Ep#66 Digital Experience & Transformation with Principal Analyst Charles Araujo

Host: Jon

Digital transformation and driving efficiency and how it relates to the great resignation or some might call it. The great reimagining. Joining me today is principal analyst, Charles Oahu, to talk about his experience in the ever-changing landscape of digital transformation. Not to mention an in-depth discussion on digital experience before I bring Charles onto the show, don't forget to hit that, like subscribe and notify. Please join me in welcoming Charles rahho to the show, Charles, thanks for joining me for this indepth discussion on digital transformation.

Guest: Charles

Absolutely great to be here with you.

Host: Jon

So, Charles, the reason we're talking today is about digital experience and transformation. Now you're the founder of the Institute of digital transformation and a publisher of the digital experience report before we get to any of those, what is digital experience?

Guest: Charles

Sure. Well, short start with the nice short answer, because of course it's not it, the digital experience is one of those terms that gets thrown around. And, and my I'll my short answer and we'll, I guess, dive into this more as we talk today, but my short answer is effectively, the digital experience is the intersection or combination of the customer experience first and foremost, supported by the employee experience and what I call the ecosystem experience or the partner experience all powered by digital technologies. But that really extends to all elements of, of almost every experience, because it's hard to imagine too many experiences a day that are not at least supported by some underlying digital technologies. So it all sort of comes together and I call that the digital experience, but there's a whole lot more to that.

Host: Jon

Now let's give, uh, the audience a little bit of backstory or background on your experience around the digital experience and how you wrote it. So why did you write this report and how do you bring some of your, you know, expertise to it?

Guest: Charles

So, so first of all, the digital experience report is a mostly weekly, um, email think of it like an industry newsletter. If you follow what subs stack is up to these days, that kind of idea. So it's a free report covering this space. So sort of everything around the digital experience, which as we'll get to extends to the future of work and, and the new hybrid work sort of momentum, um, as well as just the, what I call the X tech market, which is this broad ecosystem of technologies that I think are necessary to support, to create, deliver, manage, and support the digital experience. And so I report on news around this industry, I produce the, the report itself is basically a, an analyst report of kind of the state of things and, and covering the different aspects of it. Um, so I, I, I landed here.

Guest: Charles

I mean the, the short version of my histories and I'm an it guy at my, at my core, I ran it operations for a billion dollar healthcare firm, 27 odd years ago, and then spent another decade running large scale transformation programs for typically very large enterprises. So these were like multi-year project kind of stuff. Um, around the, the, around that, or through that process, I, I was sort of, I saw that the world of it was changing. It leaders were struggling. And so I was kinda like this crazy, crazy preacher on the sidewalk going, you must transform. And, and that led me to write a book called the quantum age of it, where everything you know about it is about to change and what it really changed was sort of my career path. So for the last that CA book came out, I'm trying to remember now it's about 11 years ago.

Guest: Charles

I think something like that 10 or 11 years ago. And so that started me on this whole career path of being a speaker. And I ended up writing two more books. Um, I've now published hundreds of articles and CIO, CIO, and site a bunch of different, um, information week, et cetera. Um, and then along the way, I ended up doing two things, one shifting my focus to digital transformation, as I saw that this was actually about much more than just the transformation of it. It was about this much broader business transformation that was occurring. And then five years ago, I put on the analyst hat as I was just sort of became this sort of natural evolution of all of it and sort of brought it all together. Cuz part of that time, I was really focused on the cultural organizational change dynamics and then putting it on the analyst hat.

Guest: Charles

I brought the technology back into it. So that's been what I've been doing for the last five years. And over the last two or three years, I saw two things. One is that digital transformation became this Uber buzzword that sort of didn't mean anything anymore. And that more importantly, people were really missing the point that I was really trying to make. Although it took me a while myself to figure this out in that that digital transformation was about this fundamental shift in power, away from the organization as sort of the center of value creation to the customer, that it was the customer experience that was driving value and that we needed to reorganize our organizations around delivering that value. And so that's why the focus on the digital experience and I believe it is actually now the central thing that organizations should be focused on, which is why I then decided to sort of shift my analyst, work into everything around the digital experience and publishing the digital experience report

