Q&A: Aaron Dignan, co-founder of Undercurrent, on demystifying digital strategy

Aaron Dignan takes play very seriously.

As the co-founder of Undercurrent, a digital strategy firm, and author of Game Frame: Using Games as a Strategy for Success, Dignan implements gaming concepts into the operational conduct of some of the world's most successful global companies.

If we live in a technophilic world, which we do, Dignan is like the technophilic Dungeon Master.

SmartPlanet sat down with Dignan (who is of no relation to our editor-in-chief Larry) to talk about complex evolutionary systems and the break between the old ways -- before digitally minded startups -- and the new ways, when systems are designed to be in a perpetual state of change.

Undercurrent is a digital strategy firm. You advise top executives at very successful global brands -- General Electric, Ford, and American Express to name a few. But I honestly don’t know quite what you do. I find that interesting. It's as if there's a shroud of mystery around this industry –- which is partly because of the privacy concerns of your clients, but another side of it seems to be about mystique. Can we unearth that a little bit?

It’s always been a huge area of confusion and mystery. You refer to it as an industry, but we don’t really know who we can compare ourselves to. It’s hard to define even what category we’re participating in. We’re not an agency, we’re not a development shop, and we’re not exactly a consultancy firm. We’re something in between.

For the last six years, we’ve gone by the first rule of Fight Club: We don’t talk about the work we do. We talk about what and how we’re thinking.

That’s lessened in recent years. When we started out we were concerned about confidentiality. We had a lot of high-profile clients and we were fairly young. We’re now more comfortable with what we do and how to talk about it. Our client projects have also gotten more exposed in a way that’s easier to reference.

Tell me about the work you do.

What we’ve come to find in the past year is all of our clients have the same problem. We used to think they had different problems -- one had a marketing problem, one had an issue with the way they structured their department, another was having a problem with a mobile app. They seemed unrelated yet we wanted to work on all of them.

So what we’ve realized is almost every legacy organization, government, and municipality in the world has the same problem. Their operating model -- the way they make decisions, hire and fire, structure, build and test products -- is built like the bureaucratic administrative complex of yesteryear. It’s based on commanding control, on authority, rigidity, scale and stability.

The most impactful, fastest-growing companies in the world today -- whether Google, Twitter, Airbnb, or whatever -- operate their businesses in a polar different way.

What we do is help large, embedded, highly influential groups of people figure out how to transform the way they operate to look more like a digital startup. Not in size or scale, but in speed, agility, connection to community, and openness.

Can we get into these structural differences? Are you saying that companies that started when we were in the full swing of the digital age have a completely different structure, and that that structure is conducive to contemporary success?

Exactly. And the structure mirrors an evolutionary system. Technology has made the world of business and government look a lot more like the rainforest. If nothing changes you can have a product that lasts 20 years and works really well. But if things are changing rapidly, you need to have a much more nimble organism. It’s difficult to compete if you’re not flexible and agile.

We hear those words thrown around a lot. What would be some concrete examples of being “flexible” and “agile?”

Let’s say you run a chain of 5,000 restaurants and you’ve just invested $10 million in a point-of-sales system that doesn’t let you know who the person buying food from you is. You have a huge problem when customers start to expect that you’re going to welcome them by name, and that they will be able to pay with their mobile phones, earn credit, and be recognized as a valued costumer.

So there’s this calcification. “Well shit, we’re embedded in this huge investment. The systems we bought are rigid, old computers that are not capable of being updated like the iPhone. Now we’re stuck.”

The question then becomes, “Will we spend a ton of money to move toward something more flexible like an iPad with a Square transaction terminal? When will it become mandatory versus nice to have?”

If I’m making a decision between two restaurants and one is a startup down the street that only has three locations, a Square [payment system], locally sourced products, welcomes me by name, and has an awesome loyalty program, that’s like a game that is fun to play. That flexibility and nimbleness leads to an immense amount of pressure on the big chains. That’s why you see in almost every industry the big players are struggling to figure out how to either stay competitive, box out people that are scaling, or be acquisitive -- essentially buy the nimble, interesting, small guys in order to try to minimize that pressure.

For these big companies stuck with something of a leviathan machinery -- a structure that is now becoming obsolete -- what advice does Undercurrent give uniquely? Is there something connected to your mission where you say, “This is what you should do. This is how you should look towards the future. These things should be most important to you?"

