Episode 169 – How You Can Stay Ahead of Digital Disruption
Steve Shallenberger: Welcome to all of our Becoming your Best Podcast listeners, wherever you might be in the world today. This is your host Steve Shallenberger, and we have an amazing guest today. He’s brilliant, he’s the founder and CEO of Tasktop and he drives the strategic direction of the company and promotes a culture of customer-centric innovation. Welcome, Dr. Mik Kersten.
Dr. Mik Kersten: Thank you, Steven. Great to be here.
Steve Shallenberger: Oh, this is gonna be a fun interview today. And before we get started, I’d like to tell you a little bit more about Mik. First of all, my brother in law’s named Mik, Mik.
Dr. Mik Kersten: Oh, really? Wow.
Steve Shallenberger: Yeah, there’s not a lot of Miks around, are there?
Dr. Mik Kersten: No.
Steve Shallenberger: He’s a great, great guy. Alright, now, before Tasktop, Dr. Kersten launched a series of open source projects that changed how software developers collaborate and as a research scientist at Xerox PARC, he created the first aspect-oriented development environment. He received a PhD in Computer Science from the University of British Columbia. What a beautiful area, Mik!
Dr. Mik Kersten: It is!
Steve Shallenberger: And his research interests focus on Value Stream Architecture. Dr. Kersten has been named a JavaOne Rock Star speaker and one of the top 10 Java writers of the decade by IBM developerWorks, and in 2012 he was awarded the Business in Vancouver of the decade. Well, of Top 40 under 40, right? Did I get that right?
Dr. Mik Kersten: That’s right, yeah, the Top 40 under 40.
Steve Shallenberger: And has been a World Technology Awards finalist in the IT Software category. And Dr. Kersten is the editor of the new IEEE software department on DevOps. You wanna tell us what that is?
Dr. Mik Kersten: Oh, sure. So, I’ve been studying this space for a while and working in this space for a while, in terms of how we deliver technology and support of our companies, our businesses, and, in the end, our society, and there’s been this DevOps movement, that’s a big part of that, so I started writing in for the IEEE software and all of those writings have actually culminated in a book I recently published, in “Project to Product”, so it’s just been an interesting journey.
Steve Shallenberger: Oh, great. Project to Product, is that right?
Dr. Mik Kersten: That’s right.
Steve Shallenberger: And what is IEEE? You have to, you know, slow it down a little for me. I got most of this, but not every little bit.
Dr. Mik Kersten: Oh, no problem. And I know there’s way too much technical jargon, perhaps, in this bio, but it’s one of the professional bodies that governs technology. So, it’s a professional body where different electrical engineers and computer scientists and so on, publish some of their work, so it’s really an academic body. We’re sort of publishing these interesting changes in how we architect software, because of what I realized is that we’ve been spending too much time looking at technology for technology’s sake and not quite enough at technology for people’s sake and for management sake as well, so…
Steve Shallenberger: Okay, good. I’m just thinking that one or two of our listeners are probably wondering, “What are we gonna talk about today and how does that impact me?” So that’s a good question, but I think you’re going to discover to our wonderful listeners that this is quite relevant to every single one of us. So let’s start out, Mik, first of all, telling us about your background and including any turning points in your life, that’s had a significant impact on you.
Dr. Mik Kersten: Absolutely. So, I guess I could start this story with… You know, when I first went to Univerisity, I was really very interested around the humanities, around people and I actually started studying at first a bit of philosophy and other things, but then anthropology. I became very excited around anthropology and this was back in ’94, so we were just starting to do things like send emails to each other back then and just do things like web-based chats on computers. My father was working in Hong Kong at the time, I remember, and we were actually chatting back and forth on the very earliest chat program that there was. And I will never forget this moment, where I started realizing that there was something interesting happening between technology, which had been around for a while, I had actually learned how to program when I was 10 years old. I learned how to program before I learned how to speak English, in fact; but I realized that it was changing. It wasn’t that computers were just there to crunch numbers on spreadsheets anymore. They were changing how society was starting to work and I will actually never forget this moment where I picked up a Wired magazine and just kept reading it. I have read it a few times before, but I thought there’s something so fundamental going on here, in terms of how communication and technology are affecting our society already, ’cause we were seeing glimmers of it back then, that I realized this was more interesting in terms of anthropology and studying people than anything I was doing in anthropology. So I actually went into Computer Science. And that was a defining moment, and even more defining was just how hard Computer Science was for me; I was way behind the math you had to study and some of that more engineering mindset, so I struggled, but I kinda came out on top and got more and more interested in the field. So that was an interesting and roundabout journey, compared to other people who just studied math and programming early on.
