Whether it comes from technological change, disruptive business models or growing market constraints linked to higher demands from customers, organisations and strategies have to change. Partnerships? Social business? Digitalization? Diversification? Or maybe all of it? The only certainty companies have left is legacy will not survive to the new era, whichever it is, that era calling for disruption, somehow, somewhere. Several approaches exist and are being use to define a pathway ahead in times of uncertainties. Grenoble Ecole de Management develops and teaches Agile Management with Jérôme Barrand, author of “The Agile Manager” (available in French). Agile projects make sense (to market, to customers, to environment, to the organisation, to people involved), deliver sense, optimise the creation process by opening it to partners and customers. They create a flexible, reliable and pro-active network of teams rather than big organisations. They are able to anticipate change.
The word “effisensible” doesn’t exist. It should. It relates to actions that are effective, efficient and sensible. It achieves objectives in the most optimised manner and brings sense throughout the value-chain up to customer and on-going commercial or partnering relationship.
Effectivity can be measured in a variety of way. Production will use KPIs, finance ROI, targets, threshold. For innovation to be effective, companies need to look beyond numbers, and consider the promise they make, not only to their customers, but also to their organisation, partners, and wider ecosystem component, including society. As Elisabeth Doti from Strategy & Business reminds, “As obvious as it sounds, most companies improve enormously by ensuring teams understand how their work fits together, and motivating them to base their priorities on the company’s goals. When companies instead invest in developing repeatable processes, they make it easy for employees to deliver on company promises, and free up their creativity for the next big idea.” Effectivity spurs organisational motivation towards a common direction and delivers companies promise as a team.
Efficiency is here seen in terms of results obtained in the most cost-time-quality effective way. As the Financial Times highlights, “Of BCG’s 25 most innovative companies in 2013, 14 are business model innovators. Business model innovation is more profitable and more sustainable than product innovation and is badly needed in Europe today.” Efficiency includes the fact of challenging status-quo and creating business models, organisation and processes that support companies’ strategy.
Sensibility for agile innovation is defined as a shared value between customers, organisation and partners, a common belief that actions we drive are creative (and not destructive in the innovative sense). First because forgetting to bring “common sense” and trying to impose change with authority never works. It leaves part of your best talent outside the discussion. As Greg Satell remarks for Digital Tonto “Respectable people always prefer incumbency to disruption. Only misfits are threatened by the status quo. So if you want to create real change, it is not power and influence that you need, but those who seek to overthrow it.”
Effisensibitily is a concept to be applied throughout development of agile projects. It is the starting point, engine and ultimate result agility leads to. There are six steps to get there.
Value of people, people of value
As Annabel Kalmar from Strategy and Business explains, “Companies need to be set up to encourage, recognize, support, and implement great ideas if they want them to succeed in the market”. In her view, most innovative companies are able to foster innovation thinking at all level, aligning strategy to an organisational design that is natural to successful innovators, making innovation part of the company culture. Julie Dixon thinks “This poses a tremendous opportunity for organizations to reassess their internal cultures, and to ensure that they have the systems and processes in place to meet the demand for authentic, compelling stories that showcase the impact of their work”. In her article for the Stanford Social Innovation Review, she develops the value of story-telling supported and developed by all which in return will drive a more impactful strategy and company culture that inspires all employees.
Emma Burnell uses the case of Cadbury and Melinda and Bill Gates Foundation to explain how “The future of corporate philanthropy is moving away from a model of grand projects and large-scale monetary giving to a more vibrant and complex world of relationship and capacity building, volunteering and locally based partnerships”. In her article for Raconteur.net, she explains how pioneering for help is changing corporate behaviour towards society and adds: “It is not as simple as writing a cheque – if it ever was – but it is now a more exciting time than ever to be an entrepreneur looking to do good.”
The way people interact with each other has dramatically evolved and Amy Celep encourages us to use these interactions smartly by bringing intentional influence in our communications. As she explains for the Stanford Social Innovation Review, “Leveraging influence with intentionality entails determining who can play a role in solving the problem and what actions we want them to take (do we want them to change their behavior? make a decision? commit resources?), as well as understanding their unique perspectives. “ Joe Cadwell from R-bloggers explains, “Different needs generate diverse usage experiences resulting in substantial consumer heterogeneity. Moreover, the infrequently occurring event or the seldom used feature can have a major impact and must be included in order for remedial action to be taken.” In the author’s view, market researches should encourage the use of reduced number of questions to respondents and use “a smaller set of interpretable latent features.” Africa M Arino reminds the importance of personal networks, especially in Africa where she explains for the IESE Business School that instead of trying to meet all actors one a time which is time consuming, “Another approach is to join a reputable institution to meet people from various countries who share values similar to those of the institution.”
