Without collaboration, innovation stalls


How we can bring Edison’s world-changing collaboration process into the digital age.

When we call Thomas Edison to mind, our first thought is of a brilliant inventor and innovator whose creations transformed modern life. We often think of him toiling away in a laboratory all by himself, long into the wee hours of the morning.

And yet, we rarely consider the role that collaboration played in Edison’s world-changing success. Tangled in the lore of the lone American inventor, our mind’s eye conjures Edison’s spray of white hair, his signature bow tie, and we quickly ascribe his 1,093 US patents to innate genius.

Tempting as it is to sustain this image of Edison, it is inaccurate. In an age when we speak of Thomas Edison and Steve Jobs in the same breath, it’s important to refresh our understanding of the pivotal role collaboration played in Edison’s innovation prowess. He viewed collaboration as the beating heart of his laboratories, a sustaining resource which fuelled the knowledge assets of his sprawling innovation empire.

EDISON 2

Thomas A Edison

Rising from humble beginnings, Edison was largely self-educated, pursuing his relentless passion for learning well into his 70s, when he taught himself botany. Deeply skilled in chemistry, telegraphy, acoustics, materials science, and electro-mechanics, Edison’s thirst for discovery began in his early teens and never ceased. Like a magnetic force all its own, Edison’s brainy leanings drew others to his quests, attracting bright colleagues with a huge diversity of skills.

From his earliest years renting space in workshops and small laboratories, Edison collaborated with others. Realizing the value of sharing his inspirations with people who held different skills than he did, Edison felt a unique bond with those who labored with him. In establishing his famed Menlo Park Laboratory at the age of 29, Edison journeyed from the failure of his first patented invention at age 22 to becoming a world-renowned inventor in just 7 years, establishing collaboration practices which came to be a signature of his campus-style operations.

Midnight Lunch – Published by Wiley – is a book from his descendant Sarah Miller Caldicott. It challenges each reader to examine the ambitions they’ve set for themselves, re-imagining what one person is capable of producing when they work in true collaboration.

The linkage between innovation and collaboration underscores why Edison’s collaborative approach becomes such a relevant subject for us now. Given the increased scrutiny placed on the role of innovation as a driver of growth for every economy – whether emerging or developed – we must ask whether collaboration is also engaged. Like a symbiotic organism which can only thrive when its host is present, innovation can only gain sustainable traction when true collaboration also exists.

I had the privilege of a pre-publication read of Midnight Lunch (Edisonian employee ritual) and can’t recommend it highly enough for any that see innovation and collaboration as the way to future business success and a higher purpose.

© Wiley Publishing and Author Sarah Miller Caldicott 

Twitter: @WileyBiz and @SarahCaldicote

COLLABORATION 2

Curated by Trevor Lee

@trevorblee

http://www.ep-i.net

http://www.ceo-worldwide.com

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LEADERSHIP FOR A NEW ECONOMY


People need organismic integration !!

It’s the process through which people develop as they engage in their world (organizationally and personally). But when we apply undue pressure to enact organizational change, and fail to garnish their input, do you know what generally happens? ——————————— Rebellion.

High-performing organizational leaders link people in a way that fosters inclusion. Nobody wants the “fifth wheel” label, and perceptive, dream-weaver leaders intuitively grasp this.

Meaningful change occurs when people accept themselves, take interest in why they do what they do, and then decide that they’re ready to do it differently.

Inundated with land mines, the organizational field requires agile players. We need to equip them by linking their minds in the fashion that garnishes a network of idea factories that carpet the organization’s floor. In the words of Steve Jobs,

Innovation comes from people meeting up in the hallways or calling each other at 10:30 at night with a new idea, or because they realized something that shoots holes in how we’ve been thinking about a problem. It’s ad hoc meetings of six people called by someone who thinks he has figured out the coolest new thing ever and who wants to know what other people think of his idea.

Perhaps it’s befitting to share a story that sums up the essence of what kind of leadership the new economy we are in requires.

On September 23rd, 2005, Warren and Pam Adams lost their home when Hurricane Rita slammed ashore in Gilchrist, Texas, with 130 mile per hour winds and a storm surge of seventeen feet. They loved the region and rebuilt on the exact spot, just a few hundred yards from the ocean.

Three years later, history repeated itself.

On September 13th, 2008, Hurricane Ike made landfall in the same location, buffeting the Gilchrist, Texas, coastline with 110 mile per hour winds and an eighteen-foot storm surge.

This hurricane, with its massive wind field, would go down in the history books as the third most costly storm to strike the U.S. mainland. Here’s the interesting part: it destroyed every coastal dwelling near where it made landfall. Except one. The house that the Adams rebuilt.

The structure survived, perfectly intact, because they built it on fourteen-foot pylons. News media outlets dubbed it, “The Last House Standing.”

This story illustrates a poignant certainty. Build your organization on the shifting sand of rhetoric and it won’t survive the onslaught of social, economic, and political waves that crash against its jetty. The latest technology, a rich legacy, and a pile of cash aren’t enough to hold back the raging surf. Rather, dynamic and dream-weaver leaders are the pylons that’ll keep it intact.

But here’s the takeaway. There’s a tectonic shift afoot within social and economic frameworks around the globe. Barriers that stood cemented in place for centuries are crashing down, becoming relics of a time since past.

Therefore, let’s sandblast bravado off the walls of organizations and replace it with—collaboration.

Becoming a vanguard organization means tapping into the deep reservoir of the human mind to promote the exchange of information and experience.

COLLABORATION 2

Trevor Lee

https://www.linkedin.com/in/trevorblee

http://www.ep-i.net

http://www.ceo-worldwide.com

@trevorblee

Create an Ad Hoc Leadership Circle to Generate New Ideas


leadership-circle

When leaders need innovative ideas to grow their company, they often turn to their direct reports for guidance. But this group, by design, represents the current operating units and functions, which often have a status quo to defend.

So when you need creative thinking, try forming a leadership circle, a diverse, ad hoc team of 15–18 people from throughout the company who can work together for about six months.

The circle should focus on the future, not the past, and healthy debate should be encouraged. Within the circle, each member should hold equal status and should not feel that he or she is being asked to represent the point of view of accounting, sales, shipping, or whatever their home department is.

Most important, whatever ideas come out of a leadership circle should be handled in the same way they were generated: They should be rigorously and systematically discussed, debated, and explored.

