Aaren Quiambao

Welcome to Coding over cocktails, a podcast by Toro Cloud. Here we talk about digital transformation, application integration, low code, application development, data management, and business process automation. Catch some expert insights as we sit down with industry leaders who share tips on how enterprises can take on the challenge of digital transformation. Take a seat. Join us for A round. Here are your hosts, Kevin Montalbo and Toro Cloud CEO and founder David Brown.

Kevin Montalbo

Let's begin, joining us from Sydney Australia is Toro Cloud CEO and founder David Brown. Good morning, David.

David Brown

Good morning, Kevin. How are you? 

Kevin Montalbo

I'm doing great. And our guest for this episode is a successful cio who has led digital transformation, product development, innovation, agile management and data science programs in multiple organizations. He has transformed under performing businesses by delivering new digital products, investing in strategic technologies enabling agile practices, outsourcing, commodity services and establishing performance metrics. He is also the author of the book Drive Digital, the Leader's Guide to Business Transformation through Technology. He's also an industry speaker on many business enabling topics including innovation, enterprise agility and big data analytics. He also writes a blog for social agile and transformation that covers topics on cio technology transformation, agile execution, big data innovation and digital marketing. Ladies and gentlemen, joining us all the way from the USA is Mr. Isaac Sacolick. Hi, Isaac. Welcome to the podcast.

Isaac Sacolick

Hi and thanks for having me. Great to be here.

David Brown

It's our pleasure. Thanks for joining us, Isaac. So we're gonna dive straight into digital transformation. Obviously, your Book Driving Digital covers this topic extensively. So look, many of our listeners will be familiar with this concept of digital transformation as it's, it's a topic we cover reasonably extensively on this podcast, but I still feel for many it is a bit misunderstood in your book, Driving Digital. 

And in your blog, you've been saying for some time that digital transformation is not simply about migrating to the cloud or deploying C ID pipelines or leveraging big data. You've said that these major initiatives are now just meeting basic expectations. I think some people will be disappointed with that because they're just meeting basic expectations. So, if digital initiatives are not these alone, then what is expected by an organisation's complete digital transformation?

Isaac Sacolick

It's a great question. And you know, I don't wanna turn people off and say thatinvesting in technologies and automating and dev ops and going to the cloud.  and putting data technologies isn't part of digital transformations. It is. But I, I want to take everybody up a ladder a little bit and look what's happening at the business level because of all these digital technologies because of the state of, you know, where customers are, are going in terms of what they can do their choices in front of them. What companies are able to do with data and analytics. It's really taken every single business by storm and saying the way you've been operating the last five years, the way you've been serving customers from an experience perspective, the way you've been using data or not using data, the types of operations and workflows that you've been doingwhether they've been semi automated or using spreadsheets and emails in between them. 

You know, all that is gonna get reinvented over the next five years and guess what? It's probably gonna get reinvented again five years after that, it's just the nature of how fast technology is moving today. And so, you know, when we're talking about digital transfer ratio, we're taking things that technology companies have been doing for a long period of time. And now saying that mainstream companies have to do these things to be competitive. And that's why digital transformation, it became such an important word roughly around the 2016, 2017 when it started peaking up. But you, you really roll back, you know, I got my front seat to digital transformation all the way back in 2000 watching newspapers and going from a print world where they were, you know, 85% of their revenue was coming from classified ads on a on newspapers. And then seeing that business model erode significantly from 2001 to this day, right? That's digital transformation. When you look at what's happening in banking today where much of the customer interaction used to be in the branch and then all of a sudden COVID hit and you can't go to your branch anymore. That's a digital transformation. 

When you look at IOT and the impact it's having on the industrial side that you measurement not only in the manufacturing process but also into the actual product that you're building, that's digital transformation. So what that's doing is it's not just changing the way we're operating and saying that applications and data is so much more important, it's changing the way we're creating products and services, right? They're in, they're straddling the boundaries of both physical and digital worlds. We're enabling new ways of customers to interact with us. And that's changing the entire way we go to market how we sell products, how we market them, how we service them, how we compete for new business. And so when you put all that together, technology, they where we're operating on the front office and the way we're operating on the back office, that's what transformation is all about. And so when you put that and you come back down into the technology layer, that means every company is trying to build up skills, process platform around technologies. We're all trying to build applications out. We all are trying to build API S out so that they interface with our applications. Well, we know we have to automate more what we're doing. We're trying to become smarter with data and analytics and that is the underpinning of the execution of digital transformation strategies. How's that, David?

