Leadership in a Digital Economy - Focus on Opening, Joining, and Smartening Up
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Professor Alan Brown's presentation from the Digital Leaders Conference 2014 in Cardinal Place, London.
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Leadership in a Digital Economy - Focus on Opening, Joining, and Smartening Up
- 1. A Few Comments on Leadership in a Digital Economy Alan W. Brown alan.w.brown@surrey.ac.uk Professor of Entrepreneurship and Innovation Surrey Business School
- 2. Why Digital? • Digital as a technology upgrade (internal focus) • Digital as a channel upgrade (external focus) • Digital as a business transformation opportunity • Digital as social transformation driving change 2
- 3. Understanding Digital Transformation: The 4E Model 3 Expectations People, Communities, and Clients Execution Organization and Delivery Environment Data, Capabilities and Interfaces Enablement Infrastructure and Technology
- 4. 4 Profitably delighting customers From controller to enabler From bureaucracy to Agile, Scrum, Kanban Communications From value to values From command to conversations Goal Role Values Coordination 20th Century Principles of traditional management Make money for shareholders Managers are controllers of indivduals Bureaucracy: rules, plans, reports Communications Efficiency, cost cutting Top down commands Goal Role Values Coordination 21st Century Principles of radical management See: Steve Denning, “A Leaders Guide to Radical Management”, Jossey Bass, 2013.
- 5. Management Approach for Digital Transformation Traditional Management Purpose of the firm Produce goods and services How work is structured Bureaucracy & hierarchy How work is organised Single big plan Transparency Tell people what they need to know How managers communicate Top down: tell people what to do Impact Only 20% fully engaged Things 5
- 6. Management Approach for Digital Transformation Traditional Management Radical Management Purpose of the firm Produce goods and services Delight clients and stakeholders How work is structured Bureaucracy & hierarchy Self-organising teams How work is organised Single big plan Client-driven iterations Transparency Tell people what they need to know Radical transparency How managers communicate Top down: tell people what to do Interactive: stories, questions, conversations Impact Only 20% fully engaged High productivity & continuous innovation Things People 6
- 7. Digital Transformation Demands a Different Management Style 7
- 8. Digital Transformation Demands a Different Management Style 8
- 9. People Make the Difference • In an environment of on-going change, agility is by far the greater driver of performance than effort or responsiveness • This is reinforced by many studies… • See: Dan Pink´s work on “What Motivates People?” • Autonomy • Mastery • Purpose See: CIO Executive Board, Building the Change-Ready Organization, Sept 2012. 9
- 10. Summary: The Focus Areas for Leadership • Opening up • Co-creation with citizens • Transparency of Data, APIs, processes • New ideas, solution, suppliers • Joining up • Across silos internally and externally • Public-Private mix • Outcome-led KPIs • Smartening up • Skills • Processes • Technology 10
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Editor's Notes
- So I am saying that corporations cannot now prosper for long, as they did in the 20th Century, merely by becoming more efficient at delivering products and services and pushing them at passive consumers through sales campaigns and advertising. Now they must understand, anticipate and meet the needs, wants and whims of customers who are well-informed, empowered and interactive among each other.. They must learn to do what the 20th Century corporation was constitutionally incapable of accomplishing: delighting the people who use their products and services through continuous, disciplined, transformational innovation. They must continuously deliver “better, faster, cheaper, smaller, more convenient, more personalized, lighter.” The good news is that we know how to do this. The practices are becoming increasingly well established. There is a constellation of principles that has been articulated in what I have called a canon of radical management literature. There are different terms in use. I have called it radical management. Haydn Shaughnessy calls “the elastic enterprise”. Dan Pontefract calls it “the flat army”. John Seely Brown and John Hagel call it “the power of pull”. There are more than a score of recently published books that talk about it, often using different labels but basically talking about the same set of phenomena. And the literature is growing by the day. If you analyze these books in depth, you can see that they describe five simultaneous shifts now under way. These shifts affect the goals of the organization, They affect the structure of work within the organization. They affect the way work is organized. They affect the values of the firm. They affect the way people communicate. In the end, these shifts affect pretty much everything. They constitutes a new canon of management. Throughout this series, we are going to explore these shifts in progressively more detail. Let me summarize quickly the five main principles. First the organizational goal: What’s the purpose of the firm. Here we are seeing a shift from an inward-looking goal of making money and maximizing shareholder value to an outward-looking goal of profitably delighting customers. Innovation and transformation are no longer options: they are now imperatives. The firm must orient everyone in the organization and everything it does to profitably delivering “better, faster, cheaper, smaller, more