Mastering Digital Transformation: From Chaos to Clarity | Michael Schank | Episode 304

Scott McCarthy [00:00:01]:
Michael, sir, welcome to the show. So good to have you today.

Michael Schenk [00:00:04]:
Thanks for having me, Scott. I’m excited to be here.

Scott McCarthy [00:00:08]:
Awesome. So we’re talking about digital transformation, in organizations. Now when I talk leadership, I talk about 3 domains of leadership, and the first being leading yourself, second being leading your team, which are, like, the individuals within within your team, the Joe’s, Janes, and Sally’s, and so on. And then the final thing is leading your organization. Now I I think we’re gonna kinda hit on predominantly the last one. But the first question I got for you out of the gate might be a little bit controversial. So how about digital transformation? But, like, are we not there? Like, have we not transformed the workplaces to a digital place now? Like, email and lives, you know, being able to sign documents digitally and all that stuff. Like, are we there? Why do we need to talk with this still?

Michael Schenk [00:01:01]:
Well, with with the, with in 20, November 2022, we had ChatChipt come on the scene. So I think we’re on the verge of a new part of the digital transformation, which is AI and what it means for the workforce. Specifically, I think it’s going to displace a lot of mundane and repetitive tasks. And I think as leadership, especially those running organizations, they’re gonna have to figure out what it means and how they design their workforce so that they they gain that next level of competitive advantage, both in how they run their organization to be more operationally excellent and how they how they position the value that they deliver to the customers externally to the market.

Scott McCarthy [00:01:48]:
Well, I I like where we’re going with this already. So let’s talk about, let let’s let’s talk about AI and stuff like this. So when I hear AI and I hear, the workforce, a lot of sensitivity. And and that that is revolving around AI is gonna kill our jobs. AI is gonna take, you know, our our our work away from us, so on and so forth. So for the leaders out there who have team members who are, like, kinda, like, you know, kinda shaking their boots, to be honest, about this Yeah. How, you know, how what do you say to them? How can they reassure their people? Or or is it true? And, you know, like, we’re gonna start seeing massive layoffs because AI is just simply gonna take it over.

Michael Schenk [00:02:36]:
I think I think some of it’s founded. The like I mentioned, some of the, mundane and repetitive tasks will go away, but it’s like any new any new technology. Like, the the fear factor is always greater than what what actually happens. I think it’s an opportunity, though, for leaders. If you if you think about, you know, what that means as the repetitive and mundane test, leaders this is a a a catalyst for for strong leaders to move their workforce into a high performance workforce. And, really, what that means is, they’ve gotta change their innovation models. And and I always talk about this concept calls called democratized innovation, which means that every single person in your company has some level of expertise of what they do. Now as a leader, if you could tap into that and drive innovation in products, processes, really everything that you do, then you could you could drive more motivation into the workforce.

Michael Schenk [00:03:31]:
Because I think at the end of the day, people want to to know that they’ve done valuable work, that they’ve contributed. They’re not they’re they’re motivated by money and and job titles and things like that, but those are only negatively impacted if it’s if minimum expectations aren’t satisfied. But if you give them, an ability to really change the workforce, I think they’re gonna be highly motivated. And in democratized innovation, in the old model of innovation, innovation was at, you know, centralized from the top down or in a in a dedicated r and t team r and d team. Sorry. But if if you could give everyone if you really arm them with 2 things, autonomy and accountability. And autonomy means you have the ability to test new ideas and experiment, and leadership values and rewards that initiative. And some things will fail, but many things will succeed, and that’ll overall move the organization forward.

Michael Schenk [00:04:27]:
From an accountability perspective, you have to be very precise with with with everyone in the organization for what they’re responsible for so that they can now take ownership for driving those changes. And that’s a lot of what my my framework does. And, you know, I I wrote a book called Digital Transformation Success, and it details a framework that I created, and I was in the consulting and I was a consultant in Accenture large banks for almost all of my career. So I was in a lot of transformations and seen a lot of lot of chaos and a lot of transformations and then disaster. But my framework is all about documenting every single process that happens in your organization. It sounds like a daunting task, but it’s it’s actually much easier than than many people think. But once you document every process and you could put a named person on each of those processes, that very clearly, crystallizes accountability. And then it goes a little bit further of if I could take all the data in my organization such as I have application repositories or vendor repositories and people and teams and and everything.

