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Interview with Dave Gray


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Interview with Dave Gray, founder of XPLANE (acquired by Dachis Group in 2010) and co-founder of Boardthing, a collaboration platform for distributed teams.

Also, he has written three books on innovation, change and design: Selling to the VP of NO, Gamestorming: A Playbook for Innovators, Rulebreakers, and Changemakers; and The Connected Company.

He is currently working on a fourth book which is due out from Rosenfeld Media in 2015.

Published in: Business
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Interview with Dave Gray

  1. 1. How are the new digital businesses being transformed by this brand-new relationship between companies and customers? Companies know that Marketing and Communication makes money if they do it well. It makes sense to me that the initial impetus and initial driving force for organizations is on the marketing and the sales side, where social media has clear benefits to building relationships with customers, being able to track behavior at a level that is unprecedented to date. But, even companies are aware that customers don't usually see them as one company. For example, if I want to interact with AT&T, and they are trying to sell me something, I'm dealing with a whole different organization than when I call in to AT&T for support or help. Most companies don’t do a very good job at looking like a single company when the customer is talking to them and building a relationship. DAVE GRAY EVERYTHING THAT CAN BE DIGITAL WILL BE DIGITAL co-founder at and author The Connected Company A lot of things can change for a company in thirty years. During this time, Dave Gray has interpreted perfectly many of the needs of large corporations. Proof of this is his great and varied experience in such diverse fields as design, communication, collaboration, corporate culture, innovation, change management… Since he started his professional career, he founded XPLANE (acquired by Dachis Group in 2010), a business design consultancy which has served more than 50 of the Fortune 500; and he co-founded Boardthing, a collaboration platform for distributed teams. Also, he has written three books on innovation, change and design: Selling to the VP of NO, Gamestorming: A Playbook for Innovators, Rulebreakers, and Changemakers ; and The Connected Company. He is currently working on a fourth book which is due out from Rosenfeld Media in 2015. In a digital context, like the one we are living in, Dave Gray answered our questions, giving us a complete picture of his understanding of digital transformation and how it affects businesses, employees and customers from different points of view.
  2. 2. NEW ANSWERS FROM DIGITAL EXPERTS One reason that could explain this problem is because organizations have not actually done the internal connecting that is necessary to make them able to be responsive to customers and operate as if they are one organization as opposed to a lot of different divisions. Which are the top notch companies that are conducting relevant actions in the digital arena? The one that stands out the most to me is In fact, Amazon operates in many ways like a network of companies. What Amazon has done very well is organize. It organizes its teams and the work differently depending on what kind of work they doing, because some things change really fast and some things change a lot more slowly. In the areas where things change relatively slowly, Amazon has organized in a pretty traditional way. They talk about drones and they may be exploring that opportunity but, for the most part, an Amazon warehouse, although it may be highly automated, does not look that different from many other warehouses. On the technology side, where things are shifting very quickly, Amazon has organized a much more distributed network with small teams interlinked to each other. They know that the Amazon homepage a year from now may be quite different than the Amazon homepage of today. At least they need to be ready and able to be able to shift that and move that and change that relatively rapidly. Another key aspect is the way in which companies set up their chain of command and its relationship with the new digital scenario. If you walk around at Amazon or Google or Facebook, you will see a much lower proportion of managers. You will see a much flatter organization, because when teams are self-organized and self-directed, you just don't need as many managers. This actually hits on one of the big transformation challenges for a large organization. What happens to managers when the organization does this digital transformation and suddenly all that the work they do is no longer necessary, because it's being handled by the social network and by teams that are self-reporting. A lot of managers spend the majority of their time in meetings sharing information. Well, if that information is all available on the social network, a lot of middle managers are very threatened by that. It threatens their job. Even if it doesn't threaten their job, it puts them in a position of wondering, well, what am I going to do in this new world? How am I going to be relevant? What is my job? How is my job going to be different? There are a lot of very big transformation challenges. It's much easier to build a connected company from scratch than it is to take a traditional hierarchical organization and transform it to a digitally connected company. Of course, everything is harder when you are big. Everything is harder and more difficult. There are a lot of people talking about digital business, but what do you mean by a digital business? Jeff Dachis, one of the founders of Razorfish and my former boss, who I worked with for DIGITAL TRANSFORMATION FAST SURVEY