Host: Jon

With the customer experience. Are you saying that companies are actually focusing on what the customer needs and wants rather than telling them what they need in one or like how's that work

Guest: Charles

It's so it's a mix of a, of a few elements. So for yes. So one, it is a shift in power, meaning that, that throughout the industrial age, you know, is the, the starting with Henry Ford, right? You can have any color you want as long as it's black, right. It was all about efficiency and optimization. And that's, you know, if you look at the mad men era, it was, it was, it was really about how do we figure out how to produce something as inexpensively as possible, optimize supply chains and deliver it into the market. Yeah. We wanna be competitive in the market and deliver the features that you want, but it really wasn't about you. It was about how do we compete around that driving of efficiency and, and, you know, the pinnacle of that was Walmart, right? Walmart basically built their entire model on their ability to just dramatically optimize supply chains.

Guest: Charles

And then you look at what, you know, why Amazon was able to come and be so disruptive in this space. And it wasn't because they had optimized Walmart. Now there's no question. Amazon is incredibly well optimized, right? They met parody on that and I would argue they're probably even more heavily optimized at this point. But the big thing is particularly in the early days, is that they were transforming the customer experience and that's why they were disruptive. And what's really interesting is if you look at some of the most disruptive companies over the last decade, the, you know, take, and I, I know I hate using these, but the Airbnbs and Ubers just cause everybody knows 'em and holds 'em up. It wasn't that what they were doing, right? They didn't invent the idea of going someplace and renting a room or staying someplace. What they fundamentally changed was how you did that, the experience that came along with that.

Guest: Charles

And so there's a lot of elements. You know, the there's a book called the experienced economy, which sort of started all of this and, and it takes a, a much more rigid view of this meaning that the experienced economy is all about. You're buying time. You're buying that experience. When I talk about the customer experience, I'm talking about the entire journey, the entire, from the first moment you decide you have a problem through discovering how someone might help you with that, the, how you feel every time you're interacting with that organization throughout your entire life cycle, that that actually becomes how we make our buying decisions and what becomes the driver of value. Why I will pay more for a certain service with a positive, lifelong experience than I w you know, will for something that is just transactional,

Host: Jon

Is that why like companies like Amazon really focus on those customer obsession and that customer feedback. And if you have a bad experience with say, you know, Amazon versus Walmart, are you more likely to go back to a company where they're accepting your feedback and a constant customer, regardless of good or PO you know, good or bad feedback, uh, are customers returning to those companies that are providing them more of that, you know, positive experience?

Guest: Charles

There's no question there's. I mean, I think that what's interesting about when you look at, and again, you know, I'm talking right now about, or we're talking right now about the customer experience, but this extends, I think com or organizations today are competing for customers, employees, and partners. So all three of these and the experience you deliver to all of them matter. But so, so I, I think, and I think this is universal. What I'm about to say to any of those constituencies is that we are judging the decisions we are making on where we're spending our time, our money, our investments, based on that experience, more than anything else. Now that doesn't mean you can have a crummy product and a great experience, right? And I think that's the part that sometimes people miss, when I, I have built something that I call the digital experience value engine and the entire thing.

Guest: Charles

So everything we sort of talked about about the employee customer ecosystem experience on one side, this idea of continual transformation to create a differentiated experience on the other enveloped by this technology that I call the X tech market. But it all sits on traditional supply chains and service models, meaning being a highly optimized efficient organization, doesn't go away. It just becomes the price of admission. It's just Walmart rose to prominence. I'm not picking out Walmart and Walmart is in the middle of its own transformation, right. But, but they, they rose to prominence based on that, on their ability to optimize. And it was almost exclusively based on that ability to optimize that meant they could deliver incredibly low prices and have these massive stores of inventory and they could do it efficiently and they can make money doing it right today. That's just the cost of admission.

Guest: Charles

That's just the, the ticket to the show. And now how you're gonna differentiate yourself is what do you do around that? Right? And that's, that's the shift. And, and I think, you know, if you look at the latest earnings report out of Netflix, you get a taste of, of why this is actually so difficult because the nature of the customer experience, unlike in the traditional ways, when you optimize that optimization investment gave very long returns, the experience is ephemeral, right? I can wake up tomorrow. And the very experience that I thought was fabulous yesterday, overnight, something could have changed and I wake up tomorrow and decide, I want something entirely different, or that it's no longer good enough. And Netflix is experiencing that right now. They were, you know, the, the, the, the top of the, the pile here, I'm the term there, but, you know, they, they were at right.