Adapted from “To Seize the Future, Create a Leadership Circle,” by Joseph Pistrui

leadership-circle

Trevor Lee

tblee@ceo-worldwide.com

http://www.ceo-worldwide.com

@trevorblee

Challenging Organisations and Society


Management Plasticity:

Neuronal Networking as the Organizing Principle for Enterprise Architecture to Unfold Human Potential and Creativity

A guest article by FRANZ RÖÖSLI, MICHAEL SONNTAG and DOUG KIRKPATRICK 

 creative-2

Abstract

The human brain exhibits a series of unique and highly desirable characteristics. It has the ability to grow rapidly during development, to learn, adapt and self-heal after injuries. lt is capable of making new discoveries and connecting seemingly disparate thoughts. At the core of these characteristics lies the brain’s ability to self-organize and form new connections, which is described by the term ‘neuroplasticity’. In an age where adaptability, creativity, and connectedness are key success factors for organizations, a new understanding of organizations as living systems maybe called for. In this article, we want to introduce the concept of management plasticity that challenges the underlying beliefs that shape traditional organizational structures. In our case study on the highly successful tomato processing company Morning Star, we illustrate how the principles and practice of management plasticity, like neuroplasticity, allow for development and connectivity, learning and memory, creativity and leadership as well as innovation.

  1. 1. Hitting the Wall with Mechanistic Organizational Structures and Styles

The business environment has changed dramatically over the past few decades as modern economies have transitioned from the industrial age to the digital age, in which innovation and creativity have become critical success factors. Tue new and highly dynamic environment has brought an array of challenges and it seems that the old organizational structures were not suited to meet the new demands.

In this environment, restructuring has come to be seen as a panacea, with the underlying belief that if only the right organizational chart could be drawn up, businesses would once again be operating efficiently. This goal has proved to be elusive. The effort has been focused on what the organization would look like, but the way people work has not really changed. Even worse, employee morale, trust and engagement have been suffering, as numerous studies have shown.1

In our view at the core of the problem lies a linear-mechanistic understanding of organizations as machines with its deeply and therefore predominantly unconsciously underlying assumption of predictability and control. Hierarchical organizational charts are indicative of a business philosophy from a bygone era, in which maximizing machine productivity was paramount. Einstein once said: “We can’t solve problems by using the same kind of thinking we used when we created them” and we assume that the numerous counterproductive attempts at reorganization will continue or even intensify if the underlying beliefs that shape organizational structures remain unchanged.

  1. A New Understanding: lntroducing Management Plasticity

To be successful in the new era, there is evidence that companies need a culture allowing employees to develop their human potential. This calls for a new understanding of organizations as living systems that operate in a mode of sense and respond, which is radically different from prediction and control for machines.2 What are the characteristics of a contemporary organizational structure and what principles could it follow?

1 See for example (LRN Corporation, 2012), (Towers Watson, 2014). 2 See (Laloux, 2014).

Looking at how Nature manages to cope with the dynamics and complexity of our environment we can try to build a new understanding. Modern neurobiology and affective neuroscience helps us to understand how the human brain’s ‘architecture’, through evolution, is conceived to cope actively with the complexity of the outside world in the most effective and impactful way. In fact in science the human brain is considered to be not only the most complex, but also the most adaptable living system that we know in the universe. lt is inherently built for learning.3 Our brain is organized as an immense, dynamic network based on self-organizing principles. lt is capable of changing either parts of its function or even its whole organizational state within milliseconds. In neuroscience this is called ‘neuroplasticity. lt is the ability to change functions coherently and quickly with a minimum of energy invested and without having to re-build or ‘re-structure’ the organic substrate.4

Besides high adaptability, self-organizing network structures have further portant advantages:

  • They are receptive to learning.

  • They work superbly even when the information is incomplete.

  • Being redundant, they are robust in case of partial failure of the system.

But how is neuroplasticity linked to the capacity to sustainably unfold human potential and creativity?

Research shows that unfolding human potential and creativity depends on our ability to mobilize intrinsic motivation.5 From neurobiology we know that these desired features will exclusively emerge when individuals and teams are able to act autonomously.6

  1. See (Fuchs, 2009).

  2. See (Haken & Schiepek. 2006). 5 See (Pink, 2010). 6 See (Panksepp & Biven, 2012).

On the other hand, not being able to act autonomously and to protect our integrity actively in the case of potential threat is a key cause of fear and chronic stress. In a state of chronic stress, as we all know, our overall health is impaired but also our cognitive capacity, e.g. our ability to think clearly and to create new understanding and connections is reduced dramatically – we are no longer able to find new solutions. But also our ability to connect socially, the precondition to ask for help, is dramatically impaired. Tue neuroplasticity of our brain declines severely. Even worse: under stress we ‘regress’. We often return to our old strategies of action, exactly those ‘proven’ strategies which have caused the existing rigidity and inability to act. Tue negative process is intensified. Stress and the energy invested to survive and ‘keep control’ increases while the energy reserves are ‘burned out: This is the case on an individual as well as on the organizational level.

Conversely, if a person has the organizational not only personal capability to act freely, in a self-organizing manner, the brain is stimulated and the energy level will increase. In this positively stimulated state, clear and flexible thinking is enabled and new thought patterns and innovative approaches arise. The eagerness to connect socially, which is the precondition for creativity, and the ability and willingness to act in a goal-oriented manner will rise. The brain’s neuroplasticity is boosted.

As we have seen, the traditional management approach with its rigid, command-and-control structures, division of labor into functional silos and underlying human nature assumptions attempts to ‘manage’ and control the individual and to minimize his or her ability to act autonomously. Thereby it creates exactly the opposite conditions to those that would be .necessary to unfold human potential and creativity. Having understood these basic principles, we have to conclude, that if an organization wants to meet the new economic conditions by enabling the unfolding of its human potential and creativity, it will have to build organizational structures enabling freedom to act within good relationships. Tue resulting organic, plastic structure is a dynamic network of self-organizing individuals and teams.7

Setting the organizational parameters correctly will facilitate neuroplasticity, problem solving and constructive actions, the preconditions to survive in the dynamic and changing circumstances of today’s economy.

Therefore we define management plasticity as the ability of organizational management to engage the energy and potential of each member to collaboratively, creatively and effectively learn from and adapt to dynamic internal or external changes, opportunities or threats.

  1. Morning Star as a Prototype

    1. lntroduction

California entrepreneur Chris Rufer formed Tue Morning Star Packing Company to process tomatoes near the small town of Los Banos, California. In the spring of 1990, a tiny farmhouse on the outskirts of town became a beehive of round-the-clock activity. The tiny farm kitchen became a conference room, where an endless parade of job applicants, bankers, regulators, vendors, and contractors met together in nonstop organizational meetings.

Chris and his team focused with intensity on getting the new factory up and running. A successful startup would declare an entirely new level of industry competition. Most of Morning Star’s new employees (including Doug Kirkpatrick, a co-author of this article) had left secure jobs to join the team. If the venture failed, there would be short-term personal disruption, but most of them would be able to find new employment. For Chris, however, everything was at risk.