  3. 3. I think it is inevitable that eventually organizations are going to have to become digital. The earlier you can get started on that the better. How fast that is going to happen? That is a totally open question. It is very hard to say but I think companies should be thinking about that and should be starting to move in that direction. Furthermore, in this transformation process, the major hurdles from most companies will be cultural. This is one of the things that I have been thinking about a lot lately. In this context, I have been working on something called the “Culture Map”, a consultative tool and a process to help companies for dealing with the issues related to culture and technology. The reason why I have been working on this concept is because after I wrote The Connected Company, senior leaders of some companies told me that they were ready to start their transformation, but they realized that culture has a big impact on the trans- formation. Culture is such a big word and it is very vague. When something fails or when something is problematic, you can blame the culture. Culture is another word for habits and routines that are happening in the organization, informal stuff. But when you start to drill down into culture, it very quickly becomes evident that incentives and the reward systems that are in place are often standing in the way of transformation. In many organizations there are long standing collaborations, but also conflicts between departments. For example, in the Banking sector, I know the case of a private bank where there is a little bit of a conflict between the sales people and the bank. There is a conflict over who owns several years, once said "Everything that can be digital will be digital.” He has also said everything that can be social will be social. I think that the bottom line is that I believe he is right. There is no business in the 21st century that is not going to be digital in some ways because all information is digital, and whatever percentage of your business is based on information, that percentage, or more, is going to be digital. We are moving towards a world where everything that exists has an information data layer associated with it. In this new economy, the majority of the value is going to be captured on that digital layer. If you make soda in a can, the opportunity for you is probably not in competing just at the level of soda in a can. That is a commodity. If you look at companies like Pepsi and Coca-Cola, what they do... They realize how important marketing and perception are and the social networks are very, very interesting to them. That is where they are focusing their attention. They are not focused on making better cans. They are focused on the digital layer, knowing where the cans are, knowing who is drinking them, knowing when they are drinking, knowing why they are drinking. That is the kind of stuff that the digital layer is going to give you. The same kind of transparency that occurred internally also will accrue externally as you learn more about your customers. This digital transformation that is happening throughout society is a very powerful thing. In your opinion, would you recommend that traditional companies should become digital, or to apply a mid-way of transformation? NEW ANSWERS FROM DIGITAL EXPERTS DIGITAL TRANSFORMATION FAST SURVEY
  4. 4. NEW ANSWERS FROM DIGITAL EXPERTS that relationship with the customer, and it is a power struggle. To me, this is a very typical kind of example of the kind of things that happen when you start to go digital and you start to do this digital transformation. You are threatening some existing power structures. Definitely the bank wants to have as much as possible want to build that relationship with the customer. They want the customer interacting with them on the mobile phone. They want them interacting on the website. They want to have a digital relationship, but if that threatens the personal relationship of the sales person, there is a big conflict. The bank also wants the sales person to enter more information into the system. They want to have more transparency and, of course, the sales person does not want that transparency. We could say that that is really what happens in the social network world, traditional relationships are threatened as well. The people who hold the keys to the face-to-face interpersonal relationships may be threatened by a digital relationship that might make them less critical, or even unnecessary. What is a digital bank? If a bank is totally digital, what does that mean to that people (for example for a teller who has a personal relationship with a customer)? Will that person no longer be necessary for the company? This is where I think Culture Mapping can be a very powerful tool, because as companies go through this transforma- tion process, they can to start to identify these relationships and conflicts, and also they can start to mitigate them. Organizations have to figure out how they can reduce their risks, make their client managers feel a little bit safer about their long-term relationship with the bank, as well as give them good reasons why they should allow this digital world to come into their lives, and show them how it could be useful to them and help them. Sometimes, without doing some kind of a mapping exercise, it can be very difficult to figure out where these conflicts exist in the organization, because they are invisible. It's not like everything has to change for an organization to transform. There are certain areas where highly targeted intervention can have a huge impact and others areas where a lot of effort could get the company no result at all. Who should lead the digital transformation, business or technology departments? That is a great question. I think it is going to be different for every organization. In my opinion, trying to decide whether it is business or technology, I believe in some ways, there are problems with both. The people on the IT side can often fall in love with technology for its own sake and lose touch with the business side. The business side can also become very entrenched in its current ways because it is focused on maximizing profits in the short term and does not always have an incentive to look forward to the long term. DIGITAL TRANSFORMATION FAST SURVEY
