Wits MBA guest lecture: Managing technology in the age of disruption and digitisation

Full-time MBA students at Wits University in Johannesburg study the management of technology and I was honoured to present a guest lecture as part of this learning module. Among a range of 4th industrial revolution topics we covered two brief case studies (Standard Bank and JP Morgan), exponentials and incumbents, the rise of the techpreneur and South African digital disruptors. Whether these students choose a career in technology or not, my goal was to impart some real world insight about the operational and strategic drivers and challenges of how tech plays a crucial role in the fast changing business world of the 21st century.

We began with an overview of the 3 broad focus areas of IT leadership; (1) running a technology function, (2) changing it and (3) contributing to the industry. Usually 50% of your energy will go into running your IT function, and earlier in your career this will be even higher. This is the day to day, “keep the lights on” work that in IT is usually dominated by data security, customer service, governance and efficiency. There are many frameworks and benchmarks for achieving and maintaining these standards; COBIT, ITIL and others. The remainder of your 100% focus should be on how you are changing things, how is technology making your world different, how are you leading the creation of new business value with tech and ensuring your IT estate looks better when you leave it to someone else. The third focus area is your contribution to the industry, the community of professionals in your field, your company’s brand and the quality of thought leadership available to other IT leaders.

While cyber security remains a top concern in the “run” pillar, the big focus in the IT industry remains on the “change” aspect. How is the IT industry professionalising the way we run projects, build new products and improving ways of partnering with business to achieve the value they are chasing? Exponential growth has been achieved in numerous industries by new entrants disrupting markets with customer centric, user-friendly technologies. Clearly these techpreneurs want to change the industry; internal IT leaders are focused on responding or leveraging these new frameworks – how are you managing your change efforts accordingly? The so-called exponential growth curve shows how the lean start-ups have quickly moved from deceptive growth, through digitisation and disruption into dematerialisation (Uber), demonetisation (Waze) and democratisation (Wikipedia). They have changed the rules of the game; technology has changed – have you?

The banking industry is a good example of these forces at work; a usually healthy tension between old and new thinking, traditional business models and progressive, entrepreneurial mindsets. Fintech is a threat to existing business models but incumbents are responding well with incubators and startup programmes that gives them preferential access to these new technologies. Digitisation is a key strategy but “it’s not enough to apply digital lipstick” says Piyush Gupta, CEO of DBS, the leading financial services group in Asia. He believes the industry has reached a tipping point and their management teams were very intentional in leading a major digital transformation. “We made killing paper a big mantra in the organisation, for instance, and were determined to go beyond just tacking on a bunch of digital apps at the front end – that’s the easy bit. We wanted to go all the way through to middleware and the back end.”

Agile software development has been around for decades but was only formalised in a manifesto in 2001 when leading thinkers established principles and values that have been widely adopted by companies looking for faster, better IT. Startups automatically think lean simply because they don’t have the size, legacy and structure that requires processes and established ways of doing things. Eric Ries says in The Lean Startup that “Innovation is a bottoms-up, decentralized, and unpredictable thing, but that doesn’t mean it cannot be managed.” He points to the importance of a “Minimum Viable Product” that helps achieve value from learning much earlier than during traditional product development lifecycles. As early as 1986, Harvard Business professor of Strategy Hirota Takeuchi proposed changing the “relay race” or sequential approach of product development into a more iterative, “rugby” approach. The “scrum” and other sporting analogies of Agile such as “sprints” came much later as jargon-lite flavours of this original Agile thinking.

Standard Bank’s CTO Mike Murphy pointed to an organisation wide Agile transformation as a key enabler of new ways of working in IT. He cites clear benefits improvement metrics that make good business sense, plus “the business feels more in control, and the IT group is no longer operating in the dark. In fact the IT group feels more empowered under this model.” As an IT leader operating in your “change” role these are crucial learnings that you should adopt and adapt in the teams under your leadership. Think about how your subconscious management-style practices might be dampening innovative, self-organising tendencies of the modern software engineer. Create safe environments for teams to achieve the innovation cited by Ries and the benefits claimed by Murphy. The Agile founders felt strongly enough about this that they worded an entire principle on this topic, “build projects around motivated individuals. Give them the environment and support they need, and trust them to get the job done.”

The industry is also fast adopting new technologies and converting blue-sky buzzwords into tangible enablers of radical new business value. JP Morgan points to machine learning as just the start of a new journey together with “big data, robotics and cloud infrastructure to find new sources of revenue, while reducing expenses and risks.” While the CIO may not control all aspects of these value chains, they have an important role to play as “Chief Influencing Officer”; become a thought leader in these concepts, be open to rapid prototyping, failing fast in low risk environments and quickly getting learning, minimum viable products and motivated teams together. As custodian of the IT assets you still have a core responsibility to keep your architectures running securely and efficiently but don’t neglect the importance of building on this with an effective “change” strategy.

During the exponentials and incumbents discussion I was asked extensively about the local banking industry and particularly the dynamics playing out between telcos, banks and new entrants such as Discovery. Besides the well documented rise of incubators and accelerators there is a continued and healthy competition for core retail banking market share with Discovery having committed R1Bn investment. The telcos have previously launched financial services products such as M-pesa which worked well in other African countries but was eventually shut down in SA. Current accounts create customer insight and customer intimacy which is enhanced through value-added ecosystems and omni-channel self service platforms.

Towards the end of the session, there was a question about demonetisation which is one of the steps in Singularity University’s exponential growth model. Paths to new revenue streams are created when existing ones are demonetised; near-unlimited digital photographic storage vs use-and-discard 35mm film, Napster audio file-sharing vs records and the best is free Google Search vs paying for a set of encyclopedias on your bookshelf. Although Wikipedia is also a good example of demonetizing knowledge I was careful to point out that it is not firsthand research and shouldn’t take the place of peer reviewed academic sources, often funded through student fees. ...I was speaking at a university after all.

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