Michael Schenk [00:05:33]:
If I could take all that data and collocate it and do some associations with what processes happen in the environment, now I have a a truly kinda hard science that leaders can use, which is now I have a data driven framework to drive that accountability, to implement some of these things that will move the workforce into into a high higher performing workforce. And and I think, ultimately, that’s that’s going to give, people more, more cognitive and and, critical thinking tasks to succeed in this new age.

Scott McCarthy [00:06:06]:
Yeah. A lot of that what you just said made sense, and you really, got me going when you said, you know, basically hinting at, you know, peak performance, organizations because, well, that’s that’s what this podcast is all about. Right? Achieving peak performance. So now now you did mention you had a framework. So I’d love to dive into that framework so we can Sure. You know, learn more about it. And for the leaders out there, how they might, how they might, be able to implement it. So first off, I’d I’d love to get an overview of the framework and if we can start deep diving into them.

Michael Schenk [00:06:40]:
Perfect. So it’s called the process inventory framework. And, essentially, what it means is documenting every single process that an organization does. Now that’s a lofty goal, but to get to something of a complete in terms of your your inventory of processes, you have to anchor to something complete, which is the organizational hierarchy. So when I work with with organizations, I always I start with the the top of an organization, and I ask a simple question. What is it that you do? And I take those answers, and I turn them into verb noun process names. But then I ask their teams what they do, and I ask their teams what they do. And, essentially, what I’m creating is a a a taxonomy of processes that covers every single action that happens within an organization.

Michael Schenk [00:07:23]:
So that’s one is modeling that that process environment. But then 2 is that data integration. So taking all the data about how your organization runs, collocating it and do that doing those associations. And what you create is one single source of all operational intelligence, and that becomes a a valuable tool when you’re driving a transformation. So I, one step that’s ubiquitous in the the transformation communities is that 70% of transformations fail. And my hypothesis is that they fail because I mean, these are these are large, you know, tens or 100 of 1,000,000 of dollars of, programs depending on the size of the organization. They may take years to complete, and it has and it it entails a lot of different types of roles within the organization. You have business.

Michael Schenk [00:08:10]:
You have technology. You have, you know, there’s all these all these different groups that have to come together. But why they fail is because there’s complexity in the environment, because no one really knows what the organization does. And if you could provide this intelligence, now you provide a common language to coordinate something as large as as a transformation. But it’s also useful for other things like I could take, my change process and use this common language for defining scope for projects and doing requirements and doing design and testing and in the organizational change management. Now if I have all my processes, I could align, standard operating standard operating procedures and job aids and training so that I’m very clear on who has to do what in the organization. And and that that way everyone is educated on their role and the expectations. It’s important for operational excellence.

Michael Schenk [00:09:03]:
So for those those listeners of yours that know Lean 6 Sigma, for instance, and those know the principles about it, it’s all about looking at analyzing the organization, removing waste and inefficiencies so that your each of your processes is delivering if as efficiently as possible what you need to deliver. I I come from, well, there’s enterprise architecture. So in the especially in the digital age, there’s a lot of complications and overlaps and redundancies in all almost all companies’ technology environment. But if you could if you could arm enterprise architects with more detailed information about what their business does, now they could design an IT environment that more closely aligns to what the business needs, and, more importantly, is agile in the face of future change. And then the last thing I’ll I’ll mention is the, risk management. So I spent my my entire career has been in financial services, banks, insurance companies, etcetera, which is one of the most heavily regulated industries around. And the the core challenge, and and there’s a lot of consent orders and fines because, these these companies miss a lot of expectations. But if you could give those risk management teams greater, detailed context of what the business does, now they could do more thorough and complete risk analysis and ultimately end up with a better control environment.

Scott McCarthy [00:10:28]:
Interesting. Super interesting stuff, especially at the end there, about risk management. It’s funny you you mentioned that process mapping Yep. And going through all the processes that organization done, My organization so by day, I still serve in the Canadian Army as a senior Canadian Army officer. And currently, I run the country’s largest supply depot, and we’re actually in that process now of mapping all of our processes. So Yeah. It’s it’s funny that you bring this up. It’s quite timely, actually.