Guest: Charles

And, and then the sort of wave shifts, because our experience is always referential. It's always comparative, right? The experience I have today, apple changed the game because they transformed the experience that we all expect. And so now we're all starting to look at every other thing in our lives and expect it to function like an iPhone, right. To have that sort of very intuitive experience. And so something that was good enough, the Blackberry was fabulous. The week before the iPhone came out, the week after the iPhone came out, the black bear experience was suddenly under threat. And so it, the dynamics of this and how we have to then function is dramatically different.

Host: Jon

We talked about the customer experience, but you also indicated the employee experience. And how does that really relate to the great reimagining and the great resignation that's happening? Are companies really changing or, well, technically they have to change that employee experience to adapt.

Guest: Charles

So there's, there's two facets here. The first is that I believe that the employee experience is, is intrinsically linked to the customer experience. Meaning, as we talked about a little bit before, not every experience is in fact digital, not every customer experience is I'm interacting with a website or on my phone. Right. I have a lot of the customer experience happens in person, but imagine let's just use retail as an example, I walk into a store and that in person experience is happening from my standpoint, sort of absent the digital for the most part, right? I mean, there's parts of it that can be, and that's starting to change, but I'm interacting with that sales person. And you know, where someone on the show on the floor of this retail establishment, and I ask them a question, and if they need to check to see if there's inventory at another store or to see if there's a price change or to see if they have it in their back lot, right?

Guest: Charles

What are they using? They're gonna use a piece of technology to help them do that. So the employee experience, the, the way you deliver a piece of technology to an employee, who's consuming it, but they're consuming it. And therefore somehow impacts the, their ability to deliver a customer experience has a dramatic impact. And the more frustrated they are, even if they're not using a technology directly during a customer interaction, if they're frustrated with it, if it creates a bad experience, then they're likely to leave, or they're likely to say, well, this company obviously doesn't care. And so there's this very direct, and we're getting better data now from studies that can now demonstrate the relationship between the employee experience of customer experience. So it's important from that standpoint, but there's another standpoint. And that is to your point about the, the great resignation or whatever you wanna call it, this idea that, that employees today, or, or people let's just make this human, right.

Guest: Charles

We're all humans. And we have a choice, particularly knowledge workers have a choice with where we work and we are now increasingly treating it. And, and the younger generations particularly are, are sort of applying this filter where they're not just saying who's gonna pay me the most, or who's gonna gimme the best title. And in fact, there's some recent studies that are showing that it's actually the money entitle are falling down to fourth and fifth in the priority for gen Zers and, and some of the other younger generations. And so we are in this competition for employees and to create an experience that's going to make them most effective and productive and give them, you know, the, the desire to actually come into work and kind of put their Bo their best self out there. So, um, I think it's very real and I think it's, again very tough, cuz it's squishy.

Guest: Charles

It's, it's hard to put your finger on it, but, but I think we're gonna see the stakes actually increased on the employee side because particularly in the knowledge space where you're fighting the hardest for those employees, they're gonna be fickle. They're gonna literally, I mean, I know it, my, my, my son just personally, my son left a position and one of the reasons was just how backwards our technology was. It's like, well, why am I gonna work for this company that clearly doesn't care about any of this enough to invest in backend systems actually work.

Host: Jon

Okay. The, you said the third and fourth options, uh, title and compensation. Do you know what number one? And number two is I, I am curious, I have some reasons and most people know that I've changed a couple of jobs in the last year and it wasn't about money and it wasn't about title. And the reason I did that is, is for this work life harmony that I need, and I need to wake up in the morning and really enjoy coming to work. So I'm curious about one and two are, if they fit me,

Guest: Charles

<laugh>, uh, I, I had to open my big mouth. I can pull the study out, but, but I do believe then, and I think they looked at it from both generationally and income level and a few different perspectives of what I'm thinking of, but, but clearly flexibility, um, the ability to work remotely, which are not the same thing by the way. Um, but, but those two things that idea of work life balance, it sort of put all that in a into one category I think is, has become incredibly important. And, and you know, the cat outta the bag, right? The big thing that the pandemic taught was that we can absolutely do it. Not only, I mean, the data has been fascinating to show. Not only do we not need to be in the office to be productive, we're actually more productive at home. Something I, you know, as someone who worked from home for the last 25 years, I know inherently right.

