E182 | Growing Your Organisation through a Digital Transformation with Paul Leinwand & Matt Mani
Is your organisation looking for a new growth strategy? Are you about to undergo a digital transformation? Perhaps you already have but you’re not sure what the next step for you is.
In this episode of The Melting Pot, Paul Leinwand and Matt Mani, both of PwC and Strategy&, discuss the book they’ve written, Beyond Digital, the result of their research into companies that have successfully undergone a digital transformation.
But just what is a digital transformation? What does one look like? What does it entail? And what did these companies have to do to achieve it? What changes did they have to make in their leadership team? In their business? How did they plan for and execute on their digital transformation plan?
Don’t miss Paul and Matt share all of this and more, using examples from the Japanese construction firm Komatsu and Starbucks. This is a fantastic conversation, we’re sure you’ll enjoy it as much as we did.
On today’s podcast:
- Beyond Digital
- The definition of a transformation
- Learning from companies that have digitally transformed
- The social contract with your people
- Beyond Digital | Strategy& + PwC
- Twitter – @paulleinwand, @MMahadev
- LinkedIn – Paul Leinwand & Matt Mani
- Website – Beyond Digital | Strategy& + PwC
Undergoing a Digital Transformation with Paul Leinwand & Matt Mani
Paul Leinwand is the global managing director for capabilities-driven strategy and growth with Strategy&, PwC’s global strategy consulting business. He lives in Chicago and teaches strategy at Northwestern Kellogg School, and has been doing a lot of interesting work with executives and boards over many years across many industries.
Matt Mani leads the transformation platform for PwC and Strategy&. He’s based in Amsterdam, and works with companies on business model transformation.
Together they work with boards and management teams, helping them with strategy, growth, and capability building. They’ve also written a book – Beyond Digital.
If, like most organisations around the world, you’re digitising only to keep up with everyone else, making investments to digitise without thinking about your future and what you’re trying to achieve, the real question becomes – are you adding value to your customers and society? Or are you just trying to keep up with the Joneses?
“What are you doing to prepare your organisation to really be differentiated? Digital can be an ingredient to that. But it can’t be the main show, we’ve got to get companies to step back and address some of these fundamental questions.”
A lot of companies, say Paul and Matt, are spending billions of dollars on implementing all manner of digital initiatives across their companies, not because they’re important or relevant to the organisation, but because they think they might be.
“We’re not saying digitisation is some terrible thing and you shouldn’t do it. But what we do lay out is how do you do it in a way that actually moves you forward? And for that, you have to think beyond digital as the title itself indicates.”
The definition of a transformation
“Look at the word transformation itself, it is to transcend the form. And so that means not just digitising yourself so that you’re a digital version of what you did before. But actually creating something fundamentally differentiated.”
That doesn’t mean throwing out everything you’ve ever done before and chasing some strange new goal, but it does mean taking forward your strengths and coupling that with the new capabilities that are relevant to your customers and society. So that you’re looking to serve them not just now, but in the future too. So you have something to grow into.
“You have to transform towards a destination. And often we don’t see destinations. Destinations to us are organisations that are shaping their future, they’re not waiting for something to come, they’re not worried about being disrupted.”
Reimagine your company’s place in the world, advise Paul and Matt, look into the future and look at what your customers and what society needs so that you can be relevant to them.
“It’s much more important to look forward and say, what is the real purpose we’re here to serve? And how is that going to be relevant? Three years from now, five years from now, 10 years from now? And how do I shape towards that future, as opposed to just continuing to do whatever I’ve done forever and hoping that it stays relevant?”
One of the biggest lessons they learned from the companies during their research was the idea of privileged insights. In order to figure out the future, to stay relevant for the future, you have to have a trusted relationship with your customers, say Paul and Matt, so that you can always be learning from them.
That doesn’t mean carrying out market research, anyone can do that. It means actually engaging your customers and learning from them.
Learning from companies that have digitally transformed
What Paul and Matt didn’t want to do with their research was to find the latest, greatest digital startups and see how they started. They wanted to find established companies that had embarked on the difficult journey of digitally transforming and come out the other side, successfully.
They narrowed the list to 12 companies based on being able to talk to the leadership teams, and learn from them, not just all the things that they did well, but also some of the mistakes they made along the way. And how they went through their journey, which is, in many ways even more interesting than what they did.
One of the biggest lessons, they say, is the change the leadership team has to undergo. If you’re asking your organisation to transform, then that needs to start at the top, with the leadership team. And this then has to replicate throughout the organisation with all the different leadership teams you have.
“How many times have you heard ‘you have to lead from the front’ and ‘lead from the top’, and it’s all about just tone at the top, and so forth. And so we have created this hero-only culture for a very long time.”
The data and the research in the book show there’s a need for a different kind of leader today, one who can be both the hero leader and humble. And have humility to know when they don’t have the answer, to step back, allowing others to take the lead.
The social contract with your people
Another key element of undergoing a successful digital transformation, say Paul and Matt, is that companies have to change the social contract they have with their people.
They need to shift from the old model of paying someone to show up, do a job, punch the clock.
“You need to be able to empower people to collaborate and work together and in ways that they are empowered to go solve problems, to invest in their own development, so that they are growing and learning and they can respond to your customers needs and keep innovating and keep your company on the cutting edge.”
Take Microsoft, as an example, they’ve been a product-centric organisation for years, focused on how many software licences they were selling. But they’ve had to pivot to a world where they had to get interested in customer outcomes. They’ve had to move to a software as a service business, where people get outcomes and if they don’t, they won’t use the products.
“In order to do that they recognised they had to bring together people from different teams to work together, and then really shift the contract that they had with these folks to say that you are part of Microsoft’s mission of serving the world. You’re not just here to work for a big software company and get a nice salary.”
If you don’t reinvent your social contract with people, say Paul and Matt, how do you motivate them? The old sloganeering of go fight, win, beat the competition, be number one, just doesn’t work. It doesn’t get people out of bed. They want to be part of something bigger than that.
- Elusive Nonviolence – Sharma Jyotirmaya
- A Brief History of a Perfect Future – Chunka Mui & Paul Carroll
- The Wisdom of Crowds – James Surowiecki
- Wisdom of Teams – Jon R. Katzenbach & Douglas K. Smith
- Ten Years to Midnight – Blair H. Sheppard
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