Scott McCarthy [00:11:01]:
So I have some ammunition to go back to work with tomorrow and say, listen, folks. You know, we need to get on with this because, hey, I spoke to an expert yesterday and, you know, said this is super critical and super important regardless if, if if my boss told me to get on with it or not. Now with that, you know, you talked about hunting down and and and removing inefficiencies and and such. So couple questions for you regarding that is, you know, 1, how do we find where they are? And and 2, how do we go about actually removing them from our daily grind? And and and to loop all this together, you know, what does that mean in the digital age anyway? Yep.

Michael Schenk [00:11:49]:
Well, if you do this and and there’s a I mean, there’s the inventory of processes, but there’s also another concept called business capability models or or an a if if people know APQC is a standard process framework. What I do is when I take the processes that I identify, I map that to a standard model. And that gives me the ability to now look and say, you know, where does this process happen across different parts of the organization? Or where is technology redundant? I have the same platform doing the same functionality, but it’s implemented in 3, 4, whatever different places. Well, to to be able to rationalize it, first, you have to see it. And with this data driven framework, you could see where all those redundancies are. Now I could start, and I could have teams dive in deeper and say, why is that? Like, what do is it make sense to have these applications? Maybe there’s a valid reason. If there’s not, maybe I I could start moving that functionality into a a smaller core set of technologies, for instance, that simplifies my environment and allows me to move change faster. Or I could look and say, you know, why do I have maybe 3 procurement teams? I could create a shared service.

Michael Schenk [00:13:01]:
So I could start to the process of designing what that new organization looks like, creating a process inventory for it, and then starting start to move the people and and designing what those roles and processes look like so that now I could rationalize and and centralize some of those things.

Scott McCarthy [00:13:21]:
So when we start talking about things like, rationalize and centralized, it kinda goes back to what we discussed earlier and immediately. I I can hear people yelling and screaming. Oh, you’re you’re, you know, you’re you’re finding efficiencies, and we all know what we mean by efficiencies is, you know, excuses to, hire or sorry, fire, lay off, you know, cut workforce and stuff like this. You know? So what type of messaging should a leader have when they’re going through this, when they’re getting these types of exercises going? Like, what’s your recommendation when you come and start talking to, you know, a CEO or whatever, what type of messaging should they be pushing when they’re talking about, you know, transformation? Regardless, maybe it’s digital, maybe it’s not, but when we start talking about transformation, you know, what type of messaging should they be pushing out to their to their teams?

Michael Schenk [00:14:13]:
That’s a that’s an excellent question, Scott. So I think it’s an if an organization’s in growth mode, it’s all about doing more with the with the number of resources that you have. So so that’s one. Because now I could I could take people out of mundane and redundant tasks that maybe aren’t even making them happy because they’re just not accomplishing something at the end of the day. And I could move them towards something that’s value added service, serving customers, delivering value for the organization. And maybe at the higher level, an organization can use that extra capacity to create new products or or serve new markets or whatnot. So so I think that’s one. I think the the second thing is, you know, it’s it’s let me and we may have to cut this part because I I had a thought and I lost it.

Michael Schenk [00:15:04]:
You know, I’ll I’ll just send it there. I I I think it’s it’s all about just it you know, it’s not about thinking, you know, that jobs are gonna be eliminated. It’s more about being more efficient with the people and the resources that you have.

Scott McCarthy [00:15:18]:
That’s awesome. Actually, you bring up a great point. So what I often talk about is, you know, there there’s when there’s opportunities, there’s challenges. When there’s challenges, there’s opportunities.

Michael Schenk [00:15:28]:
That’s right.

Scott McCarthy [00:15:28]:
There’s 2 right? Those 2 things come hand in hand. And with you know, when people look at, oh, you know, you’re gonna look for efficiency, whatever, that’s a challenge. But the opportunity, you kinda highlight it without probably even realizing is like, hey. We might be able to take you out of this job you don’t like and put you somewhere where you actually want to be, on something you could be excited about doing. Exactly. Or or we might be able to put you in something experimental just to try out. We don’t you know, we’re we’re thinking about this or we we’re thinking might want this type of capability, but we kinda need to try before we buy. Yeah.

