January 6, 2022

We are entering the Deployment Phase of the Digital Age

As of today the top 10 most valuable companies in the world as defined by market capitalization are Apple, Microsoft, Saudi Oil Company, Amazon, Alphabet, Facebook, Tencent Holdings, Tesla, Alibaba, and Berkshire Hathaway. Of course, this list changes with the markets, but if you compare that to 2011, the list is 60% different. Compare to 2001 there is only one company that is on the list, Microsoft. We are in the Digital Age, and this is just an illustration. But just think about your day - the impact of streaming services, cell phone apps, and even your car. Digital is a technology age and we are in the middle of it. 

The economist Carlota Perez is famous for her perspective on technology ages and how they affect the world. Her book, Technological Revolutions and Financial Capital describes the last 200 or so years in terms of 5 technology revolutions. 

Her thesis is that each of these 5 ages follows a similar cycle of introduction and adoption. She argues that each age follows a four-phase adoption cycle of configuration, early adopters, full adoption, and then constriction. Of course, models are always poor approximations for the reality of the world, but I am drawn to this model because it provides supporting evidence to what I see in terms of how organizations are wrestling with new ways of working that are accompanying the Digital Age.

Perez describes the Deployment Period as comprising two overlapping phases. Synergy where we see coherent growth with increasing externalities for production and employment. And then Maturity where, in this case, Digital will saturate everything it can and everything starts to slow down again. This level of market expansion of the use of digital technology will not mean the creation of new markets, but the use of digital technology in existing markets. Digital technology will become ubiquitous. Many of the changes the pandemic brought us around how we order food, consume entertainment, pay bills or even visit the doctor will become the norm, which in turn will create a cascade effect with their associated business processes becoming more digital. 

So what are the implications for how we work? What does that mean for organization structures, team models, and the day-to-day actions of people? 

Scrum, agile thinking, modern software development working practices are synonymous with Digital Technology and have evolved out of the fundamentally different characteristics of the opportunity presented by technology. Many of those initial agile meetups were driven by the need to share a different way of working compared to the waterfall approach, an approach inspired by the industrial, mass-production mindset. And, in part, the biggest challenge to many large-scale agile transformations is the friction between the industrial and digital paradigm. 

My hypothesis is that Agile and Scrum will, like the technology of the Digital Age, be part of the wide-scale adoption and growth seen by the deployment phase. As organizations transform to be more aligned to the use of digital technology in much of their product value chain, those transformations will be accompanied by agile working practices and Scrum (or other team-based approaches). Jerry Neuman, the forward-thinking venture capitalist describes the outcomes of the Deployment Phase in his blog. He says “Software Eats the World, but Everyone Ignores It,” describing the outcome of mass deployment and how as it is adopted more people forget that this is different. It becomes the norm, and everyone involved takes it for granted. For example, how many times have you heard your child say, “ But Dad, why doesn’t the fridge have an app that tells me when we are out of milk?” Neuman goes on to describe four elements of this change: 1. Information and Communications Technology (ICT) is no longer a feature of new products. For example, it is not an internet thermostat, it is a thermostat, every thermostat is now internet-enabled. 2.  Deftness of use becomes a basic expectation, 3. UI/UX becomes paramount 4. Reduction of cost allows use everywhere. Neuman also discusses the role of innovation in the Deployment Phase. He cites that big innovation will slow down but small innovation everywhere will be commonplace as organizations adopt digital platforms (big innovation) and then incrementally evolve their use for their customers and users(small innovation). 

Ok, so what does this all mean for the way we work.

