"We have to learn how to balance exploration and execution for wherever we face uncertainty, and that's the fundamental difference that I think people have to think about going forward is, how do we learn how to do exploration work? And how do we learn how to balance that exploration work with the execution work?"

Intro:
Welcome to the Agile Digital Transformation podcast, where we explore different aspects of digital transformation and digital experience with your host Tim Butara, content and community manager at Agiledrop.

Tim Butara: Hello everyone, thank you for tuning in. Our guest today is Brant Cooper, New York Times best-selling author of the Lean Entrepreneur and CEO of Moves the Needle. A company which helps entrepreneurs and startups thrive in the highly digitalized 21st century. Digitalization and digital transformation are mainstay topics here on our podcast but we never really delve into the differences between them and the potential pitfalls of equating the two and so, in today's episode Brant is going to lend us his rich expertise and help us dispel this super common DT myth. Welcome Brant, it's really great to have you on the show today. Anything you want to add or should we just move to the questions? 

Brant Cooper: I think we should jump right in, but thanks so much for having me. I look forward to the conversation.

Tim Butara: Yeah, I think it's going to be a really great one. And yeah, let's start with a hard hitter right away. So, a big trend that we've been seeing recently is this digitalization, so, companies digitalizing their processes or maybe launching websites and apps for the first time in the case of traditional businesses, and they're calling this digital transformation. But does this really do justice to DT? Is digital transformation really just about adopting new technologies or is there something else to it?

Brant Cooper: Yeah so, I think it's fine, I think that all of that digitization work that those companies are doing has to be done. I think that they're just maybe not recognizing that there's something larger going on that's driving that need and it's not just that everything is becoming digital, that's a simplistic and shallow way of looking at what's going on in the world. In my view, we are undergoing a fundamental change from a society that's been organized by the industrial age, literally organized by assembly line, by the management science, Taylor's management science and Henry Ford's perfect example of what a business should look like, optimized for producing a model T in any color you want as long as it's black, that was the optimal organization. 

And what we're moving from that ethos, from that society shaped by the assembly line, into a digital world, hyper-connected, more like a meshed network - information and even misinformation somebody pointed out to me moving at the speed of light. It's a more complex world, it's more interconnected and what it means in my view is that all of society now is going to change how it's structured, how it's managed, how it works, to reflect the digital age and so, digital transformation is certainly part of that but if you don't see the larger picture, if you don't see the real revolution that's going on and you try to manage your company inside this digital age based upon the principles of the assembly line, it doesn't really matter what you digitize in your company, you will fail.

Tim Butara: Yeah, that's a very good point, it's basically these residual things from a totally different era and work is such an important part of our lives that it makes perfect sense that the world should change because of new approaches to work, because of stuff like that. So, let me get this straight, so digital transformation is actually an all-around business and societal transformation and this digitization is just one necessary part of it?

Brant Cooper: Right. So, one might say, if one wants to keep the digital transformation part defining digitizing products and services and back end that's fine, but it's a subset of this digital revolution which is a fundamental change to society and requires then a different mindset. And so, this is the key thing that I think is missing in those that focus only on the digitization, the digital transformation, is that they're not seeing that there's a new mindset that's required to live in this and work in this digital world and so, what is that called? I don't know, but it all needs to be happening at the same time or all of the work digitizing the digital transformation side of it again will not have the impact that people are hoping it will.

Tim Butara: Yeah, because the impact is not so much as in the digital, the adoption of digital, but in the shift in the mindset, as you correctly pointed out.

Brant Cooper: Yeah right, it's the shifting mindset which again it's all across society. So, it's a shifting mindset required in education, it's required in government, it's required in small businesses, startups, large corporations, NGOs - all of these are going to change. And so those that get it and change first, that's their competitive advantage they'll be way out in front. And of course that means things will change on the worker side, and things are changing on the consumer side and so, again, if you don't do the change inside the business then you're going to be left behind.

Tim Butara: Yeah, those are some very good points. Okay, maybe, can we take a look at this distinction between digitalization as kind of a subset and digital transformation as this kind of all-- large scale thing and longer lasting process, what would be some practical indicators of this difference? I know that we pointed out now businesses just adopting digital processes and digital technologies without actually making the change in mindset, the change in structure. Are there any other practical examples? What have you been seeing with people that you've worked with who are having problems with this maybe?

Brant Cooper: Well, I think it's the continuous uncertainty and so, I think that uncertainty is really the key characteristic that faces our everyday life. And so, I think that the pandemic really drove that home, right; suddenly, all of the things that we were doing don't work anymore or we can't do them anymore and so leaders had to ask themselves the question, well what do we do? Well, that's uncertainty. We don't know what to do in the face of this global pandemic. 