Steve Shallenberger: Yes. I was just talking with a fellow who serves on the board of trustees of a major University. I mean, this is a high-tech University. He said, “What’s interesting is, our students that come in are freshmen; whatever they’re thought is already outdated by the time they’re a senior.”
Dr. Mik Kersten: Oh, yeah, it’s actually incredible, is… And this is where this pace of change that we’ve seen in technology, especially over the last 50 years is so interesting and, in some ways so problematic, and in fact, the way that the Project to Product book starts is to talk about these five different technological revolutions that we’ve had, because I started to ask myself, “Has this pace of change, always been the same? Is it going to continue forever?” Is it going be exactly as you just said, Steven, where you start University and four years later, the programming language that you learned is obsolete, which, more or less, happened to me. There’s something interesting going on here, and I became very curious whether this is something we’re going to see permanently, whether this will continue, or will it slow down, or something change?
Steve Shallenberger: Well, great. I can’t wait to hear more about the book that you’re writing and some of the observations that you’ve made. Let’s start with, what is Digital Disruption?
Dr. Mik Kersten: So, we’ve been through these different kinds of disruptions and I think digital disruption is simply the latest one. So, if we look at… There’s just been this brilliant book in my mind, a very, very dense book I should say, written by Dr. Carlota Perez, and it’s called, “Technological Revolutions and Financial Capital.” And some of her theories are actually the anchor for key parts of my book. So, she takes us through – in her book, which by the way, was published in 2002 – five different technological revolutions. And these are what we think of, as sort of the long economic waves that we see through history, right? It all started with the Industrial Age and following the Industrial Age… by the way, these things happen approximately, these kick off approximately every 50 years, so that started 1770 – 1771. Then we had the Age of Steam and Railways. And then we had the Age of Steel and Heavy Engineering. And then, we had the Age of Oil and Mass Production, and now, around the ’70s, at the time that the microprocessor started, we’ve had the Age of Software and Digital. So, the really interesting thing about Dr. Perez’s theories, is that each of these waves, has actually broken up into two different parts: the first part is called The Installation period, where some new means of production, say like electricity, or mass production, the ability to build cars, like Ford learned at the turn of the last century, some means of production becomes much, much cheaper. And with that, we have this big installation period where lots of different companies, lots of financial capital, so people wanna get reach off these new means of production, a lot of that just starts firing up and creates this frenzy. And it’s a frenzy of creative disruption, where you’ve got so many different startups and companies trying to leverage this new means of production. And that’s what we’ve had, since the ’70s with software. We’ve had this period of creative disruption, we’ve had this frenzy, we’ve had all this venture capital pursuing this new means of production, which is all around software. And that’s really what digital disruption is. It’s going after those entrenched businesses and creating and providing a digital experience, and in the process, that creative disruption, displacing some of those businesses.
Dr. Mik Kersten: Then, in Dr. Perez’s model, you get through a Turning Point and after the Turning Point, there’s something called, The Deployment Period. So the Deployment Period is when the rest of the economy, the rest of the world’s organizations start to master that new means of production. And, at that point, it’s actually no longer financial capital at the helm of the technological revolution, it becomes production capital. And that means the capital that’s in the hands of the companies. So just to give you an example, earlier in the Digital Age, you had companies, and I’ll just use the example of consumer electronics, consumer devices because we all know those pretty well. We had companies like Jawbone creating cool Bluetooth headsets and really innovating that space and creating speakers. They actually raised almost a billion dollar of venture capital, but because we’re getting through this turning point and we’re starting to see the end of the turning point, it’s no longer possible for financial capital to compete with production capital that same way, which means for Jawbone to compete with a Samsung or an Apple, becomes impossible because consumer hardware has already been mastered and that means of production has been diffused, which means that company went out of business, right? It didn’t even get to a fire sale. Jawbone’s gone. So, that’s really this world that we’re in. We’re in the middle of the turning point, where digital disruption means that traditional businesses, even some newer businesses, like the Jawbones of the world, not just the blockbusters, not just the brick & mortar retailers, they’re being disrupted by companies who have mastered the new means of production and the new means of production is all about software delivery.