7 See (Sonntag, 2012).

In a March 1990 organizational meeting with the founder (attended by co-author Kirkpatrick), Morning Star adopted two core principles: first, people should not use force or coercion against other people, and second, people should honor the commitments they make to others.

The first loads of tomatoes arrived at Morning Star’s first new state-of-the-art facility in mid-July of 1990 and kicked off a successful processing season, producing over ninety million pounds of bulk tomato paste for the world market. Morning Star is now the largest tomato processor in the world, with over $700 million in annual sales, its products consumed by virtually everyone in North America and millions more around the world.

While Morning Star owes much of its success to an innovative low-cost production strategy, much of its success is also traceable to its unique organizational philosophy of self-management, which is core for an organizational modus operandi of sense and respond. As a successful self-managed organization, it is a case study in management plasticity.

    1. Organizational Design and Philosophy

Morning Star exhibits zero hierarchy. There are no human bosses; the only boss is the mission. The operating philosophy is total self-management. Morning Star employees consider themselves professional colleagues.

Since command authority does not exist in the company, there is no unilateral authority to fire. Colleagues acquire or culminate the services of others by invoking written Colleague Principles. No one has a title, which reinforces Morning Star’s self-management philosophy. Everyone has an equal voice regarding decisions that affect them.

While lacking formal structure, there are resources available to help colleagues synchronize their activities with others. Each colleague executes a Colleague Letter of Understanding (also known as a CLOU). The CLOU is a dynamic, transparent, negotiated accountability agreement between colleagues declaring each individuars personal commercial mission, process stewardships, and performance measures.

Morning Star’s success takes place in a complex and demanding business environment. Morning Star colleagues continuously navigate complex disciplines that include cell biology, plant genetics, microbiology, food chemistry, thermodynamics, meteorology, global currency exchange and many others. The Colleague Letter of Understanding is a key navigational and communication tool that enables management plasticity by creating networks of individuals based on the resource requirements and urgency of diverse problems and opportunities.

  1. Interpretation of Morning Star’s Management Plasticity

There is as much need for leadership in a self-managed organization as in a hierarchical one; self-managed leadership is just dynamic rather than static- it completely depends on the issue and the individuals. Leadership in such an ecosystem can rotate and evolve naturally, depending on the circumstances. No particular leadership style is required, and many leadership styles can work well. Morning Star’s expression of self-managed leadership fits our definition of management plasticity. lt also proved to be a key enabler of Morning Star factory construction. A small band of self-managed colleagues in 1990 (about 24 during the construction phase) were able to oversee the construction of a new, state-of-the-art, $27 million dollar factory in a period of just a few months. This project and others could not have been completed on time with traditional, command-and-control hierarchies. Paradoxically, the very simplicity of the two simple foundational principles adopted in 1990 facilitated the management plasticity driving Morning Star’s growth. People had no choice but to manage with adaptability, agility and flexibility. There were simply no traditional management systems available to do it otherwise.

With the advent of successful new organizational models like that of Morning Star, it is worth asking the question: how do the properties of neuroplasticity inform the emerging theory and practice of management plasticity?

Morning Star’s organizational network resembles a spider web of connectivity. All associations between members are voluntary, and digitally recorded in the CLOU. When these connections are rendered in a diagram, they resemble a neural network. If one were to make a time-lapse movie of such a diagram, it would dynamically change shape and size as individuals enter and leave the ecosystem or voluntarily renegotiate their relationships and commitments. Morning Star’s actual organigraph is depicted above, built from a digital rendering of CLOU data.

One benefit of management plasticity is that organizations become more resilient and are able to adapt with flexibility to dynamic change. Threats and opportunities cause Morning Star’s human network connectivity to change rapidly in response, much like a human brain; it is all about a constant flow of sense and respond. Clusters of connections form and dissipate in response to organizational needs. Tue rapidity of this formation and dissipation is often startling – attempting to concoct or reorganize teams in a traditional hierarchical model would be glacially slow in contrast. Co-author Kirkpatrick has personally engaged with multiple temporary hot teams formed to address issues like spiking insurance costs and capital project management.

Self-managed organizations have also demonstrated, like human neural systems, the ability to regenerate themselves and self-heal.8 When an individual leaves the Morning Star ecosystem, roles and responsibilities are quickly relocated by self-managing peers, without direction or control. If the individual exiting the system possessed a unique talent or skill that cannot be quickly replicated by others, colleagues engage a recruitment and selection process to fill any gaps.

Morning Star’s member colleagues experience no structural barriers to communication with anyone in the organization. Learning is an ‘always-on’ activity, as members in similar and dissimilar functions and locations seek information from each other that will improve their own performances, and those of their peers. Members of individual business units that cross multiple factories (for example, Steam Generation) come together at least annually to formally share learnings and experiences. These formal meetings augment continuous informal communications that drive superior performance and innovation.

Creativity is another natural benefit of neuroplasticity. The virtuous cycle of absorbing new and outwardly unrelated ideas, and connecting them in unexpected ways, is the essence of human creativity. Does management plasticity provide similar benefits to organizations?

For decades, the tomato processing industry used energy-hungry elevators to carry loads of tomatoes uphill into flumes for processing in factories. Morning Star’s founder, Chris Rufer, observed that unloading trucks on top of a hill would allow gravity to carry tomatoes into the factory without the use of elevators. Today, the concept of an unloading hill is an industry standard. Similarly, he observed that evaporating water from tomatoes to produce concentrate required the use of large, inefficient cooling towers to cool water for reuse. He replaced the cooling towers with large ponds, and let the water cool down naturally through evaporation. In each case, creatively integrating natural methods of movement (gravity) and temperature change (evaporation) with industrial processes proved to be disruptive to an entire industry. In these examples, neuroplasticity and management plasticity worked together: neuroplasticity catalyzed new connections and creativity in the mind of the innovator, while management plasticity drove implementation.

When everyone is a manager, as in the case of Morning Star’s self-managed ecosystem, the benefits of management plasticity are widely distributed. In one recent example (2014), a mechanic identified an innovation in material management: the handling and usage of chemicals. The innovation, which generated a compelling return on investment, depended on the creativity of one individual with an ability to foresee improved process outcomes. The flexiblity of a self-managed environment, endowed with management plasticity, allowed that individual to creatively envision a desired future state, personally communicate the benefits to peers, re-design the process, create buy-in, and successfully implement the change.

