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CAMBRIDGE, Mass. -- Can large organizations adopt the digital cultures of 21st century goliaths like Amazon and Google? That was the question posed in the kickoff session at the recent MIT Sloan CIO Symposium.
The assumption -- argued by panel moderator and MIT Sloan researcher George Westerman -- is that there is such a thing as a digital culture. Citing MIT Sloan research, Westerman said it includes values like autonomy, speed, creativity and openness; it prevails at digital native companies whose mission is nothing less than to change the world; and it's something that "pre-digital" companies need too -- urgently.
Digital technologies change fast, Westerman said; organizations much less so. But as digital technologies like social, mobile, AI and cloud continue to transform how customers behave, organizational change is imperative -- corporate visions, values and practices steeped in 20th century management theories must also be adapted to exploit digital technologies, or companies will fail.
"For all the talk we've got about digital, the real conversation should be about transformation," said Westerman, principal research scientist at the MIT Initiative on the Digital Economy. "This digital transformation is a leadership challenge."
Marrying core values with digital mechanisms
Creating a digital culture is not just about using digital technology or copying Silicon Valley companies, Westerman stressed. He said he often hears executives say that if they just had the culture of a Google or Netflix, their companies could really thrive.
"And I say, 'Are you sure you want that?' That means you've got to hire people that way, pay them that way and you might need to move out to California. And frankly a lot of these cultures are not the happiest places to work," Westerman said. And some can even be downright toxic, he noted, alluding to Uber's problems with workplace culture.
The question for predigital companies then is not if they can adopt a digital culture but how do they create the right digital culture, given their predigital legacies, which include how their employees want to work and how they want to treat employees. The next challenge will be infusing the chosen digital culture into every level of the organization.
Corporate values are important, but culture is what happens when the boss leaves the room, Westerman said, referencing his favorite definition.
"The practices are what matters," he told the audience of CIOs, introducing a panel of experts who served up some practical advice.
Here are some of the digital culture lessons practiced by the two IT practitioners on the panel, David Gledhill, group CIO and head of group technology and operations at financial services giant DBS Bank, and Andrei Oprisan, vice president of technology and director of the Boston tech hub at Liberty Mutual Insurance, the diversified global insurer.
Liberty Mutual's Andrei Oprisan: 'Challenging everything'
Mission: Oprisan, who was hired by Liberty Mutual in 2017 to fix core IT systems and help unlock the business value in digital systems, said the company's digital mission is clear and clearly understood. "We ask ourselves, 'Are we doing the best thing for the customer in every single step we're taking?'"
The mission is also urgent, because not only are insurance competitors changing rapidly, he said, but "we're seeing companies like Amazon and Google entering the insurance space."
"We need to be able to compete with them and beat them at that game, because we do have those core competencies, we do have a lot of expertise in this area and we can build products much faster than they can," he said.
Outside talent: Indeed, in the year since he was hired, Oprisan has scaled the Boston tech hub's team from eight developers to over 120 developers, scrum masters and software development managers to create what he calls a "customer-centric agile transformation." About a quarter of the hires were from inside the organization; the rest were from the outside.
Hiring from the outside was a key element in creating a digital culture in his organization, Oprisan said.
"We infused the organization with a lot of new talent to help us figure out what good looks like," he said. "So, we're only trying to reinvent ourselves and investing in our own talent and helping them improve and giving them all the tools they need, but we also add talents to that pool to change the way we're solving all of these challenges."
Small empowered teams: In the quest to get closer to the customer, the organization has become "more open to much smaller teams owning business decisions end to end," he said, adding that empowering small teams represented a "seismic shift for any organization." Being open to feedback and being "OK with failure" -- the sine qua non of the digital transformation -- is also a "very big part of being able to evolve very quickly," he said.
"We're challenging everything. We're looking at all of our systems and all of our processes, we're looking at culture, looking at brands, looking at how we're attracting and retaining talent," he said.
T-shirts and flip-flops: Oprisan said that autonomy and trust are key values in the digital culture he is helping to build at Liberty's Boston tech hub.
"We emphasize that we are going to give them very challenging, hard problems to solve, and that we are going to trust they know how to solve them," he said. "We're going to hire the right talent, we're going to give you a very direct mission and we're going to get out of the way."
In fact, Oprisan's development teams work across the street from the company's Boston headquarters, and they favor T-shirts and flip-flops over the industry's penchant for business attire, he said -- with corporate's blessing. "Whatever it takes to get the job done."
DBS Bank CIO David Gledhill: 'Becoming the D in Gandalf'
Mission: Gledhill, the winner of the 2017 MIT Sloan CIO Leadership Award and a key player in DBS Bank's digital transformation, said the digital journey at Singapore's largest bank began a few years ago with the question of what it would take to run the bank "more like a technology company."
Bank leadership studied how Google, Amazon, Netflix, Apple, LinkedIn and Facebook operated "at a technology level but also at a culture level," he said, analyzing the shifts DBS would have to make to become more like those companies. In the process, Gledhill hit upon a slogan: DBS would strive to become the "D" in Google-Amazon-Netflix-Apple-LinkedIn-Facebook (GANALF). "It seems a little cheesy ... but it just resonated so well with people."
Cheesiness aside, the wizardry involved in becoming the "D" in Gandalf, has indeed played out on a technology and human level, according to Gledhill. Employees now have "completely different sets of aspirations" about their jobs, a change that started with the people in the technology units and spread to operations and the real state unit. "It was really revolutionary. Just unlocking this interest in talent and desire in people has taken us to a completely new level of operation."
Gledhill is a fan of inspirational motifs -- another DBS slogan is "Making banking joyful" -- but he said slogans are not sufficient to drive digital transformation. He explained that the collective embrace of a digital culture by DBS tech employees was buttressed by five key operational tenets. (He likened the schema to a DBS version of the Trivial Pursuit cheese wheel.) They are: 1. Shift from project to platform; 2. Agile at scale; 3. Rethinking the organization; 4. Smaller systems for experimentation; 5. Automation.
Platform not projects, Agile: "Rather than having discrete projects that need budget and financing and committees and all that stuff, we got rid of all that," Gledhill said. In its place, DBS has created and funded platforms with specific capabilities. Management describes the outcomes for teams working on the platforms. For example, goals include increasing the number of customers acquired digitally, or increasing digital transactions. But it does not prescribe the inputs, setting teams free to achieve the goals. That's when "you can really start performing Agile at scale," he said.
Rethink, rebuild, automate: DBS's adoption of a digital culture required rethinking organizational processes and incentives. "We call it 'organized for success' on the cheese wheel, which is really about DevOps, business and tech together, and how you change the structure of the KPIs and other things you use to measure performance with," he said.
On the engineering side, DBS now "builds for modern systems," he said. That translates into smaller systems built for experimentation, for A/B testing, for data and for scaling. "The last piece was automation -- how do you automate the whole tech pipeline, from test to build to code deploy," Gledhill said.
"So those five cheeses were the things we wanted everybody to shift to -- and that included open source and other bits and pieces," he said. "On the outer rim of the five cheeses, each one had a set of maybe five to 10 discrete outputs that had to change."
One objective of automating every system was to enable DBS to get products to market faster, Gledhill said. "We have increased our release cadence -- that is, the number of times we can push into a dev or production environment -- by 7.5 times. That's a massive increase from where we started."
Editor's note: Look for detailed advice on how to create a digital culture from experts at McKinsey & Company and Korn Ferry in part two of this story later this week.