MC Escher impossible stairs
Is it possible to lead digital transformation from the middle of a bureaucracy? What do you say to critics of the digital transformation reports at IBM, Novartis, and Michelin LINKS because they are mainly about the CEO role? “I’m not a CEO,” I’m told. “How could I possibly lead change? My firm is so bureaucratic it’s looks like an Escher drawing. No way it can change.”
The Middle Plays An Unexpectedly Crucial Role In Digital Change
Yet, as most big firms see the inevitability of digital transformation and make huge investments in it, mid-level managers may as well get ready for the digital revolution that is coming to them soon, even if their current work has no obvious digital dimension.
Moreover, if they look closely at cases on a success path, like Novartis, they will notice that these efforts began in the middle to cope with the Covid pandemic.
Indeed, an earlier study by knowledge gurus Davenport and Prusak showed that most innovations originate from the middle of a firm, not the top. (Example: AWS at Amazon.) Even digital transformations inspired by the top require leadership throughout the organization to implement, as Marco Iansiti and Satya Nadella report in HBR.
Indeed, when mid-level managers reflect, they see they don’t need further permission or money to proceed with value-creating initiatives. A survey of mid-level executives from a dozen firms from around the world showed that a remarkable 97% considered that they already had enough money and authorization to proceed.
The Seven Steps Of The Mid-Level Change Agenda
Just as there is a seven step agenda for successful CEO-led change (See Figure 2 below), so there is a seven-step agenda for leading digital change from the middle.
1. Make a decision to lead change, understanding the risks that you are starting something not explicitly mandated by the existing rules and permissions.
2. Select your opportunity, choosing an area where digital technology can make a big difference for customers; don’t waste time adjusting the bureaucracy.
3. Us stories to inspire change, to communicate the change in a way that inspires enthusiasm.
4. Build a coalition of enthusiasts, choosing those believe strongly in the cause, not simply a coalition of the willing.
5. Get started, with pilot efforts that will show whether the idea is viable.
6. Engage a sponsor at the top, recognizing that as the change effort grows, it will need top level sponsorship to be sustainable.
7. Get resources to spread the change throughout the firm and measure usage
The Case Of The World Bank
The World Bank, an early example of digital change, is an international organization whose goal is to reduce or eliminate global poverty. It’s full of brilliant people, has tons of money, and a mission to die for, yet in the 1990s, it was very bureaucratic. Everyone reported to bosses, who reported to bigger bosses, and so on up the chain. Many reviewers could second-guess what needed to be done. It was a global business, which in 1990s was conducted face-to-face, with lots of global travel. Everything moved very slowly.
In February 1996, as director of the Africa Region, I was responsible for a third of World Bank operations. Then the scene abruptly changed. The World Bank president died. My boss unexpectedly retired. Someone else was appointed to my position.
When I visited the top management and asked whether they had anything for me, they replied, “Why don’t you look into information?” In 1996 at the World Bank, information had the status of the garage or the cafeteria. I was not being offered a promotion. I was being sent to Siberia.
Using Digital To Share The World Bank’s Knowledge
Information? In 1996, World Bank was drowning in information. Clearly, if we cleaned up this mess, we would save money. But we would still be the same slow-moving public sector lending organization. And people were asking, “Does the world really need a slow-moving public sector lending organization?” Simply making the World Bank more efficient wouldn’t help answer this question.
So why nor share our knowledge? The World Bank had immense expertise in many sectors but it was hard to access. Borrowers could. But others were out of luck.
Why not reverse this? Why not make it very easy for anyone to find out what we knew? Then we could be a more useful, even exciting, organization. Why not become a knowledge sharing organization!
The initial response, even from colleagues, was negative. “Get real! This is the World Bank! We’re a bank.”
I tried everything. Reasons. Slides. Presentations. Statistics. All I got was push-back. Nothing worked, until one day I stumbled on a story that inspired even skeptics to see the power of sharing knowledge digitally, (Figure 1)
Figure 1: The Zambia story at the World Bank
This seemingly banal story resonated, first with staff, then with managers, then with senior managers, and eventually the president. The story enabled people to imagine their role in the World Bank as a knowledge sharing organization. After all, they knew they had knowledge and could build a website and share their knowledge with the world. Why not start today?
The World Bank president, James Wolfensohn, went almost immediately to the World Bank board and then the annual meeting, on October 1, 1996, and, in front of 170 Finance Ministers and all their entourages—a huge public occasion— he announced to the world, “We are going to share our knowledge with the world. We will be ‘the Knowledge Bank.’”
When the centurion guards who had recently sent me to Siberia, heard this announcement, they were horrified. This was the worst-case scenario. Now, the man from Siberia was back. And not only back: he had somehow managed to co-opt a whole group of staff, and managers, and now even the President, to pursue this absurd idea of becoming a knowledge-sharing organization.
Becoming A Digital Knowledge-Sharing Organization
The next four years were a set of battles as to whether we were going to implement what the World Bank president had already announced, and if so, how.
In these battles, I found that when I didn’t tell a story like the Zambia story, it was chaos and confusion. When I did tell a story to inspire and remind people why we were sharing our knowledge, suddenly we were racing forward into the future again.
And four years later in 2000, the World Bank was being bench-marked as a world leader in knowledge management.
Thus, leadership stories reach people in their hearts and inspire them to want to change. Stories got people thinking about the upside of change. They help generate a different state of mind towards innovation. Once people think this way, they can figure out for themselves how to implement change.
You can’t buy this state of mind. You can’t fake it. You can’t put it in a PowerPoint slide or an operational manual. You can’t touch it. But when people have it, you know it’s there. It’s energizing. It's exciting, because people, rather than things, are at the center. I had stumbled on one of the keys to leading change from the middle.
Figure 2 Seven steps of the CEO change agenda
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