Rishad Tobaccowala on digital transformation: ‘While change sucks, irrelevance is even worse’

Earlier this month, as part of its Digital Transformation Festival, The Drum’s US senior editor Kenneth Hein sat down with Tobaccowala to discuss how individuals and organizations can adapt to – and thrive in – the future of work.

The story and the spreadsheet

Tobaccowala, a man with a penchant for aphorisms, says that success requires the combination of what he calls “the story and the spreadsheet.” The story, he says, are those “softer” components of an individual or a brand’s identity: the personality quirks or company culture that confer an intrinsic uniqueness and vision. The spreadsheet, on the other hand, are those more hard-edged, mechanical components – data and routines and the like.

Tobaccowala views the interplay between the story and the spreadsheet as a kind of classic yin/yang or right brain/left brain dichotomy; each has a special role to play, but it’s the harmonization between the two where the real magic happens.

Finding that harmony, Tobaccowala says, is a delicate dance. “If you combine the two, you end up with very successful companies,” he says. “And sometimes, because of this modern data age, we go too much towards the data. On the other hand, if you only go to the story, you can get high, like Adam Neumann and WeWork, which is all story and no numbers.”

Come for the power, stay for the purpose

Tobaccowala also points out that the reasons why employees choose to start working at a company are often not at all the same as those that motivate them to stick around for the long-term. The three primary motivations for accepting a job offer, he says, are “money, fame and power” – a basic primate urge to climb to the top of the hierarchy. But the promise of status, according to Tobaccowala, is not usually sufficient to keep employees around for the long run. For that, he says, employers need to foster “purpose, values and connections” – three integral components of what’s often colloquially (and somewhat vaguely) referred to as “company culture.” Employers must be willing to ask themselves: “Do [my employees] believe in the purpose of the company? Do they believe in the values of the company? And do they feel connected to their clients, their bosses and other individuals?”

Employers must also be willing, says Tobaccowala, to prioritize the growth and wellbeing of their employees. “No business can grow unless employees grow ... a lot of us talk about net-promoter score with consumers. That’s important. But even more important is a net-promoter score with employees. A company that has great employee joy is likely to have a company with a great brand.”

Developing a digital transformation strategy

Tobaccowala writes a weekly newsletter on Substack called ‘The future does not fit in the containers of the past,’ in which he elaborates on how the business models of the past must be reshaped to fit the evolving landscape of the future. One of the prominent features of that landscape, he tells The Drum, is the development and proliferation of a new suite of decentralized technologies that has come to be referred to as ‘web 3.0’ or simply ‘web3.’ As the term suggests, this is often described as the third major phase transition in the lifespan of the World Wide Web, which was born circa 1993 and underwent a massive shift in the late aughts with the birth of social media (‘web2’).

“We’re about to enter a third age,” says Tobaccowala, in which new and transformative technologies – including machine learning, 5G, blockchain and the metaverse – will reshape not only how we create businesses, but also how we communicate and cooperate with one another. It’s essential, he says, for professionals today not only to study and understand these new technologies and trends (he says that he personally wakes up at 4am each day so that he can study until 6.30am), but also to develop practical “digital transformation” strategies for their companies. “Even though [companies are] saying ‘digital transformation,’ they have failed to transform their own organizations ... While change sucks, irrelevance is even worse. So, ask when you want to make change happen. It’s not just about M&A and reorganizations and a strategy. It’s about why is it good for the people? How are the incentive plans going to change? And how are you going to provide training? Those three key things – moving into a third connected age, are you organized correctly, and change management – is how companies will thrive in the next stage.”

Has the office become a museum?

Speaking of change: the world, it now goes without saying, has undergone some profound shifts over the past couple of years. It’s counterproductive, Tobaccowala argues, for employers to try to return to the way things were before the onset of the Covid-19 pandemic. “I’m surprised that people keep thinking they can go back to December 2019,” he says. “That’s not going to happen.” He’s even taken to calling the office “the museum” – buildings whose purpose is to provide a glimpse into the way things were.

But such massive change, while certainly disruptive, can also provide space for growth. “Our minds are like champagne corks,” Tobaccowala says. “Once you take them out of the champagne bottle, they swell, they don’t fit back again.” In our new world of remote (or at least hybrid) work, public health jitters and economic inflation, most people simply are not going to be willing to return to the old model of daily commutes and crowded office dwellings. “I don’t understand why management leaves half their brains downstairs when they go to their office,” says Tobaccowala. “People are not going to do stuff that isn’t good for them.”

To watch Rishad Tobaccowala on rediscovering the soul of your business in the post-lockdown era, click here.