David Brown

That was good. So listen, it sounds to me that the focus then should be on the business model change. So focusing on the business model, the technology is the implementation, the tools for implementation, but the digital transformation is about how your business model is going to evolve, how you're gonna be selling your products and services in the future.

Isaac Sacolick

I think that's right, but I don't want to leave out technology driven innovation out of the equation. You know, when you say it that way, David, sometimes it leads back to the separation between business and it where business at all, this is the direction we need to take the business and it was asked to follow and execute around it. So much of what business can do today comes from the innovation and the experimentation that's happening inside it around platforms around po CS that we do around, you know, new ways of doing experiments and, and experiences. 

And that's why things like DEV ops and Cloud becomes so important is because we want to do lots of experiments. We want to do A B tests, we wanna do tests around our data and see if our, our hypotheses are. Right. So it really is both a top down strategy that we're trying to implement, but also a lot of bottom up feedback that says how we should evolve that strategy based on what we're learning from customers.

David Brown

Yeah. Right. Could you have any you, you've implemented digital transformation strategies in a number of organizations? Do you have any examples of some success stories?

Isaac Sacolick

Yeah, I'm gonna share a coupleone company I really enjoyed working with over the last few years is a nonprofit here in the United States called Charity Navigator. You know, I like to describe them as the search engine for charities, you know, and where they started, where their original roots were as an organization was a watchdog. They would actually go and look at the tax forms of charities which here in the United States are public information and they would find anomalies in terms of their spending, how they were managing their finances and how they were managing their governance. That evolved to a rating system around it. When I joined them a few years ago, they had largely a manual process around their ratings. 

They were rating roughly 10,000 charities at the time. 

And their goal was to do two things evolve, their rating so that they could look at greater dimensions beyond just efficiencies and finance and governance. They want to look at how a charity was actually impacting their constituents. And then second thing is they need, they knew to expand the amount of donors using their website to find reputable charities. They had to rate a lot more than 10,000 charities. And if you look at what they're doing today, there are 100 and 60,000 charities that they're rating just a couple of years later. Um, they have a largely a it process to be in to do this. They're, they're rating on impact dimensions and other dimensions that they've added to their portfolio. And they're still operating as a very lean team based on the platforms and the processes that they put in place. A great storythat Star Cio is able to partner with them and actually implement this. And then going back to my CIO days, I was a cio at a company called mcgray Health Construction. 

Today, that company now been separated from mcgraw Hill. It's called Dodge Data and Analytics. It's a construction data company and their roots were in publishing construction information so that commercial general contractors could go bid on jobs. So essentially a database of construction jobsover a two year period period, we invested in their platforms because we knew we had different user personas that we were selling to. Some were small contractors, some were very large contractors. We knew we had those working in general contracting, others working in building product manufacturing. And we took one monolithic product set and we ended up building five products out of really a data, a NoSQL database, a data driven process,three analytics process using data visualization technologies. 

And that led to, to mcgraw hell being able to successfully market and sell that company which is still growing today. So two examples there when I look at the industry, one of my favorite examples to talk about around transformation is really Microsoft. If you looked at where Microsoft was generating its revenue last year, it 10 years ago, it was windows and office and it was C Ds and it was licensing and today they're the number two competitor with Azure. in terms of cloud marketplaces were buying office 365. You think about the internal transitions that that had to happen to make that successful and the numbers of companies and technologies that and technology that have not been successful, transforming their business model from Kodak as an example.  Microsoft is really a very interesting story and I I really encourage everybody to go read Sata's book around that. It really talks about the internal struggles at Microsoft to change your business model.

