Digital Disruption is commonplace these days. It occurs so frequently that when it happens it’s not as impressive as it once was. However, it’s an incessant reminder to the C-suite of many traditional organizations of the need to transform in order to keep pace with a market that is unpredictable and in an environment that is far from stable.
Alfredo C. Tan, the newly-minted Chief Digital and Innovation Officer at WestJet, has been tasked with driving this new direction for the Canadian airline as it moves to become a global success story. In just two decades, WestJet established more than 13,000 employees, over 100 destinations in North America, Central America, the Caribbean and Europe and an additional 175 destinations in over 20 countries through partnerships.
As with almost all industries, the global tourism and travel landscape has witnessed significant changes. This $7.6 trillion sector has seen a pronounced shift in its business model, in part because of disruptors like Airbnb and Uber. The airline industry will not be immune. Crippled by legacy operations and heavy regulation, the desire to transform is not a feat that is surmountable in a short period of time.
This 2017 report published by the Centre for Aviation acknowledged these changes:
Above any other industry, airlines are captured within an arcane regulatory framework designed 70 years ago, and whose purpose was to achieve little else than protect against new entry. It is a capital intensive heavily unionized industry, and it is dominated by legacy models still focused on buying and flying expensive metal. But at its heart the airline offering is just another consumer retail product. As such, it is just as susceptible to upheaval… The airline industry as we know it will be unrecognizable by 2025, as fundamental features are uprooted. The process will be accelerated because of the confluence of disruption in each of the key aspects of commercial aviation: flying and selling.
I had the pleasure of sitting down with Alfredo C. Tan to explore his journey to WestJet and his vision to instigate some necessary upheaval in an already accomplished organization.
Obsessed to Join the Movement to Empower the Internet Generation
Alfredo remembers Cisco Systems “Empowering the Internet Generation” commercials. The powerful message depicted a world transformed by this eventual connectivity across networks and markets. As a student of forensic science and biology at the time, he felt he had missed the opportunity to be part of this incredible wave of dot.com companies being born.
When he graduated, he read an article in Fortune Magazine about top business school graduates turning down blue chip companies to go chase the new Gold Rush in Silicon Valley. Not one to let another opportunity go by, Alfredo learned how to code and immersed himself in computer and technical courses. Soon he landed at Bell Nexia in Systems Engineering and Design where he eventually led a team of engineers to help restore connectivity between telcos in NYC and Toronto during the World Trade Centre disaster. Along the way, Alfredo had looked to mentors willing to teach him:
Most things in the professional world you can excel at without a formal education in that field. With enough mentorship, intellectual curiosity, aptitude, grit and passion you can find success almost anywhere.
Whether it was Bell Canada where he learned to build large scale strategic alliances, enterprise marketing and strategy, or at MSN.ca where he was introduced to the disruptive world of online advertising, media sales and internet marketing, or at Yahoo! Inc. working on Mobile, Search, and corporate partnerships, Alfredo’s journey exemplified this learning mantra throughout his career.
Facebook: The Platform that Changed Everything
If you could see the future and know within a decade your company has just entered the S&P500, you would not hesitate to join. In 2008, this was hardly evident, and Alfredo grappled with the decision to leave an amazing job with endless opportunities within a company that was still an internet powerhouse for a social network that was perceived to be overvalued, had no clear monetization strategy, no real market differentiator and one that could have easily gone by the wayside like MySpace or Friendster. The defining moment for him came when he returned from a trip in 2008. As he remembers,
Before I returned from a trip in 2007, I exchanged email addresses among those I had just met. And by the time I went on a trip in 2008, everyone exchanged ONLY Facebook IDs. Within 12 months the movement from email to Facebook was unreal. What Facebook was really building was identity at scale. What it really has is people – 2.2 billion people. And as it continues to grow, it continues to be unassailable.
He chose to venture to Facebook despite all the guidance and advice otherwise. He remained there for 8 years, where he spent the last two years working with the leadership teams in the high growth markets of South East Asia and Latin America. The learnings were life changing and career defining.
