Aligning throughCulture Renewal
Through the impact of the digital revolution, change is occurring with increasing speed in all aspects of both our business and personal milieus. Why would these accelerated developments not have an impact on how business strategy is approached as well? Digital transformation has indeed changed the classical paradigm of strategy. Like everything else in the digital age, the world of strategy is in a state of disruption.
This shift is particularly noticeable to me due to my hands-on-experience working for two of the best known strategy consultants in the world. During those years, I was applying what I had learned during business school about strategy and applying it as a strategy consultant, never questioning the fundamentals of the classical business strategy paradigm itself.
Classical strategy can be understood as the process of getting from point A to point B. Point A is the current location of the organization and Point B is the strategic goal that the organization sets for itself.
Classical strategy begins with a pursuit to accurately assess the current situation, in other words Point A. For example. one tool which is used is the famous SWOT Analysis - Strengths, Weaknesses, Opportunities, Threats.
The next step is the determination of the strategic goal. This is Point B that is a fixed destination to work towards and achieve. Point B can be items such as increasing market share, addressing new market segments or gaining new organizational capabilities.
The all-embracing role of classical strategic planning is to move the organization from its current position (Point A) to the desired pre-determined destination (Point B) as efficiently as possible.
Classical strategy is deliberate in nature. It depends on senior leaders to set goals and develop plans to achieve them. This typically leads to long-term plans which the organization doggedly adheres to and executes over a multi-year time frame.
The spirit of a scientific expedition – learning along the way, collaborating via cross-functional teams, adapting to unforeseen change, dealing with risk - offers an appropriate metaphor for digital strategy.
(c) Deutsche Welle
Both the famous expeditions of Alexander von Humboldt in South America in the 18th century or Charles Darwin aboard the Beagle in the 19th century were expeditions without fixed destinations. The journey itself was the destination. Humboldt and Darwin gathered as much information as they could along their journeys in order to gain insights into the emerging sciences of biology, geology and evolution. Along the way, they were constantly interacting with the environment to learn as much as possible.
In the current business environment, promoting a similar intense interaction with the environment can provide an organization with a broad spectrum of potential options. Some options may lead to new breakthrough business models and/or processes which will allow a company to serve its customers more advantageously.
Digital strategy is emergent in nature. This suggests that it can surface from any part of the organization. Digital strategy emerges as an environment changes. concurrently the organisation is constantly shifting and adapting to apply its strengths to this changing reality.
At the heart of the digital strategy process is learning, not efficiency. In contrast to classical strategy’s “Point B”, it is the journey itself which is fundamental. If another pathway appears to offer better options for learning, then a change in the destination is the more appropriate step to take.
A powerful analogy for the pivotal difference of digital strategy is the humble 3M Post-it Notes® product, (hereafter referred to as "sticky notes"). The origins of the product occurred when a 3M scientist - Dr. Spencer Silver - developed an adhesive that stuck lightly to surfaces but didn't bond with them. At the time, he had no clue how this kind of glue could be used. Years went by without finding a commercial use. It was only until Art Fry, another 3M scientist became frustrated by the fact that the little paper pieces which he placed in his church's hymn book would constantly fall out, that the first use of sticky notes was born. They could be used as bookmarks!
Since that beginning, myriads of ways of using sticky notes have been "discovered". Here’s an initial list (and there are certainly many more examples):
Each platform or technology that is brought into existence has a myriad of uses. Similar to the sticky note examples above, unexpected uses often emerge which were not even envisioned by the technology's developers!
The use of Twitter provides an excellent example of the potential of multiple usage. Major media outlets use Twitter as a means to broaden the reach of their content. Airlines use Twitter as an effective customer service tool. Many other companies use Twitter as a business intelligence tool - by following certain Twitter feeds, organizations receive an early warning of what competitors are undertaking. To enhance their readiness to respond, Red Cross uses keyword monitoring on Twitter to quickly identify natural disasters as well as their intensity.
Every technology - platforms, collaborative software, 3D Printing, augmented and virtual reality, artificial intelligence, Internet of Things, etc. – embodies this multiplicity of uses. I like to think of this potential as the "the sticky note nature of digital technology".
1. The opportunities to copy from other successful companies are limited
Benchmarking has been a favorite tool which is used by many companies to keep up with the competition. Unfortunately, in a "sticky-note" environment what is good for one company may not be good for another company.
Many of the strategic challenges and opportunities which your company will encounter will be unique, with nuances related specifically to your company, your industry sector, your geography and your competitive environment. The nuances may overwhelm the similarities. In addition, solutions to challenges previously discovered by other companies will highly likely be outdated by the time your company can implement them- As a consequence, opportunities to "lift and shift" digital strategies from other companies is limited.
There is no alternative but for your company to figure out what the best "sticky note" fit of technology is for your organization.
2. Digital strategy requires continuous ongoing experimentation (and failing)
Since the appropriate use of technology can differ from user to user, how do you find out what the best fit is for your company and its customers? The opportunities to use technology in new and creative ways increase with every passing day. Not only are novel technologies constantly emerging and improving, but existing technologies can be more easily and effectively combined with the existing technological infrastructure to generate unimagined new capabilities.
The only way to find out what is best for you and your customers is to continually experiment.
And you have to be prepared to fail. Most experiments will fail. If you are not prepared to fail, you are not predisposed to learn.
This mindset requires a significant shift in a company’s organizational culture. Most companies have been built around the principle of efficiency which has little tolerance for failure. This mindset must shift to adaptability – fail fast learn fast - in order for organizations to survive in the current disruptive environment.
