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Five Ways Your Company Must Evolve to Remain Competitive in 2014 (and beyond)

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In his November 18th article called “A New Center of Gravity For Management?”, Forbes Magazine contributor Steve Denning reported on the 2013 Global Peter Drucker Forum where experts explored the managerial implications of complexity.

More specifically, this year’s discussions explored the level of dynamic complexity organizations and business leaders are presently facing. Given a consensus that the current global business environment is the “new normal”, many of the Forum’s speakers came to the conclusion that the approach to business management that has served us well in the past will actually be a problem moving forward. Comments from some of the Forum’s big thinkers included the following:

● “We have the wrong organizational models” (Don Tapscott)

● “Helicopter parenting doesn’t work any better in the workplace than it does in the family” (Charles Handy)

● “The fear-based environments that are prevalent in today’s large organizations kill innovation” (Tim Brown, CEO of IDEO)

● “Our organizations have “run out of gas” – we need fundamental change” (Tapscott)

It seems that these comments apply equally to private and public sector organizations.

While the Forum’s participants offered different solutions and suggestions for how management needs to change in a dynamic and complex business environment, the underlying imperatives for success included (1) innovation and creativity, and (2) worker passion for their work and for creativity and innovation. Basically, to be successful moving forward, organizations, including yours, must take action NOW to optimize their capability on both these fronts.

Denning maintains that there are five essential dimensions of an organization through which business leaders can enable these capabilities – goals, structure, coordination, values, and communications. Let’s take a closer look at what was discussed at the Forum and how you can put these insights into action in your organization.

GOALS

What Was Discussed

The latest buzz word in business is purpose or defining your “why”. It turns out that this isn’t a coincidence. You see, when your world is dynamic, complex, ambiguous, and confusing, it can be difficult to make decisions and keep moving in the right direction. An organization’s purpose acts as its North Star – having clarity about what your organization’s overarching goal is makes navigating a changing business environment easier.

However, an interesting thing that was discussed at the Forum was the need to determine the right goal. Participants agreed that, to be successful, an organization’s purpose must be oriented around something outside the firm, in service of an external stakeholder. For example, in private sector companies, the purpose should be to create and serve a customer – NOT to make money (i.e. deliver shareholder value). For a municipal government, it’s to serve citizens.

The Forum’s participants agreed that this reformulation of the goal of the organization is the foundation that enables its ability to succeed in a dynamic and complex environment.

Put This Insight into Action in Your Organization in 2014

What is the goal of your organization? Is your purpose anchored outside of your organization? Who are you serving and what benefit do you provide to them?

If you can’t answer these questions with clarity then it’s time to sit down and figure it out. To do this, put together a small group of executives and employees to hammer out the answers.

If you CAN answer these questions, consider whether others at the executive table and throughout your organization would answer them the same way. If not, it’s time to get everyone on the same page. Get out in your organization and start engaging everyone in a conversation about the purpose/goal of your organization. Don’t stop until everyone in your organization answers the questions above the same way consistently and with confidence.

STRUCTURE

What Was Discussed

The participants at the Forum agreed that organizations must change from the hierarchical, command and control structure to something that is more fluid. The most progressive thinking positioned managers as the enablers of self-organizing teams and networks both inside and outside the organization. Stretching thinking to conceptualize the organization as including those outside its physical boundaries was seen as critical – the key to being on the leading edge of required change is interacting more pro-actively with networks of partners and customers/key stakeholders.

Put This Insight into Action in Your Organization in 2014

Is the work of your organization entirely executed through your organization structure? If it is, you are losing the opportunity to put cross functional teams together to work on the big problems your organization faces.

How could you encourage people across your organization to come together to identify and solve these big problems? What organizational structures and other infrastructure would you have to put in place to make this happen? How could you take an “X prize” approach to the big problems in your organization and enable motivated employees to connect across your organization to work on solving problems they are passionate about? How could you extend participation beyond your organization’s borders to involve your customers and business partners in identifying and solving critical problems and/or leveraging the big opportunities for your company?

Resolve in 2014 to implement at least one structure-busting mechanism that will help people associated with your organization to work together on the key opportunities faced by your company now and through 2014.

COORDINATION

What Was Discussed

Participants at the Forum agreed that the key to success in a more dynamic and complex world is both continuous innovation AND disciplined execution. Unfortunately, the traditional style of management has never been able to strike the right balance. In fact, balance has proven elusive with the achievement of one requiring sacrificing the other.

The solution appears to lie in implementing a process or approach that involves working in short iterative cycles that give the people doing the work greater autonomy to connect and make local decisions, and allows them to receive direct, unfiltered feedback from the customer at the end of each production cycle. Critical to the successful implementation of this approach is a change in the role of the manager – to someone who enables creativity and removes impediments to connection and co-creation.