Why Can’t Traditional Businesses Adapt to Market Changes?
For all the gains Facebook and social networks have made globally, business has still not fully embraced the changes required to keep pace with the dynamic market.
Alfredo points to disruptors like Google, Netflix, Facebook, Microsoft, Uber, Apple and Amazon. These companies have a different way of building their innovation culture. What’s common among them?
- They move with a sense of urgency
- They worship velocity
- They are unafraid of change
This is a polarized view of how traditional companies operate.
As the Chief Digital and Innovation Officer of WestJet, Alfredo’s experiences make him ripe for the challenge ahead. WestJet recognizes the need for change and a culture that supports the changes required. As a traditional company, it behaves much differently than the environments Alfredo was used to. Coming from the tech space, there is a common understanding, a common way of thinking because technology isn’t something you need to convince people to invest in.
It’s hard-coded in the DNA of the company.
In most traditional companies digital is not foundational to the success of the company. Success comes from other practices within the organization. The challenge becomes convincing a group of people in a company to invest in what you believe to be true.
Alfredo would argue the majority of leaders and employees understand the world has dramatically changed but it’s not clear how digital could be a competitive advantage. There’s a process in education and winning the hearts and minds of people to “believe it before they see it”. The executives were sold on change as the new normal at WestJet. Alfredo was inspired by the genuine interest and motivation by the employees to make this a reality.
WestJet’s First Ever Hackathon
Thinking differently takes time. You can’t make the assumption that people understand simply by saying. Just as he continues to learn about an infinitely complex industry, Alfredo and his team, in turn, need to educate and tell the story in a way that helps the entire company understand the impact of digital and innovation on the business, without the jargon and without the hype.
This came to fruition soon enough. WestJet’s VP of Loyalty, d’Arcy Monaghan and Rhonda Reynolds, Product Development Manager, approached Alfredo about developing solutions for the premium traveler, which could then trickle down to all of WestJet’s guests. Alfredo had only been in the job a few weeks and didn’t feel he and his already-constrained team were in a position to solve the problem on their own.
While the original idea was to hold a brainstorm among a group of people from various departments, it quickly morphed to include some of Alfredo’s friends from the tech industry. As more people heard about it, the more they wanted to participate. The kernel grew into this idea of a full day hackathon, a competition to develop a seamless premium guest experience and #HackInTheHangar was born.
Alfredo invited some of the biggest tech companies and systems integrators like Adobe, Facebook, Amazon, Deloitte Digital, Google, Panasonic Avionics, Twitter, LinkedIn, Snapchat, Hootsuite, IBM, Salesforce, Huge Inc. In all, 17 companies and their 120 people from technical, creative and design backgrounds were paired with 37 WestJetters and a dozen of WestJet’s premium travelers to participate in this one-day event. As Alfredo points out:
The initial, very simple idea gave birth to this movement in the company which aimed to answer a few key questions:
- How can we show 13,000 people that we can solve problems in a different way and co-create new experiences?
- More importantly, at a greater velocity:
- How do we get non-technical people to solve problems in a hack culture?
- How do we gain the respect of the global tech community to be be inspired and partner with us in our digital and innovation mandate and co-create the future of travel?
- How do I win the support from key executives in the organization who I would need in order to succeed?
The judges for the event were chosen with care and purpose. The objective was to demonstrate the amazing thinking and solutions that were developed within one day, and to have them understand and evangelize Alfredo’s vision for the company.
The Digital Company that Just Happens to Fly Planes
By the end of the day, the executives at WestJet needed little convincing. Louis Saint-Cyr, the Vice President of Guest Experience indicated that airlines with legacy behaviors limit what they can do for the customer. The hackathon revealed WestJet’s need to align with what will be an increasingly digital guest journey. He validated the industry’s current push and pull between innovation and regulation which has produced operating limitations. Despite this, Louis saw huge possibilities:
This hackathon revealed how we can innovate around these structural limitations. How do we digitally empower the front lines and augment soft skills WestJetters are known for with technology to tailor guest experiences?