David Brown

Yeah, I mean, when he came on board, he, he declared that was his, you know, he's gonna pivot the company straight away, right? It was his number. Yeah. two interesting examples there. So the charity in mcgraw Hill. So the first example was really about enriching the data and automation. You said they had a small team. So they probably wanted automation in order to go from a few 1000 or 10,000 to 160,000. So, you know, that had to be driven through automation and they introduced a number of other metrics to their data. So it was, it's enriching the data. The second example was about in the construction company about analyzing the data they already had and introducing new digital products out of the data they already had.

Isaac Sacolick

That's largely correct. Yes, very well, very well done.

David Brown

So I mean, but that's two good examples of digital transformation, right? And both related to data that either, you know, taking data enriching it or automating it to the production of that data. Or the second one is, obviously creating new digital products and services out of the data and or processes that a company already has. So OK, there's a couple of really good success stories, how about some values? We don't need to mention names. But you know, there's some projects that you can recall failing. And perhaps more importantly, some of the reasons that they fail.

Isaac Sacolick

Yeah, I gotta tell you every transformation that I've been a part of has had speed bumps and derailments.  I have, you know, huge scars on my back from trying to get organizations to think aligned and transform. So, you know, it's not as black and white as success and failure even, you know, within mcgraw Hill and Charity Navigators, certainly a lot of issues that we had to contend with to make those transformations hit success points in their journey. And that's really what we're talking about is hitting success points in a journey.  I do talk a lot about thisin chapter seven of this book and my next book is going to have even more examples of things that organizations really have to do when they think about transforming in order to maximize their chances of of success and I'm just gonna label a few things here. The first thing is just getting to the starting gun. Right. Just recognizing that what you're doing today and how you're operating isn't going to be sufficient for you to stay in business. Five years from now, you'd be surprised how many businesses are really reluctant to get to that starting gate. 

In fact, there's a, a great comic going around. That's saying, you know, when did your digital transformation start? You know, COVID started it. Well, that to me may have digit started digitization of your business, but it didn't necessarily change your digital models. And when you look at what's going to happen over the next two years, you know, our buying habits have changed,our relationship with ourcustomers have changed and there's going to be a lot more of transformation disruption happening because of that. So first is failure to start. Ok. Second thing is, you know, the leadership of an organization has to set the ground rules and the ownership, the governance model for a transformation to happen successfully. So if you have too many cooks in the kitchen, if you don't have your budget set, right? If you don't have an aligned set of goals and objectives at the top level, it's really hard to transform. You know, I think of the many times I had to go back to a CEO and say to them, look,we need to change something that we're doing in sales. We need to change our way of doing accounting around to function and we have to change our budget mindset because otherwise I'm never going to be successful instrumenting what we're doing that requires a cohesion at the executive level that recognizing that you have to change what you're doing and it needs some leeway and some mindset shifting at the top level to make that happen. 

Sometimes we call that changing the incentives you think about. I'll share one example of Business Week magazine. We used to sell $100,000 print ads and we went back to our sales group and said, you have to start selling $10,000 5000 dollar display ads with as much voracity and, and, and, and controls around them because we need digital dollars coming in as much as we do print dollars very hard for a sales group to recognize that when they're not just not going to get the same commission. So we have to change our commission structures.  I have a great post and a video around this around the number one reasons digital transformations fail and I'll, I'll share the answer here. The spoiler alert. It's really because to be successful, it is a bottoms up process change, you know, and you could see this when organizations come up with the mega strategy and they put their cio and they put their CD o in charge of it. They come up with a nice deck and here's everything we're going to do in the next five years, we're gonna be this great business. We're gonna go compete with this one and that one and everybody goes back to their day job. Right. 

Everybody's going back to what they were doing before. And so, so much of what needs to happen, we call it change management, what I call it transformation management. It's really starting with a group of people who are going to be the instrument of that transformation and that needs to grow over time to get more people in the organization involved and part of the process and having a role and understanding what their new job and responsibilities are going to be as the company is transforming.  So that's what bottoms up. Transformation is all about. And most of when you read 4050 60% of transformations are failing. It's largely because they don't realize the people aspect of that transformation.

David Brown

Interesting. This bottom up approach is interesting because we talk a lot about first of all, driving cultural change, which is a top down approach. So I'm guessing that things like a vision statement for digital transformation is still important.

