Kartik Daswani was the Global Head of Transformation for HSBC until Spring 2018. Before leaving his role, Kartik led multiple large and complex transformation projections across a diverse range of areas including strategy, operations, technology, change, risk and compliance. We met with Kartik to learn about:
– The greatest myths of digital transformation
– The greatest challenges of implementing a DT project
– The most common mistakes and how how to avoid them
– The key differences between successful and unsuccessful DT projects
Question 1 – In your career, what has digital transformation allowed you to achieve that would have otherwise not been possible?
“I guess to answer that, the first thing is digital transformation is one of these new buzzwords so I guess mean slightly different things to different people. So to me, digital transformation is the use of data with more than technology to make a difference of process or people or organisations for their betterment. So in the banking sector where my experience has been, we’ve been using or trying to use digital technology ever since it came into being really. So as the internet was launched in the early 90s, even using some of the basic techniques we had then. So my first digital project was using a software, people laugh when I mention it, Windows 3.11 before it became Windows 95. We actually used to have rate sheets for auto loan salespeople and they’d go around the big folders of rates for customers and using various permutations and combinations. Then we created something with a vendor which allowed that to be done on a computer irrespective of, at the time, it was 3.11 or 95 which is a great technological innovation at the time and went down very well. So in small degrees since then we’ve been moving digital innovation forward. The exciting part of the market of course is now that everyone has a mobile phone, everyone access to the digital world, everyone is becoming more aware of how powerful their data is and the tools that have recently come to market and got more and more popular. The opportunities are boundless and therefore the ability to take those forward and move on is really exciting and I think while that is exciting in itself and gives rise to many possibilities, like with all big changes, there a number of pitfalls as well but I’m sure we’ll talk about that a little bit more later on.”
Question 2 – What would you say are the biggest myths surrounding digital transformation and in what circumstances can those be harmful?
“Well I guess to two or three that I’ve come across in my experience. One of course is associated with the whole concept of digital transformation and that it is a goal in itself. I see digital transformation very much being a tool to get to an organisation outcome, not goal in itself. The second element of digital transformation that I think a lot of people get wrong is that, becoming digital is something that sits alongside your existing operation rather than integrated with it. The third one is there’s this fear which I think the media has been hyping recently that ‘digital is gonna come take your job’ and I think those are the three myths that if we consider them one at a time should quite radically be debunked. I think digital is a tool and like any other tool it has to be used in the right way for the advantage of the organisation and and that is one of the things I think some organisations in the past have got wrong and they’ve tried to see digital as a goal in itself and that’s why they spent millions and millions of dollars and often are not really achieving the outcomes they’re looking for. The second one around running digital as sort of adjunct to the organisational and integrated with its legacy operations. I suppose is reacting to some of the new players that have come into the market which didn’t have that legacy operation and therefore were more fleet of foot and legacy organisations have tried to copy that without sort of like throwing the baby out of the bathwater and they’re not so playing to their strengths and in doing that are sort of caught between two two different bolts and end up in neither and that’s of course something we need to be careful of going forward. The third one like with any evolution, people’s jobs change. So I mean if we cast our minds back in history, when we move from a primary to a secondary economy and secondary to tertiary, the nature of people’s jobs changed. I mean lots of articles talked about ‘hey the Industrial Revolution changed the nature of people’s jobs, the internet revolutions will do likewise’. So I think the important thing to remember is we need to harness how digital being a tool gets harnessed, used by people and how that tool of better, more real time and information being aware available at the moment can be used to interact better with customers, how organisations can manage their stakeholders better to get the results they’re looking for using that digital tool.”
Question 3 – What aspect of digital transformation has the possibility to cause the biggest technological or economical disruption?