3. Any company can be a disrupter!
The good news (and the bad news) is that any company can become a disrupter. Everyone can experiment and potentially find breakthrough combinations which change the nature of your business. Cultivating a culture of curiosity, experimentation and learning is the best path to cultivate a disrupter mindset. This is not an activity which is relegated to a select few IT specialists but must embrace the creativity and ingenuity of as many of your employees as possible. There is power in numbers!
As we enter an "Era of Experimentation and Emergence" (E³!) we should remind ourselves that this is not a new process but has been around throughout human history. However what is new and different in today’s world is the exponentially increasing possibility of finding breakthrough combinations which can be implemented quickly. In addition, the possibility to identify these innovative approaches is within the reach of a much larger population.
Experimentation and emergence has been around for a long time
Sir William Henry Perkin - a British chemist in the 19th century attempted to synthesize quinine as a treatment for malaria. His numerous experiments ended up in failure - or so he thought. It turned out that one of his "failures" could be used to dye textiles. He had accidentally created the first synthetic organic dye - mauveine. By doing so he lay down the foundation for the synthetic organic chemicals industry, thereby revolutionizing the world of fashion.
In the micro-world of experimentation, it is easy to lose track of the big picture. The effort to achieve short-term objectives can easily lead an organization in the wrong direction.
It is key not to lose precious time and resources experimenting in areas that will not bring the company forward. A fluid but deep-rooted framework to guide experimentation is critical for success.
Digital strategy relies on its focus on a strong purpose and a clear vision of the digital future.
Why does a company do what it does? The answer to this question determines what areas to experiment in and what lessons to draw from this experimentation.
The company Interface provides an inspiring story about the power of purpose. Interface is the world's largest manufacturer of carpet tile and a global manufacturer of commercial flooring. Their purpose is to create products and services which not only fulfill customer needs, but also contribute to creating a better world. In 2016 they launched an initiative called "Climate Take Back" . This was a pursuit to determine how their products could help to reverse climate change. With this purpose in mind, the CEO unleashed the creativity and ingenuity of his employees to find a solution. After much experimentation, the R&D group revealed a first-of-its-kind prototype carbon negative carpet tile. Further experimentation has refined this product. In 2020 the company launched a carpet tile that has a carbon negative impact (i.e. the production and use of the tile sequesters more carbon out of the atmosphere than if it had not been manufactured in the first place).
“… if your purpose is to do amazing things or create things, you'll never run out of purpose because you're never done."
Jim Collins, American researcher on business management, company sustainability and growth
As companies think about their purpose, they are well advised to move beyond thinking of themselves not only delivering products and services, but delivering outcomes for customers, society and even the planet.
Ask yourself this key question to determine (or refine) the purpose of your organization: "What are the outcomes you are delivering?"
* Collins, J.C. & Porras, J.I. (2000). Built to last: successful habits of visionary companies (3rd edition). London: Random House Business Books.
The word “vision” is a much misused word. Crafting a vision is challenging. In an era of constant disruption, a company’s vision is more crucial than ever.
You don't want to be fighting the last challenge but preparing for the next one. In the words of the great Canadian ice hockey player Wayne Gretzky:
"I skate to where the puck is going to be, not where it has been."
Processes such as scenario role-plays or reverse engineering of the future can provide helpful insights. Such processes help to make explicit the transformational impact of technology your business faces.
An example in the field of manufacturing makes this point clear. 3D Printing is for instance a potential disrupter of a classical manufacturing business. Leaders can use scenario role-plays to gain important insights. You begin by assuming that this technology has fully arrived. This assumption enables a company to explore what it could mean for its manufacturing footprint, supply chain, the nature of work in the factory et al. The result of these thought experiments enables a company to become better prepared for the future and act proactively rather than just reacting to on-going developments. It provides observations which enable an organization to articulate its purpose and the desired outcomes which it intends to deliver to its customers and society.
But how does this work in the current business environment? The advantage of this approach was evident at a recent health care conference. Participants from various companies were discussing the adoption of the current EMR technology (Electronic Medical Records). As part of this discussion, they contemplated on the potential impact of artificial intelligence and blockchain technology on EMR in the coming years. Many participants reached the conclusion that a large majority of the EMR systems which they were currently developing would be obsolete by the time they were implemented.
A well articulated digital vision helps prevent companies from going down the wrong rabbit holes. It is an envisioned future.
The arrival of fluid strategy
Deliberate strategy is dead. The classical approach of planning how to get from Point A to Point B is too slow and inaccurate to be suitable in a time of digital disruption. Such approaches are being replaced by "Fluid Strategy". This is a constantly evolving strategy which is determined by the ability of an organization to learn about a constantly changing environment.
It is fitting here to return to the analogy of a scientific expedition. Digital strategy is similar to exploring a natural environment. The explorer regularly stops to learn as much as he/she can about the flora, fauna and landscape. While never forgetting the purpose of their expedition, the surroundings are scanned for possible next steps along the journey and the best path is chosen which could lead to additional discoveries and more learning. The process of learning, scanning and choosing the best path is continuously repeated, changing destination when necessary.
This is the excitement and on-going challenge of mastering digital strategy: To identify a broad spectrum of possibilities, consider possible successful scenarios to explore their viability and discover how best to test ideas and products which fulfill the company’s vision and, by doing so, continue to pursue the company’s purpose for its future.
Through processes such as Peer-to-Peer Learning, Community Learning, Leadership Sprints, C-Suite Mentoring, Team Coaching, Thematic Large Scale Events, Learning Journeys, Cluster Communication and Pinboards, Ensemble Enabler supports organizations to gather insights and act upon ideas along their learning journey.