An author, speaker, public intellectual, and expert on business ethics and leadership, Paul Gibbons helps business leaders use science and philosophy - science, to make better strategic decisions, implement change, innovate, change culture, and create workplaces where talent flourishes, and philosophy to navigate ethical conundrum around AI, privacy, and disinformation. In 2017, he was recognized as one of the top 20 experts on culture change. His most recent book, Impact (21st-century change management, behavioral science, digital transformation, and the future of work) is the second in a series called Leading Change in the Digital Age. The book shows a way out of the irony of using "analog" change methods in the 21st century and using old school methods in 21st-century digitally enabled business.
In an exclusive interaction with People Matters, Paul shares his views on the digital transformation journeys that organizations are going through, how successful transformation hinges on the ability to bring people closer together, and what are the key reasons behind these transformations failing.
Take us through your journey so far.
I started as a science and math guy and went on to work in banking. Thereafter, I went into consulting and with my science and math background, the kind of consulting I did was called ‘expert consulting’. So, we provided copious advice to clients, which in my case was derivatives. One of the most stunning things to me as a young and naïve consultant was when I produced a report for the Barclays Bank. To my astonishment, though they said they loved the report and found it marvelous, they did nothing with it. And we had charged them seven figures for it! I was perplexed and disappointed at that time. I was idealistic and was thinking my work would make a difference. So, I then became curious about change, both at an organizational and personal level. So, mid-career, I reinvented myself and went back to school and got a Masters in Psychology followed by a Masters in Philosophy and then founded my own Leadership Development Company in London, where we did some really interesting work. And then, I became a professor after I moved to the United States and teach Business Ethics now.
With all the brand-new concepts - like Artificial Intelligence, the fourth industrial revolution, the future of work, the changing culture that millennials represent, the globalization of the workforce, etc. - the context in which we do change is different
Please tell us more about your book, Impact, which is focused on what businesses need to do, from cultural changes to upskilling, to avoid getting left behind in the race to digitize 21st-century business. What made you write this book?
One of the things I realize today is that when I was taught change management in the 90s, a lot of it was wrong. The very first model was something from Kübler-Ross’ research on Death and Dying. It basically talks about five stages of denial, anger, bargaining, depression and acceptance that people who are dying went through. But somehow this got adopted as something that happened in organizations when people go through change. As if a change in business needs to be like a death experience. I think a lot of those metaphors are fallacious and wrong-headed. I wanted to debunk these bad change models in my books – The Science of Successful Organizational Change and Impact. Also, now there are new ideas on change and a lot of amazing stuff has been happening in behavioral science that is first being brought to the public attention with books like Thinking, Fast and Slow and Predictably Irrational, which are two books on the limits of human thinking and rationality. So, behavioral sciences provide us really interesting ways to change behavior that are better than the old-fashioned ways that I learnt. The other reason that I wrote this book was because with all the brand-new concepts - like Artificial Intelligence, the fourth industrial revolution, the future of work, the changing culture that millennials represent, the globalization of the workforce, etc. - the context in which we do change is different and so I thought a book needs to be written that covers these topics.
Though digital transformation is among the most exciting opportunities in business today, according to McKinsey, only 25% of them succeed. So, if you are a CEO today, you are on the horns of a dilemma
What is your take on the digital transformations that organizations are going through at the moment?
It is one of the most exciting changes to happen in the last 35 years in the business scenario. I am particularly excited about the developments in healthcare. It is interesting to see how AI and robotics are going to improve human wellness. However, though digital transformation is among the most exciting opportunities in business today, according to McKinsey, only 25% of them succeed. So, if you are a CEO today, you are on the horns of a dilemma. You risk investing a lot of capital with possibly a high chance of failure or you take another way, which is, not to follow the digital path and resist being disrupted or being put out of business. It is an interesting time to be a leader, and a challenging one too.
In your book, you have mentioned why digital transformations in businesses fail. Can you tell us the top three reasons for this failure?
Some of it has to with people change. Of course, there are technological challenges but a lot of it boils down to people challenges. It also has to do with upskilling your people for example. It is certainly the human challenges that captivate me the most. Some of those can be having a mindset to work with data rather than traditional ways of making decisions, having the skills to work with data, and having a culture where people are ready to experiment. In behavioral science, a lot of what you need to do is about experimenting with different behaviors to find out what produces the best results. You need to do that in data science too; you need to have an experimental mindset and an agile mindset. Organizations have always struggled for change and always struggled with engaging people, so none of that is new. The necessity for culture and mindset changes are not new, but I think they are more dramatic than they have been previously. I guess in a three-word summary, it would be - mindset, skills and culture. These are the top reasons for the failure of many digital transformations.