Including the new values people have built though new interactional behaviours is important for agility as it fuels the core engine of creativity. If people know who they are and who they interact with, they are more inclined to use the right communication path to foster ideas and deliver change. Ultimately, such focus on people first encourages focus on customer first as a natural outcome.
The rise of new technologies and ensuing communications has brought customers at the heart of strategy. In order to better listen to them, companies and organisations need to concentrate on three different levels of relationships with customers. Engage, reward and partner.
The first idea is to better define customers’ requirements. As Maelle Becuwe from Chef D’Entreprise.com reminds, “by requesting support from business partners on requirements, needs and expectations, a business is optimising marketing and commercial launch”. Describing how several innovative start-ups have joined the 23% of French SMEs engaged in open-innovation, the author explains that collaboration enables companies to find knowledge and know-how they miss to compete under high market constraints while adding value for customers.
The second step is to concentrate on customer value and benefit from it. In an article for Forbes, Oracle explains how ““customer success” must become part of your organization’s DNA, and it should influence every customer interaction you have. By making customer success an integral part of your ongoing agenda, you’ll be in a great position to thrive in the new age of the customer.” Companies should concentrate on delivering their customers’ business objectives. Vala Afshar from The Huffington Post has met Tobias Lee, CMO for the Tax & Accounting division of Thomson Reuters. As the writer mentions, “Lee is partnering with companies that develop marketing analytics to improve the contextual understanding of marketing campaigns and at the same time developing internal data-driven capabilities within his organization. It is clear to many digital savvy marketers that building analytics capabilities within marketing is a critical success factor.” In fact, as Lee himself puts it, “Making sure we have happy customers is the top line, that is it.”
Partnering with customers
The end-goal is to optimise the whole value-chain ecosystem around customers. Marcel Bogers from the Wiley Online Library describes how “In general, open innovation research considers all possible combinations and recombinations of externally created innovations, as long as the firm can successfully commercialize the insourced innovation. Most specifically, open innovation implies that firms acquire technology that is new to them but not new to the market, whether incremental innovations in personal computers (Chesbrough, 2003a) or discontinuous innovations in consumer electronics (Christensen, Olesen & Kjær, 2005).” By creating new knowledge combinations, companies, partners and customers are able to interact seamlessly and redefine innovation collaboratively.
This World is Ours
Since the new ecosystem is defined jointly by various stakeholders, the barriers and opportunities to market are rebuilt. They are not known, controllable, sizeable issues. They open access to exponential growth. That is if the system can handle systemic threats and opportunities.
The Human Framework
Laura Stempler from TIME relates the story of El-Erian, former CEO, who has decided to spend more time with his family when discovering his daughter really needed him. “He has learned that there are “crystal” and “rubber” moments — while you can bounce back from missing a few occasions, the crystal moments (graduations, weddings, births) should never be dropped”. Focusing on people helps you understand their priorities, and they are not business priorities, most of the time. It might be the same for your customers, and the ecosystem built around it. Renuka Rana reminds on Explore B2B that “Being environmentally responsible, another advantage of green computing is: cash in your wallet. SMBs have the budget constraints and limited resources, money cannot be simply wasted. Green computing trends towards efficient utilization of resources.” Working together isn’t simply working better, it is also working smarter.
Working smarter necessitates a new approach to strategy. As John Kania from the Stanford Social Innovation Review explains, in order to “make greater progress in meeting society’s urgent challenges, they must move beyond today’s rigid and predictive model of strategy to a more nuanced model of emergent strategy that better aligns with the complex nature of social progress.” The emergent strategy he presents throughout the article automatically adapts to change by listening closely to “attractors”, those points when the whole system decides to follow a new direction. “Emergent strategy accepts that a realized strategy emerges over time as the initial intentions collide with, and accommodate to, a changing reality. And this newly realized strategy will continue to evolve, incorporating aspects of both deliberate and emergent strategy.” Feel this is too much of a challenge? Alistair Cox from the World Economic Forum does ring an alarm on skills needed. “The skills they are looking for are simply not available in sufficient quantity to meet the industry demand and that is now starting to push up salaries in a number of markets, even when overall wage inflation remains very low. It’s a worldwide issue and, if not tackled, those shortages will hinder the long-term performance of organisations and economies alike.” Fortunately, there are plenty of resources to help. McKinsey urges us to use the global pool of talents which is widening thanks to the spread to communication technologies. Richard Dobbes from McKinsey stresses out that “The importance of anticipating and reacting aggressively to discontinuities also is rising dramatically in our increasingly volatile world. The strategist increasingly needs to think in multiple time frames. Executives need to think about how specific technologies are likely to affect every part of the business and be completely fluent about how to use data and technology.”