Scott McCarthy [00:16:03]:
So what do you think? You wanna come out of, you know, just simply doing the cover letters for the TPS reports? You wanna come over here and try something new?

Michael Schenk [00:16:11]:
That’s that’s exactly right. And and I wrote about in the book, there’s this Hertzberg 2 factor theory, and I kinda touched on this before. But but what really motivates an employee? And I think it’s it’s things like recognition and and understanding that they’ve contributed value to the organization and and that they love their work, etcetera. And and it’s all about focusing the work that they do in such a way that they they really feel connected with your company and and the mission. And and I’ll bring up to the the you know, from an external perspective, it’s a very competitive landscape in terms of how technology is moving and and how companies compete. And I always bring up this is a classic example of Nokia. So in 2006, Nokia had a little bit over 50% of the the mobile phone market. Well, that same year, Apple came out with the iPhone with its superior touchscreen interface and better operating system.

Michael Schenk [00:17:03]:
Nokia just couldn’t keep up. So they were they were building things the old way and wasn’t serving serving the market. Well, fast forward to 2013, Nokia had lost 90% of their market share and ended up selling their phone business to Microsoft. So completely out of it. So, you know, I I get the the the people aspect of it, and that’s super critical because we have to obviously serve our people. But but as a leader, you have to balance, are you competitive in the market relative to every every all every other player in your industry? And are you doing the right things to to make sure you’re delivering the value that your customer demands? And and as a leader, you have to you have to kinda look at both perspectives.

Scott McCarthy [00:17:46]:
No. Absolutely. So it’s interesting you use Nokia. Being Canadian, we often talk about the BlackBerry for that example. Yes. Because they they’re still they’re still they’re still live, not quite in the market share they used to be. Yeah. But, actually, like, the I prefer using Kodak example where they actually the board was actually pitched the idea of the digital camera.

Scott McCarthy [00:18:13]:
Yep. And they looked at the pitch and went, well, why would we sell digital cameras? We’re we’re in the film business. We wanna sell film because it gets us out of right? And now, well, where’s Kodak? It’s literally nonexistent. So you bring you bring up a great point, though. Sorry to cut you off there, but the point that I’m kinda driving home is that as a leader, we need to take care of our organizations because without the organization, I. E. Without the business, we we have nobody to take the lead.

Michael Schenk [00:18:49]:
Exactly. That that’s exactly right. And and, you know, the codec example, just to to say one more thing about it is, their problem is and and organizations need to look at this. You need to be able to to cannibalize your own success, and that’s the same thing. Like, it we we moved into a digital photo age, and the film industry just died. So you’ve gotta be able to look at the horizon and see this coming and start to move your organization to whatever that means if you’re Kodak, for instance, so that you could be a player in the digital age.

Scott McCarthy [00:19:22]:
Well, I like that. Cannibalize your own success. I may have to steal that line. So we we we’ve talked about the process mapping Yeah. And we’ve talked about identifying, you know, efficiencies and and such. We’ve talked a lot about, you know, messaging and how important this is and stuff like this. What what’s the next thing for leaders they need to be worried about or should be focusing in on, I should say, when it comes to the digital transformation framework?

Michael Schenk [00:19:50]:
I I think it’s let me think about this because I think I covered a lot of it. You know, I I think it’s all about execution. So if if you you know, obviously, you gotta think about what your strategy is, the competitive landscape, your own strengths and weaknesses. But a lot of these transformations fail because there’s just a lot of confusion. There’s a lot of complexity in the in the environments. There’s a lot of chaos. And how do you bring order to that chaos so that so that everybody who has a role in the the transformation understands their role, knows, exactly what they what they need to do, and and their accountabilities? And I think that’s a key for leadership is is and and you’ve you’ve got to in order to do that, you’ve got to do the hard work to document what your organization does at a at a detailed level, because there’s you know, in a lot of organizations, knowledge is focused in just a small a very small subset of sneeze. You need to go talk to Joe because Joe knows everything.

