Speaker 1: A little bit about me, I started out life as a computer engineer and I was the ultimate geek. Everything digital is what I was interested in and that was my, I went to university, studied computer engineering, went off and got a job and over a couple of years I realized that actually the technology was really interesting but there was a lot of interesting things that happened where technology and people ran into each other and I started to get quite interested in that and I ended up going back and doing a master's degree and then a PhD and fast forward 20 years, I'm at Imperial College and I teach leadership and technology. I put those two things together and that's what I want to talk about tonight. What I really want to talk about is the challenge of digital transformation. We're all hearing, that's another one of these words we hear a lot, another thing that's in newspapers and magazines and articles that we're going through a process of digital transformation. I think that's true but I think the challenge that we haven't taken up yet is to figure out what kind of leaders we need to manage that process in a way that we get the most advantage from it and we avoid the biggest dangers of it. So a lot of the technologies that you hear about, you hear all kinds of potential horror stories and also all kinds of amazing applications and what we have to think about is what kind of leaders do we need to make sure that process works as our organizations are transformed, as our economies transformed and as our lives as individuals continue to be transformed by this technology. So that's what I want to talk about. So what does this mean, digital transformation? Well the first part, digital, obviously has to do with 1 and 0s. So something's digital if it's encoded in 1 and 0s but that's kind of boring. That's not really what's important. Just encoding something in 1 and 0s isn't very interesting. What's important is that digital technology allows us to take things and make them virtual. So what we have done is already taken many, many activities which used to be done by real people with pens and pieces of paper in offices or wherever and we've transformed them into things that now happen in a virtual world. So all of you now use your smart phones to do your banking. You think nothing of it. You never go to your bank anymore. You don't even know where it is and you don't need it and the fact that you have a branch is kind of not really very important because all of your banking is done on your phone almost all the time and it's very interesting because you all said you didn't want to do that. You all said you wanted to keep using internet banking when the banks asked you but then immediately when they made the app available, you all started using it without thinking it. So we can't even ask us very much what we want. But that digital thing then is really about this process of virtualization, how things are taken from the real world and put into this virtual world. Now what about the transformation part? Well, this process is having huge impacts and that's really interesting and this word transformation is actually an important one in economics and sociology and it was used once before and I think looking at the time it was used before to describe processes in our society is useful in informing what's happening right now so let's start with that. So let's cast our minds back or actually none of us remember this but think about what we know about pre-industrial society. So pre-industrial society was an interesting place. In some ways there was tons of change. There was wars, new kings, new queens all the time. Stuff was happening. We all read our history but at the same time it was actually very stable. People's lives were pretty similar for hundreds of years. The lives of grandchildren looked quite a lot like the lives of grandparents. They lived the same way, they worked the same way, they found their mates the same way, they practiced their religions in the same way. Very little change in terms of the life of people until something happened and this is the first time that people started using this word transformation and applying it to society and what happened was the industrial revolution. So a gentleman named Karl Polanyi wrote a book called The Great Transformation talking about this thing that happened over about a hundred years, about a little less than a hundred year period and this fundamental transformation of everything in our society. So the nature of work changed, the articles of things that we used in our everyday lives changed, mass manufacturing appeared, printing press it appeared, we had newspapers, our political systems changed and what was really interesting is for a long period of time there was no change and suddenly there was fundamental change in every dimension of society. People's lives were completely different from one point to another. Grandparents did not understand or recognize the lives of grandchildren. That was our first big transformation. Well now something like that is happening again and we're in the middle of it and you're experiencing it and we won't but we're only partially, we're only a small portion of the transformation is complete. What's happening is this. We're creating a new world where things that even if they look familiar aren't really. This is a car, sort of like that Henry Ford's product on the previous slide but actually it's nothing like it at all and it's not important that it's so much as electric and all that. That's interesting but it's not that much different than a diesel versus a gasoline car. What's really interesting is this is really a platform for software. So if you have one of these, your car gets software updates and when it gets software updates your car changes. It suddenly has new capabilities. It can do new things. Not only that but this car is autonomous, semi-autonomous right now. So it can take over and drive for you a bit if you're tired. You're not supposed to sleep, you're supposed to stay awake but who knows what people actually do. And very soon the idea is it will be autonomous so you can get it to drive for you and it certainly already can park itself and it'll even bring itself from the garage to your front door if it doesn't have to go on a public street that's legal for it to do. So this looks like a car but it's not. It's fundamentally changed and that process is digital transformation. Now what does this mean? Well for companies and for industries this means a fundamental transformation of the basic way their industries work. This is a quote from the CEO of Accord Hotels and he said talking about what was happening with his industry, he said we're going through an industry mutation. It's not only transformation, it's a mutation. He's trying to highlight that what's happened is so fundamental that he doesn't even know how to do business anymore. Of course what happened to his industry is booking.com. Suddenly a company came along and inserted themselves between the hotel chain and its customers. Not only that but they said give us 30% of the revenues which just happens to be exactly equal to your profit. Suddenly the CEO of Accord Hotels has no idea how to make this work anymore and doesn't understand what his company needs to do, what kind of new capabilities his company needs to have to compete in this new world. So this is a fundamental change. How does he lead in this new company? Of course this also isn't just about business or government or big organizations or small organizations. It's also about your life as an individual and this is also equally important. So we've completely changed lots of the things that we traditionally had done and we haven't really even noticed it a lot of the time. Amazon, I'm sure you heard, Amazon is now worth a trillion dollars which is quite a lot and it's the second company of course now that's passed that bar. So the first one of course was Apple and that was only a few weeks ago. We're seeing something new with these companies. They're of a size and kind of power because they're dealing in this digital world and they're very successful at it. Amazon is bigger than the next 12 global retailing companies combined. All of you automatically order stuff from Amazon all the time and you don't think about the fact that you don't go to the high street. You don't think about what's, this is just normal. How we get our news is completely changed. How you learn about the world, you're all on your phones all the time. You may be reading a newspaper on your phone but that newspaper updates all day. So you can check at 3 o'clock, you check at 10, there's different news on a newspaper. We don't think about that, it's fundamentally different. How we communicate with our friends, how people find their mates. 