“I think digital technology, when used right, can be can be revolutionary. Digital technology is often referred to as a transformation and I firmly believe a transformation is required where an organisation or an industry in fact hasn’t been evolving regularly. Because if industry was evolving as technology evolved, as cultures evolve etc there’d be no need for a transformation. But the reality of the world we live in today is in many industries there is need for transformation and digital is a tool that is allowing us to look at how far away we are from the possible and try and upgrade that reality into transformation. While that sounds really exciting and a very interesting analogy I read somewhere was it’s like a stable marriage and the attractiveness of a new relationship. Often people give up on a stable marriage for the excitement and when they get into it they found they find the grass always looks green on the other side. So organisations need to get into digital with their eyes wide open and they need to do it the right way so that it’s achieving an end goal and they need to determine why they’re doing what they want to do, how they’re going to do it and then what that will deliver rather than the other way around.”
Question 4 – What advice would you offer to an organisation considering investing in digital transformation?
“Well I don’t think that advice would be any different to any organisation investing in any transformation really. Any transformation an organisation needs to sit down and think about its strategy. Think about where that transformation fits in its journey to achieve that strategy, why they are undertaking it, get the communication right. Then go about assembling the team, empowering them, passing that message on and making sure that the transformation is delivered in short sharp steps, each step that is able to pay for itself so that they are there’s playback, there is momentum, there’s continued buying and making sure you have enough time to evolve or change that strategy as you need to as you go from step step. So pretty much change management 101.”
Question 5 – What in your opinion are the most challenging aspects of implementing a digital transformation project?
“In any transformation project, the most important piece is to get it right at the outset. Is to define it correctly, make sure you’ve got executive buy-in, make sure you’ve got the communication right so your people buy into the transformation they see the need for it and then start to see real change that can be embedded. So again this is going back to the basic principles of change management and why do changes go wrong? It’s you have to start it right, make sure there is enough fuel in the tank to make sure people remain embedded to the idea of that change and continue to move it forward in short sharp steps.”
Question 6 – Why is it essential to choose the right digital transformation expert for your project?
“I think that digital transformation needs three or four elements within the team. As I said earlier, it needs time with the organisation strategy. Digital by definition has a lot to do with technology but is about harnessing that technology for organisational change. So you need somebody right the top of the organisation who bought into the need for this it needs, to align to your strategy. You need somebody who understands the new technology, working very closely together with somebody who understands your business so to realise how that new technology could be harnessed for the organisational benefit that needs to come in back into the business and therefore how it could be used to take that business forward. Often that change is not going to be small and will be quite culturally changing and challenging for the organisation. So you need to factor that element of change into it. So any organisation embarking on this needs to think carefully about the team and rather than focus on technology, as many organisations seem to do, think about the wider aspects and bring bringing a partner who is able to appreciate that. It’s like the ancient fable of the six blind men and the elephant, it’s very easy when looking at an organisational change to look at the part that’s staring you in the face and come up with the wrong conclusion, so the organisation needs to find someone who’s able to step back see the big picture for what it is and address how that change will happen, to address the entire big picture.”
Question 7 – Can you give an example of projects that have been very successful and those that have failed and the key differences between them?
