Crossing the Digital Faultline - Book Review
1 February 2022
Dr. Moria Levy
The book 'Crossing the Digital Faultline: 10 Rules of Highly Successful Leaders in Digitalization' was authored by Sri Manchala, the director of Trianz, a company specializing in digital transformation. It was published in 2021.
Within the book, Manchala delves into the widely discussed topic of digital transformation and sheds light on the astonishing fact that only a tiny fraction, approximately 7%, manage to achieve it successfully. He presents ten rules that outline the defining characteristics of top-level managers. According to Manchala, these skills can be acquired, and he provides a roadmap for skill development and progress. Through this guidance, managers and organizations can confidently navigate the digital transformation of the 'promised land.' Manchala emphasizes the urgency of the situation, cautioning that a failure to act swiftly may become obsolete without even realizing it. He draws connections between the challenges we face, including the impact of COVID-19 and the imperative to adapt to frequent changes.
The book is structured in a clear format, comprising:
The era of Digital Transformation
10 Rules for Leadership
Becoming a Leading Manager - Step by Step
This book has achieved significant success and is highly recommended for managers who genuinely aspire to guide their organizations into the new era. It offers valuable insights and guidance to help leaders discern the necessary efforts and strategies. While a summary is provided here, it is strongly encouraged to read the entire book for a comprehensive understanding.
The Era of Digital Transformation
The most successful organizations in digital transformation possess a profound understanding of customer behavior. They can reimagine their products or services, offering substantial added value to their customers. These agile organizations swiftly provide solutions based on this added value while ensuring a seamless digital experience throughout the supply chain. This seamless experience is achieved through web platforms, mobile apps, or Internet of Things (IoT) integration. These organizations are even willing to abandon existing models in pursuit of innovation.
Leading digital organizations can either be digitally native, such as Amazon, or they may have undergone a significant leap from a traditional environment to become digitally focused, like Disney.
While several factors contribute to the success of a leading digital organization, the style and attitude of managerial leadership stand out as the most significant. These leaders approach their roles with different mindsets. They recognize the current window of opportunity and understand the urgency to take action. They know that success is not achieved through gradual, step-by-step progress in a single stroke.
For those who believe that the winds of change have not yet arrived, it is crucial to realize that significant changes are brewing beneath the surface. By the time they emerge, it will be too late to catch up. Therefore, prompt action is imperative as early as yesterday.
Why? Six driving factors shape the digital landscape:
Customers: Customers crave innovative solutions driven by digital technologies and desire a seamless digital experience.
Disruptive Technologies: New technologies disrupt existing paradigms.
Global Competition: Innovation can originate from any corner of the world and across various sectors.
Significant Growth in Asia: Asia, particularly China and the Eastern region, has witnessed remarkable growth in innovation and the development of new products and services.
Start-up Era: Many small companies have achieved remarkable success.
Corporate Hacking: High-tech enterprises venture into traditional markets, altering the dynamics.
It is important to note that while technology plays a central role in this transformation, it is not the sole determinant. Instead, it serves as an engine and catalyst for change.
Examples of significant changes brought about by this transformation include:
The shift to online shopping.
Movies with enhanced customer experiences that encourage increased consumption.
Digital assistants like Alexa, Siri, and others.
Leading companies at the forefront of this digital revolution include Amazon, Microsoft, Tesla, Walmart, Disney+, Twitter, Apple, and Adobe.
The 10 Rules for Leadership: Customer Centrality
Rule 1: Placing the Customer at the Center
Understanding and prioritizing customer preferences.
What motivates customers to make purchases?
Their needs, technology, convenience, entertainment and online content, social connections, environment, and influence from online personalities.
What do customers value?
Time efficiency, adaptation to digital habits, functionality, trendiness, and environmental consciousness.
Factors that influence customers' decision-making:
Disposable income, spending preferences, price sensitivity, comparison shopping, and digital commerce.
What do customers expect to receive?
User-friendly digital interfaces, relevant digital content, collaboration, proactive service, and support.
To truly achieve customer centrality, it is crucial to comprehend customers' desires and requirements and anticipate their needs, often even before they express them.
When managers plan and strategize, they must consider the entire value chain of their customers, from external interactions to internal processes.
Prioritizing customer centricity should go beyond mere competition and attitudes towards rivals. Examining competitors' practices only if they prove more successful and advanced, motivating our progress, is crucial.
The more successful we are in placing the customer at the core of our thinking, addressing their needs, and adapting to their evolving behaviors, the more engaged they become with our company. Building a relationship with customers and soliciting their feedback is invaluable.
Rule 2: Decision-Making Based on Data and Information
Make decisions based on data and information analysis rather than relying on assumptions. Data and information provide an accurate and reliable understanding of customers, employees, regulations, partners, suppliers, and competitors. It serves as the foundation for intelligent decision-making and creates an infrastructure for enhanced automation and the integration of artificial intelligence. Data and information from internal operational systems and external sources such as the Internet and accessible databases contribute to this knowledge. Analyzing and making decisions based on data and information reflects a level of maturity in the following aspects:
The ability to generate reports on past organizational events using available data and information.