Guest: Charles

That, um, that, that we are in fact productive working from home. And so, so a lot of the traditional, um, excuses for why we couldn't give people that flexibility have fallen away. And so it's a lot harder for an organiz organization to stick a stake in the ground and say, this must happen. Now, there is some, some decent data that says certain types of collaboration do in fact, um, produce better results if, if we're in person. So there are definitely reasons, but I think the future of that, I'm probably getting off topic, but the future of that is sort of what Salesforce is doing. Salesforce just leased a massive property, um, south of, of San Francisco. And basically it's a big di giant retreat center. It's a retreat and wellness center. And their idea is for teams to go there, to have, um, time together, to get out into nature, to embrace wellness, but also to have meetings and to have that sense of collaboration.

Guest: Charles

So, um, sometimes they're, you know, they're currently making it very open in that you can just go there to, to be together and, and sometimes to more traditional, like offsite type functions. But I think that's gonna be more the future where, where offices and spaces are, are more about that. But the second piece, what, as I recall, um, and I think intuitively we sort of know this is that it's, um, not only the personal side, but it's also the, the mission side that we wanna be a part of organizations that are about more than just making a buck. So I think you're seeing lots of tenants here that ESG movement is part of that. The, um, you know, if you look at going back to Salesforce, right, they make a massive stink in terms of, um, their message to the world about how committed they are to things like the environment and what have you, and what that is really about it. It's signaling to their employee base to say, this is who we are. This is what we stand for. And if you believe in that, then come be with us. And I think while I don't necessarily think an organization has to take a stand on social issues, I do believe you need to have a vision that is bigger than yourself and is about more than just making a buck. And it's about actually having an impact in the world. And I think those two things are increasingly trumping things like position and money.

Host: Jon

I can tell you, there's probably, I, I like the option of going into work. If I had to, or meeting up with my team or traveling, I've been working from home for the last seven plus years. I know how to manage my time. The older companies who haven't had those work from home, who are traditionally actually go to the office every day. I think they're the ones that struggled with this in the beginning, but realized that there's a lot of work that gets done more often than people actually spending in the car commuting and getting home. They can work that time. They can throw in a load of laundry if they want, they can clean some, they can walk outside, grab a drink, and they can do that. But the interaction of face to face you can't be. And that's why I like the option to go or to travel.

Host: Jon

I think that provides some good collaboration. Now, Charles let's, let's switch a little bit of a gears. You and I talked offline and you talked about reshaping the world or reshaping the world order. I wanna know a little bit more about that. Um, is it with the digital transformation? Is it with the digital experience? Is it with the, you know, great resignation, are employees reshaping? How, you know, companies do it, are they switching gears? And that employees now, you know, are making the choice versus they, I don't wanna say they hold more control than the actual employer.

Guest: Charles

Well, I, I think it's getting there, but so I'm not, I'm not sure that I was, um, quite grand enough to talk about changing world order. But, um, the here's I guess maybe what you're getting at, what, what I believe is that

Guest: Charles

There's a lot of folks out there that talk about the digital experience and they talk about in this sort of one dimensional fashion. I actually believe that that as we, as we've talked about, the customer experience becomes the driver of value for the modern enterprise. And as part of that, it's not about creating a nice interface or having a, you know, a nice party to have people to welcome a grand opening or something, right. It's about completely reenvisioning your entire business model to identify what experience you wanna deliver to look at that experience over the entirety of the customer journey from discovery through long after any purchase and redesigning your business model around that, that might involve things like going to consumption based pricing that might involve changing your distribution model. It might change every, you know, who knows, but it requires a fundamental relooking and reshaping of your business model.

