If digital capability is so important, why isn’t the market dominated by young entrepreneurs and digital natives? The truth is that well established companies able to recognize the importance of adopting a working digital strategy backing the existing business plan, have the best starting point. They have their products, market shares, funding, and domain specific competence. But being too slow to react decisively, this advantage will quickly evaporate leaving the marked position exposed to agile new entrants. So what are typical factors identifying such “adaptive” organizations?
After all - most battles of change for success or failure, are still fought on the people-level. The current increase of technological and digital opportunities creates a constant technological debt for most companies. That is, the gap between “what is” and “what is possible”. The ability to adopt and effectively use new opportunities is therefore more critical than before (where tech and SW development was the limiting factor). This continuous backlog of improvement will effectively sift the organisations able to change rapidly from those who don't in years to come. So - maybe it always was - but now it really is down to us humans…
Let's dive into how culture and mindset (change readiness) are now a business critical factor, and what we might do to find a competitive advantage.
The learning organization
The leader group. The transfer of power can be a slow and painful process. Embracing change often involves recognizing the fact that all our hard work and experience turns stale at a staggering rate. The leader group should be flexible to add members with digital competence (at least 2 or 3). Perhaps the leader group composition should be flexible enough to rotate based on main strategic priorities. But how do we balance the equation, without degrading or offending long standing trusted employees currently in management positions? Read on...
The learning organization needs to incentivize change and counteract our natural instinct to cling to status and title. This may cause us to revisit our core company values, incentive systems and culture. The company should be able to offer attractive alternatives to clinging to management positions. After all, we don’t want to alienate our long-term loyal team-members. However, we need to make room for new ideas, for that we need new competence in positions of power.
Cultural change agents. Steve Jobs famously labelled death as nature’s change agent. However, we have to find other ways than retirement and death of our colleagues to facilitate organisational change. Better and more positive ways to balance the equation between digital savvy and traditional industrial competence. Are you offering digital training to senior managers? Are you pairing the experts with the digital native in reciprocal mentoring roles? Are you providing attractive career options for those who consider stepping aside? Are you empowering change agents in all levels of your organisation? People are naturally risk aversive, and reducing the barriers and competitiveness in a transparent way, will trigger creativity and innovation. The alternative might mean stagnation and death of your company.
Building digital competence vs the innovation manager. Hiring an innovation manager to manage your digital strategy alone is a bit like slapping a fresh bumper sticker on your old battered car. Being able to visualize and redesign value streams, work processes and data flow in an integral manner AND having the power to implement it quickly is vital. Unless digital understanding becomes an integral part of the leader group, this is not a likely scenario. The change will also set an example for the rest of the organization to follow.
The role of the Board members. As with the leader group - there must be a strong presence of digital competence within the Board members. This is necessary to encourage the company on its digital journey, recognize new business opportunities and support development of all the 4 areas of the Operational strategy: See article: The flavors of strategy
Re-shaping the organization into process oriented mode – knocking down the silos. The successful implementation of digital process support assumes clear process ownership covering a start to finish lifecycle approach. It may also involve challenging the traditional IT department (focusing on uptime and license costs, rather than total operational efficiency.)
Top down vs bottom up innovation. Understanding the need and Introducing the Digital ambassadors. Given that the management team have taken the leap to develop a digital strategy it is time to activate creativity by the bottom up approach. The boot-on-the ground understanding of operative challenges is a key component of successful digital (and physical) improvement. Empowering Digital ambassadors on the Shop floor will trigger improvement proposals bottom up and help implementation of digital support systems top-down.
Digital and LEAN, digital work process support goes hand in hand with the physical aspects of methodologies such as LEAN/5S and similar well proven approaches. Workspace cleanliness, access to tools, necessities and crisp logistics are mutually beneficial with digital process support systems. After all, both digital and physical improvement seek to improve the production process of which they are a part.
Change readiness (as we define it here) is the organizations’ ability and willingness to adapt new behaviours, processes, tasks or tools (digital or physical) with a desire to improve and make the most of it. This means that a certain altruism is needed on a personal level in order to succeed as a company. For businesses over a certain size, let us say 50 (where personal relations and influences may still be the driving factor) - this can be achieved through a compelling vision and a sense of urgency (created and owned by management). If the vision is compelling enough and meaningful down to the individual employee, the results can be dramatic (“we are best at this”).
Vision and consistency. If we can focus on the compelling aspect and necessity of change enough to get the ball rolling, how do we keep the momentum? Most “change campaigns” are launched with fanfares and a lot of steam, but typically run out after 12-18 months. At this point, the progress gained may be quickly lost, and the processes revert back to “business as usual”. In order to build a change machine (the adaptive organisation), we need to recognise human risk aversion in the form of traditionalism as the main antagonist. Taking calculated risk (allowing that not all initiatives will succeed), trust and room for honest discussion and good old fashioned leadership grit are all needed. What does leadership grit mean? It's the times when you need to maintain support for change (in endless repetition and in the face of criticism), making difficult decisions and taking true ownership (and understanding) of the tasks involved.
Talent and curiosity. Change in today's business will be more or less a constant. The bonus is that the best minds are attracted by learning opportunities, and organisation in constant change/improvement offers this in abundance.