A lot is currently written about challenges mature corporation face to innovate : various mavens and gurus exemplify Uber, Airbnb (add yours here) as models to follow, urging businesses to disrupt themselves and behave like startups.
There a is indeed a wide broadcasting of this polarised view of old world vs new world, without much thought being given to the underlying laws of strategy and business at play nor long-term impact on wealth, labour, society, etc…
We are hammered with the transformation imperative, with an obsessive focus on technology and a total ignorance of the challenges of adoption inherent to human behaviour.
Big players create research lab, corporate accelerators, hackathons to look like startups:
it seems it is more important to appear innovative, then to actually do the hard work of rethinking the way you do business.
They spin off digital academies, digital or disruption days, visits to Silicon Valley, or dedicate a section of their executive training programmes to this thing called “digital”.
It’s like going to visit the gym – only once – to get an idea of what it could look like to be fit.
Less than ten years ago, I remember a client of mine at Nokia stating that Nokia was now an ”internet company” (today, the equivalent is “everlasting startup”).
Makes me smile: You can mimic the looks of an internet company or a perpetual startup, but you ain’t one: you copy the artefact, not the underlying “reason why”.
As I’ve stated this previously:
- mature organisations are good at executing a business model, but not good at innovation (mostly because they tend to only focus on one type of innovation: product)
- Startups are good at creating products, but not good at operating at scale.
Both mature companies and startups both face a common challenge:
how to design an organisation for scale in a highly unpredictable environment,
when obviously organisations models inherited from previous ages do not work anymore.
Our current model of how a company works is inherited by previous industrial revolutions, and a “machine view”: a business is a well-oiled machine, with multiple parts, each assigned to a specific task. Inputs/Outputs.
“The mechanistic view of the world that evolved in France after the Renaissance maintains that the universe is a machine that works with a regularity dictated by its internal structure and the causal laws of nature. This worldview provided the basis not only for the Industrial Revolution but also for the development of the machine mode of organization (Gharajedaghi and Ackoff, 1984).”
Therefore you “just” need to optimise the parts to run at maximum efficiency.
But as the company grows, so does complexity, and the common solution is to increase processes and procedure to control chaos, by limiting the autonomy of each part.
And we roughly end-up with two types of control:
– monolithic and central: senior management reviews all tactics, lots of buy-in meetings, slowness increases with size.
– independent silos: everyone does their own thing, alienation and suspicion between departments.
Efficiency trumps flexibility. In a fast-paced and unpredictable environment: the company become irrelevant.
“The most stubborn habits, which resist change with the greatest tenacity, are those that worked well for a space of time and led to the practitioner being rewarded for those behaviors. If you suddenly tell such persons that their recipe for success is no longer viable, their personal experience belies your diagnosis. The road to convincing them is hard. It is the stuff of classic tragedy.” (Charles Hampden-Turner and Linda Arc)
Contemporary research in various fields indicates that this machine view is flawed: the interaction of the parts (ie. the dynamics of the system) matters more that the intrinsic performance of individual parts:
Proof is recent news about Google’s Aristotle Project, IMD’s or MIT’s research on collective intelligence cognitive diversity team performance
I also find Netflix’s culture deck very insightful in this matter:
– “context, not control”: clear and articulated context allows autonomy and relevant, decentralised decision-making
– “highly aligned, loosely coupled”: all parts are aligned to deliver on clear strategy and specific, broadly understood goals. Teams interact around strategy and goals, not tactics.
To thrive in complexity, companies need to be purposeful systems and have a purposeful strategy: be able to produce the same outcome in different ways in the same environment and different outcomes in the same or a different environment.
To achieve that leaders and managers need to become designers : learn how to use what they already know, learn how to realize what they do not know, and learn how to learn what they need to know.
Producing a design requires an awareness of how activities of one part of a system affect and are affected by other parts.
Unfortunately, the task is not just an academic discourse; it demands enormous emotional struggles and a huge cultural challenge. Engagement in this process, in addition to competence, requires courage.
I guess courage is the new competitive advantage.
(to be continued)