Guest: Charles

And the minute you do that, then what happens is you recognize that these operating models that sit beneath the business model were developed to support these traditional industrial age business models. And that means your operating model has to change. And what you're typically going to see there is that's going to be taking some of the things that we've already been looking at, like agility and, and, um, you know, move fast, break things that sort of ethos and put 'em on steroids because the operating models now are all about flexibility and adaptability. And then once you change these operating models, then you pretty quickly realize that the management models were also built around this industrial age construct to support these traditional operating models, which means you need to blow them up. So I'm a big, big fan and believer of things like holocratic, um, approaches to workforce management and just completely gutting it.

Guest: Charles

There's a handful of approaches that, um, how we start dealing with self management and self-organization, and I think you're gonna need that to support these highly adaptable and agile manage or working or operating models. So it ends up becoming this massive. So when I talk about digital transformation, that's actually what I'm talking about. This, you know, bigger than a bread box, sort of fundamental shift. And then the last little piece of this, as we talked about is the customer experiences ephemeral, I it's dynamic. I can change momentarily and it's not universal. My experiential expectations are not the same as your experiential expectations, so it's also not monolithic. And so that means what we're really looking at is this multi threaded, continual state of transformation in order to compete. And this is where I think a lot of traditional enterprises are struggling because it is the antithesis of what the industrial age model was all about, which was to build one big, giant monolithic model, and then just scale it and lock it in.

Guest: Charles

Right? And so it, it was all about building rigidity and, and that's part of the challenge with a lot of the traditional ways we've addressed. How do we scale businesses, things like six Sigma and all, and, and I understand their great, their effectiveness from an efficiency standpoint, but they actually have the exact opposite effect in terms of, they end up creating this rigidity because we're locking in, this is how we do things and there is no variance. And so when I think the, the, the organizations that win in the future and the, the new order, if you talk about are those that figure out how to bring these two together. Because as I talked about the optimization, the efficiency is still there. It's, that's just the ticket to the, to the, to the, to the game, to the show. I don't know. And, and so, you know, you still needed all those pieces, but now we need this layer of adaptability and flexibility. So we can continually pivot as experiential demands, change on top of it. And that is an incredibly challenging combination to put together. And that's the essence of digital transformation in what organizations are struggling. The, the ones that are doing this properly today are struggling with this, but they're the ones that are gonna come out on top. When the dust all settles,

Host: Jon

Charles say, I've identified myself that I need help. Right. Or I think I need help, or I'm not sure I need help. How do you help? Or how can you help? Do you help, you know, enterprise companies really go through this process? Do you help identify it? Do you point 'em in the right direction? Or do you just kind of do like a, you know, a speaking engagement to get, 'em all excited and say, here you go. Like, how does it work? How do we interact?

Guest: Charles

Uh, so no, I do not help. I mean, the, the Institute for digital transformation, which I founded, um, but I'm not actively involved in the day to days of it today. Um, does have something called. So one of the things I did is I created that I, what I called the digital digital enterprise readiness framework, and it's basically a, um, an evaluation model or a way to look at your organization and say, do you have this degree of this combination of, of stability, of optimization and efficiency, layered with agility and adaptability and looking at leadership models and governance structures and things like that. And so we do have a, um, a framework that's I think about to get rolled out that will allow people to sort of do their own diagnostics around this and work with consultants if they, if they want to, to try to drive that level of improvement.

Guest: Charles

But otherwise, mostly what I do is, you know, subscribe to the digital experience report and kind of, um, hear my views on that. But, but I'm trying to, you know, be the evangelist out there telling the world about what I think is going on and helping them see it from the right perspective. And then my businesses, I work with technology companies to help them sort of tune their message and positioning for this world because, um, in many cases, what I find is there's there's technology companies that have fabulous technology that actually do help with all of this that we're talking about, but they're still talking about it in sort of an industrial age, from an industrial age perspective, and it's all about the efficiency and optimization. And so a lot of times I help them understand the role that their technology plays in this broader experiential view of the world.

