Digital Transformation – Perspectives Change

Business models need to evolve and change to meet new demand.  During certain phases changes are incremental but at times a step change is required. Missing such moment in time may well mean the end of the business or the company.

Many organizations have difficulties to see the need for a step change. It is easier to focus on daily problems and find reasons for increasing difficulties in being successful. To step back and trigger fundamental changes is hard, requires guts and in some ways against human nature. People fear to lose something now and rather defer (eg reasons to not do) the opportunities to win in the future. Big change feels risky, staying and repeating what was successful before seems safer.

The caterpillar in the picture above had a great life so far. But in order to move on it is required to change the form and learn new capabilities. This is not about becoming a bigger or faster caterpillar or to add a few cool extensions – it is about fundamentally changing the nature and form. It requires fundamental changes to the way success is measured. As a butterfly would for not score high on the caterpillar KPIs – the opposite is also true.

For banks, this means to leave the world of brick and mortar ages and the management structures introduced by Taylor. New banking business models need to take advantage of the internet, create banking products which are digital in their core and embedded into the network. This does not automatically mean that everything becomes self-service – it means that humans involved need to add value and apply their authorised special abilities like creativity or empathy. It is the machines which follow predefined instructions and learns from patterns – humans complement this by finding creative solutions to problems based on empathy and emotions.

What is Superintelligence? – Part 2

And here is the second part

A Better Man

You’ve probably heard it a million times, but there is some wisdom in being careful what you wish for. While we may be striving to attain superintelligence, how can we ensure that the technology doesn’t misunderstand its purpose and cause unspeakable devastation?

The key to this problem lies in programing the motivation for SI to accomplish its various human-given goals. Say we designed an SI to make paper clips; it seems benign, but what’s to prevent the machine from taking its task to an extreme and sucking up all the world’s resources to manufacture a mountain of office supplies?

This is tricky, because while AI is only motivated to achieve the goal for which it has been programmed, an SI would likely go beyond its programmed objectives in ways that our inferior minds couldn’t predict.

But there are solutions to this problem. For instance, superintelligence, whether it be AI or…

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What is Superintelligence? – Part 1

The first part of two blog posts on a topic which is very relevant not just for financial services from A Better Man.


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A Better Man

How many movies, cartoons and sci-fi series have you seen featuring some kind of superintelligent robotic race? Probably quite a few. In some films, such as Terminator, they come to conquer the world; in others, they help us out; and in some, like Wall-E, they’re simply adorable. Of course, these robots are fictional, but will they always be? Will the future bring superintelligent AI? If it does, what will they look like and when will they appear?

In Superintelligence: Paths, Dangers, Strategies by Nick Bostrom, we learn about the journey toward AI so far – where we might be going; the moral issues and safety concerns we need to address; and the best ways to reach the goal of creating a machine that’ll outsmart all others.

What fundamentally sets us apart from the beasts of the field? Well, the main difference between human beings and animals is our capacity for abstract…

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Keen to help and complete the picture

Launching a new business is similar to solving a jigsaw puzzle. The entrepreneur must have an idea of the complete picture and vision of what he wants to achieve. At first pieces or details of the puzzle may not be known but once the team manages to add most of them then there is a good chance that other people will jump in to fill the remaining pieces. The clearer the vision the higher chance to complete the puzzle as it clearly identifies what are the missing pieces required from someone(s) in order to fit into the whole. People, in general, are very open to help and demonstrate their skills and knowledge. Therefore don’t focus on pieces where you don’t have the expertise – use your energy to complete everything you can and engage with others.

The new currencies of trust

What’s the foundation of banking and how is it affected by digital transformation?

A bank in the past provided physical safekeeping services. As it was hard to keep money safe at home there was a case to build a fortified building with specially protected safe to keep valuable assets. The fortified building, aka bank, could now take deposits and keep books to understand the ownership of the deposited assets. One element of trust came from the people and the other is bookkeeping and from the quality of the building and safe. At the time it was no doubt that an impressive building was a good selling point.

Today banking happens in the cyberspace. The quality of the accounting is still a key aspect. On top risk management becomes much more important mainly due to the way banks create new money. Cybersecurity has replaced the physical security of buildings. All these factors are facilitated by technology which becomes the dominant factor for success and failure. People are still important but today’s banking is no longer computer-assisted – it is human-assisted.

People start to realize that the digital transformation is progressing fast and affects their daily life. It is great to have a talk with an adviser but the people factor has become much more an empathy interface or the voice of a set of algorithms running in the background. If the underlying system is outdated or the user interfaces are bad, then this is results in a poor experience for the client.

In the digital era many of the physical trust factors like buildings and people loose relevance. A big and expensive building no longer suggest trust but rather the bank is wasting client’s money or seen as being high cost. In the past, people had a look into the safe room to gain confidence but now they may soon want to understand how technology is set up and ensures the safety and management of the deposited assets.