Defining your value
Inside the box takes us through the systematic inventive thinking model that is required to thrive in a systematically changing world. As explained in the article, “creativity has more than 200 definitions in the literature. However, if you ask people to grade ideas, the agreement is very high. This means that even if it is difficult to define creativity, it is easy to identify it. Most creative ideas share a common structure of being highly original and at the same time highly useful.” One methodology used is “Where you subtract one of the resources” — such as engineers and marketers — “and replace them with a resource that exists inside a closure (box), in this case your consumers.”
The New Organisations
What happens when your customers join the board? It adds an additional pressure, but that’s pressure from the inside. From a mechanical point of view, you could call it an engine. Around that engines the ecosystem gets flexible, intelligently reactive and most of the time highly pro-active.
Eric G McNulty from Strategy and Business explains what it takes for leaders and managers to drive such a dynamic ecosystem. In his view, “management is the what and leadership is the why. If you have all what and no why, you wind up with a workforce just going through the motions with no real engagement. If you have great why and not enough what, the result is a lot of enthusiasm without much tangible output.” In essence, a systemic challenge requires a systemic commitment. So management and leadership will have to work as a continuum to thrive. Charles Hermann questions the value of calendarised reporting. In his article for WNYC, he states that “Writers with the Lex column at the Financial Times think these frequent filings might not be worth it, that they lead to short-term thinking by companies and put too much focus on stock prices instead of the long-term health of companies. This week on Money Talking, Sujeet Indap, a columnist at the Financial Times, makes the case that U.S. investors might be better off if companies had fewer filing requirements and provided information when it really matters.” When it really matters? That means intelligent reporting.
Intelligent reporting works in an intelligently reacting ecosystem. Andy Meek explains for FastCompany how Anita Krohn Traaseth made her way to the C-Suite. “One of the values she’s placed a high priority on throughout her life and especially during her career is courage–the courage to experiment, courage to think differently. She wanted to ask people, one-on-one, questions like: What should not change or be messed with by me at HP Norway? What should be changed? Give me examples of bottlenecks. And, finally, do you have a talent or skill you don’t get to use now in your position?” Maybe the right point to share information is when it adds value, when we allow experiments, when we take courage. Robert Safian takes the example of Fisher, 64, who has always considered being in a “business as a movement”. She tries to drive her company around simplicity as a core value. “Fisher acknowledges that this is all in a process of becoming, that the outcomes are unclear. But she’s committed to evolving the culture of her business. “We have purpose programs for our leaders, and we’re looking at getting participation from all of our employees, we’re setting up a learning lab. I really believe that business is going to have to think this way.”
Burkhard Gnarig from the Stanford Social Innovation Review explains how “ICSOs should permanently scan relevant developments and identify those that may affect them. They need to build an organizational culture that embraces change. They should adapt their highly successful business models to new demands while they are still successful; once disruption strikes it may be too late.” In order to navigate disruption, companies need to react before it’s too late.They should also be prepared for failure while maintaining investments for long term, as Alexander Borsh explains for Deloitte. In his view, “Understanding innovation projects as a portfolio can curb the tendency toward escalation of commitment. First, innovation and performance metrics should be applied to an innovation portfolio as a whole, rather than governing individual projects. Given the inherent uncertainty of innovation, it is safe to expect that some projects will fail, and others will succeed.” On top of placing innovation as a central priority and company value, businesses need to rethink the way they interacts with their environment. He explains “This external ecosystem and the constant external feedback in every phase of the innovation process help the company to have diversified sources of ideation and to steer the innovation process in a market-oriented manner.”
The Market, Your New Partner
At the end of the day, this is how agile organisations thrive: they partner with the market itself. From knowing the market to moving with the market, they end-up creating and re-creating new ecosystems, opening new markets.