Isaac Sacolick

Yeah. Do a good job reading my blog. I talk a lot about that.  You know, look, I put out the vision statement,some quite frankly reactionary and I was seeing two things happen when I walked into organizations first is there were some leaders coming in and saying, you know, tell me what the RO I is going to be around something like this or let's talk about the KPIS that we're going to change or let's get some really structured goals on this transformation program. And I'm like, we haven't even started like working together yet. We don't know the answers to that. We need to start being able to experiment, but we need a way of expressing what is it that we're after. So I can't tell you the goals yet. I can't tell you the KP I si don't know what the RO I is going to be. I can't give you a traditional PNL business case, but I can start putting a group together and start articulating what this thing is going to look like. And one of the things I like doing with groups is let's do a headline test, what does the newspaper article read? What is the headline read in three years when we're successful? And how do we craft that message? So first is, you know, the too much detail around trying to craft what the strategy looks like. 

The other problem. I see and, and quite frankly, I see this a lot in technology organizations is when there's a bit with it, when there is a lack of, when there's a lack of vision statement specifically articulated upfront you get a lot of people working very hard, every sprint, every release, doing the next thing that's on their list and they sort of get lost, lose sight of the problem statement. And so I come in and say, ok, you're doing this work on master data management or you're doing this work on improving the experience around this application. Tell me what problem you're trying to solve and who's the customer and what's the value trying to solve for them. And quite frankly, not enough people in the organization know it, the product manager might know it, the product owner and I'm using agile terms here, they might know it. But I go talk to the developer, I go talk to a tester. There's somebody in operations who every two weeks is responding to an incident. I asked them and they have no clue and it's not their fault. I mean, communications is really hard. And so the vision statement is really about taking one piece of paper that everybody can see that understands what, who the customer is on one side and what the strategy is on the other side and what's the time frame for that vision. And I have a vision statement that does that.  if you are interested in seeing it, you can go to the blog post around it at stars dot com slash vision statement and you can get to the blog post that I talk about that one.

David Brown

Perfect, excellent this vision statement is obviously important, but you talk about this, the also equally important, this is bottom up approach that is the engagement from those people which are gonna actually be implementing the transformation. And you'll also mention the importance of experimentation. So the experimentation to test and pilot new projects and see if they work and, and and to to, to develop the digital transformation strategy and presumably learn from mistakes and, and get started that you've also talked about in your blog, technical debt, technical debt that can be introduced by these pilot projects, which if they're done around shallow goals and they're not being driven by a clear vision from the top down that there's this danger that these projects, this experimentation and pilot projects could be just introducing more technical debt into the organization which they're going to have to deal with one day. Can, can you run us through that a bit in, in more detail?

Isaac Sacolick

Yeah, I mean, you're touching on two topics there that I do think intersect. I'm gonna talk aboutinnovation and poc and pilots first and then we'll get to technical depth. I thinkyou know, on that side of it, there are gonna be times when you are gonna do some innovation, some R and D for R and D sake, right? You're gonna go exploring a set of platforms because you have no idea whether or not that particular platform has any business value and you should do those things. You know, if you're investing in machine learning and you don't know what model ops is and you want to go do a POC with a company or with a piece of technology that allows you to do model ops, go do that. If you want to go test a low code platform, go test a low code platform, right? So these are things that are truly important. I think that experimentation for technology's sake needs to go into the governance model of any agile team that says, you know, over a period of time, whether it's a release a quarter, however, you want to measure a duration, there needs to be some time where you can actually do experimentation for experimentation's sake. 

The question is, when do you start rolling these things up? When do you, they start saying, OK, we've, when does this learning exercise really end? And I, I actually talk a little bit about that in the book on, on chapter six. when you're actually doing that level of planning and you don't really know you, you sort of learning your problem statement while you're experimenting with the solution. At the same time, you start, you need to put it together some questions. You go through that POC, you go through a spike, you get some answers and you go back to your sprint and you say, do I wanna go do another sprint exercise? Around this particular problem because I think it's worthy of investing in it. Or maybe I've hit a dead end. This is notan answer I want to get to, I want to go try something else. So I, I think, you know, when you put in, I gotta do some experimentation, I gotta do some innovation. It's got to help me answer some questions. I'm doing it very transparent in my agile process. It's not some skunk work. It's not something that's running for three months without an end to it.  That's very healthy innovation from my perspective because everybody is aware of where you're starting from and you're trying to get to problem solution at the same time now where that leads into technical debt. 

