A digitalization strategy is dangerous and mainly wrong approach.
Because it draws the attention to today’s models, structures and systems and how they can change and become digital.
And why is that wrong?
Just ask yourself these questions:
No, of course they wouldn’t. But they might have had better chances to survive if they understood how digitalization changed the world around them. And if that insight could help them letting go of their obsolete assumptions and identify where the new potential for value creation will be tomorrow. Then, they would at least have a chance to develop a relevant strategy in order to transform themselves.
What companies need for the future is not a digitalization strategy, but a broader overview and insight of what is happening and a strategy for meeting a world that is transformed by the tsunami of digitalization – a strategy for the future and not for the past.
Nature can be described as organized in hierarchical systems layers – but that doesn’t mean humans must organize themselves in static hierarchies. There are examples of different ways of organizing people to perform work together.
This post explores three flat and fluid organizations in completely different industries and of vastly different sizes. All of them lack hierarchical management, so how do they thrive? They follow these principles:
- Management is tasks: They think of management as a set of tasks rather than a group of people. Those tasks are broken down and formally distributed among regular workers. Everyone manages but no one is management.
- Transparency and accountability are sacred: Everyone’s performance metrics are made public and anyone can demand an accountability to anyone for their performance.
- Everyone makes decisions, but not everyone is involved in every decision: Workers are free to make decisions about their work without consulting “higher ups” (as there are none). Decision making power is distributed, but decisions are not made by majority vote.
- Make what’s implicit explicit: Topics that are taboo or give room for internal politics in hierarchical organizations (e.g. compensation, natural leadership, allocation of undesirable or highly desirable tasks) are confronted head on and the resulting decisions are made public and binding.
These organizations are living examples of that there are different ways of organizing than the traditional hierarchies. So why do we believe in organizing hierarchically when we can avoid it?
Most of us agree that just because the development process in nature can be described as a Darwinistic process doesn’t mean that we should use Darwinism as a norm to how we organize our society. Why is it then so important to organize ourselves in static hierarchies?
There seems to be a failing normative logic behind Organizational Hierarchism similar to the failing normative logic behind Social Darwinism. It might just be an example of Moore’s naturalistic fallacy; just because something IS in a certain way doesn’t mean that it OUGHT to be that way.
What is Blockchain and what are the possible consequences for the future?
Blockchain is the key innovation behind the cryptocurrency Bitcoin and have lately come in focus almost everywhere. Blockchain itself can be described as a technology with the ability to displace the need for other (e g human, legal, governmental…) layers of trust between any numbers of globally distributed endnodes. We can compare it to how e-mail and messaging is displacing the need for mailmen and postal services. Or putting it another way: it is a global distributed platform for implementing algorithm based trust relations.
Ok, but what does all this mean for the world in the longer term?
Service based organizations like e g insurance companies, banks and most governmental bodies rely on two core capabilities: (1) the ability to provide a certain service while (2) retaining their role as a trusted provider. We already witness how accelerated digitalization and democratization of technology moves processing power from centralized service centers to our smart phones and personal computers. One consequence is that our devices now have the capacity to completely bypass the central servers. If it wasn’t for the trust aspect many systems and apps would be redesigned taking advantage of the new technical possibilities. What Blockchain is doing is opening up the possibility to digitally integrate the trust component.
If the local endnodes in a global system of relations provide algorithmic trust i e have an algorithmic proof mechanism instead of having to rely on other ways of trusting each other, it opens up the world of global and individualized cooperation and collaboration. More specifically it opens up an innovation arena for the, now much larger, army of hackers that e g built the Internet.
A huge wave innovation around Blockchain will change the world quite dramatically. The administrative services we rely on today from a few large providers will be digitized, unbundled and reinvented by millions of innovative individuals who have better ideas. Specific platforms like e g Ethereum or more generic cloud platforms like e g Google, Facebook or Amazon will provide the trusted storage, processing and communication needed to run the societal administration.
If there is a wide adoption of blockchain-like technologies it will mark the beginning of the end of organizations, companies and governmental bodies who provide information and administrative services. Cloud platforms will be fully capable of provide a large part of their value. Those institutions who are not rendered completely obsolete in this transformation will at least live through an accelerated unbundling of services which will break institutions apart and turn them into new and unrecognizable constellations.