Markets are uncertain by nature, but they are increasingly unstable at the inflexion point with unlimited possibilities of technological advances. Jeff Degraff explains on LinkedIn how “Part of innovating is stopping things now so can you make the room to do new things. Stop planning and start acting. Don’t let the uncertainty of the future slow you down. Be prepared to adapt as things happen. Expect the unexpected: leave room for the stuff you don’t know now.” The new nature of companies has to be experimentation, that is experimentations with changing markets. This is what will generate knowledge, this is what will generate value. E Learning Industry explains how “An organization that truly wants to improve bottom line performance must take a long hard look at internal operations, daily procedures and perhaps above all else, the company culture. If every employee is singing from the same hymn sheet, things are bound to improve. Not only will productivity and efficiency increase, workforce motivation and happiness is bound to be high as well. But how can a business implement and maintain such an effective and successful environment? The answer is by introducing a culture of learning.”
Moving with markets
A culture of learning is a culture of change. It is a necessity. As a sign of the increasing demand from businesses to develop a culture of change, KPMG has decided to launch a new consulting practice, as Caroline Fairchild reports for Fortune. As she comments, “The move pulls KPMG into the already saturated space of strategy consulting. The other members of the big four — Deloitte, PricewaterhouseCoopers and Ernst & Young – all offer strategy services while consulting firms like Bain & Company, BCG and McKinsey market themselves as strategy experts as well”. The difference is that KPMG will be building its new service from existing resources. With an increasing need for change, companies driving and defining transformation will need dedicated help to build new models. A variety of opinion is good when considering navigating uncertainties with experimentations.
Pawel Turczynowicz explains in this article for Y Banking how “Almost all successful business models in the digital era are based on the Network Effect. This phenomenon not only enables exponential growth, but, even more importantly, creates defensibility of a given venture in the sector or niche. Without this defensibility, all great innovations like mobile banking, PFM, etc. are just copied and don’t really change the market. Imagine what the market would look like if there was only one bank providing mobile banking.” The network effect mentioned by the author is based on creating new services with a holistic change ranging from building “real trust” to easing the regulatory environment inasmuch as it generates innovation. As Norbert Bol writes on his blog, “Innovations today are increasingly mixing these aspects to create new products, processes and services to become successful experiences. To better understand these experiences, a more integrated or holistic perspective is necessary.”
The Hyphenates Rise
Now that they can anticipate market moves, companies can understand better the value of change. Because they are focused on people, markets, ecosystem, they create and adapt continuously the processes that “cures the system” and generates value for customers and individuals of the system.
Change as a process
There is a common trait in all successful change stories: understanding motivation to implement change. As Benham Tabrizi from HBR outlines, “Many change efforts fail because people reduce themselves to checking boxes in safe, defensible systems such as Lean and Six Sigma. Successful change leaders, on the other hand, are open, bold, and have a clear sense of their motivations”. Trying to figure out how natural resources shortage will affect the Internet, Patrick V from Thinking Out Loud concludes: “It will depend on the resilience and self-organization levels in the adaptive cycle…”
Change as an asset
Indeed, adapting is a key attribute of agile systems. It proves systems have integrated change as an asset rather than a cost centre. Furthermore, it enables to curate systems so they concentrate on adding value. Project Eve reminds how critical it is to select the right partners for the right projects. As explained in their article, “The ability to discern which service provider drives or diminishes your business growth is important. Nothing is more frustrating to work with than a provider that isn’t a good fit. Time, money, and a few brain cells, are squandered because of incompatibilities…not to mention the energy lost from tolerating a poor fit.” This can only work if a adapted common goals are being defined for partnerships. Deborah Fleischer from Triple Pundit presents the “Emergence Operating System”, an approach that is “aligned on shared purpose”. As she explains, “The model is not suggesting that you replace the command and control style operation system, but that you obtain senior leadership sponsorship to “install” an EOS that works side-by-side the command and control system. Everything becomes possible when both types of operating system work together for a shared purpose.”
Change as a value
Because of the boundless opportunities it generates, change can now become a value to agile systems and organisations. As Bryan Balfour explains in linked podcast, the point is to bring the whole system to experiment success and failure as a team. The result of driving change as a value has a direct impact on customers. As Mike Lehr concludes, “We can view uniqueness as the outcome of growth, being recognized for the outcome, the achievement. While all have need for this, some will interpret and emphasize their experiences more from this perspective than others by highlighting their skills, expertise and talents. Observations over the long run will form our conclusions.”
Agility brings benefits and change on a systemic basis to help innovation deliver sense and value. This is what we could call “constructive innovation” in referrence to “destructive innovation” as presented by Schumpeter in “Capitalism, Socialism and Democracy” and more recently by Luc Ferry in “Destructive Innovation”. The point is to start a virtuous circle that encompasses a shared benefit and drives to uniqueness for customers. Agile organisations naturally seek to build this optimum.