Steve Shallenberger: Okay, so, how does that affect brick & mortar companies, service companies, let’s say HVAC contractor, you know, those that might provide services to a home. How about, let’s just hit some different industries. We already see what’s happening, for example, with Tesla. They’ve closed most of their, if not all their shops, right? Their service centers. People order online at Tesla. Would that be part of what you’re discussing, part of what you’re talking about?
Dr. Mik Kersten: Yes. So let me actually answer… I think you had a few interesting points there, Steven, and we’re gonna take those one at a time. This digital disruption, this turning point that we’re in, in the Age of Software, is going to affect the entire economy. Now, it’ll affect different parts of the economy in different ways. So, we will have businesses whose business model simply go away, because a digital experience is going to supersede it, right? If consumers actually elect that they do not want to go to stores, to get their daily goods, they want those delivered to their door, it’s possible that Amazon actually completely displaces the Walmarts of the world and all those other stores. So, we’re seeing that kind of disruption, we’re seeing it more in retail, actually, and this is something we’re familiar with, with companies like Sears, so brands that have been around for ages, going out of business, going bankrupt in some cases. In fact, if we look at the stock price change of retailers, between 2006 and 2016, Amazon has grown almost 2000%. Almost all of the others have dropped, right? That’s how serious digital disruption has been in retail. And it’s going to happen across all parts of the economy that are affected by digital experience. So, basically, whenever we have a relationship with some service, some product, that can be changed through a digital experience and that’s something that consumers will elect to do, they prefer that; it somehow gives them better value. We’re going to see this. So we’re basically going to see across all parts of the economy. And not just the consumer parts of the economy, you can even look at the primary sector and the way that resources are extracted right now is very heavily dependant on software. It’s become very… Much more software intensive to figure out where to look for oil, where to look for gas and all of those things. So, we’re seeing software as the driving factor for helping businesses compete and the businesses that are slow to become digital and to have their operations based on software, are the ones being disrupted.
Dr. Mik Kersten: So I’ll just get into your Tesla case right now. Geoffrey Moore has this great book called, “Zone to Win”, which describes a different kind of disruption. So, you can have an infrastructure model disruption, which is really how you’re delivering your good to your consumer; an infrastructure model disruption, something that Tesla’s doing, just as an example, they’re changing the experience that’s the car, right? The car is now driving more autonomously, it’s an electric car, it’s a different product and it’s very digital. It’s got a very large screen. So it’s a very different model. And people think of Tesla’s disruptive in that way, but with Tesla, Steven, is actually a much more profound disruption, which is the fact that Tesla’s changing the operating model of the customers relationship with the car, by taking dealerships, which they’d already done, and now, even their own storefronts out of the equation, and having the cargo directly to the consumer, through the web experience, that’s a pretty significant disruption, when you think of all the businesses that are founded on the old distribution model, that Tesla’s changing. And then, Geoffrey Moore speaks of one more kind of disruption, this is called the Business Model Disruption, where the consumer’s relationship with the offering changes completely. And so this is what Uber’s doing, and this is what, even the Teslas of the world need to be worried about, because, if all of the sudden, the ownership model changes, and it’s more about mobility and just getting driven around in an autonomous car that an Uber picked you up in, well that could even disrupt all sorts of other vendors.