…Think of the hurdles that go into a customer’s travel journey: the time to get to the airport, the waiting times for bags, the check-in – things that can add stress. By leveraging the emotional framework of social media and aligning it to the guest journey, we can address these hurdles in a direct way to transform air travel for guests.
…Overall, by amalgamating guest profiles with their expectations to what they’re experiencing on board, on the website, and in the airport we can make significant strides in the guest experience.
CEO of WestJet, Ed Sims closed the day and declared that in 24 months, WestJet will be a digital company that happens to fly planes. It sent a signal to the tech community and the leadership team that this hackathon wasn’t just a side project; this will literally be the future of the company.
WestJet’s first hackathon represents a cultural shift toward more innovative thinking at WestJet. We will move fast, learn fast and build fast. We now have an opportunity to do things differently and to innovate in the travel space like has never been done before. Our goal is to have products way ahead of guests’ expectations.” ~Ed Sims, WestJet President and CEO
Alfredo’s next steps?
The hackathon and the thinking it surfaced are all theatre and theory until you start to build. We have to build the capabilities that we saw were compelling plus other capabilities we will investigate in the future. Innovation is a cultural mindset more than anything else but it comes from building.
These brilliant ideas will lay the groundwork for developing those capabilities over the next five years. In addition, given the incredible demand to repeat more events after the hackathon WestJet is planning to host an annual event with different themes.
In a short period, the acceptance the hackathon generated, instilled an idea to embed the hack culture into the company as a way of addressing problems and empowering cross-functional groups to self-organize and invent solutions in a confined period of time.
We’ll find a way to make it pervasive in the organization so a flight crew member who wants to fix a process can gather a group of people to create a solution then present that for budget approval in a matter of days. It’s bringing the hackathon to smaller scale, smaller team sizes, with less fanfare. Hopefully, that will influence 13,000 people to start to think this way.
We are just getting started… In the end, I would have failed in my job if I was the only one responsible for the digital and innovation culture. It’s for all WestJetters to embrace it and the future.
For someone whose mantra is to be curious and continue learning, Alfredo C. Tan, in the first 90 days, has pushed the organization to think differently, learn new ways of doing things, and challenge the limits of their imagination.
Hessie Jones is the Founder of ArCompany advocating AI readiness, education and the ethical distribution of AI. She is also Director for the International Council, Global Privacy and Security by Design. As a seasoned digital strategist, author, tech geek and data junkie, she has spent the last 18 years on the internet at Yahoo!, Aegis Media, CIBC, and Citi, as well as tech startups including Cerebri, OverlayTV and Jugnoo. Hessie saw things change rapidly when search and social started to change the game for advertising and decided to figure out the way new market dynamics would change corporate environments forever: in process, in culture and in mindset. She launched her own business, ArCompany in social intelligence, and now, AI readiness. Through the weekly think tank discussions her team curated, she surfaced the generational divide in this changing technology landscape across a multitude of topics. Hessie is also a regular contributor to Towards Data Science on Medium and Cognitive World publications.
This article solely represents my views and in no way reflects those of DXJournal. Please feel free to contact me firstname.lastname@example.org
4 ways to plan for the post-pandemic normal
When the crisis eases, we will have entered a new digital normal. Your strategies need to reflect this shift: Consider these factors as you plan for the longer term.
When I sat down to write this article, a follow-on to my previous article on common leadership oversights on the path to digital transformation, the coronavirus’s threat to global business had not reached the magnitude that we feel and see today. In a few short weeks, the pandemic has forced a new virtual work reality on businesses and entire operating models have been shifted – and in many cases, upended.
A business environment that is changing so dramatically and rapidly requires speed, innovation on the fly, and the need to scale thinking beyond anything we might have previously imagined. Now is not the time to back-burner digital initiatives but to ramp them up.