8 See also (LRN Corporation, 2012).

  1. How to Start a Journey Toward Management Plasticity

How can enterprises that have been built on traditional command and control management structures and tools take steps toward greater management plasticity, i.e. enterprises that have not been built from scratch in a self-managed manner like Morning Star? In the natural sciences, experiments are fundamental to progress and success. In contrast, in the business world, experiments will often face bitter opposition, as they are perceived as carrying uncontrollable risks with possible undesired outcomes. Yet experiments can pay off precisely because of their very nature of accepting unpredictability and failure and therefore fostering learning and adaptation in contrast to traditional projects within the outdated predict-and-control fashion of traditional management.9 Examples of possible managerial experiments toward management plasticity are10:

  • Voluntary participation in meetings of all kinds·

  • Voluntary participation in projects or experiments

  • Access to all information for all employees

  • Time and space for the employees to develop their creativity

  • Abolition of formal talks on target agreements and incentives (also financial)

  • ·Abolition of job descriptions

  • Abolition of traditional budgeting and budget targets

Such kinds of experiments support management plasticity and the opportunities to live up to one’s full potential as lived by the Morning Star Company. This is in line with the call for management plasticity, which sees neuronal interconnectedness as a metaphor for a new organizational understanding.

  1. Conclusions

Building an organizational structure based on self-organizing, dynamic networks releases trapped human potential and leads to creativity, as well as to a whole field of other positive and critical features in today ‘s complex and fast changing world, as we have seen in the Morning Star case. These include adaptability, resilience, ability to innovate and self-healing capacity.

In the end, to really unfold human potential and creativity, we argue that courageous leaders will be needed everywhere in organizations to transform the traditional management mode of predict and control into a new mode of sense and respond that we have defined by the term management plasticity in this article.

  1. See (Hamel & Zanini, 2014).

  2. See detailed examples in (Kirkpatrick, 2011) and (Hope, Bunce, & Röösli, 2011).

creative-2

ABOUT THE AWESOME AUTHORS

Franz RÖÖSLI, PhD, is a professor at the University of Applied Sciences Zurich (ZHAW), management trainer and Director of the Beyond Budgeting Round Table (BBRT), an international, membership-based practitioner and research community. He had worked in different companies in leadership positions including member of the executive team before he started an academic career. His research and consulting interests are organizational behavior, leadership and management innovation. He co-authored the book “The Leader ‘s Dilemma”. Contact: franz.roeoesli@zhaw.ch
Doug KIRKPATRICK is the author of Beyond Empowerment: The Age of the Self-Managed Organization. He is a former financial controller for The Morning Star Company and a participant in the adoption of its unique self-management philosophy. He is an organizational change consultant, TEDx and keynote speaker, executive coach, writer, educator and SPHR. Contact: doug@redshift:3.org
Michael SONNTAG is a medical doctor, Bioenergetic Analyst (trained by Alexander Lowen) and management consultant. He is specialized in teaching and creating the conditions needed to enable, enhance and govern deep transformational and self-healing processes, both on an individual and an organizational level. Contact: m.sonntag@sonntag-consulting. ch

Curated by Trevor Lee

http://www.ep-i.net

http://www.ceo-worldwide.com

@trevorblee

 

References

Fuchs, T. (2009). Das Gehirn ein Beziehungsorgan. Eine phänomenologisch-ökologische Konzeption. Stuttgart: Kohlhammer.

Haken, H., & Schiepek, G. (2006). Synergetik in der Psychotherapie Selbstorganisation verstehen und gestalten. Göttingen; Hogrefe.

Hamel, G., & Zanini, M. (2014). Build a change platform, not a changeprogram. Retrieved November 12, 2014, from McKinsey Insights & Publications:http://www.mckinsey.com/ insights/organization/build_a_change_platform_not_a_change_program

Hope, J., Bunce, P., & Röösli, F. (2011). The leader’s dilemma how to build an empowered and adaptive organization without losing control. Chichester: John Wiley & Sons.

Kirkpatrick, D. (2011). Beyond empowerment the age of the self-managed organization.

Sacramento: Morning Star Seif-Management Institute.

Laloux, F. (2014). Reinventing organizations a guide to creating organizations inspired by the next stage of human consciousness. Brussels:Nelson Parker.

LRN Corporation. (2012). 1he HOW report new metrics for a new reality: rethinking the source of resiliency, innovation and growth. Retrieved März 9, 2014. Archiviert mit WebCite ais http://’\\’W\V.webcitation.org/6NwNkhUsk, from http://www.lrn.com/howmetrics/ data/LRNHowReport2012.pdf

Panksepp, J., & Biven, L. (2012). The archaeology of mind neuroevolutionary origins of human emotions. New York: W. W. Norton.

Pink, D. H. (2010). 1he surprising truth about what motivates us. Edinburgh: Canongate.

Sonntag, M. (2012). Jenseits von Managed Care -Wie aus unserem Gesundheitswesen ein modernes und wertgenerierendes System entstehen könnte. Schweizerische Ärztezeitung, 93, pp. 729-730.

Towers Watson. (2014). Towers Watson Global Workforce Study 2014. Retrieved November 12, 2014, from http://www.towerswatson.com/en/lnsights/IC-Types/Survey-Research­ Results/2014/08/the-2014-global-workforce-study

No more Command and Control. Please!


growth-1

In order to power growth you should aim for an adaptive and empowered organization, that:

  • Responds rapidly to threats and opportunities.

  • Adaptive organizations operate with speed and simplicity by giving managers the scope to act immediately and decisively within clear values and strategic boundaries. Making strategy an open, continuous and adaptive process is the key. It enables the firm to react to emerging threats and opportunities as they arise rather than being constrained by a fixed and outdated plan.

  • Attracts and keeps the best people.

  • It is no coincidence that Adaptive Organizations such as Google, Handelsbanken and W.L. Gore regularly appear in the lists of “best companies to work for”. The reasons are obvious. From the employee perspective, talented people want to learn and develop; they value time to think, reflect and try new ideas; they want decision-making responsibility and they want a friendly, collegiate culture. From the employer perspective, they want people who have the right attitude, have ideas and can add value, want to participate in decision-making, are good team players and have the talent to become leaders at any level.

  • Enables and encourages continuous innovation.

  • Innovation is about thinking and acting differently whether it is about strategies, business models, processes, or management practices. In adaptive organizations, people work within an open and self-questioning environment. Clear governance principles set the right climate and builds the mutual trust needed to share knowledge and best practices. This is also encouraged by the move away from individual rewards based on budgets and toward team rewards based on business unit or group performance.

  • Drives operational excellence.

  • Adaptive organizations have lower costs. Not only do they connect the work that people do with customer needs, but they also align products, processes, projects, and structures with their strategy. Operating managers also challenge resources used rather than seeing them as ‘entitlements’. Just asking the question, “Does it add value to the customer?” is often sufficient to ensure that unnecessary work is eliminated.

  • Leads to loyal and profitable customers.