Dr. Mik Kersten: So I think what we’re seeing, in terms of all of these services and products, the software will power the changes, the companies that will be better at building that software will be the ones who thrive. We’ll see a lot of businesses fall through in the process, The nature of the services that we provide, so back to your HVAC example, I think there’ll be less disruption in parts of the economy, right? The services sector might be considered less disrupted than other parts of the economy. But, the way that the service is delivered it and what they’re delivered for, will change as well, with, let’s say, Tesla now bringing a repair man to your door, as well. So I think the change is… We’re just really starting to see the scope of the change because we’ve been through this installation period, it’s going to go very broad, very quickly right now. And really change the way we all work.
Steve Shallenberger: Well, Mik, you bring up a great point too. Let’s take the HVAC company or others that are services related, even though, and we’ll see how this all plays out, and certainly, will play some role, software, internal software, can give that company a competitive advantage. So, yeah, even the delivery may still have to be in person, but as I’m reading from what you’re saying, this has both an internal and external impact.
Dr. Mik Kersten: It does, it does. And it’s kinda like, there’s the companies whose services are software, are explicitly software, such as Netflix, and social networks and so on, but then, there are the companies, whose operations depend on software, and increasingly, that’s going to be everybody, other than you know, maybe some small businesses and agencies and so on. So, it affects everybody and I think that’s a really key point, as the bank who’s become better at creating their internal software, will outcompete the bank who hasn’t and who’s potentially outsourcing all their software. So, software and digital is becoming core to running pretty much every business. And then there’s… I do wanna distinguish two kinds, cause for those of you listening, who are running small businesses, this is really just about gaining, as leaders, as employees and as team members, competency in using these digital technologies in the workplace. But, as the businesses get bigger, it turns out they actually have to build their own software to maintain their relevance. So, it’s being able to build software, being able to manage developers for any company that’s at scale, even any Government institution, that’s at scale, becomes a really, really critical thing.
Steve Shallenberger: So, this is one of the things that can differentiate a company, is their capacity to produce a software that best serves their customer, and so that’s a unique approach that makes them different and perhaps allows them to serve their customers better. Is that what you’re saying?
Dr. Mik Kersten: That’s exactly what I’m saying. And that’s actually the whole point and the whole motivation for the book, which is, what I realized is that we’ve got some companies in this age of software, that have become very, very good at building software and at managing software and having a leadership, an organizational structure that supports that. And those are the FANGs, the Facebook, Amazon, Netflix, Google, you can add Microsoft in there, you can add some of the ones from China, like Alibaba and Tencent and ft.com. If you take those eight companies, the wealth that they’ve accumulated, through creating these digital offerings, actually puts them as the third largest economy in the world. So, at the size of Japan. That’s how much wealth has been created by these companies, who have become the masters of software delivery, right? Think of Visa as the new robber barons in the Age of Steam and Railways, that’s how much wealth have accumulated. And the problem with that is the world where there’s that much wealth concentration and the new means of production is controlled by so few, is that it’s not a great world for everybody. And so, what Carlota Perez actually predicted, very interestingly, back in 2002, is that we would see the same thing that we saw in other technological revolutions, towards the end of this turning point, which is that we would start to see regulation, talk of regulating these companies, right? And that’s one approach. I’m just not holding my breath at how long that will be, because signs of effective regulations are just barely beginning. It’s unclear to me when that would happen. So what I realized is that the best hope we’ve got right now is to teach the rest of the world’s organizations how to master, how to thrive in this Age of Software and Digital.
Steve Shallenberger: Yeah, okay that’s terrific. So amazing, so stimulating and thought-provoking. So, I know that you thought about this and probably have included this in your book and I’m excited to study this more. What are your predictions for the next decade of software delivery? Where is this going?