This way of operating is essential in a dynamic environment because it allows an organization to get new offerings, that meet customers’ real (and shifting) needs, out the faster and with better results.

Put This Insight into Action in Your Organization in 2014

What is your organization’s cycle time for producing and releasing new products and services? Do you involve a cross-functional group of employees AND your customers in the process or does your hierarchy and bureaucracy get in the way? Does your organization demand perfection in new products and services BEFORE they are released? What’s the ROI on your new products and services?

In 2014 it’s critical that you take steps to shorten your new product/service development processes/cycle (to get more products and services on the market before the customer’s needs change) AND build greater customer intelligence into this process (in an effort to achieve more hits than misses). Determine how to get those employees with real insights into customer needs involved in the process and be sure that they have a direct line to the customer’s response to new offerings. Start training your managers on how to play their role in a new way – one that supports this new approach to product/service development and implementation.

Doing this will accelerate employee and organizational intelligence about your customer, allowing you to create targeted products and services that surprise and delight your customers more pro-actively and reliably in 2014.

VALUES  

What Was Discussed

Forum participants noted that in the traditional organization, efficiency and predictability are critical operating values. However, it isn’t hard to see that in a dynamic and complex business environment, these values are difficult to implement successfully. In fact, these values actually get in the way of sensing and adapting to dynamic complexity.

What’s required in the new world is a commitment to transparency (sharing information so that all employees can see what’s going on and make the right decisions), continuous improvement (the ability to re-imagine your business, products, and services as technology and customer needs shift), and sustainability (shifting away from conducting one-off transactions to establishing relationships that will grow your business over time).

The underlying premise behind this values shift is alignment with the organization’s ultimate goal – a shift from selling products to customers to impacting and changing their lives.

Put This Insight into Action in Your Organization in 2014

What does your organization value? Are you focused on efficiency and predictability? How are these values helping or hurting your organization’s success? Will they serve you well as your operating environment gets increasingly complex and changeable? Why or why not?

Do your values include transparency, continuous improvement, and sustainability? If so, how do the definitions of these values compare to the definitions outlined above? What changes might you need to make in the current definitions?

In 2014, take the time to revisit your organization’s values by exploring the questions above with people in your organization. Refresh your values as needed to align with your organization’s goal and to thrive in a more dynamic and complex business environment.

COMMUNICATIONS      

What Was Discussed

There was agreement that the old style of one way, top down communication is no longer effective. Moving forward, vertical communications will continue, however communications will become increasingly horizontal both inside/across and outside the organization. In addition, rather than telling people what to do from a place of authority, communications need to become more conversational in a way that features a respect for both viewpoints and expertise. The result will be a more agile organization that is more aware of, and able to respond to, changes in the business environment.

It’s important to note that success in communications isn’t as easy as setting up social media channels for your organization – it involves a fundamental re-thinking of how your organization wants to relate to the world and what this in turn means for how it engages, operates, and behaves both internally and externally.

Put This Insight into Action in Your Organization in 2014

What is the nature of communications inside and outside your organization? What mechanisms are in place to enable two-way dialogue? Are directives or conversations the natural communication style of leaders across your organization? What would it take to make everyone in your organization a conversation leader?

Resolve in 2014 to dedicate your organization to conversation and two-way communication. Think through and declare why this approach is necessary to fulfil your organization’s goal and to thrive in a dynamic, complex business environment. Communicate this expectation to everyone in your organization and give them the training and support they need to be conversation champions. Implement at least one two-way communication mechanism in 2014 that will enable dialogue both inside and outside your organization. Keep a focus on conversation throughout the year and reward and recognize the changes of behavior, and the results that they achieve, as they emerge across your organization. If you do this, before you know it, you’ll make conversation a way of life for everyone.

Participants at the 2013 Global Peter Drucker Forum agreed that in a more dynamic and complex business world, the traditional approach to business management is no longer viable. A focus on goals that serve the interests of the company only, hierarchical structures that impede rapid, cross-functional innovation, and values and communication styles that support a command and control approach to management, suck the creativity and passion out of an organization. Companies that refuse to change from this model will become less able to capture the economic benefits of their business activities.

The Forum’s participants and I are challenging you to make 2014 the year that your organization becomes more creative, innovative, and passionate, allowing your organization to succeed and thrive in an increasingly dynamic and complex business environment.

What steps will you take to make this a reality for your organization?

Take the time to sketch out your action and implementation now. Then get ready to remember 2014 as the year that everything changed for you, your employees, and your company!