Michael Schenk [00:20:52]:
And don’t let Joe play the lottery or cross the street because if that happens, we’re in trouble. So what what you need to do is do the hard work, make that all transparent so that everybody knows everything that’s going on or at least it’s accessible in their in their at their fingertips. And I think that’s the key of of what I’m trying what I get at in my framework is is a structured approach to make everything transparent.

Scott McCarthy [00:21:16]:
I love it. And, actually, that was kind of something I have employed in the past. You know, again, military background, But, I was a part of the organization that was, what we refer to as a high readiness unit. So meaning you can get a phone call, and you’re at the door not knowing when you’re coming back home. Right? So but, you know, those they they weren’t frequent or anything like that, but, you know, they they did come. Yep. And for 2 years, quite more frequently than, 3 other years that I spent at that organization. So but at the same time, you kinda like, you know, we need to keep the ball rolling.

Scott McCarthy [00:21:56]:
We need to keep moving forward. We need to keep it, developing and stuff like that. So I implemented a change framework where I said, listen. And I used the you know, it was a super tactical example, but it’s gonna reinforce with your point. I said, guys, we’re gonna use MS Teams. And what we did was I used task planner in there. I said, here’s the you know, we made a each project a task within it and, you know, did subtasks and so this is it. Everything related to these projects, these tasks that you’re working on, put it in the task within MS Teams.

Scott McCarthy [00:22:29]:
Yep. And, yes, daunting. Yes. It’s a little bit of a pitter or pain in your butt. But when the phone call came and I have to, you know, ship you out, at least then I or someone else can go in there, and we then at least we we have the information that at least you had. And then we can, like, okay, we might not be as quickly able to get up and running and get up to speed, but at least we’re, you know, we’ll be able to be have enough information to be dangerous per se.

Michael Schenk [00:22:58]:
Exactly.

Scott McCarthy [00:22:59]:
And and and run with it. So it definitely is a huge point for sure, that transparency bit.

Michael Schenk [00:23:04]:
Exactly. And and organizations and and I I wrote about this in in an article, but we generate so much data, both external facing about our customers and the markets, but also internal facing about, how our organization set up and run. And part of of winning in this new data driven ages is harnessing that data, making it, intel making turning that data into intelligence that everyone can use as a as a platform so we’re all on the same page in terms of where we’re going in these transformations.

Scott McCarthy [00:23:39]:
No. That’s great, Michael. That’s great. Hey, before we wrap up here, just a couple of quick last questions. Yeah. One one is, you know, is there anything that we haven’t hit on yet that you think would be super beneficial to the listener out there right now?

Michael Schenk [00:23:53]:
Yeah. I think this and and this probably goes into AI. But one thing that I think will probably come in the future as it as it relates to AI is is some a concept called, digital twin. And in in AI today, a lot of it is on the peripheral of processes. So I could I could send it text, and it can help me write an email. I could send it a contract, and it’ll tell me if the terms are favorable or what I need to be concerned about, etcetera. But where I think this is going is if you could educate AI on all the nuances of how your how your business is run, so where are the inefficiencies, where are the dead bodies, etcetera, now you could and that’s that’s what a digital twin is. It’s a virtual replica of your real world environment.

Michael Schenk [00:24:37]:
So you’re building this model and you’re you’re, you’re, backing it with an AI engine. So now it knows everything about your environment. Now if you could feed it data signals about how certain things are working or which applications or or vendors or customer touch points or or whatnot, now it could start help it could start to help you analyze everything about your business so that you could drive whatever metric you’re looking for, to excellence. So, you know, what is my customer satisfaction and and how is the touch points? Do I have any any risks that it may turn into issues that I need to be wary of and and maybe catch before they have have impact? Do I have inefficiencies and waste that, I I need to to to bring out? And, I I think that’s gonna be super impactful to businesses, and and I think my framework is one that that can help organizations build that that digital, or that virtual model, by documenting every process, by documenting everything your organization does, and now feeding it data in that context. I think it has the power to transform how organizations operate.