Implementing business intelligence systems and dashboards that offer a real-time view of ongoing activities.
Incorporating algorithms that provide predictive insights into future organizational developments.
Adopting analytics and artificial intelligence to understand human behaviors, derive valuable insights, and automate work processes.
The primary role of data and information today is to facilitate learning and understanding customer needs and changes in their behavior, enabling proactive preparation and response.
Rule 3: Disruption
The impact of the high-tech world is not limited to innovative industries; it is also permeating traditional sectors. Companies like Tesla are selling cars; Amazon is offering a vast array of products, and even entertainment, food, and medical markets are witnessing an influx of high-tech solutions and companies. The underlying concept is that these companies are prepared for transformation in cutting-edge fields and traditional areas like car washes and supermarkets.
Traditional companies and organizations can no longer afford to lag because those who fail to progress will be surpassed not only by familiar competitors but also by high-tech companies that offer new value to customers. Disruption, as a fundamental change, follows a cyclical pattern that involves endless imagination beyond the horizon and the development of solutions based on customer analysis, product evaluation, competitor assessment, and emerging technology in three dimensions:
Understanding the customer and their needs, focusing on the benefits they can derive.
Enhancing the customer experience.
Building a strong relationship with the customer and fostering their engagement with the company.
Key elements that facilitate the implementation of disruptive change include:
1. Technological infrastructures:
Cloud computing: Enables agility in solution development and leverages advanced auxiliary services available in the cloud.
Artificial intelligence: Empowers machines to acquire knowledge, improve performance, and enhance decision-making.
Virtual reality: Facilitates visualizations and simulations, enabling the offering and testing of more prototypes to customers, ultimately improving the value proposition even before the development stage.
2. Development concepts:
Agile methodology: Integrates the customer throughout the process, from defining needs to prototype evaluation, validation, and testing.
Rule 4: Added Value Based on Technology
Technology brings added value in various ways:
Attraction of Customers: Customers actively seek a digital appeal, and technology can help capture their attention.
Understanding Customer Needs: Technology enables us to understand better and meet customer needs, eliminating assumptions and gaining insights.
Alignment with Consumption Habits: Online purchasing of products and services has become common, and technology facilitates seamless transactions.
Time Efficiency: Technology reduces wait times for customers, enhancing their perception of Return On Time Investment (ROTI).
Physical Connection: Integrating connectivity into products or services establishes a tangible link between the customer and our brand.
Multiple Interface Options: By providing options to access services through mobile phones and computers, technology offers flexibility and convenience to customers.
Strengthened Customer Engagement: Technology supports the formation of stronger bonds with customers by aligning with their evolving digital habits.
Incorporating technology-driven added value can significantly impact customer satisfaction and strengthen their connection to our organization.
Rule 5: Collaboration Across Departments in the Organization
To successfully navigate digital transformation, the company must break down the barriers of working in isolated silos within each organizational unit.
Linking Databases: By connecting and integrating databases, valuable insights can be gained from the collective information. This enables a comprehensive analysis of the organization and facilitates the creation of a fundamentally different value proposition that ultimately benefits the customer.
Fostering Interdepartmental Connectivity: Collaboration and information sharing among individuals working in different departments are crucial. When people from various departments come together, they can leverage their diverse expertise and perspectives to drive innovation and improve organizational performance.
Combining these two elements is essential for fostering a culture of collaboration and enabling a holistic approach to organizational development. The author proposes an "experience-driven" organizational structure, where individuals from product, sales, service, supply chain, finance, and procurement work together in every activity. This approach emphasizes collective effort and focuses on delivering optimal outcomes for the product, customer, and service.
By promoting collaboration across departments, the company can harness the collective intelligence of its employees and unlock new opportunities for growth and success in the digital era.
Rule 6: Learning Digital Technologies
For a manager aiming to lead the organization through digital transformation, it is crucial to recognize and comprehend the potential of emerging technologies that can contribute to this transformation. These technologies span various areas, including:
Internet of Things (IoT)
Managers must take the initiative to educate themselves about these technologies while fostering a learning culture among their employees. This involves integrating the workforce into the learning process, establishing teams dedicated to continuous learning, and facilitating regular collaborations between business units and the IT department.
By actively pursuing knowledge and promoting a culture of learning, the manager and their organization can stay abreast of the latest advancements and effectively leverage digital technologies to drive transformation and achieve desired outcomes
Rule 7: Planning and Execution in Agile Steps
To navigate the uncertain landscape we operate in, it is imperative to adopt a strategic mindset and execute swiftly and iteratively. In short, we must embrace agility.
Why? Because uncertainty permeates various aspects:
Uncertainty regarding customers, employees, suppliers, and influencers.
Uncertainty surrounding competition.
