A Heavy Dose of Truth and Consequences on Digital Transformation
An interview with Stephen Andriole: The latest conversation in an on-going series of thought-provoking interviews with big thinkers, authors, scholars, and visionaries on all things digital transformation.
Stephen Andriole is the Thomas G. Labrecque Professor of Business Technology in the School of Business at Villanova University.
He has written, co-written or edited 33 books on information technology, technology trends and business technology management. His latest book is called “The Innovator’s Imperative: Rapid Technology Adoption for Digital Transformation”. Andriole has published over 500 articles, monographs, reports and book chapters.
He was also a monthly columnist for Datamation Magazine on business technology convergence, and a regular contributor to Forbes Magazine where he writes about “all things digital.”
Appian recently talked to Andriole about the future of digital transformation, and why the days of phased technology adoption—when you could sit back and be a fast follower, late adopter, or wait-and-see’er—are over.
In this insightful interview, Andriole talks candidly about how emerging technologies have crushed traditional barriers to competition, and scared the heck out of many senior executives.
Andriole’s message is clear:
“If you’re running a big, established, company and you think that you’re safe from disruption—you’re not.”
Read the full Q&A below.
Appian: Professor Andriole, welcome to Digital Trailblazers.
Your latest book, “The Innovator’s Imperative” is based on five years of research you did at Villanova. One of the findings highlighted by the book is that digital transformation and rapid technology adoption go hand in glove. What else did you learn from your research? And, were there any big surprises?
Andriole: So, yes, there were a ton of surprises in what the data revealed. One of the biggest surprises was that companies have almost completely abandoned the idea of spending months and years figuring out business requirements, before they deploy new technology, especially when it comes to emerging technology.
“Back in the day, companies would spend years looking at traditional technology like an Enterprise Resource Planning (ERP) system, before they deployed it. But now, companies are trying out technology before they even figure out the problems they can apply the technology to. And that is stunning.”
Appian: So companies are abandoning traditional approaches to requirements and analysis?
Andriole: Yes. And they’re doing this for a variety of reasons—one is fear. Companies know that they can’t spend three years deciding whether Artificial Intelligence or Robotic Process Automation makes sense or not, because of the rapid pace of technology change, and what they’re competitors are doing.
Much of this fear has to do with the uncertainty around the trajectory of technology, especially at the business unit level. It used to be requirements first, and technology second. Now it’s the other way around.
Appian: So, what’s the best way to approach technology adoption?
Cloud Speeds Tech Adoption
Our argument is that there’s a better way for companies to differentiate themselves. There’s the notion of phased technology adoption…early adopter…fast-follower…late adopter. But there’s no time for these approaches anymore. They will render you obsolete.
“The world has changed dramatically. Today, if you’re not rapidly deploying technology, you’re in trouble.”
Appian: But what about the cost of adoption? Isn’t cost an issue?
The cloud has made it so much easier for companies to adapt. They don’t have to spend a fortune to try something new, like they did years ago—and then get stuck with a bad decision. Now, the technology is in the cloud. You can throw a few people at it. See if it sticks. If not, you can stop without incurring big costs, which was the problem back in the day.
Appian: So, would you say that there’s a misconception about the cost of adopting new technology?
Andriole: One of the big misconceptions is that it’s expensive. But our data is showing that CIOs have gotten over that, because cloud delivery has paved the way. Even CFOs are thinking that technology adoption doesn’t have to be expensive.
Taming the Cost Beast
And many of these CFOs went through the cost nightmare with traditional Enterprise Resource Planning systems. They were incredibly expensive, and took years to get right. But now it’s easier for a disruptive technology champion in a company to talk to C-Suite decision makers about doing a use case or prototype to get some traction for a better approach.
That’s the case with Robotic Process Automation (RPA) and other emerging technologies.
“The question is, do you have the courage to challenge your existing business model, because you believe it has an expiration date? They all do.”
Appian: Are you beginning to see more of this rapid adoption mindset at the C-suite level?
Andriole: Yes. In our research, we talked to many C-level executives, CIOs, CFOs, CMOs CTOs and business unit leaders. And they get it. They absorb the fear faster. No one experiences fear faster than someone who’s running a business unit. And they love the flexibility they can get with the cloud. Once you leave the cocoon of folks who maintain the technology status quo, decision makers are willing to try new technology as quickly as possible.
Appian: So, what’s the takeaway for senior executives?
“The big takeaway is that the pace of technology change, and nature of disruptive competition makes the whole idea of elaborate requirements analysis—you know, let’s take a year or two to figure things out—obsolete.”
If you wait two or three years, you’re a Blockbuster. Because with all the competitors out there that are coming to take away your business, you have to be an early adopter. You don’t have a choice. And it doesn’t mean you’re going to spend a fortune doing it.
Fail Fast, Move Forward
Last year, CIO Magazine covered my research in this area. They talked about the strong appetite for emerging technologies, with all of their potential risks and rewards, coupled with a growing willingness to fail fast and move forward, and how this mindset is essential for CIOs to navigate the digital era.
Appian: You’ve said that innovation is no longer a dilemma, it’s an imperative. What did you mean by that…What’s the risk of not focusing on innovation and emerging digital trends?
Andriole: Survival—one of the takeaways from our research is that early technology adoption is a matter of survival. But, you know the hardest time to change is when your business model is still making money. Your growth rate might not be what you want it to be, but you’re still growing. That’s the hardest time to change, especially in a public company.