Now is not the time to back-burner digital initiatives but to ramp them up.
When the crisis eases, we will have entered a new digital normal. The strategies we use to run, change, and staff the business will need to reflect this shift. Consider the following factors as you plan for the longer term:
1. The right financials
Any business that isn’t digital by now likely won’t be a business for long. Learning to embrace and adjust is imperative. Continuing – or starting – a digital transformation will be more important than ever, and you’ll need to rethink your business’ capital allocation strategies for digital initiatives and the staffing that supports them.
To figure this out, become best friends with your finance team and think for both the short- and long-term. In the current climate, it can be easy to be either too short-sighted or too far-sighted, but you need to plan for the next week, month, quarter, year, three and five years.
Become best friends with your finance team and think for both the short- and long-term.
Consider how your company may bounce back from the pandemic when stay-at-home orders are lifted, kids go back to school, and consumers begin to mobilize again: We will have entered an entirely different digital world, with new digital expectations from consumers. Is there potential for a rapid and significant surge, followed by a normalization? Will you be facing a slow rise? Digital transformation funds need to be allocated to react appropriately to these various scenarios; staffing discussions should follow based on these decisions.
2. The right tools
It is likely that at least some of your employees will remain virtual, even when the majority can get back into the office. How will you support them? You may have sacrificed some tools or technologies in your move to quickly get employees out of your building and into their homes; you may have also overpaid for the sake of quick deployment.
You’ll need to rework your strategy for the long term. This could include better or more consistent access to networks and servers, the capacity to host formal business meetings online, new portable equipment, virtual collaboration and communication software, and more.
For many, this will require working with your corporate legal team to change their thinking. Where they may have once been risk-averse for the sake of the business, they will now need to take smart risks, also for the take of the business. State your case, find common ground, and move forward.
In some particularly dire situations, you may even need to become comfortable with making decisions first and asking for permission later.
3. The right staffing
You’ll need to continue to make smart staffing decisions – quickly. You likely have three types of talent available:
- Employees who are great at running the business
- Employees who are hungry for more
- New talent that may not yet exist in your business but needs to be brought in
Unfortunately, this global crisis may have created gaps in your workforce.
Identify the individuals in the first two groups and work with your talent management team to assess whether you need to advance digital investments previously planned for. Do these individuals have the right type of skills for their teams? Are they collaborative and communicative? IT cannot work in a silo, and team members need to be able to communicate what they are doing and why, and be clear on how their actions are aligned to larger goals.
When you’ve completed this review, identify the additional skills you will need for the future. This might include teams familiar with building out cloud deployments or working with microservices, etc. Push the rest of your leadership team to break through capital allocation constraints to bring in new employees who not only have the right experience but also can quickly teach your existing teams on new tools organically.
4. The right brand permission
As you work through your accelerated digital transformation, you’ll start to think about your business as a truly digital brand. In fact, you might already think so, simply because you’ve been able to get your staff up and running remotely.
But is this the perception all your stakeholders have? According to the Yale School of Management, “Brand permission defines the limits of customers’ willingness to accept a familiar brand name in new marketplace situations.” For example, you can’t simply say, “We are digital now, world!” and expect your market to immediately accept that if you haven’t been digital historically. You need to earn this right.
You can’t simply say, “We are digital now, world!” You need to earn this right.
Brand permission is something you and the rest of the company will need to work on – largely focused on delivering useful and impactful digital products and services – in order to attract the new talent you need. Start thinking about this now.
The global pandemic has thrown us into an entirely new world. Business leaders can no longer rest on their laurels and, certainly, can no longer put off or draw out a digital transformation. Making the right decisions now will help to ensure your business is positioned well when this crisis passes.
As Chief Digital Officer of Agero, Bernie Gracy brings more than 30 years of technology experience helping drive new product/platform introduction, client delivery, and the establishment of new software-enabled business models.