Uncertainty regarding technology.
Uncertainty about the ever-changing competency landscape, where needs, technologies, and models evolve rapidly.
Uncertainty about the pace of change itself.
The iterative process unfolds across five levels:
Analyzing the situation through data.
Formulating a data-driven vision, strategy, and prioritization of actions.
Adopting an innovative development process for the product or service.
Realizing the technological aspects.
Launching the product or service and measuring the results.
By following this iterative approach, we can adapt to the evolving landscape, make informed decisions based on data, foster innovation, leverage technology effectively, and evaluate our progress against predetermined metrics. This agile approach enables us to navigate uncertainty and respond promptly to emerging opportunities and challenges.
Rule 8: The Human Element
Here's a surprising revelation: while we often discuss digital transformation centered around technology, the key to success goes beyond technology alone. The leading manager must recognize that the essence of transformation lies in creating added business value. To ensure the success of the change, it is crucial to understand the nature of the transformation, how it should be implemented, and devote proper attention to it. Corporate culture, employee loyalty, and commitment play significant roles in supporting this success.
The manager must comprehend the expected emotions at various stages of implementation:
Vision, Strategy, and Prioritization: There may be a sense of apprehension mixed with anticipation and excitement for the transformation.
Innovation: A sense of security may arise.
New Technology-based Solutions: A feeling of ownership may emerge.
Initial Launch and Measurement of Results: A commitment to continuous improvement becomes evident.
In guiding the employees, the manager should focus on providing access to knowledge, empowering them, and encouraging risk-taking. Professional training for both the manager and employees, tailored to their roles and specific needs, becomes the key to successful change, according to Manchala. Eventually, learning becomes an integral part of the corporate culture.
Rule 9: Measurement, Progress - and Beyond
The measurement of several goals serves various purposes:
Assessing Progress: It allows us to understand where repairs are needed, where reinforcement is required, and where support is necessary.
Validating Work Assumptions: It helps us examine whether we are moving in the right direction.
Celebrating Achievements: It creates a sense of accomplishment for the team and fuels energy for continuous progress.
Seven interconnected dimensions characterize the journey towards achievement and crossing the digital fault line:
Analytics Infrastructure: It indicates the progress made.
Individual and Team Capabilities: It signifies the ability to work independently, even without constant managerial supervision.
Alignment between Business and Technology: It involves operating in a cohesive and integrated structure.
Continuous Customer Engagement: It entails regular feedback from customers and other stakeholders regarding products/services through digital channels.
Digital Key Performance Indicators (KPIs): They provide insights into productivity.
Relevant Digital KPIs: They guide us on the most effective path for ongoing progress.
Clarity about the Next Iteration: It outlines the necessary actions to take in the present.
It is essential to remember that reaching the fault line and crossing it does not signify the end. There is no finish line. Instead, we must continue moving forward to the next step and embrace the ongoing nature of digital transformation.
Rule 10: Setting Distant but Attainable Expectations
One of the defining traits of successful leaders is their ability to assess tasks and establish appropriate expectations. These expectations should be ambitious yet realistic, enabling the organization to go far while remaining within the capabilities of its employees and stakeholders. Successful leaders focus on a vision and develop a practical plan to drive digital transformation. They also align expectations with influential stakeholders such as the board of directors and shareholders, effectively navigating their perspectives and creating a two-way dialogue.
Furthermore, they coordinate and align progress with operational, finance, and IT managers. The journey towards becoming a leading manager is achieved step by step. Five maturity levels measure a company's progress in digital transformation based on parameters such as:
Digital IQ: The company's vision and data-driven decision-making.
Relevance of the product and service portfolio to evolving needs.
Level of internal process automation within the organization.
Digital literacy and readiness of employees to manage technology-intensive processes.
Preparedness to address cyber threats.
Leading an organization through digital transformation begins with the self-transformation of the leading manager. Manchala analyzes different types of managers and concludes that successful ones possess analytics, decision-making, and communication skills. Various management styles are explored, each with its advantages in other contexts. The less familiar, somewhat novel definition of a successful manager is someone who embodies the characteristics of a methodological entrepreneur. They possess abilities in strategic thinking, prioritization and planning, organization and execution, reliability, leading by example, active listening, ego-free communication, belief in people, and celebrating the team's successes.
Such managers can see both the details and the bigger picture, and they believe in the power of "we" rather than "me." Manchala suggests four steps for implementation, as outlined in the book:
Adopting the ten laws as standard practice within the organization, following 45-day cycles.
Conducting a comparative assessment of digital maturity and developing a vision with a prioritized plan.
Training in the ten laws while implementing the program iteratively.
Developing the capabilities of a leading manager as a methodological entrepreneur.
While success is not guaranteed, following this well-structured method allows managers to learn, adapt to the organization and themselves, and initiate implementation persistently and fearlessly while inspiring and guiding others. The outcome may lie beyond the horizon, but the journey toward digital transformation is worth pursuing.