The digital transformation of organizations begins with an internal cultural shift promoting agile strategies, a hunger for innovative practices and the ability to change direction quickly.
As serial entrepreneur James Bilefield pointed out in an interview with McKinsey, culture change can be the biggest challenge of any major organizational shift:
“In my experience, culture is the hardest part of the organization to change. Shifting technology, finding the right talent, finding the right product set and strategy—that’s all doable, not easy, but doable. Hardest is the cultural transformation in businesses that have very deep legacy and cultural roots.”
That all seems taxing enough. Now imagine the organization in question has more than 100 departments and 250,000 employees. That’s exactly the challenge that the Canadian Digital Service (CDS) is facing.
CDS is a team working within the Treasury Board Secretariat to help the government design and build better services. Structured on the delivery of useful tools, the team is also helping government departments to build greater capacity for digital problem solving. The CDS team retains control of their communication tools allowing for their work to be shown out in the open. And through the government’s Interchange Program, they’re able to recruit private sector talent on short-term assignments.
Pascale Elvas, Director of CDS, has an up-close view of the government’s hunger for change and how many roadblocks there are along the way.
“We’re trying to get departments thinking about digital differently,” says Elvas. “We want them to really understand their users, the citizens that they serve and to unpack the problem.“
Traditionally, the government puts out a request for proposal (RFP) — the average size of the RFP and bids related to it is 8,000 pages long — detailing its requirements, a solution and asking vendors to build that solution. However, this traditional method is far from agile project development.
“By the time it’s deployed, it’s already obsolete and there’s no room for course corrections along the way,” says Elvas. “We’re trying to get departments thinking about digital differently. We want them to really understand their users, the citizens that they serve and to unpack the problem.”
Since Elvas joined CDS a year ago, the organization has grown from three people to 45, they get more than 40 requests from departments per month, and they’re recruiting just to keep up with demand.
Elvas says a change in perspective within government departments is at the root of the work being done by CDS:
“It’s getting departments thinking about digital in a different way, and not necessarily starting with an end-state solution from the outset. So allowing the discovery work to happen, to talk to real users along the way, to iterate and to adapt and course correct based on the insights gained through that work.”
Elvas and her team at CDS are advocating for whole new methods of addressing and carrying out projects, reworking the culture around tasks within the government, in order to put the needs of the citizen at the forefront.
“Part of this work is about culture change: It’s about breaking building projects down into smaller chunks, it’s about building microservices, it’s about using different methods, it’s about moving away from waterfalls to agile, it’s about active prototyping and constant iteration, moving to user needs over government needs, and iterating along the way based on user feedback.”
CDS follows the efforts made by both the Government Digital Service in the U.K. and the United States Digital Service to transform government in the 21st century. While everyone can agree that governments around the world need to revolutionize their use of digital tools to improve user experiences, the way forward can often appear muddy at best.
In one ongoing project, Natural Resources Canada (NRCan) is using CDS to open up data on household energy use in a transparent and reusable way. The initiative is particularly insightful as an early CDS project, as it involves working with legacy database systems, and includes user research sourced from various, unique data sets — specifically, provincial and municipal governments.
The expectations NRCan approached the project with, the kind of solution they already had in mind, changed radically after working with CDS to address the problem with a user-based mindset.
“When NRCan came to us,” says Elvas, “they came to us with a very specific solution in mind. NRCan wanted us to build them a database. They already had an internal database, so they wanted a database that was searchable by the public and that was more of a client-facing version of their internal database.”
“Now in doing the discovery work and talking to department officials and understanding their business, we discovered that what they were asking for wasn’t exactly what they needed. Building an API will enable all kinds of new services to be built and for private sector partners to use the data to do all kinds of other neat things — and open the door for much deeper service redesign work.”
CDS is hoping they can build on the success of projects like the API for NRCan to get government departments to reassess how they approach digital problem solving.
“We hope that by demonstrating an alternative way of doing things, we’ll move away from the traditional waterfall approach of launching an 8,000 page RFP with set requirements to really using service design and other methods to unpack the problem, understand the users and to build smaller solutions that can be iterated along the way.”
