimate of the risks and opportunities of staying the course? That is just as much an active choice. And, you know, you will see this in a lot of industries in the digital era. They've gone through a lot of change. It was very easy for years if you were a television network or traditional media player to say, “look, I see, I see what's going on with Netflix
and some of these new models. Streaming, does not look as attractive, isn't going to be as profitable a business as as cable. Right. So, we should stick with cable.”
Right. Okay. That would make sense if you could stick with cable. Right. If you actually thought, yes, the world is just going to come to a standstill and nothing will change. Obviously, that's not what the future is going to look like. And at a certain point, you know, over time, all the players, all the legacy players have sort of realized that and come around to the fact they have to change. I think the auto industry has been a little more proactive with electric vehicles. I think I give them credit as a group, the legacy players that, you know, they started to see before disruption had really hit that, guess what, the current market is virtually all, this is a few years back, you know, maybe five years ago. The current market is virtually all ICE, internal combustion engine.
But that's not where the long term is. It is going to be electric. This is not something we can turn on overnight. We're just going to have to, you know, belly up to the table and, you know, put down the resources and make the investment and make the decision. We're going to start down this path now before we have to in terms of what sort of evident in the moment so that we're going to be there for where this world is going and where that future landscape is headed. That's what companies need to do.

Jeff

I suppose it's recognizing the principle, David, that every business is in a state of decline, looking at its current business model, perhaps that it could be a decline, it could be rapid, it could be by tomorrow afternoon or it could be a longer period of time, but not forever. It explains this way. It always resonated with me is that without innovation, without digital transformation, every business is in a state of decline and you need to continue to search for a longer term solution.

David

Jeff, one of the questions I always ask senior leaders when we get in a room is just get them to focus on the risks of inaction and say, look, I'm not going to tell you the answer. You tell me the answer. If you were to change nothing, if you just said we're going to save our pennies, not waste them on this innovation and experimentation and digital stuff, we're just going to keep running the business as it is right now and invest the savings back into our you know, into our finances. How far into the future do you think you might be out of business, right? You might no longer exist and there's no right answer. The only wrong answer is never. Right, because no business operates forever. Right. Fascinating to get to start that conversation and get different voices in the room. And some say 20 years and some say eight years and some say two years. It's like, okay, let's hash this out and why are you arguing this and that? And to start to get around some alignment, okay, maybe we meet somewhere in the middle or hash it out and then think about let's keep that in mind as we're then making decisions that, you know, we do not have an infinite leash in which to keep going and expect things to sort of stay the course.

Jeff

What an uncomfortable conversation for many leaders, I would imagine. Yeah, I imagine that they're probably leaving. And there have some sleepless nights thinking about about that question. Okay, such a great discussion. I want to do one more, let’s do one more quickly. Go to the third roadmap step validating new ventures and yeah, and in this chapter of the book, David, talk about how organizations maybe sometimes place too much emphasis on, you know, what we call the front end of innovation to creating ideas rather than the validation of those ideas.
Could you explain a bit and expand on why ideation
is so attractive to organizations, but perhaps not as much as the hard work of validation?

David

So, yeah, why is it attractive?
I mean, it's fun. It's much easier. Right.

Jeff

This is an innovation theater with the front lines.