  • Adaptive organizations know how customers want to conduct business with them. Key issues are whether customers just want the lowest-cost transaction, added-value services, or customized solutions. Under this “outside-in” approach, firms know how to satisfy customers’ needs profitably. This means not only knowing their needs, but also their net profitability.

  • Support good governance and ethical behaviour.

  • Adaptive organizations are held together by strong values and inviolate principles. However, it is not a soft option. It exposes nonperformers. It challenges people all the time. You cannot just agree on a number. You have to show people that you can actually achieve real performance improvements, and must always be prepared to be judged against others with similar problems and opportunities.

  • Leads to sustained value creation.

  • Leaders in Adaptive organizations focus their attention (either explicitly or implicitly) on creating wealth over the longer term. In particular, they focus on setting high performance expectations and stretching people’s ambitions. Those companies that operate this way tend to beat the competition not just this quarter or this year but year after year.

Clearly adapting in these ways the organisation that will emerge will replace the 20th century industrial age command and control management model that is no longer ‘fit for purpose’.

A viable alternative* that will provide a sustainable basis for high performance.

*BBRT.ORG will assist you on this journey as it has done alongside so many leading organisations (see website)

Trevor Lee

tblee@ceo-worldwide.com

http://www.ceo-worldwide.com

@trevorblee

 

 

The Firm of the Future


In this paper, Dr Jules Goddard, Fellow of London Business School, puts forward the argument that, with three relatively small contextual changes, businesses themselves could amplify and exploit the VUCA world in which they compete and thereby disproportionately enhance their opportunities for wealth creation. The firm of the future will be the one with the courage to do so.

The three great challenges facing business today are to create a commercial culture in which capital is more patient, work is more variegated and entrepreneurship is more mainstream

Anyone listening in on the conversations of executives over the last 10 to 20 years cannot help but have noticed that managerialism – the art of getting things done by and through other people – is the main source of frustration, disengagement and underperformance within most organisations. As a 19th century social technology for controlling and coordinating large numbers of relatively unskilled people, managerialism is delivering ever-declining value. We are trying to create wealth in a knowledge economy by relying upon structures and processes designed for the industrial age.

The language of planning and control, of targets and KPIs, of metrics and benchmarks, of efficiency and excellence, of specialisation and standardisation, of jobs and careers betrays a way of thinking that is wholly unsuited to the challenges confronting firms today.

The agenda has moved on. More management is not the answer. Tweaking the managerial model by opting for out-sourcing, de-leveraging, re-engineering, dis-intermediating, off-shoring, and other such administrative processes beloved of consultants, is a classic case of “doorknob polishing” when the stately home has long since fallen into disrepair.

The problems facing business have much less to do with internal systems and processes and much more to do with external or contextual variables, such as the institutions and structures within which companies are expected to perform. The five-day work week, the employment contract, the job description, the office hours mentality, the working time directive, the lifetime career, the long hours culture, the limited liability company, the quarterly reporting cycle, the acquis communitaire, and the regulatory mindset are just a few of the situational factors that contribute to a culture of indecisive management, compliant employees and passive shareholders.

For some time we have been witnessing diminishing returns to management. We need to pioneer alternative organisational models that have the potential to motivate and inspire those coming into the workforce, as well as re-energising those already within it. To borrow a telling phrase from Charles Handy’s most recent book, we need to invent a “second curve” – a new way of working – if we are to attract millennial talent into the world of business and put it to work on behalf of a better world

Three deep-seated structures – or pathologies – are particularly responsible for holding back economic growth in today’s world:

  1. The 5-Day Workweek: we spend too many hours in the constrictive environment of the office and too little “out and about”. Our working week is typically too monotonous, too uniform and too “full-on” to lend itself to creativity. What has been called “hurry sickness” is crowding out time better spent on inquiry, reflection, natural conversation and “downtime” generally.

  1. The 5-Week Shareholding: perhaps this should read the “5-Second Shareholding”. It has become a cliché – but none the less true for that –that capital markets are insufficiently patient to serve one of their main purposes, which is to match lenders with borrowers and, in doing so, help direct savings into their most productive uses (even though, shockingly, only about 3% of the assets of British banks are today devoted to this purpose). Short-termism is a rational response to the irrational state of affairs in which the business model that drives the decisions of asset managers conflicts with the interests of the investees, namely, companies and those whose money is invested in them.

  1. The 5-Decade Career: the problem, as Charles Handy said many years ago, is not just unemployment, but also employment. As a legal structure and behavioural context in which individuals may be planning to build their working life in the 21st century, it is too closed, too restrictive and insufficiently developmental to meet their variegated needs.

Increasingly the role of senior management will be to redesign the organizational context in which work is done, rather than to supervise the content of the work itself. Ideally, there will develop a competitive market in employment practices and ownership rights – where, for example, different firms will experiment differently with the length and composition of the workweek, the incentives attaching to different classes of shares, and the opportunities for employees to become entrepreneurs in mid-career.

The 4-Day Workweek

Remember, you only have 2,000 weekends, and then you die”

Ryan Carson, CEO of Treehouse, a company that treats Fridays as part of the weekend

John Maynard Keynes predicted that, by 2030, there would be a 15-hour workweek. Yet the statistics suggest that, if anything, people are working longer hours now than they did in the 1930s. This is a paradox. Presumably, Keynes’ logic was that, as the wealth of the world increased, so the marginal utility of income would fall relative to the marginal utility of leisure, placing pressure on governments to encourage more flexible employment contracts and offering opportunities for firms to compete on the basis of hours worked. Yet the reverse would seem to have occurred. The wealthier we get, the harder we work, the longer we stay in the office, and the later we retire, if ever.

The working week needs a radical re-think. Just as the notion of a career – that is, working (often for the same employer) for 45 hours a week for 45 weeks a year for 45 years – was radically challenged by Charles Handy in the 1980s when he wrote about “portfolio working”, so it is time to re-appraise and overhaul the unduly rigid notion of the 5-Day workweek.

The gig economy, the pop-up shop, the farmer’s market, the boot sale, the innovation hub, the zero-hours contract and so on are all symptoms of the fact that work needs to break out of its straitjacket and try on different apparel.

Ironically, zero-hours contracts have come in for a terrible pasting by the media and yet 80% of those on such contracts are delighted with them, such is the freedom and flexibility that they afford. Instead, the real problem is the formulaic nature of the everyday employment contract. We talk a lot about corporate agility and the merits of anti-fragility, yet we persevere with one of the most embedded and inflexible institutions in modern society.