DX survey reveals high levels of enterprise-consumer disconnect
A new survey looks at the global investment and effectiveness of businesses’ digital transformation efforts. The survey shows a disconnect between enterprise investments and consumer experiences.
The survey is titled “The Kony Digital Experience Index (KDXi) Survey”, and the main takeaway is that while businesses have invested nearly $5 trillion on digital transformation initiatives, only 19 percent of customers have reported any significant improvement in the experiences offered to them.
The Kony Inc., survey included 1,600 responses from business leaders and customers across the U.S., Europe and Asia. The responses were used to gauge the target digital project implementation efficiencies in banking, retail, utilities and healthcare. The research showed a disconnect on both sides and a potential misalignment around investment priorities, and highlighted the impact this could potentially have for businesses.
Among other things, the study found that consumers are underestimating the number of businesses that are investing heavily in every customer experience outcome by at least 50 percent. This means that while business are spending money on digital transformation projects, consumers are not necessarily noticing a difference.
The survey also reported that 62 percent of consumers say that they spend more with companies that offer effortless digital experiences, while 56 percent of consumers indicate that they will switch if a retailer does not deliver the digital experience they want. This signals the necessity for businesses to continue to invest in the digital experience for the customer. However, in doing so they need to start making an impact.
As the report states: “It is critical for businesses to have a greater focus on understanding and aligning with customer needs and priorities to ensure that they are driving the agenda for the digital technology they create and fund.”
In terms of what businesses should be doing, the basis of a strategy includes:
- Embracing innovative thinking, ambition and a commitment to improvement
- Prioritizing investment in digital outcomes, not digital initiatives
- Getting their foundations right before evolving
- Building for now, but investing in a roadmap that leads to the future
- Saying no to silos and yes to integrated digital strategy
- Setting a customer-centered digital transformation agenda
This means companies should work to provide web experiences that make it easier for users to navigate, and for websites to be more engaging and intuitive to use. There also needs to be comprehensive online and mobile facilities so that users can do everything online or via their mobile device. Furthermore, to truly step forwards, businesses need to begin offering digital experiences such as AI, chatbots and augmented reality.
Summing this up, Thomas E. Hogan, chairman and CEO, Kony, Inc. states: “Improvements in costs and efficiencies are always welcomed and clearly important to project funding, but the real returns and real impact of digital starts and stops with its impact on the customer experience.”
‘Ethical AI’ matters — the problem lies in defining it
News that Microsoft will invest around $1 billion to examine ethical artificial intelligence signals that the tech sector is thinking deeper about the ethics underlying transformative technologies. But what is ethical AI?
Microsoft is to invest around $1 billion into the OpenAI project, a group that has Elon Musk and Amazon as members. The partners are seeking to establish “shared principles on ethics and trust”. The project is considering two streams: cognitive science, which is linked to psychology and considers the similarities between artificial intelligence and human intelligence; and machine intelligence, which is less concerned with how similar machines are to humans, and instead is focused on how systems behave in an intelligent way.
With the growth of smart technology comes an increased reliance for humanity to place trust in algorithms, that continue to evolve. Increasingly, people are asking whether an ethical framework is needed in response. It would appear so, with some machines now carrying out specific tasks more effectively than humans can. This leads to the questions ‘what is ethical AI?’ and ‘who should develop ethics and regulate them?’
AI’s ethical dilemmas
We’re already seeing examples of what can go wrong when artificial intelligence is granted too much autonomy.Amazon had to pull an artificial intelligence operated recruiting tool after it was found to be biased against female applicants. A different form of bias was associated with a recidivism machine learning-run assessment tool that was biased against black defendants. The U.S. Department of Housing and Urban Development has recently sued Facebook due to its advertising algorithms, which allow advertisers to discriminate based on characteristics such as gender and race. For similar reasons Google opted not to renew its artificial intelligence contract with the U.S. Department of Defense for undisclosed ethical concerns.
These examples outline why, at the early stages, AI produces ethical dilemmas and perhaps why some level of control is required.