In his role, Gracy is responsible for all aspects of product and technology development, architecture, infrastructure, and innovation for a rapidly evolving ecosystem powered by digital, mobile, the cloud, location-based services, and IoT.
Five key trends shaping the application landscape
According to application services/application delivery company F5 Networks, 98% of organizations depend on applications to run or support their business — hardly surprising considering that most organizations have some version of a digital transformation plan.
In their new 2020 State of Application Services Report, F5 has found that most organizations have entered the second phase of DX, defined as the integration of automated tasks, “and taking advantage of cloud-native infrastructures to scale the process with orchestration.”
As Lori MacVittie, Principal Technical Evangelist, Office of the CTO at F5 Networks explains in a blog post about the rise of cloud-native architectures, the average enterprise app portfolio is now at 15% modern, microservices-based applications.
“That’s now more than the stalwart 11% of monolithic / mainframe-hosted applications,” she adds. “Considering reports of extreme backlogs for new applications in every industry, that modern apps have consumed such a significant percentage of the corporate portfolio is nothing short of impressive.”
Based on a global survey of nearly 2,600 senior leaders from various industries, company sizes, and roles, F5’s report outlines five key findings on the trends shaping the application landscape, “and how organizations around the world are transforming to meet the ever-changing demands of the digital economy.”
1. 80% of organizations are executing on digital transformation—with increasing emphasis on accelerating speed to market.
As organizations work to scale their DX efforts via a digital footprint with cloud, automation, and containers, “it is time to manage the application portfolio like the business asset it is.”
“Organizations able to harness the application (and API) data and insights generated will be rewarded with significant business value.”
2. 87% of organizations are multi-cloud and most still struggle with security.
27% of respondents reported that they will have more than half of their applications in the cloud by the end of 2020.
But despite the crucial importance of applications to business strategy, “organizations are much less confident in their ability to withstand an application-layer attack in the public cloud versus in an on-premises data center.”
When F5 asked how organizations decided which cloud is best for their applications, 41% responded that it was on a “case-by-case, per application” basis — an important strategy, given the uniqueness of each application and the purpose it serves for the business.
“It is imperative to have application services that span multiple architectures and multiple infrastructures,” outlines the report, “to ensure consistent (and cost-effective) performance, security, and operability across the application portfolio.”
3. 73% of organizations are automating network operations to boost efficiency.
Process optimization is a key motivation for DX efforts, which makes it unsurprising that most organizations are automating their network operations. The goal? Consistent automation across key pipeline components: app infrastructure, app services, network, and security.
“Despite the fact that network automation continues to rise, we are still a long way from the continuous deployment model necessary for business to really take advantage of digital transformation and expand beyond optimization of processes to competitive advantage in the marketplace.”
Respondents report that the most frequent obstacles to continuous deployment are “a lack of necessary skill sets, challenges integrating toolsets across vendors and devices, and budget for new tools.”
4. 69% of organizations are using 10 or more application services.
With the maturation and scaling of cloud-and container-native application architectures, “more organizations are deploying related app services, such as Ingress control and service discovery, both on premises and in the public cloud.”
One of the most widely deployed application services are those largely dealing with corporate and per-application security. “For the third year running, respondents told us by a wide margin (over 30 percentage points) that the worst thing they could do is deploy an app without security services,” details the report.
5. 63% of organizations still place primary responsibility for app services with IT operations, with more than half moving to DevOps-inspired teams.
“It’s also no surprise to find that as organizations transform from single-function to modern ops-oriented team structures,” adds the report, “responsibility begins to shift from IT operations and NetOps to SecOps and DevOps.”
One reason why? The shift of application services into modern architectures. “DevOps teams are intimately involved with the CI/CD pipeline, which, for cloud- and container-native apps, includes a growing portfolio of application services such as ingress control, service mesh, service discovery, and good old-fashioned load balancing.”
DX Journal covers the impact of digital transformation (DX) initiatives worldwide across multiple industries.