Dr. Mik Kersten: Yeah, so that’s an interesting one. It really is looking at what happens when we get through the turning point and into this deployment period where my hope is, and my whole goal is, that the rest of the world’s organizations are getting better and better at mastering software. So, first of all, there’s a very broad range of organizations. We’ve got healthcare companies, we’ve got companies running the software in their hospitals, we’ve got companies that are citizen services, well, we’ve got citizen services in the Government and so on. And so, I think what’s going to happen, and this goes back to your point about the University students, the things they learned are obsolete by the time they’ve graduated, I think we’re gonna go away from this age of frenzy and invention, where everything is moving constantly and now we have mobile and then we have internet and things and then we have Cloud and so on; I think on the technological front things will stabilize. Some, right? It will actually… This is what happens towards the backend of a technological revolution, which is the pace of invention actually slows and, you know, look at your phone. The pace of the invention is absolutely slowed on your phone. It’s almost… If we’re just standing four feet away we can’t even distinguish which kind of phone someone’s holding. Things are starting to stabilize, and so this age of invention starts to pivot into this age of adoption, where all these companies are getting better and better at adopting software and digital technologies, and adopting it for their business models, for their customers, and for their domains. So, we go away from just a small number of companies who are the tech giants and if we know how to manage software to scale, the software becomes critical to every niche; to how we provide healthcare services, how we provide mobility service and so on… And citizen services. So, I think we’re gonna see that that pace of innovation slow, I think things like artificial intelligence will become actually a part of that, so there’s still interesting things that will happen, but I think what we’ll notice is we won’t have self-driving cars tomorrow. We’re seeing less of a pace of invention, but the benefits of software in technology and digital can now be applied to more and more organizations.
Steve Shallenberger: And this will have a huge impact, no doubt. You just mentioned artificial intelligence, and robots and self-driving cars and drones, so I like what you’re saying, is figuring out how to really apply it and become the best at what we do in delivery with were at before another revolution begins.
Dr. Mik Kersten: Yeah. And then, by the way, these revolutions, as Carlota Perez talks about them, I’ve talked to her about this several times now, as well, over Skype, is when we’re in one revolution, we cannot fathom what the next one is. So just, in our minds, we should consider that this one’s gonna last a while and because we can talk about artificial intelligence, it’s probably more part of this one, at least the way that we envision artificial intelligence today. So, this pace will slow, but the complexity of software it’s just going to grow, like crazy, right? We’re already dealing with the fact that companies cannot keep up with the complexity of the software. We’ve seen these breaches these companies have, like the Equifaxes and Targets of the world. And that is because they’re trying to innovate, they’re trying to deliver faster, they’re trying to create these digital offerings. Now just this week we saw what happened with Boeing 737 Max 8. The design of that particular feature actually has an effect on how a plane handles and whether it stays in the sky. So these are all things based on software. And until these companies, the world’s companies get better and better, at mastering that software, making it secure, at keeping our data secure, if that’s their business model, then we’re going to see more and more problems because the complexity of the software is growing to almost unmanageable proportions.
Steve Shallenberger: Let’s just deviate, just a little bit, and then maybe we can come back and wrap up with some of this discussion where we’re at now. Why does project management cost center, budgeting and organizational charts, as a way to manage teams actually drag organizations down?
Dr. Mik Kersten: Right. So, remember when we just talked about, at the start of this discussion, these five technological revolutions.
Steve Shallenberger: Yeah.
Dr. Mik Kersten: An interesting thing that’s happened with each revolution is that a new managerial principle formed. So, back in the Industrial revolutions, that the innovation on the management side was factory systems and then, in the Age of Steam and Railways we got subcontracting. That was a pretty significant innovation. Then, in the Age of Steel and Heavy Engineering there was something called scientific management, or Taylorism, that formed, and this was really the ability for organizations to divide and subdivide work and dish that out among workers and really treat their workers, more or less, even though this may have not been the intention, as cogs in a big machine. Then, in the next age, of mass production, Henry Ford realized that, well, this may not be the best way for us to treat our workers, he decided to pay workers twice as much as his competition and to invest in his workers, and invest in their knowledge and training and that actually became Fordism. So mass production companies that have been successful have adopted Fordism. If you treat your workers like cogs in the machine and dehumanize them to that point, chances are you’re not gonna thrive as a car company. And the problem that I’ve noticed is that a lot of traditional businesses, so large organizations, the banks, healthcare companies, insurance companies and so on, they have grown up in this age of Taylorism and so the way they think – that’s where their businesses where started back in that age, a good number of them – and project management as a discipline, is actually all about treating people like replaceable, fundable resources. You just allocate work to people, they get it done and you’ve got your dam or your building, right. That’s one of the big innovations during project management was the ability to create something as complex as the Hoover Dam. But if you’ve got a creative discipline and software is creative, it’s about design and experience and listening and understanding to your customers, your users and so on, this notion of project management of trying to run everything through costs and budgets and basically take everything creative out of the loop, it just doesn’t work. So companies, and this I’ve realized is one of the big bottlenecks for traditional businesses, trying to do digital transformations, is it trying to do it with project management as the manager of discipline and it’s a complete failure, in terms of being able to provide the kind of leadership, the kind of environment, the kind of culture that you need to be a software innovator. So, hence, the title for the book. I think Project Management is a complete dead end if you’re trying to transition to this world of software and digital and you have to take this customer and product and offering centric focus in order to transition and to really understand how to innovate.
