What I learned from a Harvard Business School debate on ‘Building your scaled digital organisation'

I recently listened to a panel discussion hosted by Professor Karim Lakhani, who leads the Dean’s task force on digital transformation at Harvard Business School. While the panel focused on how leaders are scaling businesses beyond the publishing industry, I was struck by how much legacy content businesses could learn. 

Here is a summary:

Transforming a legacy business into a disruptor faces three main challenges:

1. Balancing scale (and all the savings those deliver to pass on to customers and remain competitive) vs intimacy (delivering the tailored digital experiences that customers now demand)
2. Balancing simplicity (supporting fewer options to deliver a stable and cost-effective service to customers) vs personalisation (multiple options to give customers the choice they now demand)
3. Balancing consistency vs failing fast (creating a culture of continuous experimentation)

Overcoming these challenges to becoming a fast-scaling insurgent is not all about investing in the right technology or platforms. Instead, success hangs on having the right people and the right culture. And the greatest change is often needed at the very top of an organisation.

In many legacy organisations, the CEO develops the strategy which is then pushed down or “cascaded” through the organisation via the c-suite and often many layers of management. But successful disruptive strategies are more likely to have been built from pull, not push. 

Pull means empowering the wider team, often those closer to the customer than senior management. It means giving smart people the authority to make their own decisions, knowing they will sometimes make the wrong choice, but from which they will learn and, as a result, gain muscle memory.

Digital and cultural transformation must be executed hand in hand. The CEOs of winning digital disruptors have evangelised a clear and compelling purpose for digitalisation, working with not to the team members who will catalyse the cultural revolution. 

Next, senior management needs to invest time to communicate the company’s place in the world and market until everyone understands. An empowered and well-briefed team will know which decisions are in bounds and which are out of bounds. 

This means that, in practice, successfully disruptive digital strategies are based on multiple smart decisions, never one big smart decision made by the CEO. CEOs of successful disruptors are secure in allowing individuals in their organisation to make decisions and make mistakes: they have the political will to democratise decision making.

A number of successful CEOs have built “lighthouses” in their organisation – a series of best practices aligned to the strategy and made known across the organisation. Around 12 lighthouses appears to be a good number; not too few to be too simplistic but not too many to be too complex. 

For each lighthouse, companies have amassed the best cross-departmental talent to work together on them. These small working groups take responsibility for communicating and explaining to their colleagues how to put the best practices each lighthouse covers into action. That way best practices and preferred ways of working don’t cascade from above, they emerge from within the organisation.

The panel also came up with some thought-provoking maxims:

• Disruptors live in a world of Post-it notes; executors live in a world of playbooks. You need to find a way to bridge the two
• Change management really means changed management
• You have to show to tell. Get down in the trenches together. Build sufficient trust so that people will follow. Evaluate collectively, don’t pass judgment from the dock
• Be a good listener and understand what motivates people, who they are and how the cultural change will meet their needs
• Treat suppliers as extensions of your team and collaborate with them. Share your business challenges with them and innovate together
• Solutions can start small and they don’t have to solve problems for everyone. Once a solution starts working for some people then expand it to meet more customers’ needs
• Strong culture companies are rarely good learners and rarely good partners
• Bureaucracy makes problems bigger; insurgency makes problems smaller
• The skill is finding solutions with what you are given, asking endlessly for more resources prevents speed at scale
• You can’t get people to change their minds; they have to change their own minds