Designing AI ethics
Ethics is an important design consideration as artificial intelligence technology progresses. This philosophical inquiry extends from how humanity wants AI to make decisions and with which types of decisions. This is especially important where the is potential danger (as with many autonomous car driving scenarios); and extends to a more dystopian future where AI could replace human decision-making at work and at home. In-between, one notable experiment detailed what might happen if an artificially intelligent chatbot became virulently racist, a study intended to highlights the challenges humanity might face if machines ever become super intelligent.
While there is agreement that AI needs an ethical framework, what should this framework contain? There appears to be little consensus over the definition of ethical and trustworthy AI. A starting point is in the European Union document titled “Ethics Guidelines for Trustworthy AI“. With this brief, the key criteria are for AI to be democratic, to contribute to an equitable society, to support human agency, to foster fundamental rights, and to ensure that human oversight remains in place.
These are important concerns for a liberal democracy. But how do these principles stack up with threats to the autonomy of humans, as with AI that interacts and seeks to influencing behavior, as with the Facebook Cambridge Analytica issue? Even with Google search results, the output, which is controlled by an algorithm, can have a significant influence on the behavior of users.
Furthermore, should AI be used as a weapon? If robots become sophisticated enough (and it can be proven they can ‘reason’), should they be given rights akin to a human? The questions of ethics runs very deep.
It is grappling with some of these issues that led to the formation of OpenAI. According to Smart2Zero, OpenAI’s primary goal is to ensure that artificial intelligence can be deployed in a way that is both safe and secure, in order that the economic benefits can be widely distributed through society. Notably this does not capture all of the European Union goals, such as how democratic principles will be protected or how human autonomy will be kept central to any AI application.
As a consequence of Microsoft joining of the consortium, OpenAI will seek to develop advanced AI models built upon Microsoft’s Azure cloud computing platform. There are few specific details of how the project will progress.
Commenting on Microsoft’s big investment and commitment to the project, Microsoft chief executive Satya Nadella does not shed much light: “AI is one of the most transformative technologies of our time and has the potential to help solve many of our world’s most pressing challenges…our ambition is to democratize AI.”
Do we need regulation?
It is probable that the OpenAI project will place business first, and it will no doubt seek to reduce areas of bias. This in itself is key to the goals of the partners involved. For wider ethical issues it will be down to governments and academia to develop strong frameworks, and for these to gain public acceptance, and then for an appropriate regulatory structure to be put in place.
Digital transformation is causing C-suite tensions
Digital transformation is not only about technology, it’s also about changes of practices which need to diffuse through an organization’s culture. This needs to be begin at the top. A new report finds C-suite discord is a block to effective DX processes.
Rapidly undergoing effective digitally transformation puts a strain across C-suite relationships, according to a new survey of major enterprises. The report has been produced by business management software provider Apptio, and commissioned by the Financial Times. Titled “Disruption in the C-suite“, the report is draws on the findings of a survey conducted with 555 senior executives, (50 percent occupying CxO roles). The executives were based in major economic nations: Australia, Denmark, France, Germany, Italy, Japan, the Netherlands, Norway, Spain, Sweden, the UK and the U.S.
The report finds that while digital transformation leads to greater collaboration across different business functions, it can also create blurred responsibilities across the C-suite. This crossover carries the risk of key issues being missed; it also serves as a source of tension between top executives, as traditional functions merge and territorial disputes are triggered. As a sign of such differences, 71 percent of finance executives found the IT unit within the C-suite should be seeking greater influencing skills to better deliver the change their business requires.
Team deficiencies found in the survey included not having key performance indicators in place with to measure digital transformation progress. Also, the CFO was found to be the least deeply aligned member of the C-suite team, especially not being aligned with the CIO.
To overcome these divisions, the report recommends that organizations invest time in ‘bridging the trust gap’ between functions and seek to ease tensions, especially between the offices of the CIO and the CFO. An important factor is with establishing which function has accountability. Another measure that can be taken is with ensuing that data is more transparent and where key metrics are issued in ‘real-time’.
The report also charts how digital transformation is being fully embraced, as leaders at global brands are embracing processes and technologies like artificial intelligence, workplace reskilling, cloud computing, agile working and de-centralized decision-making.
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