So, some make the mistake of thinking that the pandemic is the cause of the uncertainty and my argument is that it's just the latest cause. In other words, the increased complexity and the interconnectedness of the world means that we're going to be facing continuous disruptions. And what's extraordinary here in the US is if we just look about the last year: pandemic, Black Lives Matter protest, energy grid failing in Texas that causes hardship for millions and millions of people, a ship gets stuck in a canal that upsets global supply chains, an insurrection. 

I mean, these are all like potentially once in a lifetime type of disruptions and they happened in the last year. So, I think that the broader point is that we are living in a world that-- where we're going to see endless disruptions. And if we see endless disruptions and all of this complexity, it means that uncertainty is the new norm and so, I hear people talking about, leaders saying like, 'oh well I just can't wait until things get back to normal, right?' and this is like the biggest mistake that leaders can make. There is no getting back to normal, this is the new normal. Uncertainty is the new normal and so if that's the case then we have to look forward and say, 'what does that mean for our business?' 'What does that mean for how we organize people? How do we organize work? How do we measure progress?' All of these things change because now uncertainty is deeply embedded into our normal lives.

Before, we all had very much an execution mindset, and execution mindset meant that we know what we have to do and so, we have to increase the efficiency of knowing what we have to do, of the work that is known that we have to do, and so we optimize that efficiency, and we squeeze harder and push our people harder and increase productivity and lower input costs and it's all around increasing the efficiency of execution work. But now that we face uncertainty all across the business from the core business, to “innovation down the road”, we face some level of uncertainty, it means that then we have to not just execute we have to be in this exploration mode, we have to be in learning mode, we have to learn how to balance exploration and execution for wherever we face uncertainty, and that's the fundamental difference that I think people have to think about going forward is, how do we learn how to do exploration work? And how do we learn how to balance that exploration work with the execution work? 

And all of the work that these businesses have been doing over the years around human centered design and agile principles and rapid experimentation. These are all clues, these are all part of this exploration work, but we still don't know how to scale it and we still don't know how to organize it on a large form factor and there's all sorts of other purposeful things that one must do inside their organization to make that new reality work, this balancing between exploration and execution. So, there's a lot of work to be done in order for these businesses to be able to survive and thrive in an era marked by uncertainty.

Tim Butara: Yeah, I think you really hit the mark there, I think certainty is definitely the great kind of differentiator. And as you pointed out, all of these concepts, like agile, like being future ready, creating stuff that is future proof, these all kind of fall into this mindset of, ok, we can't eliminate uncertainty, but the best way we can do is embrace it and incorporate it into our strategizing and our planning. Another really good point by you was, how we have to balance the exploration phase with the execution phase because, I think it's not that hard to make the transition from execution to exploration, but knowing that you have to keep the two and knowing that you have to keep both of them in a good balance, I think this will be one of the next big challenges for DT to overcome to transition to the next phase.

Brant Cooper: Yeah, I think that's spot on, and I think that the innovation industry and even the digital transformation industry pretends that there's an execution side of the house and an exploration side of the house and that's wrong. The execution side of the house faces uncertainty, therefore, they must also explore. They explore less but, wherever there's uncertainty they have to learn how to explore. So, this arbitrary splitting of the company into execution and exploration side is wrong and I think that the digital transformation unfortunately often falls into that because a lot of the digital transformation stuff has come out of the innovation industry and it's too focused on technology, and again, not that mindset as we talked about before.

Tim Butara: Yeah, definitely. I think this is already a nice transition into my next question because we're already kind of talking about these organizational things and about-- I mean, it's just a no-brainer, right? If the execution is separate from the exploration, on the organizational level this translates to organizational silos and you can't have effective digital transformation if your teams are siloed, if they're not working together, if they're not collaborating, if they're not all on the same page. This is what my next question is about. So, how can we or how should companies balance the role of people and the role of technology in order to achieve this large-scale digital transformation or maybe even how should society do this?

Brant Cooper: I think that we have to-- boy, there's a deeper philosophical answer to this that I'm exploring but I think I'll save that for another day as my thoughts coalesce around it, but I think that our approach to technology is part of the problem and our belief that the technology itself inherently has all of these, I don't know, properties, that will change things for the good. And I think that that's wrong, I mean I think that the technology itself often is zeros and ones or it's technology that has extraordinary power but in the end it's up to the human beings using that power to address real needs. And so there's this humanistic part of technology that we tend to ignore, and I think it's not a coincidence that human-centered design and design thinking and those practices, and even the empowerment of agile is coming to the forefront at the same time because, there's some sort of recognition that we need the humanistic part as well as the technology part.