David

I mean, generating ideas is, you know, relatively if you see this as sort of a blue sky process and you don't have any constraints because you're not trying to implement anything yet, gee, that would be a nice world to live in. So, I mean, it's also, frankly, sold by a lot of books and a lot of consultants,
you know, innovation theory, until, you know, about 15 years ago was primarily focused on coming up with ideas. Most leaders think their job is not necessarily to come up with ideas, but to pick the right idea. You unleash the creativity of the people that come up with ideas. And I'm a senior leader. My job is to pick which one is right. That is completely wrong. The job of the leader is to pick
the most important problem to solve, right, or to pick the questions that matter most and then tell their people,
okay, you've got to go out and find the answer to that question. You've got to find some possible solutions to that problem, and then we're going to validate them. I always say this in my classes Jeff, great ideas, are rarely a source of competitive advantage. Companies almost never win
because they had a better idea, right? They win because they're able to take ideas and validate them and figure out, test their hypotheses, invest very few resources, minimize
the risk at the early stages when uncertainty is very high,
de-risk the idea, validate, learn. And this is a critical point. Ideation is not the front end. It is not the starting point. If you understand and you rediscover the idea. Innovation is about continuous validation. Ideation happens at every stage. Every time you hit that wall, every time
you pivot, you find, you know what? That's not the right market entry point. Those aren't the customers. You're going to be our early adopters. Oops, that wasn't the feature that was going to be, should be the first feature in the product to drive adoption. Oh, that's not the use case where this product is really going to be most used every time you learn something is what you didn't expect, that triggers ideation.
Okay, then what next? What? Instead, if it's not this, maybe it's that. So, you have to be engaging your mind,
your team. You're in a constant process of testing,
learning, defining hypotheses, seeing what you learn in testing them and then thinking creatively again and coming at it with a different angle. That's also one of the aspects that I personally loved about the book is that there are a number of occasions where you recognize that there is an existing innovation theory or a thought leader, and we've mentioned Steve Blank a number of times, but recognize many times in the book that that the lean startup theory, there's a place for that and that I think there was a breakthrough in the work that Steve Blank and others and he's been on the show talking a bit about this, the value of MVP's. He told the story. I think he told the story in his books about two of his students were developing an app, and every student that comes through his class, they have to actually build something. They're not just talking about it, but they need to build it. So, they go to their favorite coffee shop and the MVP is on the back of a napkin. It's not a technical, it's just drawing up what does not have to be a working product. Yeah. And they go across the coffee shop and they show it to potential customers and give some feedback that I like features three and four. I don't like this, but you forgot about that. And they sort of save it and they go to the next one and they go to somebody at another table like that's innovation. And that's to the point that you just raise. The ideation is continuous and that learning process, I think it's such a simple example and I love how he explains that because doesn't that really prove that it is iterative and the importance of it?

David

The whole process is iterative. You know, I've learned so much from Steve Blank, also from his coauthor, Bob Dorf.
I've gotten the chance to teach classes with each of them over the years.

Jeff

Oh, great.

David

I could not have developed
my model of, you know, the four stages of validation, which is the framework I lay out in this book for how to organize within a company on a repeatable basis. This process of experimentation. I couldn't have done that with what I learned from them about the Lean Startup as well as, you know, Agile and ideas from design thinking and so forth. But such an important body of work. And what you underline there in that story is, is a real critical insight about MVP is you know the name is, can create confusion, minimum viable product people think it's a product it is I define it as a minimal artifact designed to test a business assumption. That's exactly what Steve is talking about in that example. So, the whole point is, it's about the intent and MVP is not built to make money. It is not even built primarily
to solve a customer problem, right? These are iterative and eventually as they get further and further develop, they may start to solve a customer problem. But the primary goal is to drive learning to answer a question, to test a hypothesis,
to bring in that feedback from the market, and to make that learning as fast and as cheap as possible. Right. And that's why exactly you start with a napkin sketch, you move on to a wireframe, you move on to a more robust interactive wireframe. You have then finally a first working product with real data in it, but it's kind of half-baked and only has one or two features, but just enough to actually bring some utility to the customer in their real world life or job or entertainment or business. And then you start to build in more. It's very iterative process At every stage, though, it's a slightly different question. It's not what features should we Jim indexed, it's what do we need to learn next about customer demand, problem or solving, use case, delivery? Can we deliver this? Can we deliver it legally? If you're in a regulated industry, there's so many questions you've got to validate. And each MVP, which sometimes is just a test, is just a market test. You know, an email campaign can be an MVP. Is designed to learn what matters most for you to learn right now at that next stage.

Jeff

And you said it, David, just in that last statement about, you know, this business experimentation can take many different forms that you have hypothesis about many, many aspects of the business and the product and the customer problem itself. And you tell me if this statement goes too far, but you present many different frameworks in the book that will be so helpful to our listening audience. But you chose one to put your personal name to. And I actually came away feeling that it was the most impactful. They're all great. This one to me was so impactful because I feel like the world is craving some organized framework to how to manage that business experiments. Those all of the different. So, you put called the Rogers Growth Navigator. Explain why that,
explain the need for the navigator and what problems that solves for our audience.