Scott McCarthy [00:25:48]:
I love the twinning aspect. And believe it or not, I I have a I have a twin. So I do have my own bot referred to as ScottBot, and it is a leadership bot. And everything I produce is a as regards to, you know, leadership and and such, it it knows, and it’s been trained on. So I’ve been training this thing now for, oh, I would say probably close to 2 years. And, you know, you can you know, for the listener there, this is part so this actually is part of, the package you get when you sign up to my, mastermind community, which is called the Leader Growth Mastermind. So you get access to the Scott bot, and you could literally go in and say, hey. I’m doing a digital transformation, running my team through a digital transformation.

Scott McCarthy [00:26:34]:
What are you know, give me a framework of steps, or, hey. Can you tell remind me of what Michael Shanks, digital framework steps are? And it’ll take what we’ve discussed today and and spit it out to you as the leader. Love it. And and and be able to, you know, just go tick tick tick, hear all the different steps that you need to to consider. So Love it. Yeah. It it’s awesome. It’s a awesome tool.

Scott McCarthy [00:26:59]:
I actually use it myself because, you know, I can’t remember everything that I’ve been doing this for close to 8 years now. I can’t remember everything that’s been discussed on the podcast and everything I’ve learned. So, or or, you know, or discuss with the with the members or with the guests, I should say. But it is a fantastic fantastic way to, you know, identify this stuff or use it as a resource. Right? I’m glad. Before we wrap up, just another question for you. You know, for the listener out there, what’s one thing that they could do today or tomorrow when they’re listening you know, once they’re listening to the show and push them, their team, their their organization from your perspective a little bit closer to that peak performance level. Like, get them a little bit moving, a little bit better.

Michael Schenk [00:27:45]:
I think I think it comes down to, as I mentioned, doing the hard work. So if it and, you know, this my framework could be done at an enterprise level. So you stand up a a process center of excellence or some group that that does this, that documents processes, that maintains it, that that builds all this data integration, that uses it for various use cases. And that’s at that’s at one level where you’re you’re getting you’re you’re making a a leadership commitment to this. You’re putting the investment in because you see that how this can transform your organization. That’s at one end. But at at the lower end, just an individual level, you know, take the time and document. Like, if you’re working on requirements, take the time and document everything that that business does so that you’re on the same page of what they’re doing and then how those requirements impact them, and then share those with others.

Michael Schenk [00:28:34]:
And if you could do that, you you bring order to the chaos. You put more structure into it. You could have better conversations with your business leaders or other stakeholders. And, you know, if you could deliver success in that, now you could take that story and and, tell it to other other leaders within your organization. And, hopefully, that, that builds within your organization. You could get, more momentum to adopt something like this.

Scott McCarthy [00:29:00]:
That’s awesome, Michael. Hey, man. Thank you. Appreciate you you talking to me, talking to the audience. So much great tidbits, so much timely tidbits for me. I’m gonna have to, revisit this podcast episode. I gotta I don’t have to recrack open your book, by the way. Thank you for a copy.

Scott McCarthy [00:29:16]:
Appreciate that. Of course. Before we do sign off here, final question to show, where can people find you, follow you, shameless plug, how about it? It’s all but you now.

Michael Schenk [00:29:27]:
For sure. For sure. So, so firstly, you could find my book on Amazon. It’s called Digital Transformation Success. 2, I am very active on LinkedIn. So Michael Schenk, you could find my posts, and interact with me, reach out to me, and and we could, set up a conversation. And then 3rd, I have a a a consulting company, and I’m rolling out training. And, you could learn everything about that at processinventory.com.

Scott McCarthy [00:29:57]:
Awesome. And for the listeners always, it’s easy for you. So all you need to do is just go to lead dump boss.comforward/theepisode number for this episode. Don’t know what number it is yet because I haven’t produced done the final production, but that holds true for all the episodes, for checking out the show notes because for every single episode, I put all these links in there to make it easy for you. And most importantly, Michael, it’d be able to help them get to you if they want to. So again, my friend, thank you for taking time. I appreciate you. And, yeah.

Scott McCarthy [00:30:25]:
Thanks for coming out.

Michael Schenk [00:30:26]:
Thanks for having me, Scott. This is great.