I mean, let's talk about some of the reasons organizations end up with more technical debt than they should and actually I have different answers for than some people. Number one. I think that if when you look at investing in technology and you look at why you're putting a developer to solve a problem or why you're putting an engineer to solve a problem and I can draw a straight line and, and from that problem into a couple of categories, one of those categories might be help the business move something forward. I'm doing something for a customer, I'm doing something for an end user. I can see the business impact from what I'm doing and sometimes I'm doing something to solve a technology problem. OK. When I see a average company, a non tech technology company investing code to solve a technology problem. I'm gonna take a step back and say, why are we building this? There's probably somebody who has solved this before in a platform, in a library and get somewhere with a methodology that I can go borrow and leverage in my environment. And so when companies decide I gotta go build this myself, I gotta go build a custom C MS today as an example because I think what we're doing is so unique that I'm gonna go do this.  Those are the kinds of things that lead to technical debt because now if it makes it into production, I have to support it, right? And support it means deal with all the things that somebody who's doing this professionally is probably going to build into their environment because they have multiple customers using it. So that's one thing that leads to technical debt. Let me tie it into Po CS for you as well. Second thing happens is when you build something without defining the constraints of what you built, right? So I built a POC, the customer loves it. Let's get it out into production tomorrow. 

Well, that might be OK. I might want it out in production, but I need to put a disclaimer. Hey, this thing was designed for 100 users. This thing was designed for a database that shouldn't grow more than 10 gigabytes in database. And I'm gonna put that directly in my vision statement before I even start coding. This is the box I'm going to live in that I'm building toward that we're all aligned to because if we start growing outside of that box, I need to go back and reinvest in it. OK? So that's another reason tech, that the third thing I see happening is look, there's just organizations that think that agile and development and engineering is always about adding new capabilities, not necessarily maintaining them enough.  I have a blog post out there about how to get product owners to, to sign up and prioritize technical debt. And I have a very simple formula for this 30% of your backlog, whether it's measured at a release level or a quarterly level, you get to decide, but 30% should really be addressed to used to address technical debt. How do I come up with? 30%? I go back to the old days of software licensing. I pay 20 percent to my software vendor for ongoing maintenance. Most organizations are not software vendors, they're not as efficient as software vendors. So I asked for 30% and it's just that simple and I'll be lucky and I get, I'll get lucky if I get 15,

David Brown: fair enough. You've previously written about killing silos and then being crucial to driving digital transformation, killing silos within an organization. So what does it mean by operating in silos within an organization?

Isaac Sacolick

Yeah, I'll show you two examples that I see very often. example, number one isfailure of an organization to set reasonable priorities that are aligned to a reasonable set of objectives. So when I come into a company and there's 300 people in it and they have 50 priorities, I'm like, really? Is that going to work? Ok. Now, let's say they whittled it down to 10. Sounds reasonable. Right. I have 10 priorities. I'm gonna have 10, you know, 10, you know, teams of 30 people. Well, I just, I call that 10 silos, ok, until I understand how they are all aligned. So I always tell organizations the same thing that we expect of our teams. They go to a backlog, they have a number one priority, they have a number two priority, the number three priority and then they cut off the list and say I commit and that's as far as I can do this sprint. I do the same thing with executives. Right. Let's figure out what the number one priority is and let's resource it to make sure that we're 100% successful before we get into the next one. Ok? And before you know it, you're gonna run out of steam when you do it, that methodology, but you're also gonna drive more success around it. The other way I see silos is you know, when I talk about, for example, data technologies or agile or even dev ops, you know, early stages when you walked into an organization and you dropped those words, people were learning what they meant. OK. 