The mindset tends to be: “If it ain’t broke don’t fix it.”
“But, it’s difficult to tell your shareholders that you’re going to cannibalize your business, because you’re worried about potential disruption. But better you than a startup that disrupts your business, with one of the emerging technologies.”
Appian: You’ve spent lots of time talking to senior execs about digital transformation. Do they have a sense of urgency about it?
Andriole: I’ve talked to many companies that say they want to digitally transform. But you have to understand where the motivation is coming from. Are they saying it just to be able to tell shareholders that “they get it.” Is it to tell investors—if it’s a private company—that “we’re going to be agile and nimble?” The question is, do they really mean it?
Fear Motivates Transformation
Appian: So, what distinguishes the true-believers from everyone else?
Andriole: According to our data, the companies that really mean it, are the ones that are failing. The ones that are losing market share. If you want to find a company that’s serious about digital transformation, find one that’s losing market share. Because everyone’s on the same page of “we’ve got to do something different.”
Appian: Which brings us back to the fear factor…
Andriole: There’s no better motivator for digital transformation than fear. How long did it take the ERP vendors to go cloud? A long time, because they were making so much money with the on premises stuff.
The other thing that I’ve discovered is that most companies haven’t modeled their processes. So, they don’t understand how some cool new technology will help them improve customer service, claims processing, or other routine and knowledge-based tasks…
“On the other hand, if you’ve modeled your processes, and you’ve determined that a specific technology has legs, you’re better positioned for a quick transformation. The bad news is that our data suggests that few companies have current, updated models of their business processes.”
Appian: So, for some companies, digital transformation can be like throwing technology against the wall to see what sticks?
Andriole: Exactly. The perfect storm for digital transformation is an openness to the adoption of new technology—having a current model of business processes, and a senior management team that is ready, willing and able to transform… motivated by fear.
New Tech Creates More Jobs Than It Kills
It’s not just about throwing technology against the wall to see what sticks. It’s about understanding your processes well enough to know which technology should stick.
Appian: You’ve said that not every company can, or should, be digitally transformed. That seems counterintuitive. What did you mean by that?
Andriole: First, there are some business processes that kind of work okay as they are. It doesn’t mean that they should stay static forever. Supply chain is a good example. It has been dramatically impacted by automation over the past 20 years. Look at how Amazon is pushing the limits of automation in their newest fulfillment centers.
But at the same time, you’ve got payment systems that have evolved without disruption. For these kinds of processes, evolutionary, incremental improvement may be okay. The key is to understand the difference. Unfortunately, many companies—because they don’t understand their processes—don’t know the difference.
Appian: On a related note, when you think about Robotic Process Automation, there’s a point of view that says these technologies are job killers. What’s your take on that?
Andriole: I think people are being disingenuous when they say there won’t be much job displacement with automation. We know that’s not the case. If you look at history and the waves of technology, you know that new technologies tend to put companies out of business. The fact is, technology always creates displacement. But it’s also true that new technologies create more jobs than they displace.
“The question is how do we manage the transition? And this involves lots of important political decisions around training and investment. To say that emerging technologies won’t displace jobs would be disingenuous.”
And, emerging, intelligent technologies won’t just displace routine, manual tasks. These technologies will also displace knowledge workers in jobs that require deductive reasoning skills. This isn’t new. It’s been happening for years.
Appian: Based on you research, what role will RPA play in the digital transformation journey?
Andriole: RPA is an essential ingredient for digital transformation. You’re talking about process modeling on steroids. It’s the next phase from BPM, which I’m still a big believer in… because you have to understand your processes before you can transform them. But I’m also about throwing new technology against the wall to see what sticks, as long as it’s a process wall.
Appian: So, are we past the hype phase with RPA?
“RPA is about integrating advanced technologies into process. It’s also the intersection of process-based modeling with Artificial Intelligence, which is a wonderful thing. We may be at the peak of inflated expectations with RPA. But I’m predicting demand will remain strong. People are building platforms, they’re building RPA tools, making the technology smarter and easier to deploy.”
Appian: You’ve said that the path to transformation is a risky one. What can C-suiters do to mitigate the risk?
Andriole: It starts with changing your organizational culture. In some companies, it’s okay to fail. In the digital economy, we have this notion that you can fail fast and cheap because we have cloud. So, this is the first change is to embrace. The risk is not in spending years and a small fortune to see if a new technology will work. That’s not the risk.
The risk is that you will be displaced in the marketplace, if you do transformation badly—or if you don’t do it at all. The risk is your business model—Do you want to be Blockbuster or Netflix?
5 things Every Senior Executive Should Know about Digital Transformation
- Every company should always think about how changing their business processes will impact their business model. Reviewing business processes should be continuous.
- Digital transformation doesn’t always have to be with a new technology. It can be with traditional technology. There are lots of companies that haven’t optimized their conventional operational technology, let alone adopt new technology.
- Profitable companies aren’t the most likely to adopt successful digital transformation projects…. The data suggest just the opposite. If you’re making a ton of money, there’s no incentive to change anything.
- You need to disrupt your industry before someone else does…We now have this phenomenon of fringe companies not just testing unbaked, untested technologies, but disrupting an entire industry. So you had better be in front of that disruptive curve. If you’re not, you’ll bet pushed aside. You shouldn’t be worried about losing market share to your competitors. You should be disrupting your business instead.
- Fear is the biggest motivator for senior executives to get behind digital transformation. If you want to find a company that’s serious about digital transformation, find one that’s losing market share.