Host: Jon

So you said you do some speaking engagements now that things are opening back up. Do you have any upcoming that are planned

Guest: Charles

Nothing in person yet, but in fairness, I, you know, I was very fortunate. Um, when the pandemic hit, I, I would say maybe 25% of my business was, you know, paid speaking engagements and, you know, that meant 75% was other things. And so, um, it became just, you know, a, a feeding frenzy, because of course everyone was trying to adapt and fight for the few things that were out there. And so I really pulled back from the speaking side of it, through the pandemic. Um, I've certainly got a few invitations and, um, I expect I'll probably be back on the road, um, doing some live speaking events, come the fall or early next year. But, um, the only things that I have booked right now are either private events or, um, some virtual stuff,

Host: Jon

Any virtual stuff that you can share with the folks that I can actually announce and bring some awareness to, or we can share it later through the description.

Guest: Charles

Yeah. I'm trying to think I have, so I know I'll be doing an event, um, on, let's see, bring it up really quick. I think it's May 19th, um, for a group called CXO sync. And that is so it's, um, uh, it's gonna be a panel I'm actually hosting this, um, a panel talking about, uh, I'm not even positive, to be honest, I need to go look it up. Um, uh, so, but it's basically an executive event talking about digital transformation. Um, I'll be doing an event on the effects of digital transformation, the digital experience for local governments, um, in September for a company called Granicus. Um, I think I have another couple, one I'm also, if you are an it, um, operations executive, I do host a monthly event called whiskey and wisdom. It is, um, invite only. So, and it, you, you need to be an enterprise, um, level it, operations executive, um, but if you are feel free to reach out to me and I'm happy to extend an invite for that. Um, and I'm sure there's other stuff, but I'm blanking at the moment.

Host: Jon

Oh, that's all right. I have one last question for you. And you just, uh, mentioned it, is that, does the digital experience or transformation change for governments versus, you know, public sector? I mean, how does that, does the messaging change? Because I envision like the government, the traditional wanted, here's what we provide you. This is what you get, you know what I mean? But how does that messaging change if it does?

Guest: Charles

Yeah, well, you know, interesting, um, local government is a very different sort of space. So on the one hand, it's very different. On the other hand, it's not as different as you think. So we we're obviously talking in terms of constituency experience. Um, but some of 'em, you know, parts of the government run ex just like a retail type service might. Right. And so, um, while the there's not a direct exchange, well, in some cases there are direct exchanges for money in which it operates exactly the same way, um, where, you know, I need, need to go pay a fee for a license. Well, there's really no reason why I can't, you know, treat that in the exact same way that an retail organization, but there's definitely others where I'm not, it's not a direct kind of transaction like that. Um, but what I, what I will say is that cities just as just no different than, than, or no different than any other organization, they are in competition.

Guest: Charles

So cities are competing for residents. They're competing for businesses that generate tax revenue. Um, they're, you know, they're competing for just the best and the brightest, right? So even if in the age of, and this is I guess, in the residence side of it, but as far as the, the type of people that are going to bring, you know, at the end of the day, the city government or local government, their job is to, to foster a community that serves the entire community right. To bring everyone together. And so the best of those, um, are, you know, organizations that, that have leadership that recognize that that experience is just as important when we are dealing with our government, as it is when we're going to a restaurant or we're buying something at a store we're going on Amazon. And so, um, they're employing very, very, very similar techniques.

Guest: Charles

And in fact, um, uh, Rob, Lloyda a good friend of mine who is now the deputy city manager for the city of San Jose, was the CIO for city of San Jose. And before that, uh, the CIO for a, uh, city outside of Phoenix and he is been a champion, this, and it's, it's not only has it propelled his career forward. Um, but the results are just staggering, right? I mean, every time he's gone in and sort of brought this attitude to a city, it is truly transformative because people wanna interact differently and they're able, the city's able to compete for those businesses to attract development and all the things that that a city has to do. And, and this extends across, you know, you, you name it. I think when you get to things like, you know, police departments of fire departments, it's a little bit harder cuz they're more removed from that sort of direct relationship. But I think it applies just as, as well.

Host: Jon

Thanks Charles. I appreciate that insight. All right. Everybody Charles Arajo joining us for digital experience and transformation, Charles, thank you so much for joining me.

Guest: Charles

Absolutely. Thanks for having me.

Host: Jon

All right. I'm your host, John Meyer. This is a John Meyer podcast. Don't forget to hit that. Like subscribe ed notified, because guess what? We're outta here.