In their genealogical explanation of civilization, Acemoglu and Robinson draw a distinction between inclusive institutions, such as those that “enforce property rights, create a level playing field, and encourage investments in new technologies and skills” and which “distribute political power widely in a pluralistic manner” with extractive institutions, such as those that “concentrate power in the hands of the few” or “are structured to extract resources from the many by the few”. Today’s workplace, with its rigid structures, burdensome rules, and mood of distrust is in danger of becoming the 21st century equivalent of the kind of extractive institutions that Acemoglu and Robinson believe to have been antithetical to human progress.

So why not move to a 4-day workweek? Why not “Thank God it’s Thursday”?

Dan Hamermesh, an economist at the University of Texas at Austin, makes a fair point when he says that, “It’s very easy for folks sitting back in their chairs to say, ‘Yes, you need to be on a part-time schedule, or a four-day, 32-hour schedule’, without thinking about the extent to which such folks want the income and are willing to put up with the hard hours”. In other words, there’s always going to be a tradeoff between hours worked and income earned. If everyone worked fewer hours, then surely the economy would shrink, and salaries and wages would suffer.

Yet this same argument must have been used 100 years ago when a New England mill, to the delight of the labour movement but perhaps to the consternation of the entrepreneurial class, became the first American factory to treat Saturdays as off-limits to employers.

There are two linked assumptions made by those defending the “long-hours culture”: first, that there is a positive correlation between the length of the workweek and the productivity of the workforce; and second, that, given this fact, very few people would prefer to take a pay cut in exchange for a longer weekend.

However, there is some evidence that this may not be the case, for four principal reasons:

First, fewer hours to perform a task means less time to waste:

As Ryan Carson, Founder of Treehouse, an online education company, observes, “You get all Friday off, instead of pretending like you’re working when you’re not”. The more hours that are made available for a job to be done, the more the job-holder will find ways to distract himself if only to break the monotony. This is an echo of Parkinson’s Law: work expands to fill the time available. Twice the hours doesn’t mean twice the effort or twice the output. Particularly in the case of knowledge workers or creative tasks, forcing longer hours is invariably counter-productive. To invert Parkinson’s Law, perhaps work contracts to fit the time allotted, or, put another way, time quickens to achieve the task to be done.

The workaholic is a menace in the office. It is said that Field Marshall von Moltke sought out intelligent and lazy officers to be his Commanders because they placed particular emphasis on finding the easiest way of achieving a task; whereas he was notoriously averse to stupid and energetic officers because they made so many things happen but almost all of them wrong-headed. Many of us will immediately recognize this type of manager: he is the one who is endlessly setting targets, measuring effort, cutting costs, re-engineering processes, judging others – and working long hours.

Second, longer weekends refresh and stimulate the creative mind:

Creative problem-solving, innovation and critical thinking are more likely to thrive under conditions of trust and patience than supervision and urgency. Quality work happens best when uninterrupted. Guy Claxton has demonstrated that the creative mind works at a slower pace than the mind engaged on routine tasks. Jason Fried, the founder of Basecamp, a software company whose employees take Fridays off in the summer, discovered that “Better work gets done in four days than in five”.

Third, more free time makes for a happier work environment:

Those countries that work shorter hours tend to be happier and more convivial than others, with no apparent loss of prosperity. An OECD report in 2013 found that, amongst full-time salaried workers, the Netherlands enjoys the shortest workweek in the developed world, at an average of 29 hours per week, followed by Denmark (33), Norway (33), Switzerland (35) and Sweden (36). Is it any coincidence that these same 5 countries, according to the World Happiness Report of 2013, were also the 5 happiest? The same report provided evidence that happiness is positively correlated with productivity, health and longevity.

When Kelly Holmes was rounding the final bend in the Athens Olympics’ 800m final, for which she won the gold medal, Michael Johnson, the American sprinter who was commentating on the race for the BBC, remarked that, whereas every other athlete was racing, Kelly was running. What a wonderful insight. And what light it throws on today’s workplace, which incentivizes racing rather than running. Julie Burchill, the writer and journalist, recently remarked that, “Most of us would do our jobs better if we did them less”.

Fourth, a four-day workweek has formidable power to attract and retain talent:

Adding an extra day of freedom to each week is a magnet for talent. Any mention of a shorter workweek, even when this entails a cut in take-home pay, usually excites even the most industrious and sober of managers, professionals and working people. The millennial generation, in particular, is likely to price its freedom at a higher rate than earlier generations.

Patient Capital

There is something unreal about the way in which finance has evolved, dematerialized and detached itself from ordinary business and everyday life”

John Kay

The extraordinary growth of the finance sector since deregulation – what John Kay has called the “financialisation” of the modern economy – has contributed remarkably little to the creation of new wealth; rather, it has discovered ingenious ways of expropriating the wealth created elsewhere in the economy and rewarded itself handsomely for doing so.

Once upon a time, or so our memory tells us, the investment landscape was peopled by a rather small number of prominent fund managers looking after a rather selective share portfolio on behalf of a rather larger number of influential private investors. The investment chain was much shorter. The fetish for index-tracking or index-hugging had not yet been adopted and the fashion for hedge funds making ultra high-frequency trades had not yet been invented.

Most observers of the world of business and finance – and indeed many who earn their living in this world – have long had concerns about short-term decision-making – and the perverse incentives that seem to reward this behaviour. Particularly since the crash of 2008, there have been innumerable recommendations for how to reverse the seemingly remorseless move away from long-term considerations in equity markets.

The response by US authorities to the 2008 crash was to invent ever more voluminous and intricate regulations, such as Dodd-Frank. John Kay believes that this is precisely the wrong response. “There has not been too little regulation, but far too much … we should put an end to the seemingly endless proliferation of complex rule books.”

Nor can we count on virtue. In the last few years, we have learned that any change in behaviour that relies upon good faith, noble declarations, “social responsibility”, value statements, well-meaning compacts and commitments, what Private Eye used to call “Solomon Binding”, is likely to fall foul of the epithet that “the road to hell is paved with good intentions.” Something much tougher is needed.

In Britain, the emphasis has been squarely on the reversal of financialisation. The Kay Report made four significant recommendations: release companies from the obligation to report their quarterly financial performance; replace this custom with a “stewardship code” and make asset managers who are responsible for other people’s money personally (not corporately) subject to civil and criminal penalties; ban all short-term cash bonuses to executives; and encourage greater communication between shareholders and companies. On all these fronts, progress is being made.

However, there is one area where the pace of change needs to quicken.

It starts with the distinction between “investors” and “traders” – between those who buy shares on the basis of their understanding of the fundamental value of the company and those who buy on the basis of their expectations of short-term fluctuations in the share price. This distinction is not always clean-cut if only because some trading is necessary if liquidity is to be made available to investors. But the argument remains: the sheer volume of trading that we witness in today’s capital markets is far in excess of this requirement.