convenient, more personalized, lighter.” This must become the obsession of everyone in the firm. Organizational structure: we are looking at a shift from a world where managers are controlling individuals to a world where the manager’s role becomes that of enabling collaboration among diverse self-organizing teams, networks and ecosystems. The reason for this shift is that when you have managers controlling individuals, you can’t unleash the creativity that you need from the workforce to deliver “better, faster, cheaper, smaller, more convenient, more personalized, lighter.” So you have structure work differently so you can unleash this talent and initiative. Firms that don’t make this shift simply won’t be able to innovate quickly enough. Coordination of work: we are looking at a shift from coordinating work by hierarchical bureaucracy with rules, roles, plans and reports to dynamic linking, to a world where work is coordinated with iterative approaches to development and direct feedback and interaction with customers, networks and ecosystems. In the first instance this kind of coordination happens within the team itself. But then it spreads to whole networks and even ecosystems outside the firm. This is the world of Agile, Lean, Kanban and so on. It’s a world that is increasingly familiar to software developers but it is still largely a secret from general managers. I believe for instance that there has never been a single article in Harvard Business Review devoted to it. And yet it’s the way of the future. It’s a different way of coordinating work and for various reasons, it seems very hard for traditional managers to understand. Values: We are looking at a shift from a single-minded preoccupation with economic value and efficiency to an embrace of values that will grow the firm and the accompanying ecosystems, particularly radical transparency, continuous improvement and sustainability. Hierarchical bureaucracies can be very efficient and predictable. But they are not very transparent. There are a lot of reports going up and down the chain, but it can be hard to figure out what’s going on, particularly in a world of rapid change. Those reports are often about what people want to hear, not what people need to know. That’s not good enough for a firm that is desperately trying to deliver “better, faster, cheaper, smaller, more convenient, more personalized, lighter”. They are delivering that customers who are unpredictable and inscrutable and who themselves don’t know what they want. Radical transparency suddenly becomes something not just nice to have, but a sine qua non of survival. Communications: we are looking at a shift from top-down directives to multi-directional conversations. Instead of telling people what to do, leaders need to be able inspire people across organizational boundaries to work together on common goals, not only inside the firm but beyond the firm, in related networks and ecosytems. Telling people what to do doesn’t get the job done any more, in part because the manager doesn’t have the answer either. Nor do the workers. Or even the customers themselves. The answers lie in the interaction between networks and ecosystems of customers, workers and managers. So communications become much more multi-dimensional and interactive than in Traditional Management. None of these principles individually is new. What is new is implementing all of the principles together as a system in a coherent and consistent way. The core principles fit together as an interacting set of organizational possibilities. Implementing only one or two of the principles is not sustainable: the organization will slide back into the old mode. This is a step change in organizational capability. It goes beyond merely becoming better at what is currently done or acquiring different management tools, techniques, systems or processes, or following a new set of rules. Just as dinosaurs became birds, not by becoming better at crawling or walking, but by learning to fly, so organizations have to become different kinds of animals, with different mindsets, attitudes, values and capabilities. It means different ways of thinking, speaking and acting in the workplace. It means change at the level of the firm’s DNA. The phase change is as fundamental as the Copernican revolution in astronomy—a shift from the view that the sun revolves around the earth to a view that the earth revolves around the sun. Initially Copernicus’s discovery appeared to be no more than a better way of calculating the movements of the planets and the stars. It was of vital importance to the obscure subject of astronomy but had little relevance to society at large. But once people grasped that the earth was not the center of the universe, they began thinking the unthinkable. They began questioning fundamental societal assumptions like the power of organized religion and the divine right of kings. In time, the change in perspective led to vast changes for politics, religion and society. Similarly, the current economic phase change might appear at first sight as an insignificant conceptual shift in obscure aspect of management theory. But as in astronomy, once people grasp that corporations are no longer at the center of the economic universe, they begin to think the unthinkable. They begin to question fundamental assumptions as to how organizations are structured and run and their role in society, with far-reaching economic, social and behavioral changes. So this is a new world. It’s phase change that is enabled by technology but it is driven by economics. Those firms that get it and master it, will prosper. Firms that don’t, won’t. It’s that simple, that grim and that thrilling.