Many banks have very nice buildings with a technology landscape full of legacy. The tech giants and many of the neo banks are in a much better position to gain trust in this new norm. They are ahead of the digital transformation curve and ready to take over more and more business from companies which have not yet understood the new normal.

While apps and web pages have replaced the buildings, transparency and openness have become the new currency of trust.

Related post:

Measuring or facilitate agility?

Recently I had a discussion about agility which I found quite thought-provoking.

Let’s assume an organization wants to become more agile. Following the principle ‘If You Can’t Measure It, You Can’t Manage It’ the management asks to define those KPIs which measure the organizational agility.

Let’s start by thinking about the purpose of being agile. An agile organization adapts its actions and decisions whenever required based on the experiences made, available resources, skills and changes in the environment. It desires to move, react and adapt quickly.

Let’s look at the agile manifesto which says:

We are uncovering better ways of developing software by doing it and helping others do it.

Through this work we have come to value:
  • Individuals and interactions over processes and tools
  • Working software over comprehensive documentation
  • Customer collaboration over contract negotiation
  • Responding to change over following a plan

What should or could be measured? Maybe this is the wrong approach, therefore, let’s explore what happens if a KPI is defined and declared as important in an organization? The organization starts to optimize the KPI value and KPI polishing often becomes the main mission and purpose instead of value creation for clients.

Maybe it is time to look at this from a different perspective. Think about a windmill and KPI’s which could be used to optimize its efficiency. The key factor at the end is the wind – the windmill can be optimized to the max but it will never produce more wind. A team, produced by the organization, is like a windmill exposed to the wind.

So rather than measuring the windmill, it is more sensible to measure those factors which create an environment which powers an agile team. Those factors are mainly cultural ones. The culture of a company is the long-term memory of the organization. Culture reflects the companies lived values, its actions and not by marketing slogans. If the organization’s culture reflects slow processes, inflexible planning, hierarchical and slow decisions then this enables very limited chance for an agile culture to emerge. Such organisations can only celebrate agile practices but will never execute in processes.

Here are a few questions about aspects which can be used to assess the organization and the environment:

  • How many people outside the team need to be involved to make a decision?
  • How many pizzas are required to feed the team?
  • Can the teams deliver independently?
  • Does the team control the resources to reach the desired outcome?
  • Is the team empowered to make decisions?
  • How skilled are the team members?
  • Can the team decide on its members?
  • Are all the skills from all disciplines part of the team?
  • Is failure considered a learning experience and a key step in a career?
  • Do all team members share the same vision and objectives?
  • How many people involved do not contribute to the outcome?
  • Does the team have direct access to the clients?
  • Does the team get direct client feedback?
  • Can the team decide on timeline and deliverable?
  • Can the team engage openly with internal and external experts?

Depending on the answers to the questions it makes more sense to transform the organization than to measure the teams. Remove outdated top-down structures, decentralize decision power and seek high skilled staff. Be aware that many parts of an organization have no interest in the transformation. They typically form the immune system of the former structure and will try to keep things like they always were. Some even dream to turn the clock back to the good old times.

As part of the transformation, many things are turned inside out. The primary purpose of the management in an agile world is to enable the teams, break down barriers and minimize friction through the organization.

This process takes longer than the time horizon considered by typical managers today. As today’s problems are much more urgent and need to be solved immediately, there is no time to transform … but enough time to define some KPI’s, perform measurements and produce slides.

Digital Transformation – today’s future is tomorrows reality

Technology is changing fast. What was state of the art a few months ago becomes outdated today. The majority of change today is enabled by the advancement of digital technology.
Significant technological changes have always triggered major social and cultural changes. The industrialisation era introduced engines amplifying human forces, transforming society from agricultural to industrial workers.
In the current transition, humans get amplified in many ways. This leads to many opportunities but also challenges as many simple and routine tasks and activities will become automated.
Complex activities will be exposed to automation as machines excel in processing the vast amount of available data. Machines are also entering the realm of white-collar workers like lawyers, managers and various professional service industries.
Areas where empathy counts or creativity matters will remain human-dominated but become increasingly machine assisted.
The digital transformation will likely be a much bigger challenge than the previous step changes in history. Reason due to the higher speed (within a life of a person) of change while prior changes happened over generations in the past.
In the past access to information was difficult – educated people typically accumulated a lot of knowledge and information. Today the access is rather easy, information is evolving rapidly and key skills have become to know how to use and combine various information sources and to gather and apply the collective knowledge. There are also creative elements and intuitions which become very important.
These changes are big challenges for countries that use to evolve slowly or try to preserve the past. All those who created big and complex structures will have increasing problems to keep pace. Companies with distributed and flexible structures outperform centralized ones.
If a country decides to move slowly, it can but others will not wait and continue to evolve. A chasm is opening between the ones who move with the time and others which become digital developing countries.
But also within a country, many things have to change such as education. The focus must move away from extrinsic to intrinsic motivation. Doing things well and being creative becomes more important than trying to be the same as all others.  Education needs to amplify skills and passions rather than pressing all into one common scheme.
While the past may have been great it is only the future which matters as today’s future is tomorrows reality.