So, I think that organizationally, what that means is that the more uncertainty that you face, the more cross-functional, interdisciplinary and diverse your teams must be and so, technology, design, support, marketing, sales, operations, the more of this cross-functional interdisciplinary way of tackling uncertainty becomes more vital because that's it. If we're all just putting together like-minded people then the solutions that they come up with are all going to be like-minded and so, the more uncertainty there is the more we need the going big and looking as broadly as possible, and then having the discipline to narrow and test and experiment and do empathy work to try to figure out where the fit is. 

Over on the more execution side of the house where more is known, then you need less of the cross-functionality or the interdisciplinary, but you have to be cognizant of the uncertainty. So, you have to have an increased self-awareness and you have to learn some of these softer skills of admitting when you don't know and being able to recognize and admit when failure happens, hopefully failure on a small degree, and to bring in the different functions or the different disciplines that you need in order to overcome that uncertainty. So, structurally that means that it's very agile, right? 

So that a team itself needs to be able to be empowered in a classic agile you know in the guise of the agile manifesto, anyway, not thinking about any implementation of agile, but self-organized, autonomous and able to decide how best to accomplish a mission is up to the team, which means that they need access to resources such that, if they face uncertainty that they don't have the capabilities there, they can bring in the right team members that help them solve for that particular uncertainty and if they don't need it then they don't have to, right? But so, the work itself and the deep knowledge of the problems and the needs and the deep understanding of ways to solve it, is all generated by those agile teams and that's true on the very execution side of the house but it's also very true on the very uncertain side of the house.

So, to me, that’s sort of this basic structure now and I call it “team is the new unit of work”. So, rather than focusing on the individual and of course an individual is still important, but the individual belongs to a social structure which is the agile team that is empowered and held accountable to solving their mission. And so it's that unit that ends up being able to navigate the uncertainty. And what that does, is freeze up all of this middle management so that they can then allocate resources really on the fly based upon changing priorities or changes in the outside world, these other elements that they need to be able to on the fly manage the missions and how missions are going to be accomplished and how those missions roll up to the group level, and they own this larger context of how all of these-- this agile layer below them contributes to the divisional or group mission.

And so, you start seeing a hierarchy of team of teams that goes up to the company priorities and the company needs so that you can draw a straight line between the work that an agile team is doing and what the output of the company should be. And this is actually revolutionary, the existing way of managing is that we hope that a team that writes a million lines of code will have a positive impact on the company, but that's all just, that's hope. You can't draw a straight line. Who knows, maybe it's 100 monkeys that write a million lines of code and you don't get anything out of it and so, this structure bottoms up agile with cascading missions up to the corporate objectives, actually, maybe gets us to a point where the very work that the ground level does in direct response to needs, is how these organizations can become more resilient to all of these uncertainty and endless disruptions.

Tim Butara: That makes perfect sense, this move from the individual as kind of the defining unit to the team in an agile world, I mean in a digital world, where things move so fast, where you have to be agile, where you have to have as you said not uniform thinking in order to truly succeed. You have to have people with different expertise on the team, people with different mindsets, from different backgrounds so that they can truly innovate in the proper sense of the word. And man I just feel like every point you make, like another piece of the global puzzle uncovers in my mind so really, super insightful talk already, I'm loving it.

Brant Cooper: Thank you, you're too kind. I think that the key is that there's a lean turn from lean manufacturing, the Toyota production system Genchi Genbutsu, which is “go to the source”. And the idea is, that an agile distributed agile team is close to the need, it's close to the problem and also has the ability of finding the solution. And so, that makes just in this complex world which makes a heck of a lot more sense than the old school way which is hierarchical, that the understanding of the problem and the solution is generated top down rather than ground up.

Tim Butara: Yeah, another good point. And another thing that I thought of earlier when you were talking about the kind of skills that people need in order to thrive in this information age. I'll just put it like that, because we are living in the information age and it seems to me like this is the main reason why we're also seeing this shift from a focus on hard skills to soft skills, right? Because hard skills, with everything at your disposal, with every learning resource at your fingertips, like literally your keyboard, it's much harder to acquire these soft skills and so, I think this is why this will be the primary kind of competitive advantage in the years to come.

Brant Cooper: Yeah, I agree and I think that we already see that on the leadership side, right? So, I've run into and talked to lots of leaders that are getting these new skill developments around vulnerability, empathy and empowerment and self-awareness and all those types of things. My favorite is Brené Brown's Dare to Lead, which just really nails that and then I do think that in different elements of the ground level, we also see that and a little bit of democratization around design thinking, I mean it's almost a buzzword. Boy, there's a whole-- I don't remember what car it is there's a whole car commercial series now where they're all talking about empathy which just kind of cracks me up, the fact that empathy is a corporate buzzword is amazing to me and at some level, though maybe it diminishes it a little bit, even if they do empathy wrong the fact that they're trying is a good thing, I think.