Impact argues that successful digital transformation hinges on the ability to bring people in the workplace closer together and fostering the uniquely human qualities that make a business thrive: curiosity, community, collaboration and trust. Could you shed some light on this?
Digital transformation isn’t unique; it has always been the case that to make change happen, you need some kind of coherence or alignment from staff. But digital transformation gives us an opportunity to do that in new ways. For example, the old top-down model of communication is that the leaders come up with strategy and then try to align people with it. That model of the strategists coming up with the design for the business and then hoping to persuade people of the wisdom of it and to bring their hearts and minds along, is an old model. It is an old model for a couple of reasons. People lower down in the organization are most close to the customers and what’s going on and there are many more of them who can provide strategic insight. But further more, if you involve them constantly in checking the strategy, you have the opportunity to engage them first and develop the strategy later. That doesn’t mean that if you have an organization of a million people, everyone gets an equal vote. By engaging people and bringing them together first and thinking about the strategy second, you have an opportunity to not have to persuade them later that your idea is good. We also have new tools for constant engagement now and with new communication techniques, you can talk to customers all the time. So, you can create these communities where people learn and discuss constantly. You want a model of constant engagement and not one of periodic engagement. It is good for one of the other things I am interested in, which is democracy in organizations. It is about giving people a say in matters that affect their working lives. There’s a paradox that more technological our decisions become, the more important the human becomes.
To make a success of digital transformation, effective leadership and a mature organization culture is required. What is the mindset that leaders require in order to actually succeed in a digital world?
There are two important ones. One of them is that they need to put culture first. Satya Nadella once said, “The C in CEO stands for Culture”. One of the things he undertook when he took over Microsoft, he said we are going to make this a culture where people experiment, where people take risks and collaborate, where people have fun at work, where people are at the liberty to be creative, and where people have a growth mindset. And he saw that as CEO as one of his most important jobs, because culture is the soil in which all of these innovations and projects take place. A metaphor I have used in the book is, ‘a leader is the master gardener’. So, there is a little bit of time spent tending to individual tasks, but what you want to make sure is that the soil is correct, the layout is correct, the plants are properly placed together and essentially, you are looking much more holistically at the business. The other metaphor I used in the book is, ‘a leader is a learner’. For organizations to upskill quickly enough, leaders need to model the behavior. Leaders need to be modeling constant learning. They need to be the Chief Learning Officers, they need to be demonstrating to the workplace that though our current capability is great and valuable, but it’s the slope of the line and how quickly and easily people are developing will tell us about our future.
Organizations have always struggled for change and always struggled with engaging people, so none of that is new. The necessity for culture and mindset changes are new, but I think they are more dramatic than they have been previously
What cultural traits must an organization possess before embarking upon a digital transformation journey?
Some of the cultural traits according to me are creativity, having a mindset of experimentation, having the skills to conduct data science and behavioral science experiments, and also having a culture that understands the importance of being able to fail fast but fail forward. One of the people I admire today is Elon Musk. He is someone who is prepared to look at the next quarter of the century instead of the next quarter financial results. Where do I want my business to be in the next quarter of the century? He is one of the few people I know who is looking at a 20-year term. For me, the higher up you go in the organization, the more you need to expand your horizons.
One of the chapters in your book is based on change management. How can organizations make change management successful and what is the future of change management?
One of the things that’s a problem is that change is too important to be left to a specialist. So, the model right now is that you have a manager who gets an opportunity on the job, goes away to do an MBA and then comes back and drops all of that theoretical knowledge. But nothing that they have learnt so far has taught them how to manage change, how to empathize with people, how to bring people along, how to create a vision, how to engage stakeholders, how to manage risks, etc. They haven’t learnt any of that stuff. In all my time working at organizations, most of the headaches people have are when big changes happen. So, you don’t want to call a consultant every time you have a change problem. You want some skills yourself. Like when there is a conflict within my team or between two other people, you should have the skills to bring people together. So, a lot of what we pay change management specialists to do, is just a substitute for things that we don’t teach people in management education. By and large, we don’t teach people sufficiently people skills and change skills when we deliver management education.
Any particular tip/recommendation that you would like to share with HR leaders on building an impactful digital-ready culture?
One of the things that gets talked about a lot is about learning organizations. It is about having an organization that learns. Learning is similar to growth, change and life. But all of those are part of life. The fact that life has existed on our planet for as long as it has is because we were able to learn and adapt very quickly as a species. When we became able to talk to one another, we were able to share those insights and learnings and build a historical record of things. So, that’s our great superpower as human beings – learning and adaptation. Organizations need to think and work on how to create a developmental culture. Organizations need to have a culture where everybody spends a decent percentage of their time not just on delivering work, but on getting better at delivering work. They should focus on bettering themselves and bettering their own capacity to deliver.