For nation states this might turn out to the greatest challenge of them all. Already today the nation states are gradually becoming reduced to insurance companies with armies. This is starting to become a huge problem for many governments who see their relevance for their people are being reduced step by step. With Blockchain there might radically less need for a trusted nationwide insurance logic. What is left is then – an army!
We are drowning in news about new technologies every day. Technologies that are solving difficult problems as well as opening new possibilities. It is easy to see them as the most powerful forces transforming our world. But we forget one important aspect. We perceive these technologies through the stories of our time. These stories are much more important factors shaping our future than any technology. It is the stories by which we explain ourselves, our situation, our role in the world and our futrue that determine our thinking decisions.
In the late 1990’s I visited Global Business Network in Emeryville to learn scenario planning. During those meetings I met many interesting people: Peter Schwartz, Stewart Brand and Kevin Kelly. I was fascinated by their long view of the critical importance of stories. Since then I have been following their work and soon after they initiated the epic project to build a 10.000 year clock. The core idea was to challenge our current civilizational stories. By running a public project with a civilizational time frame of 10.000 years in the future, it will require us to take a longer view. A longer view that change our stories about on ourselves, our civilization and our future.
I have written about this a couple of times before so why do I mention it now? One reason is that I feel our times are now accelerating even more and we are starting to feel the future dizziness and nausea like we are being rolling around in a washing machine. In short: we are in more need than ever of inclusive longer term stories that organize our thinking and our societies.
A more direct reason is that a group of filmmakers published this beautiful short film describing the project.
I agree in principle with the analysis that BCG have done and which they conclude in what they call the Digital Imperative. They have also developed a nice animated presentation that explain it visually.
It is when I reach the end of their animation I suddenly see all five fundamental changes that a company needs to address I start to laugh and shake my head. I suddenly visualize something like a Larson cartoon where a bunch of dinosaurs are sitting in a conference listening to a presenter that shows PPT-slides which tells them to evolve into mammals.
– “A developed reproduction system known as a womb and a new and more advanced temperature regulation system is the core tricks here. We call this strategy the Mammal Imperative!”
It is very clear that all organizations that sustainable thrives in the new digital ecosystems are younger than 30 years of age and belongs to a different species. It is also clear the number of organizations that have changed and survived through disruptive business environment transformations are almost zero.
The BCG line of reasoning assumes that a single organism or system can have the ability to fundamentally redesign itself. Nature have so far for the last billion or so years taken a different path:
Isn’t it the same pattern we see in organizations as well? Organizations don’t seem to have very good capacities to change, but people are creative. When they start a new organization, their knowledge and capabilities of finding out how to create value in the current ecosystem results in that next generation of organizations have different capabilities.
I know this is a tall order to grasp. Could it really be so that my organization don’t have the capacity to change and adapt to the emerging digital world? Yes, and if we are looking at statistics so far it is even very likely so.
If you still are having this blog in your RSS-stream or elsewhere I think I owe you an explanation of the disappearance of this blog. It did NOT mean that I stopped working with future related things. This blog, and the whole of my site was unfortunately hacked, and I had to remove everything and start all over. I fixed my Swedish counterpart of this site which was the most important for as most of my work is taking place in Sweden. Anf this have been dragging ever since…
But now I am back!
If somebody is still here, why don’t you throw me a comment?
In uncertain times it is more important than ever to wish each other a Happy New Year!
Happy New Year to you all!!!
How does the digital transformation of your organization go? According to the global studyÂ DIGITAL TRANSFORMATION: A ROADMAP FOR BILLION-DOLLAR ORGANIZATIONS from CapGemini just 50 of 157 executives say that they have an effective approach. Not an easy task it seems…
But why is this so hard? The report states that
Successful digital transformation comes not from implementing new technologies but from transforming your organization to take advantage of the possibilitiesÂ that new technologies provide. Major digital transformation initiatives are centered on re-envisioning customer experience, operational processes and business models. Companies are changing how functions work, redefining how functions interact, and even evolving the boundaries of the firm.
I couldn’t agree more. But isn’t this difficult? Yes, really! What makes it even more difficult is further described in another conclusion:
Successful DT comes not from creating a new organization, but from reshaping the organization to take advantage of valuable existing strategic assets in new ways.
This means that in order to succeed you have to understand what your valuable existing strategic assets really are and transform your business to leverage them in a digital approach.