There are two answers to that question. The first is that we have a framework for a digital operating model that is made up of five domains. Purpose is one. We find digitally native companies that have incredibly well clarified and meaningful purposes. Take Google: Organize the world information and make it useful and accessible. And they are willing to put the interest of shareholders and the market behind that purpose.

Then there’s process, which is about how we develop. Is it a long, drawn-out process with a lot of people involved or is it quick? Amazon has the two-pizza rule: No team can be bigger than it takes to eat two pizzas.

Then we have people. Who are you working with and how do you organize teams? Product: What do we make? And platform: How do we connect what we’re doing to a broader community? Those are the five dimensions.

We believe pretty wholeheartedly in viral medicine. So rather than try to tackle everything at once or organize some kind of big manager conference, we tend to start with one lab -- one entity that has a very clear assignment. Maybe it’s attack mobile, attack loyalty, or a particular web property or piece of hardware. We run that lab autonomously with a completely different digital operating system from the rest of the business. And then over time we let that entity start to touch and improve other parts of the system.

What we find is any other group that comes into contact with a lab group wants to look and behave like it. They see the speed and autonomy. The lab is able to get results faster and get recognized within the business. So the group is like, “Shit, we want to look like the lab. Can we start a lab?” And that starts the domino effect.

Look at companies like Amazon, Netflix and Spotify –- these companies have thousands and thousands of employees. They’re structured in squads that have total autonomy and very clear mandates and it works really well. They are all very successful, very rapid, very customer-focused companies.

Let’s move into gaming psychology. There's an interesting inversion happening with your work. Commonly we talk about playfulness as an antidote to the productivity-obsessed age we live in. But you flip that around and suggest that play -- more specifically the psychology around gaming -- can reveal ways to make us more productive and more efficient in the workplace.

No matter what, there is a game going on in your business, your office and your town square. The question is whether the game stinks or not. If it’s creating a behavior you want or not. Just like people say, “You can’t not have a brand. You might have a shitty brand, but everybody has one.”

When I go out and speak about behavioral game design I say, “Look, we don’t have to make everything a game per se, but we want to think about the structure of every experience with the lens a game designer would use: what do I want people to do? How do you win? What are the ways for people to cheat? How often are people getting feedback?” Those questions matter.

Imagine playing a game where you only get feedback once a year in an annual review? It would be the worst game ever. And yet, that’s the game we play at work. So using that frame of reference changes the way we look at the workplace and human resources for sure.

It’s interesting that the vilification of play happened right around the same time as the mechanization of the bureaucratic business model in Victorian culture. How do you control a far-flung British empire when there are only boats to carry messages around? You punch out a bunch of people who are designed by the education system to be obedient, subservient, calculating automatons. The same thing happens when you say, “We’ve got to punch out a million parts at the factory today. There’s no time for play.” The reason is, you don’t need to play if you’re not learning.

Now, in such an information and creative economy, learning is crucial. Based on research in neuroscience and the research I did in my book, we contend that if you’re not playing, you’re not learning. Play is really about that experimental ‘poke it and see if it pokes back.’

Game Frame: Using Games as a Strategy for Success came out just over two years ago. Has your perspective changed in any way since then?

My perspective on the gaming front has changed only in so far as I expected to see more experimentation than I’ve seen. Organizations, companies and governments are very tentative to try to design a game within their setting without an example from someone else who’s already done it. There’s a little bit of everybody waiting to get on the ferris wheel and just looking around at each other. At all my speaking gigs I say, “Don’t wait. There isn’t another bank doing this. Just be the bank that does it!”

I expected a little more boldness. I think that will still happen but it just may take longer than my taste. One of my obvious personality traits is I’m a little impatient.

What’s next for Undercurrent?

One thing that’s new here is we’ve started connecting the dots between our investment activity and our clients. We’ve hired a Ventures Director to manage our angel and seed investing, but his actual job is to connect the startups that we are close with -- either as investors, friends or partners -- with the “endups” as John Maeda [the President of RISD] calls them. The big companies know a lot about scale, influence, impact, and how to get things done. The startups know a lot about this new operating model and how to learn quickly. When they come together, really interesting things happen.

What does that look like exactly?

A good example is Quirky and GE just came together to do a whole line of products called Wink, which are smart, connected, home products. Those two companies met each other through Undercurrent originally. Josh Spear [Undercurrent’s co-founder] and I are both advisors to Quirky, and GE is a client. It’s beautiful to see this kind of thing play out. They make a lot of good mischief together.

This post was originally published on Smartplanet.com