“Actually to that point, I read an article in the Harvard Business Review quite recently in March I think. Where they talked about large companies that have invested multi million dollars in digital transformations which they’ve had to either stop, put down, or even in some cases led to the CEO being replaced. So the one that surprised me the most really because like many people, I associated GE being in the vanguard of digital transformation you know, that they allegedly invented the internet of things, they put scanners into their various modules you know, in the last century and so on and have been at the vanguard of the digital change. But I was interested to discover that because of the amount they were investing in their digital initiatives and the sort of payback it was getting, they’ve actually fired their CEO who was driving this digital innovation, Harvard says because of militant investors not getting the returns that they were seeing and they’ve now got somebody who’s much more focused on costs and they ramped down that digital budget. And that article goes on in talks about a number of big names ; Lego, Procter and Gamble, Nike, all of these big companies have invested millions in that digital innovation and they’ve had to scale it back because I think and this is what I agree with the Harvard sort of proposition that those companies hadn’t really worked out what they wanted to do with that digital element, whether they would pay back in time and how it added back into their digital strategy. So going back to what I thought was important, it has to tie into your business strategy and has to deliver to your current set of stakeholders so despite these companies having huge, deep pockets, throwing the best people at it, huge budgets added, it still didn’t give them the payback that they were hoping for. I think in my mind, that is a pitfall, not only of digital transformation but any transformation really and therefore mature organisation like this which had access to the best minds, best resources still are able to get it wrong. One thing I guess the digital transformation opportunity does, it democratises the whole landscape so you can have new players coming into a market without the huge infrastructure costs, without the huge developmental closet in a legacy environment you needed and they’re able to capture niches in the market. So I think about the financial services sector, thinking of operators like PayPal. In Alibaba, what they were able to do. In Paypal’s case, a small element of the payments market, they made sure they had really a simple proposition that was available to everyone, easy to use, and they focused on that and enhanced it in slow steps and look at them today, they are a major player in the payment space. Alibaba I think took a more location-based strategy and they focused on the China market and now through ad financial other things they’re expanding that space and I saw an article somewhere saying there now that they would be the 10th largest commercial bank as they seek banking licenses and look to grow their current space. So I think that’s two success stories of incumbents who started small, focused on the their niche, made sure they got that story right before expanding out. So I think that sort of brings brings out the difference between huge large established players who threw many resources at the digital problem and perhaps have stumbled along the way and small players who were able to come in without the legacy costs and focused on niche, kept their eye on the ball and moved forward and achieved success at least to date.”
Question 8 – How does a digital transformation for the banking industry differ from other types of organisation?
“Well banking I suppose is interesting at two or three levels. One of course, within banking there is the element of trust, we all want to put our money with somebody we trust and therefore in the UK for example there is great frustration in the media and with some of the newer players that there’s not this great rush of money away from big high street banks. But I think that has to do with the element of trust in that trust has been won over many many years by some of these players and rightly or wrongly they’re perceived as safe havens for our money and that is very central to what we do. So there’s that element and then there’s the second element is there are people who are entering the market, I mentioned PayPal. There are players in the UK market who are coming in and offering services as well. So on the one hand, you have the people who have a trust of the banks, they have a customer base and they importantly have the data about this customer base which they’re starting to increasingly leverage and take forward. On the other hand the other people who don’t have those constraints of legacy, but they don’t have the trust of the people and they don’t have a great sort of brand reputation. I think the opportunity lies for somebody who gets it right, who focuses on a niche, similar to the way PayPal did and take that forward. So for example, I mentioned over the past three months I’ve been exploring a FinTech idea which I think could revolutionise the sales and borrowing space not only in, initially in the UK market, but then globally. I hope you know, with the right backing and the right the nursing towards the change program so I’ll eat my own dog food, make sure we get the strategy right and take it forward and watch this space.”
Question 9 – In your opinion, which is the most crucial phase of digital transformation and why?
“In my mind, the most crucial phase of any transformation is the planning and getting it right. Steve Syntek I think described this really well as he talks about his golden circle and moving from the inside out and the examples he is fond of using is Apple, Martin Luther King and the Wright brothers. What did they do differently from folks around them? Rather than decide on the what, how and why in that order, he suggests the right way to do it is to decide on the why, how and then the what and getting that right allows us to sell our products differently, conceive them differently and then figure out the details of the product in order to meet those two cycles and I think as long as an organisation puts things in that order it sort of ties it to what I said earlier about making sure there is buy-in to fit in with the business strategy. There’s enough communication, people will then understand why we’re doing what we’re doing, buy into it better and then there’s a matter of implementing which could be done in short sharp cycles to make sure the profit and loss pays back and other things. But I think the most important thing is conceptualising it right in making sure you get the top down buy-in and then communicating really well.”