  1. Scrum (ok, I am biased) will be used by the majority of knowledge workers because innovation and adoption will require continuous improvement throughout the enterprise. For example, a call center will be empowered to work on improving their engagement with the customer and have some level of development (process and technology change) integrated into their organization. They will have clear goals and the means to achieve them.  They will be incentivized to make improvements. This will be very different from the traditional top-down innovation that happens today where their goals and measures (calls serviced, NPS, etc.) are often directly undermined by the new “efficient” stuff that is brought in from outside. 
  2. User Experience / User Design will be more and more integrated into teams as they wrestle with making the experience seamless for their users and as the use of digital technology is being adopted by more and more end customers. Think how many other generations are now using Zoom, Apps, and the Internet than before. It is clear, from my conversations with my mother, that UX is still a real problem for adoption. I realized this after reading Jeff Gothelf and Josh Seiden’s book titled Lean UX. It encouraged me to sponsor the development of a course and rethink my view of Backlogs and Value. 
  3. Organizations will be flatter. It seems obvious to anyone that a deeper hierarchy inherently is less agile than one that is flatter. When decision-making goes up and down the hierarchy, it takes time and loses context. I am reminded of executives sitting in call centers, and in logistic offices during the first days of the pandemic. The reality is that model will continue, not in terms of executives being present every day, but that a combination of shortened decision loops, empowered teams, and radical transparency will reduce the number of layers of an organization. Also, the internal introduction of digital collaboration technology will change how those interactions occur thus providing opportunities for de-layering.
  4. The distinction between business and technology will continue to blur until everyone is using technology in their business and thinks nothing of it. I guess this is where I have the most angst. Because everyone has a responsibility to take advantage of digital technology to deliver more value that means that business and technology are blurring. Processes are not being automated, they are being improved and maybe, radically changed by the use of digital technology. But how does that work? The skills required to take advantage of new technology, to even think about its use are very siloed today. Without widespread skills enablement, it is hard to see how this will play out until the people who are born “digital natives” are in these organizations.  The misalignment of skills and availability of them is evident in the jobless vs job opening reports. The Digital Age is ultimately driving a wedge in our employment market by clearly showing what organizations need vs what is available. Reskilling programs that Scrum.org is involved in such as Grow With Google and YearUp provide some hope. 
  5. Funding will change at both the macro and micro levels. At the macro level funding for digital endeavors will move from venture-backed, speculative to Main Street. But within organizations how projects, teams, and departments will be funded will also change. Today, for many organizations, annual budget cycles, bottom-up planning, crazy week-long horse-trading meetings, and very complex processes accompany how work is decided and funded. The Digital Age requires a different funding model. Investment is planned at the macro-level in terms of value streams or products. Funding is not determined by the amount of work, but instead the amount of value. Some value streams will get a higher % of investment because of their growth status, others will get less. Projects will still exist for cross-cutting initiatives such as things like GDPR and infrastructure work, but they will not be the primary form of funding. Once funding is agreed upon, then the teams decide what is important based on their work with customers, users, and other stakeholders. Priorities change in response to the needs of the environment. 
  6. Measures will support a more outcome-centric view of the world. The rise in the popularity of OKRs is a major step toward thinking in terms of outcomes rather than outputs. Outputs are a major part of the industrial paradigm relying on someone to decide what is important and valuable. Outcomes change the environment by ensuring that everyone understands the value and has the flexibility to respond differently if needed. Think about a group of soldiers being given the instructions to march up a hill. The hill is heavily protected by the enemy and they have a large number of casualties in taking the hill. But imagine if they had been instructed to get high ground. Maybe there was another hill that was less heavily defended. They were closer to the problem and understood the risks. And therefore, could make a more informed decision. By building the right objectives, leadership can clearly describe in a simple form the why, the outcome they seek, allowing their teams to execute on it without worrying about the how. 
  7. Learning will increasingly be part of the job. The age of mass production and oil focused on not only breaking jobs down into their smallest parts but encouraging people to learn just enough to do the job and no more. Work was organized in such a way that time for training, study groups, book clubs, and other education-oriented things were kept to a minimum. Anything that reduced efficiency was to be avoided or at least managed in the most efficient way. Of course, organizations invested in staff development, but mostly as a funnel to leadership, and these programs came with handcuffs and incentives to stay at the company and earn back your training investment. The nature of the Digital Age is that change is the norm which results in teammates always having to add new skills. A new mindset will be applied to education, one of abundance. In part, this mindset is enabled by digital technologies and the sheer volume of information available, but also in how work is approached with cross-functional teams supported by a community, or in the case of Spotify - Chapters and Guilds. Maybe this is the first step for all Knowledge workers to be part of a professional association as these internal communities become external. 

Of course, any model that describes our future is fundamentally incomplete, but the ideas of the Deployment Phase provide us with a structure that can help us at least make some sense to a complex and ever-changing world. The pandemic will drive broader adoption of digital technology, and that will result in changes in the way that knowledge workers work, are organized, and what they work on. Agile will no longer be nice to have, or siloed to a few people in IT but will, like digital, be everywhere. The question is not will digital transform your business, the question is will your business survive the Digital Age?