Tim Butara: Yeah, definitely. Now I actually want to return to something that we started talking about earlier but maybe, I want to dedicate a little bit more time to it and you probably already know what I'm talking about. So, the Covid pandemic has had a huge impact on how we treat the digital, if that's the right way of putting it. So, how do you think that this trend will continue? How do you think that digitalization will evolve as we move out of the pandemic? And do you think that this distinction between just digitalization and digital transformation will become more prominent or will it become diminished as we embrace the digital more and more?

Brant Cooper: Yeah, I don't know it's a tough question. The same time that we're seeing all of this embracing of the digitization, we're seeing here in the US, some anti-trust action taken against big tech. There's certainly a lot of backlash on privacy and even more than privacy, the manipulation of human beings by technology and by manipulation I mean that a lot of these companies are just trying to increase engagement using whatever methodologies that they want, ethics aside, right, there's no ethical standards being applied and so we're seeing some pushback there. So, I think that it's a big question to me whether we are able to strike a balance and find, again, I alluded to it earlier, this more humanistic approach to technology and so rather than just pretending that technology itself is the end-all and is going to cure all and all of this type of things, it's really about the application and us keeping our human side. How do we build ethics into the digitization? How do we build ethics into digital transformation? 

I cover that a little bit in my book too, I think it's in my view in an agile world, again, agile with a small ‘a’, the team structure, the team as the new unit of work is a way for us to add the ethical part of it because when you're defining a mission for a team, you can set the boundaries, you can set the guard rails right there as part of the mission such that those team members, they've helped establish that so, they're bought into it and then the team members will hold each other accountable to that. And so that's actually how you drive culture change to be more ethical is when the ground, from the ground up, the behavior is within these values’ guard rails. If we're in an agile organization and we're already setting this mission, then it's really not that big of a leap to start adding these boundaries and these value statements into the mission and in that way, I'm hoping if people bought into this that we can start bringing in this more humanistic side to technology, to digitization.

Tim Butara: So basically, we shouldn't view technology or the digital as the positive change but we should view it as something that can enable us to make positive change?

Brant Cooper: Yeah, that's well said, I think so. There's a chart in my book where I put Moore's law on the exponential growth of power of transistors and I overlay on top of that the wealth disparity and it tracks and it doesn't mean there's causation there but, you can draw some inferences that technology has not cured our economic inequity, It's actually getting worse as well. And so, I think that for a lot of us-- you know, I've always been a tech startup guy and I think for a lot of us, the promise of capitalism, of technology of computerization of digitization has been that we can create a better world. But we need to ask the question now, are we creating a better world for a few of us or are we going to create a better world for a majority of us, for all of us, for as many people as possible? And I think that if it's the latter, which is certainly where my heart is, then we have to take some steps to make sure that that happens. We can't just be passive about it, we actually have to actively alter the system itself so that the output of the system is a more equitable world.

Tim Butara: Mic drop, those were some super strong points there, awesome! That does it for my questions. Just before we finish, the book that you mentioned, this is the book that's coming out in September, Disruption, right?

Brant Cooper: Right, so, it's actually now October but the book is called Disruption Proof. It's available for pre-order at your favorite retailers, but also on my website brantcooper.com. I've got some other bundles there, so it's a way for you to get the book plus a little bit more and so, people should hit me up on brantcooper.com if they're interested in that. Yeah, and so anticipating your next question, I'd love to hear from people about what they think about this and they can join the conversation. I've got a Slack channel that they can join; if you go to brantcooper.com, you can see an invite for that. I'm Brant Cooper on all social media, LinkedIn, Twitter, Facebook and all the rest. I encourage people to reach out brant@brantcooper.com is my email address and I try to respond to everybody. So, I really hope that those people out there that want to be part of this change, of taking this action will join the conversation.

Tim Butara: I can definitely vouch for Brant that he's very good with responding. So, you can take your word for that. And Brant, this has been an awesome conversation. I'm really glad we got to speak about such an important and interesting topic, it's been both very insightful and a real pleasure. Thank you so much for spending time with me today.

Brant Cooper: Thanks for having me.

Tim Butara: And to our listeners, that's all for this episode, have a great day everyone and stay safe.

Outro:
Thanks for tuning in. If you'd like to check out other episodes, you can find all of them at agiledrop.com/podcast, as well as on all the most popular podcasting platforms.

Make sure to subscribe so you don't miss any new episodes, and don't forget to share the podcast with your friends and colleagues.