A dramatic change in the incentive environment is needed if short-termism is to be reversed. How about firms offering different classes of shares with different degrees of power, such that voting rights are related not to how many shares you own but to how long you have held them? When buying the “more powerful” class of shares, for example, shareholders would register the length of the time they intend to hold them: the longer the time, the greater the number of votes. If the shares were later sold “prematurely”, then there would be a financial penalty. One of the beneficial outcomes of such an arrangement would be that decisions about acquisitions and mergers – which are currently a major source of short-term bias – would be mainly in the hands of the more committed shareholders.

The limited liability company was originally a noble idea designed to give protection to shareholders who, as residual claimants, were more vulnerable to the failure of the firm than other stakeholders, such as creditors, employees and customers, whose claims were contractually prioritized. The balance has now swung decisively the other way. Such is the pressure on Boards of Directors to maximise shareholder value that other stakeholders, particularly future shareholders, are losing out. Colin Mayer has argued convincingly that, as a result, companies are seriously failing society by engaging in unjust forms of inter-generational wealth transfer.

The Post-Employment Enterprise

Smart young things joining the workforce soon discover that, although they have been selected for their intelligence, they are not expected to use it”

André Spicer

In 30 years time, we will look back on employment habits and customs as the last vestige of a kind of feudalism in the workplace. This is not to suggest that today’s employees can be compared to serfs but simply to bemoan the cynical and dispiriting assumptions about human nature that underpin so many workplace practices.

No one who expects to live to 100 – as do most of those coming into the workforce – is going to put their faith in a 70-year career, let alone a single employer. Those who are imaginative, energetic, optimistic, or adventurous will want to create for themselves some form of independence and self-responsibility by the age of 45. (Indeed, firms such as Uber and Airbnb, are capitalizing on this very trend.) But understandably most young recruits into business will still expect – and need – an “apprenticeship” in business acumen before they go it alone and found their own start-up. The firm’s role will be to act as a kind of incubator in which employees in their 20s and 30s acquire the skills and confidence to design successful new ventures

It will be a rare employee who wishes to remain within the firm after, say, the age of 50. A society of free citizens will gradually come to be interpreted as a network of entrepreneurs, co-owning with friends and colleagues their own businesses and taking responsibility for creating jobs for those younger than themselves rather than occupying them. Firms will increasingly treat their employees less as loyal citizens over the course of their career and more as potential entrepreneurs whose businesses they help nurture and in which they invest capital.

All employees will, effectively, have two jobs: the “day job” delivering value to the core business and the “development job” preparing to launch their own new venture. These activities will be intimately linked. The day job will offer the experience from which the employee learns about business: how customers are won, how leadership works, how humans are motivated, and how wealth is created. The development job will translate these emerging skills into nascent businesses.

Let us illustrate the argument with some numbers. A firm of 10,000 employees will typically contain 2,000 in their 40s, an age that is ripe for the adventure of entrepreneurial innovation. Let’s say that half of them – or 1,000 – are up for this. And let’s also assume they have come together in teams averaging 5 members around a strong idea for a start-up. So the firm has the opportunity to invest in 200 new businesses every decade. Let’s say half of them survive and grow. In other words, every year the firm is investing in 10 spun-off organisations, each led by 5 of its former employees.

My prediction would be that within 10 years the aggregate market value of these new ventures would be greater than that of the parent company that spun them off. This is the reward for moving the company from being a place to build a career to becoming a place to invent a business. We could name this new form of company “a venturesome enterprise”.

The evidence for the viability of this model is growing all the time. It is well documented, for example, that the new ventures founded by Hewlett-Packard “alumni” since 1990 are now more valuable than Hewlett-Packard itself. The tragedy for HP, of course, is that it didn’t foresee this turn of events and therefore didn’t invest in these businesses.

Why do so many people need to be employed? Why do so few want to do the employing? We educate the young principally to find employment. Very few schools and very few teachers see the purpose of education as creating jobs rather than simply filling them. We look to others to provide work for us. We should not be surprised if there are people eager to fulfill this role, but we should be wary of becoming the followers of those who aspire to lead.

This is the real inequality in society: the disparity between those exercising power and those submitting to it. Disparities of wealth are innocuous by comparison with disparities of power and influence. Yet most of us aid and abet these disparities by choosing employment over self-employment. The economic health and vitality of a society can be measured by the proportion of people who resist the lure of employment and choose instead to manage their own working lives. To be employed at a young age is fine so long as its purpose is to grow out of the need for it. Rather in the way that parents bring up their children to grow out of childhood and to become adults, so employment should develop young adults to move beyond dependency into self-reliance.

Concluding Remarks

Stop the world, I want to get off”

The conditions that Daniel Berlyne, the cognitive psychologist, discovered to be the ones most conductive to creativity are what called the “collative variables”, such as uncertainty, novelty, surprise, complexity, incongruity and absurdity.

The oft-repeated platitude that “business hates uncertainty” is not only a serious misconception of the role of business but also a slur on business and on the creativity of business people. Good businesses thrive on unpredictability. Indeed, markets reward those firms that detect opportunities in ambiguity and complexity that other, less creative firms don’t. If the future were predictable, entrepreneurs would not exist.

Consider the following analogy: just as it makes no sense to say that you are “in heavy traffic” when the reality is that you are yourself the traffic about which you are complaining, so it is equally nonsensical to describe business as having to accommodate – or respond to – “a VUCA world”, as though volatility, uncertainty, complexity and ambiguity were an unwelcome visitation rather than the natural and perennial ambience of business activity itself.

Volatility is what business is about. Indeed, most of the VUCA we experience in the world is the direct and intended product of business, particularly the globalization of the world for which business bears the primary responsibility. Trade has always had the effect of unsettling societies and disturbing the habits to which they have become accustomed. Business is intrinsically restless. Arguably, it has been the greatest disturbance factor in history. Hayek believed that the first moneylender was unknowingly the inventor of the modern world.

Gifted businessmen like nothing more than the uncertainty out of which innovative strategies are crafted. Most competitive advantages, most entrepreneurial breakthroughs and most sources of wealth creation arise from different interpretations by different people of the same data. The market itself is a filtering device for removing businesses that are fearful of the VUCA world or do not have the wit and energy to discover in the chaos the opportunities for disruptive innovation.

FUTURE 3

In appreciation and posted by:

Trevor Lee

http://www.ceo-worldwide.com

http://www.ep-i.net

@trevorblee

Executive Search & Interim Management since 2001
Connecting you with the best certified executive talent on the planet

 

References

Daron Acemoglu and James Robinson, Why Nations Fail: The Origins of Power, Prosperity and Poverty (London: Profile Books, 2013).

Mats Alvesson and André Spicer, The Stupidity Paradox: The Power and Pitfalls of Functional Stupidity at Work (London: Profile Books, 2016).