  5. 5. NEW ANSWERS FROM DIGITAL EXPERTS What I have seen that seems to be working in some organizations is the idea of internal innovation incubator (operating something like funded start-ups within a larger organization.). The incubator has the ability to create start-ups, with different structures, different incentives, based on a long-term strategic vision. Additionally, and as a key element, they are creating teams with the most entrepreneurial people to work in these new environment and they are finding these new professionals both from inside the company and from outside the company Actually, it is not about whether they are people who belong to areas of business or technology. They come from both disciplines. There are small teams that are focused on business and technology and have a strategic goal (or a set of objectives) laid out by the organization. There are a lot of fake players around customer experience and design thinking. What is your opinion about this? There is customer experience design. There is design thinking. There is also an emerging field called service design, which is, I think perhaps, a little bit more rigorous than some of those others. It has more of a defined discipline around it. In fact, I think it is more advanced in Europe than it is in the US. In my opinion, what happens when you start looking at the customer experience and the customer touch points, and you start looking at what your organization can deliver in terms of a customer experience, you will find that most organizations are not organized in a way to deliver; the companies are simply not designed for it. Customer support is in a completely different box than marketing. In a lot of ways, from a customer’s perspective, people want to be able to interact with marketing and customer support as if it were one entity. Ideally, that information would flow through to both, because good customer support is probably the best marketing in the long run. It builds a relationship. What happens in most organizations is that when people go to customer support, that department is optimized to basically give them as little support and as little time and energy as possible and to maximize the profitability of that unit because they are already customers. Companies do not want to spend a lot of money to keep existing customers. On the other hand over in marketing, organizations are spending a ton of money to get new customers, but from a different perspective... Most companies are designed for their own internal efficiency, which is very different than customer efficiency. What happen is, it’s a noble idea for companies to say “we want to work on a customer experience. We want to improve it. We want to think about the world from our customer's perspective”, but then what happens is, when marketing professionals see what it is going to cost and what is going to take to deliver that customer experience, sometimes they think, how could we even make money if we did that? How could we even be profitable? Of course, the risk for some organizations is that they can create a great customer experience that is not profitable if they are not careful. What is your personal vision about what is going to happen in the next year concerning internet of things? I think it is very difficult to imagine. In my opinion, in the near term, the thing that we are most likely to be the most transformative is going to be the car. If you think about how transformative the mobile phone has been in the last years, the car will be equally transformative in the next decades. If a mobile phone is a computer that you carry around in your pocket, the car is a computer that carries you around in its DIGITAL TRANSFORMATION FAST SURVEY
  6. 6. I think that the sharing economy is going to be a bigger deal in very dense urban environ- ments, where space is very limited and people do not have space to own a lot of things. They are going to be more inclined to share or want to share. If I am going to a place and all the hotels are full because of some event that I did not know was going on, often I can find a pretty nice Airbnb for example. I was staying in Amsterdam for three weeks few months ago and I rented a houseboat. It is cheaper and a little bit more fun than staying in a hotel. It worked out great. pocket. Cars are going to drive themselves and park themselves, and you can imagine that you take your car to work, and instead of parking it, you tell your car to go make some money for you while you are at work driving people around. You will go into work and your car will be out being a taxi for you for a while, and then when you come out of work at the end of the day, you will have your car come and pick you up. That kind of stuff is going to happen. I think that it is hard to imagine the degree to which this is going to transform society. Another example is related to the information and personal devices, such as wearables. Your employees are going to have access to tremendously valuable information. You either give them access to that information wherever they are, which empowers you and enables you as a company but also increases your risk because they could more easily walk away with that data, or take it to a competitor, or you do not and you try and lock it down in which case you would probably lose the best people and you will be less effective in the field. It's a very big dilemma. Security versus autonomy. Because I do believe that the companies that are able to move faster and be more flexible are going to be the ones that get more autonomy and more information to their workers. People are very focused right now in the internet of things and all the amazing things that are going to happen, but I do think that security is going to be a big, big, big part of that. What do you think about sharing economy? Are you a heavy user of this kind of services? NEW ANSWERS FROM DIGITAL EXPERTS DIGITAL TRANSFORMATION FAST SURVEY