David

So, I've seen this in so many companies is they start to unde0rstand the principles and sort of the ideas of experimentation, like, okay, why we should be doing this and we want to reduce our risk upfront. We want to learn before we build and so forth. And then they really struggle to put this in place to make this a repeatable process. And there are tools out there which I found helpful. I've tried all of them working with different teams, startup teams, teams within established companies, trying to build new ventures. There were always sort of some missing pieces. And so, this for me has been a very iterative journey developing, okay, how do I build on the great thinking of people like Steve Plank, the tools developed by people like Alex OsterWalter One of the things that I'm finding is really helpful. One of the questions I keep hearing from people. So, one of the most important, I guess the biggest thing I found still lacking was companies, teams struggle with sequence, right? Once they adopt that mindset of humility and they say they realize all the things they don't know, You know what? We don't know what the problem solving is. We don't know who the right customer is. We don't know what the solution is going to look like. Certainly, we don't know which features to build first. We don't know what use cases they're going to use it and who's the competition, what's the price point, what's the pricing model, what's the size of the addressable market? The list goes on and on, and then you get sort of overwhelmed, right? Where do we start? Most companies start in the completely wrong place, right? And so that's why I developed these four stages of validation, I should say. These stages continue to build on each other. It's not a stage gate. You don't do one and then you're done, but you start with one. The first stage is validating what problem are you solving? Are we solving a genuine problem for a real world, flesh and blood breathing customer. Second, does that customer see value in the solution we plan to build? This is before you've got a working solution, right? Third question right. Can we deliver a solution that the customer will use? Now we're getting into critical questions of both delivery, right? Do we actually have what it takes and usage? Okay. Very often you get product market fit. You've got customer demand. They say, yes, give me one of those. Give me one of those, give me one of those. You give it to them. They drop it. They stop using it after one week. So that's a whole other set of questions. And then the fourth stage is business validation is, can we capture enough value that it's worth pursuing this opportunity? So, you have to do all of this, but you have to do it in the right sequence. So, I started with that and that was the theory. But then as I was working with teams, what I found was they needed a tool. They wanted a tool to say, okay, let's capture all our hypotheses. Let's see what we've learned, what's still unknown, and the Rogers Growth navigator is built around that theory of the four stages. So, unlike all the canvases I'd seen out there and tried using with teams, it actually guides you through what is the starting point, what comes next? what comes next? How do we build on that? How do we take all these different factors into account to move from that, really that very first napkin sketch in the coffee shop, right point to actually having a product, a service, a business model, innovation that's at scale in a large company, you know, delivering value operations, supply chain, everything.

Jeff

I think it's a great point, David, for us to anchor this wonderful conversation that we've had today, because again, and for our audience that I think there's so much utility that our audience and our innovative audience will get from the Growth Navigator. I think it's an extension of some tools that exist in the market today. But I found after I read that chapter a few times, because of the importance of recognizing those four distinct areas and the types of problems that you're validating through hypotheses that you have about the product and the solution, and about the how it fits within the business. And I think it recognizes that distinction, which I thought was most important. Okay, David. Such a great conversation. If you're up for it. We have a typical feature that we end all of our Better Innovation episodes with three quick questions to close us out. Sure. What do you say? You up for it?

David

That sounds great.

Jeff

Oh, here we go. Let's do it. Yeah. All right, First one. What's a book that has greatly impacted you?