More I read which got me thinking

Over half a year has passed since posting What I read got me thinking. It’s time to update the list with other great books – ones which made me think, find fascinating and thought-provoking.
Inspiration is a source of engagement which is key to reach goals and new things. Inspired by Marty Cagan is a great book on inspiring products and product management. Marty helps teams to discover and build outstanding products at the right time for consumers. In today’s fast-moving world it requires empowered teams which have experiences and deep insights to innovate and produce products clients love. The managers’ main duty is to enable and foster such teams rather than performing short-term labour arbitrage for income polishing.
Maybe you are tired as well of yearly performance management processes and feel that such processes do not produce any value in the current time of change. Measure What Matters by John Doerr gives a lot of insights into the operational key results (OKR) based approach adopted by many of the most successful companies today. Not all companies are ready to adopt this as it requires an honest and transparent culture from the CEO down to all the employees to get the organization aligned with what really matters.
Many companies have lost their innovative power which attributed to their past success(s). Many started to preserve their brand and sustain by iterations of the same products lacking any real innovation or change. Iterations are a sign that a company is on the way down and that it may need somebody to revitalize it by hitting the refresh button. Hit Refresh by Satya Nadella shows how Microsoft did this by aligning the employees and the company behind common goals. Such a refresh action will eliminate a substantial amount of the bureaucracy/overhead in many organizations today.
Zurück an die Arbeit‘  is another great read where Lars Vollmer relates as though he is an employee of the company you are working for. In a world of fast changes it is key to give the people the option and the authority to decide and move. In his newest book ‘Wie sich Menschen organisieren, wenn ihnen keiner sagt, was sie tun sollen‘ Lars outlines with great examples what happens when people just start to organize themselves based on shared objectives and how incredibly powerful and engaging the results can be.
Many people define goals without reflecting enough and get frustrated if things do not work out in the way they imagine. It becomes key to understand one’s own motivations and priorities to identify what really matters. The Subtle Art Of Not Giving A F*ck by Mark Manson explores this in a direct and immensely thought-provoking style.
The amount of great knowledge out there at your fingertips is amazing. I wonder how many people think they are too busy to take the time to read, think and reflect.

Motivation and the need to disrupt yourself

Mark Murphy recently published an article on Forbes titled What Motivates You At Work? He lists five types of motivations:
  • Achievement: People with a high need for achievement seek to excel.
  • Power: People who are driven by a need for power as they do want to be recognized for being influential. 
  • Affiliation: People with a high need for affiliation want harmonious relationships with other people and they want to feel accepted by others. 
  • Security: People with a high need for security look for continuity, consistency and predictability in their job, work, and pay. 
  • Adventure: People with a need for adventure are motivated by risk, change, and uncertainty. They thrive when the environment or the work is constantly changing. 
There is an online self-evaluation to help you identify the things that motivate you. I did the evaluation and it suggested that I’m motivated by adventures, by trying out new things and move forward.
But man is a creature of habit. And it is hard to get out of habits built up over years. I noticed that I stopped moving forward in my former life which finally triggered a decision. We, a group of colleagues started a new company named YAPEAL. A month is not a long time but I think there is one big change I feel each and every day. Maybe not the best way to phrase it, but I started to feel myself much better again. The work before was interesting but somehow had little impact, reactions were always similar and any change felt impossible or at least difficult. Now everything matters – this is challenging but very motivating.

Who is leading?

Our post Next stop – FinTechGiants touched on the three structures existing in any organization:
  • a formal structure of power, required to perform business and ensure regulatory compliance
  • an informal structure of social networks and communication paths
  • a value creation structure which solves problems and produces the values 
All three structures exist in each and every organization or company and each has its own leaders. Leadership is one of the often used terms. But what is a leader? What is leadership? 
  • Leadership is the result of a social process 
  • It is something which happens between people
  • It is typically the result of a bottom-up process 
  • And it often requires passion, inspiration and motivation to jointly achieve a goal
Leadership is something which cannot be actively assigned – it needs to be earned or gained. It is about being respected or accepted as a leader. 
The roles in the formal structure are assigned. They are 
  • typically the result of a top-down assignment
  • they give position power 
  • they allow controlling a group to achieve a goal
  • they come with clear expectations by those with more power who made the assignment
  • often results of internal politics used to secure or gain assigned power
Having such a formal position does not imply being a leader – it just implies control or management power. While a good leader typically also has management skills there are many managers which are no leaders. Individuals with important formal roles in companies often start to separate themselves from the rest. They become an elite in an organization and lose the contact with the base. Many of them also have no vision to share and hence focus on managerial or material aspects driven by the fear to fail. This is not sufficient in the current time of change where companies need leaders to move successfully towards a shared vision by giving direction.