30% of the marriages in the United States now start online. 30% and it's rising rapidly every year, the number of people that are meeting online. So we have a whole transformation of how we live, how we work and our relationship with each other around these digital devices and what they kind of do for us and how they help us to live in a different way. So this for me raises a real challenge. If this technology is coming in, it's making these huge changes in organizations, it's changing the way we live. Are we ready in terms of having the kind of leaders, the people in place in organizations, in our government that can deal with the questions that come up and make sure that these technologies are implemented in a way that provides the most benefit and the least damage. And I think it's unfortunate that we're spending many billions of dollars right now, many billions of pounds developing new technology and almost nothing developing new leaders. We're not even really thinking very clearly about what these new leaders need and that's what I want to talk about a little bit tonight. I'm going to use this term, leadership competencies, which is really just the idea that they're the things that leaders need to be able to do in order to be successful in leading the organizations and the people that they're leading. So I'm going to talk about that and I'm going to talk about some that hopefully resonate with your experience in organizations and your experience dealing with organizations. First of all, I think there's a set which we could refer to as technological competencies. And technological competencies are really just understanding, first of all, what these technologies are. And I think there's four that all organizations need to start dealing with if they haven't already and so we need leaders in every organization that can deal with these technologies. That's blockchain, AI, robotics. And these technologies are very important and we need to get people up to speed in events like tonight are helpful for that. You've been hearing about technologies tonight and that's really good and that's very helpful in kind of helping people to think about this and that's the first set of competencies we really need to get to. Second of all, we have some organizational competencies. I just want to talk about two. I think there's a bunch. Organizational competencies, I mean the things that leaders need to be able to do in terms of the organization and making the organization work in the way that will allow it to use these new technologies really well and also ways that make sure that new technologies are implemented in the best possible way for the people in the organization and their customers. The first one is test. What does that mean? Well, we're moving into a world where experimentation is much more important than it has traditionally been. Because we have a lot of unknowables in organizations, because we have these new technologies create a lot of challenge and a lot of uncertainty, it becomes more and more important for organizations to have cultures of experimentation. We have to be able to create teams and create a culture in the organization that helps people and supports people to ask questions about the world and run sort of quick, cheap experiments to come up with a solution. Not experiments like in a lab, but just trying something in a way that allows them to learn whether that thing is actually going to work. That's one kind of thing. The second picture is actually an organization called Shopify. It's a Canadian unicorn. It's a company in Canada that's worth more than a billion dollars. I went and visited their offices. It was very interesting, because when I was talking to the guy who ran the company, who's in his 30s, and he was talking about the kind of things that organization needs to supply and how it motivates people. What was really clear was that the way his workforce, their average age was about 22. For him, the kind of nature of the organization and how he had to motivate these people was very different. It required a whole different way of doing that. I then was at another company, Bentley. We're talking about some of the same sort of thing. Their challenge wasn't so many young people. It was so many old people in the company, because people were no longer retiring. They were staying on, because they're healthy and fit, and they were still perfectly able to contribute to the company. They also had these returnees, people who went and retired for a while and came back. In that organization and the people I was talking to, the marketing department, and the oldest person in the marketing department was 92. Imagine you're a manager now. You have a new kind of diversity. You have a diversity around more generations in your office than you ever had before. You have these millennials and even the next generation starting to appear, whatever we're going to call it. Then you have, at the other end, a very experienced and valuable group of people who traditionally would have left the organization and now aren't. You have four generations in the workplace. As a manager, a leader, your challenge is how do you deal with and manage this diversity and leverage this new kind of diversity. That's a really interesting, I think, challenge. Finally, and perhaps most importantly, we have the question of the ethical challenges that exist around these new technologies. Organizations are beginning to talk about this and are beginning to have these conversations. These are really important questions, particularly questions about privacy. We're able to collect lots of information on people now, and we're able to use that information in all kinds of interesting ways. What's the right principle to follow in terms of what you collect and how you use it? There's the law, but there's also just ethics and what's your company's position on privacy and how you use and deal with and protect the data that you collect, for example. That's only one. There's other ones about the fact that these new technologies are exponential. The impacts of what you do with these new technologies and how you put them in happen much more quickly and have much more effect than maybe traditional kinds of decisions. You have to be looking out much further along the impact of this technological adoption. These are another very important. Third is decision-making, AI. These AI systems are making decisions. How do we make sure that ethics and morals are embedded in the system and that we aren't actually having biases embedded in our AI systems when they learn biases as well as learning to have an ethical position? There's a lot of questions that we need to make sure we ask when we're implementing AI systems in organizations. We are spending a fortune developing new technology. It's impacting our lives deeply. It's impacting the organizations we work in. It's changing how we live, how we work in our society. We have to make sure we're developing leaders who are able to manage this, work with this, and make sure the outcomes are the most positive ones possible. Thank you.