And I remember doing agile 15 years ago and explaining stand ups and why a retrospective and why two week sprints were, were even, most people were learning that from the ground up and starting to instrument it. When you walk in today, people come in and some have done safe and some have done less and some have done D ad we talk about data technologies. You know, some are strong proponents, everything should be in SQL. Some have done had successful doing no sequel. So everybody comes together and they have their own digital lens in terms of how to operate. And so that creates its own set of silos. And a lot of what we do at Star Cio is really bring people together and say, all right, we know you've had success with A B and C in your past. We know you have an understanding of a methodology or a technology, what makes sense for this organization. And so we spend a lot of time trying to get out of silo, thinking around how to operate and saying, let's get to one set of operating models for a set of use cases and that's really about killing silos.

David Brown

We’re currently living through this revolution, this digital revolution at the moment and, and people like yourself are, are writing about it and giving people practical road maps to work their way through it. I want you to put on your futurist hat that now though, because presumably like the industrial revolution, most organizations at some point in time will have undergone a process of digital transformation. They'll become agile organizations. They'll have innovated their business process and their business model, they'll be delivering value to customers through digital products and services at speed. So how long do you think this process is gonna take? This digital revolution process is gonna take and where would it end up? Where's it gonna end?

Isaac Sacolick

Well? Let's leave the word digital transformation just for a second and maybe answer talk about, you know, how much evolution our different companies are going to have to have because of the nature of technology, because of the nature of data.  and, and, and other factors as well.  And so I think about if you roll back the past, you know, were we done investing in technology after the PC revolution or after the internet revolution or after the mobile revolution? And now maybe you want to call it the cloud or the micro services or the low code or, you know, some revolution of technology that we're in today. And then, you know, maybe in 20 years we're gonna be talking aboutgeneralized, generalized a I or convers of A I. So, you know, we're still in an evolution where our business models are going to continue to change because our technology and our ability to work with larger data sets, our ability to connect the physical and digital worlds is still evolving. 

And if you want to ask me where this is going, you know, how far can I stretch my imagination? We still have huge problems around our environment. We still have a huge problem around a pandemic right now that could repeat itself in another decade with a different issue. So we still have lots of runway of major issues that we do not have technology solutions for. We have a couple of people out there that are now pushing our boundaries to get to Mars and that, you know, they're going to stretch that limit of human capability and then we're going to be starting to evolve our ability to run our businesses so that, you know, maybe in 100 years we're running global technologies or, or planetary technologies and asked me, where is our imagination? Really going with this? Honestly, I think Star Trek, I do, I, I think Star Trek, I mean, we had printers, we have 3d printers, we're now beyond Berger, right? Where does this go next? I don't know. You know, I, I think we're gonna be evolving for, for a long time. I don't think-

David Brown

I've just finished that discovery, what an awesome series and the technology they showcase and that is awesome as well. That's a great analogy. Isaac, I was reading your reviews for digital, driving digital in Amazon. And there was this recurring theme is that you cut through the BS straight away in your book and get to practical execution strategies. I think that's very clear from today's podcast is there's really practical advice there. Thank you so much for joining us today on the podcast.

Isaac Sacolick

Thanks for having me. It's a great conversation. Great, great questions. Love having you and, and, and thanks everybody for listening.

David Brown

And where can, where can our listeners follow you and learn more about what it is you do.

Isaac Sacolick

You know easy ways. You know, find me on Twitter. If you ask me a question on Twitter, I always answer it. It's Nyinyike on Twitter.  You can go to my blog. I have over 500 posts on my blog covering 15 years of digital transformation, Agile dev ops. That's blogs.starcio.com. And then look for my youtube channel. I put out a youtube video every two weeks. It's called Five Minutes with NY I. And it's usually answering a question like, you know, what's a good KPI for agile or what should a technical do in agile? And I'm always answering questions around that. So just three of the avenues you can find me.

David Brown

Good stuff. Thank you, Isaac.

Isaac Sacolick

Thank you.

Kevin Montalbo

All right. That's a wrap for this episode of Coding over cocktails to our listeners. What did you think of this episode? Let us know in the comments section from the podcast platform you're listening to. Also, please visit our website at www.torocloud.com for a transcript of this episode as well as our blogs and our products. We're also on social media, Facebook, LinkedIn, Youtube, Twitter and Instagram. Talk to us there because we listen, just look for Toro Cloud on behalf of the team here at Toro Cloud. Thank you very much for listening to us today. This has been Kevin Montalbo for coding over cocktails. Cheers.