D. E. Berlyne, Conflict, Arousal and Curiosity (New York: McGraw-Hill, 1960).

Guy Claxton, Wise Up: The Challenge of Lifelong Learning (London and New York: Bloomsbury, 1999).

Jules Goddard and Tony Eccles, Uncommon Sense, Common Nonsense: Why Some Organisations Consistently Outperform Others (London, Profile Books, 2013).

Daniel S. Hamermesh and Elena Stancanelli, “Long Workweeks and Strange Hours,ILR Review, Cornell University, vol. 68(5).

Charles Handy, The Second Curve: Thoughts on Reinventing Society (London: Random House UK, 2016).

John Kay, “The Kay Review of UK Equity Markets and Long-Term Decision Making”, Department for Business, Innovation and Skills (2014).

John Kay, Other People’s Money: Masters of the Universe or Servants of the People? (London: Profile Books, 2015).

Colin Mayer, Firm Commitment: Why the Corporation is Failing Us and How to Restore Trust in It (Oxford: Oxford University Press, 2013).

Consumer Behaviour – from minor player to lead role in shaping the Enterprise


A guest post by Nick Rowley, who leads the Marketear Limited team in helping companies’ transition to a truly customer focused approach.

In the last decade two undeniable truths have emerged:

  • Consumer behaviour drives commerce – which the Enterprise depends on
  • The Enterprise has to adapt to the new order or perish

Social Media burst in to visibility thanks in large part to the explosion of the web and has galvanised consumer opinion across disparate individuals and communities who otherwise were unlikely to be known to each other. But Social Media itself is only a single dimension of Consumer Behaviour. Consumer Behaviour has always been in evidence, be it nurture, environment, responses to advertising, disposable income, peer pressure or need, to name but a few examples. These components and more, had been islands of influence, but are now inextricably linked and are creating a massive energy field that the Enterprise has to embrace. Likened to Pandora’s box, once opened, there is no turning back, the Consumer Behaviour ecosystem will only become more deeply integrated and influential.

Some, 250,000 people watched ‘United Breaks Guitars ‘ on YouTube, before United Airlines saw fit to do the right thing for Dave Carroll; but was that really any different to the Libyans gathering in Martyrs’ Square to demand Gadaffi be overthrown? A protest yes, but not a consumer decision influencing mechanism. The question is, would ‘United’ have done anything without the aggregated power consumers unknown to each other, committed to fair play?

With consumers having choice and significant voice, now backed up by influential muscle, no longer can companies adopt a dismissive or reactive culture. Choices for the consumer are becoming far more granular, across the full spectrum of products and services they consume, right down to the basic utilities flowing into one’s home, the consumer can now choose which supplier and the type of product/service being provided. So how do they decide? No longer the billboard, the clever TV advertising campaign, the most ‘liked’ supplier on Facebook, or other sensory receptor open to supplier manipulation – the consumer has taken control and sovereignty.

Consumer Behaviour is all about the consumer exercising independent choice, which multiplied out by us all (we are all consumers), awards business to enterprises. It can be transitorily fickle – such as when we all boycotted Starbucks for a millisecond when we discovered it was not paying taxes – but it can’t be tamed. Like water rushing downhill, there is not only the inevitable direction to it but significant energy, which provides the opportunity to be used constructively, but is all too often interpreted destructively or obstructively. It is the role of the enterprise to invest far more energy and resources than they have done previously, in understanding how to work with these new forces.

Taking a simple example. If an insurance business interacts with its customers through their preferred channels, using competent resources, it will almost certainly provide a better experience, for customer and company alike, leading to a reduction in costs. Reduced costs offers bigger profits. But wait. If you are communicating in a way the customer wants, they are likely to be happier. A happy customer is way more inclined to increase loyalty, reducing churn and more disposed to promote the company, encouraging others to your product/service. It gets better still, happy customers complain less, meaning your customer service operations can deal with real problems rather than noise. Fewer, more focused queries, will – with quality staff – deliver higher staff morale and that in turn reduces staff turnover, promoting lower costs (decreasing the need for recruiting and training) and driving a more experienced workforce.

It is easy to see how doing the right things for customers positively impacts so many functions in a business, with the potential for a virtuous circle of benefits, and all from a shared cultural disposition toward Consumer Behaviour; it is however more often a vicious circle where the initial disregard for the customer triggers almost the exact opposite of the positives just described.

So, if it is not the business’s actions, in a positive sense, influencing the consumer, what other than the negative or indifferent actions of the business is determining Consumer Behaviour?

The main drivers:

  • Activity levels: The sheer volume of mainstream personal administration, (number of transactions per capita per annum), for example credit cards, store cards, mobiles, utilities, insurance, e-commerce etc. etc., have increased 100 fold since 1975, eroding the consumers personal time and showcasing a growing spectrum of sub-optimal service styles.
  • Accessibility: All aspects of accessibility have or are moving in the Consumers favour:
    • Availability: Some form of 24 x 7 is becoming the standard
    • Channel: Alternatives emerging, though not necessarily by current provider(s).
    • Access Device: Choices available according to user preference and nature of interaction required.
    • Digital Communications: Enables mobility and time independent access.
  • Free Information repositories: Have promoted two key behaviour modifications:
    • A mindset geared to research
    • An expectation of immediate responses across all access points
  • Social connectivity: From casual interaction to more meaningful business related relationships, consumers are discovering a new source of trusted advisors, bypassing the traditional corporate advisor. Social connectivity is also competing for the consumers valuable time, given it is a generally a more pleasant experience.
  • Rate of Change: The requirements of the customer/consumer are already moving faster than the ability of the business to change, unduly pressurising the quality and timing of decisions.

There are many secondary drivers contributing to the changes in consumer behaviour, but most can be tracked back to the five main drivers identified, thus consolidating the shift in the balance of power to the consumer.

It follows that the corporate world is increasingly being shaped from the outside in, even though business continues to focus its changes from the inside out. So how long can the business world ignore this imperative, continuing with ‘more of the same’?

The reality is somewhat obvious, not long at all, dependent on their industry and position in that industry; however, the operational and cultural changes required to move to the new paradigm are significant and require experienced practitioners with the correct balance of tools and techniques to work with an organisation’s specific issues.

Marketear Limited provides the necessary thought leadership, through to programme ownership, delivery, support and on-going mentorship.

How prepared is your organisation for this most significant change?

Nick Rowley is MD of Marketear

07768 715 715 or nick.rowley@marketear.co.uk

consumer-1

Post hosted by:

Trevor Lee – EP International

http://www.ep-i.net

http://www.ceo-worldwide.com

@trevorblee

We provide C-suite services in the field of talent acquisition, development and retention.