Digitized and digital: Two sides of the digital transformation coin
According to a research brief out of MIT, thriving in the digital age means undergoing two distinct transformations: Digitization, i.e. the incorporation of digital technology into core operations like accounting and invoicing, and becoming digital — “developing a digital platform for the company’s digital offerings.”
While both of these require companies to embrace emerging technologies, these present two distinct challenges, each with a differing set of rules and strategies. As explained by Sara Brown from the MIT Sloan School of Management, “Becoming digitized relies on traditional business methods. Becoming digital requires breaking old rules and embracing new thinking.”
Digitization relies on the company’s operational backbone, which supports core operations — i.e. how a company delivers goods and services, maintains its books of record, and completes essential back office processes, explains the research brief. Traditionally, base technologies for these were ERPs, CRMs, and core banking engines. Today, though, it’s likely software-as-a-service (SaaS).
At the same time, becoming digital means creating a digital platform — “a foundation for a company’s digital offerings and their rapid innovation.” Creating speed and innovation, “this platform, a combination of different software components that can link with partners and connect with customers, enables a company to quickly develop and add new digital offerings, and targets revenue growth,” explains Brown.
When it comes to managing both sides of this digital coin, decision-makers must manage leadership, operational, and cultural differences, Brown says:
Leadership: For digitization, leadership is firmly in place, making clear decisions, outlining processes and standards, and ensuring adoption success.
For a digital platform, however, top-down decision making stands in the way of success. Trusted teams are in the driver’s seat, innovating and implementing new ideas. It’s up to management to define an overall digital vision.
Operational: “Changes to the operational backbone can be planned and evaluated using traditional methods like metrics and customer satisfaction,” writes Brown. On the digital platform side, these methods only result in frustration.
Cultural: Digitization isn’t changing the fundamental place of the operational backbone, MIT’s research found. A digital platform, however, “means radical changes in how decisions are made and work gets done. This can be uncomfortable for people at every level.”
When it comes to actually managing these two different teams, MIT researchers suggest these three actions:
Keep ‘em separated: Simultaneous management of digitization and digital means clearly distinguishing their separate responsibilities, says the research brief. Examples of companies that have taken this approach include Schneider Electric, Royal Philips, and Toyota. In another example, one organization’s operational backbone was managed by the CIO, with a Chief Digital Officer taking the lead on the digital platform.
Funding should also be separate. As the researchers outline, “People responsible for digitization can better pursue operational excellence when the operational backbone receives consistent investment, year after year, at the enterprise level.” Meanwhile, funding for short-term digital innovation “experiments” can be easily upped or decreased, depending on outcomes.
It’s important, however, to keep the overall shared vision in mind, explains tech specialist and Tech Wire Asia editor Soumik Roy, for TechHQ. Leaders might feel that separate teams are a waste of resources, he writes, “because ultimately, the business needs its digital initiatives to converge — like its data, analytics, and platforms.” But in reality, separate teams can optimize DX efforts, but only if a shared vision of the organization’s future is kept top of mind: “Each team, working on their own side of improvements, can make contributions that help move closer to the end state. In practice, this is often more productive as well.”
Rule breaking: Inherent in digital innovation is breaking old rules and making new ones, the researchers found — from subverting budgets processes to guarantee resources to bypass CRM approaches, among other challenges.
Rule breaking ends up being manageable because it’s relatively contained to a small team that’s experimenting, though it’s crucial digital teams have sign-off and ongoing support from senior leadership.
New leadership: “Not all people who have successfully led traditional businesses are well-suited to digital business leadership,” says the brief. “The idea of breaking rules to identify what works may feel terribly unnerving for some— even when they have been encouraged to experiment.”
If someone in a leadership position isn’t comfortable with creating new rules, they explain, coaching could be implemented to help guide them in the right direction. Alternatively, there is likely plenty of new talent that is ready to implement a shift.
DX Journal covers the impact of digital transformation (DX) initiatives worldwide across multiple industries.
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