Steve Shallenberger: Yeah, it actually has the opposite effect, that they had hoped it would have.
Dr. Mik Kersten: Well, yes, exactly, because I think that’s what happened is that a lot of organizations learned how to master complexity through project management, through decomposing these things. But that only works if you’ve got a simple problem domain; a building is a relatively simple thing. You can break it down to all these processes and it’s a well-understood problem. Building software that’s never been built before, and never run at the scale of the internet before, you have to learn as you go, and the good companies have created those feedback loops. That’s actually what this term of DevOps is all about. It’s about flow and feedback. So, if you’re trying to pretend that you know upfront what you’re software will look like, the way you might at building you’re wrong, you’ll fail, and that’s why these digital transformations fail more often than not and you fail because you’ve used the wrong approach to try to conquer that complexity.
Steve Shallenberger: Yeah, exactly. You’re trying to unleash the creativity in people. You know, I am always blown away how fast these podcast interviews and shows go. I mean, we’re at the end of our time.
Dr. Mik Kersten: Oh, wow, that did go by fast. Those were some interesting and fun points, Steven, thank you.
Steve Shallenberger: Oh, great. Any final tips you’d like to leave with our listeners today, Dr. Kersten?
Dr. Mik Kersten: I think the main thing is that if you feel like you’re in one of these organizations that’s being disrupted, that’s going to get disrupted or working with a large or mid-size organizations, that are going through these digital transformations, I think, do take this bigger perspective, in terms of where these things are headed, how your career or your path within these organizations needs to be modernized, because a lot of things will be changing over the coming years. And I think having this perspective of this massive shift into a new way of leading and managing and producing value through knowledge, through software, is really important to wrap your head around, because the things that worked in past ages, we’re seeing those things fail at an accelerated rate now. And I think there’s, again, the great thing that Carlota Perez talked about is, after the turning point, you’ve actually got a Golden Age. You’ve got a period of wealth generation and I think everyone owes it to themselves to become a part of that and for, basically, all the wealth that’s been created and concentrated tech giants, to be more broadly distributed in this age that’s coming.
Steve Shallenberger: Well, what a delight. What a delight to have you on this show today, to hear your insights, your thoughts, so stimulating and so relevant. Its very much appreciated and how can people find out about what you’re doing, Mik?
Dr. Mik Kersten: mik_kersten on twitter, so check it out there or go to projecttoproduct.org to learn more about the book and the mission and the vision there. I would love to hear from you.
Steve Shallenberger: Well great. Thank you, Mik for being part of this show today! What a really exciting and stimulating and inspirational visit this has been.
Dr. Mik Kersten: Thank you so much, Steven.
Steve Shallenberger: All of the above, and we wish you all the best to your making a difference in the world. We have an exciting world that we live in, and to all of our listeners, this allows us, this kind of thinking, literally, to use our efforts and influence to make a difference, to stay ahead of the curve. And also, remember the human side, this whole issue of becoming your best, this is right in the heart of it and it’s this technological side, but also the relations that we can bring together and this is what creates, really, the difference. Thanks again, Mik, been great.
Dr. Mik Kersten: Absolutely, thank you so much, Steven.
Steve Shallenberger: Wishing all of our listeners the best, this is Steve Shallenberger with Becoming Your Best Global Leadership, wishing you a great day!