I think these statements are correct, are really important and points in the right direction. But judging from my 10+ year experience in working with intelligence, strategy and change in a global company, I see is that this is incredibly difficult to do in practice. Is it really so that as much as 1 in 3 are successful in this process? And to what extent are they successful?
From a historical perspective from other technology driven transformations, there are extremely few companies that have been successful in transforming themselves across societal and technological shifts. How many companies are e g older than 100 years? 100 years ago there was another, albeit a magnitude smaller, technological and societal shift that also required transformation and how many organizations survived that?
We must correlate these insight with other findings e g John Hagel’s analysis of the performance of today’s companies:
Firms in the Standard & Poor’s 500 in 1937 had an average life expectancy of 75 years; a more recent analysis of the S&P 500 showed that the number had dropped to just 15 years.
I think it is time that people reread the former Shell executive Arie de Geus’ book The Living Company,Â Clayton Christensen’s The Innovator’s Dilemma: The Revolutionary Book That Will Change the Way You Do BusinessÂ and Alan Deutchman’sÂ Change or Die: The Three Keys to Change at Work and in Life.
In the end of the executive summary the CapGemini reports correctly states that:
Despite the hype around innovative digital technologies, most companies still have a long way to go in their digital transformation journeys. Leadership is essential. Whether using new or traditional technologies, the key to digital transformationÂ is re-envisioning and driving change in how the company operates. Thatâ€™s a management and people challenge, not just a technology one.
From my view from the outside I still wonder if change really is happening to the extent that people think it does. Because if it does it is against all historical odds. Or are we creating an illusion of change, when in fact organizations are failing more dramatically than ever?
The good thing with this report is that they are starting to formulating the difficulties in a much more realistic way than I have seen before from IT-consultants. And that is a good thing… If they show the correct picture of the reality, I am not at all sure.
This is a 3D-printed shoe I recently found search Flickr for images on 3D printing. It is obvious that the quality of 3D printing is rapidly getting better and according to the discussions on the Internet most people seems fascinated of and apparently caught in the race towards higher and higher quality. The problem with this race is that it might draw us down into the technical details of 3D printing rather than into the important implications 3D printing might have in the future.
There are (at least) four aspects that is much more important that product quality to note when thinking about where 3D printing might take us in the future. 3D printing might:
On October 11 Thomas L. Friedman, author of widely selling books like The Lexus and the Olive Tree, The World Is FlatÂ and Hot, Flat, and CrowdedÂ as well as a NY Times columnist wrote a massively referred and tweeted column by the nameÂ Somethingâ€™s Happening Here, which he started off by:
When you see spontaneous social protests erupting from Tunisia to Tel Aviv to Wall Street, itâ€™s clear that something is happening globally that needs defining. There are two unified theories out there that intrigue me. One says this is the start of â€œThe Great Disruption.â€ The other says that this is all part of â€œThe Big Shift.â€ You decide.
And ends with:
So there you have it: Two master narratives â€” one threat-based, one opportunity-based, but both involving seismic changes. Gilding is actually an optimist at heart. He believes that while the Great Disruption is inevitable, humanity is best in a crisis, and, once it all hits, we will rise to the occasion and produce transformational economic and social change (using tools of the Big Shift). Hagel is also an optimist. He knows the Great Disruption may be barreling down on us, but he believes that the Big Shift has also created a world where more people than ever have the tools, talents and potential to head it off. My heart is with Hagel, but my head says that you ignore Gilding at your peril.
Since I have been following and been talking about the future based on the underlying driving forces that lead up to this development for many years now, I couldn’t agree more to about the relevance of these narratives. But I think Friedman makes a mistake when he thinks just one of these two narratives about “The Great Disruption ” and “The Big Shift” are right. To me these two theories actually describes two driving forces that play out simultaneously , which both will have huge ramifications on our society. Because of this model I call our society which now lives through this the transition society.
This is a compressed version of a slide I usually show in order to talk about how these forces are related to each other. As you can see here I think of the impact as a transition phase where one s-curve shaped development is replaced, being succeeded or eventually melted together with another development in form of an s-curve. As we know from ecological systems, the outcome from such a transition is highly uncertain, and I think we should think about our future in the same way.
This way of visualizing the future is of course highly abstract and theoretical, but is nevertheless one of the few ways I have found to visualize the complex development of what we see happening around us.Â One argument for this S-curve/transition model is that it would also explain the transients and rapid swings we see today and which is a normal effect in the observation of phase transitions in e g Â physics, chemistry and biology.