David

That could be a long list. Let me. Let me pick two business books. Right.
One, I really loved reading Measure What Matters by John Doar. It's on its surface, a book about the history and the application of a method called OKRs, Objectives and Key results. And that's interesting to learn. But what really struck me is it's a book about why we measure, right? The real lessons there go far beyond whether you implement OKRs at all. It explains that the real value of measurement is in the stage of defining what your metrics will be right? Going through that thoughtful process and not at one stage and one level of the organization at every level of the organization. Everyone takes accountability for outcomes. They say, what am I trying to achieve? And that idea does not have to be a quantifiable measure, right? This is breaking down a lot of sort of long-standing theory of certainty. You can't measure it. You can't manage it. No. That objective can be qualitative, it can be squishy, it can be hard to completely pin down, but it matters. It's really important. And then you ask this question of how do we know if we're making progress towards that right now? Give me some definition of success. Give me some definition of success, some sort of metrics that will at least tell me this should mean I'm marching towards that goal or getting closer. It's a great way of thinking about having everybody in the organization think about measurement and the other beautiful lesson from that book is that if you read it carefully, the real value here is in alignment. So, the most important thing here is going through the thoughtful process of what are we trying to achieve, right? Why am I actually showing up at work every day, whatever my role in the organization is, and then going through the collective process of hashing that out, arguing, agreeing and aligning. Okay, we have agreed this is what we're all trying to do. Wonderful book. Another one, very different. Tim Harford, the economist, he is an economic historian, his book, 50 Inventions That Shaped the Modern Economy. And I love the book because it's sort of about technology and innovation, but every chapter is a short snapshot of a particular innovation, and some of them are very highly technical and, you know, digital age and so forth. Others are things like the invention of barbed wire, right, or the invention of the container shipping, standardized container shipping just literally a size of a shipping container. And you find out what really matters in innovation, what really creates an impact. And it's about so many other factors beyond the sort of scientific discovery or invention of engineering, a new particular technology. Sometimes that's part of it. But it's only there's so many other factors. So that's a that's a really wonderfully written book. Love it with a great lesson for all of us.

Jeff

You can see how these books impact your work, especially the first book about metrics. And we talked a bit about it with the proximity challenge. You talked about it in defining a shared vision. So, you can certainly see the metrics thread that runs throughout your work. Okay. All right. You're doing great. Tomorrow, what piece of advice would you give to a younger version of yourself?

David

I think I would say recognize that your plans will change and be okay with that. So, I had certain ideas in mind if when I was really focused on when I was, you know, a young adult and I was, you know, a jazz saxophonist and composer,
and among other things, and I sort of thought I knew it's
not that I thought I knew every, you know, my entire life
what I was going to do. But I had this very sort of conviction
of sort of where I was heading. And I would say it took me a number of years. I'm now very comfortable with the idea that what I'm doing today, what I think I'm doing at this point, three years from now could shift and that that's fine. So, I would just encourage, you know, myself to maybe learn that lesson a little bit earlier, be passionate, be focused, have your plan, have your goals, have the things you're working on, but just recognize plans will change and be okay with that. And that's, of course, completely true for businesses as well.

Jeff

Such good advice. Give your younger self a break. Perhaps another way of looking at it. Okay, last question, David.
That's terrific. What areas or industries do you think are ripe for innovation? Just look out next, 3 to 5 years or so,

David

Next 3 to 5 years, that's sort of near term. I think a couple that stand out. One would be work collaboration in the aftermath of the pandemic quarantines. We have opened up organizations to a lot more consideration of different ways of organizing work, you know, hybrid working and so forth. And so, I think there's a lot of opportunity with existing technologies and capabilities and of course, with the new ones that are coming online, like generative AI to really come up with different ways not to replace people, but different ways for people to work together
and really do amazing things. I think health care is going to be, there's a lot of opportunity. Of course, there are a lot of structural impediments to change. I do think some of the areas where we can see and will see a lot of innovation in the near term, one is around diagnostics tremendous growth happening there and that's one where there are fewer barriers and application of predictive AI models and all kinds of new machine learning and other approaches are really going to not only make advances but advances that have huge impact on outcomes, on quality of life and length of life and so forth. And the other is sort of around more, I would say, sort of what we might call mental health, but even more broadly, sort of social mental wellness, the kind of breakdowns are the issues we're facing around disconnection from each other and so forth, and how do we address them. And some of them may not look like sort of traditional what have been historically mental health, you know, medicine and therapies. Obviously, those have a place. But I think there's opportunity for things with large language models and a lot of other tools to start to help to help us connect with each other as humans, as social animals in healthier ways.
Jeff:
You heard today from our guest, David Rogers, author of the new book The Digital Transformation Roadmap. David, thank you so much for coming on the show. Really enjoyed this conversation. Loved the book and I can't wait for our audience to get it and to and to enjoy the principles in the book as well. Thanks for spending some time with us today.

David

Thank you, Jeff. It's really been a pleasure.

Presenters

Jeffrey Saviano

EY Global Emerging Technology Strategy & Governance Leader

Podcast

Season 7, Episode 2

Duration

1h 11m 4s

In this series

EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients.