We are caught in a real tug of war within much of what we do in business today; in our responses and reactions to many of the dramatic business conditions we are facing, many deteriorating or being challenged by greater global competition.
We are facing a very uncertain future if we base our actions on past practices. We need a new management model, one where we are pushing to seek increasing new knowledge.
We actually are in urgent need of a new management operating model.
A new management model where we are pushing to seek increasing ‘fusion’ but still want degree’s of separation, we are seeking out ‘flows’ through new knowledge to break down barriers that restrict new insights so as to turn these into new value creation, and we are encouraged to seek out and establish a higher ‘fluidity’ in what we do and reduce the rigidity we presently have in place in our current organizations.
There are growing concerns centered around how we need to adapt our management practices to manage in a digital world, we are grappling with the consequences and we need to find new solutions and approaches. We face issues made up of increasing information overload, coming at us at increasing speed and failing in our abilities to fully interpret this. We lack the agility and flexibility to respond to what this all means in both its implications and potential, for sensing and seizing new value creation from understanding this.
We need a new management practice to deal with our digital world. One real need is for increasing knowledge and then being equipped in interpreting this in our learning, daily routines and activities are becoming paramount to break out of a declining performance cycle.
Applying the three horizon lens to develop new management practices
If you apply the three horizon lens we need to construct management and its performance approaches differently you begin to see the pathway for change.
Applying the three horizon lens to new management practices
The idea grew from picking up on Deloitte’s Shift Index that has come out every year since its first release in 2009 I came across a way for me to frame this.
Our horizon one (extending business as usual) needs a deeper, yet strategic restructuring of firm economics to generate the maximum possible value from existing resources
For horizon three (the future need) we need to develop new management practices to be effectively catalyzing and participating in different knowledge flows, fusing what is gained into new value creation, reducing friction and barriers, constantly refreshing and extracting from the relevant knowledge flows that provide scalable learning pathways.
Our horizon two (transition from old to new) we need significant innovation, learning and experimentation to drive scalable participation in knowledge exploration and exploitation, a duality of fluidity and stability.
Let me build this out in why we need to change the way we gain knowledge and translate this.
My three points of reference in researching and framing this post are, firstly, Deloitte’s ongoing work on the Shift Index, providing a longer-term set of indicators to how we can change performance through the flows of knowledge, capital, and talent (their second wave). This is coupled with my own studies and commentary on fluidity and thirdly, the “stock and flow” of knowledge and how we can harness it for our needed sustainability and this new value creation.
The future of managing will be through ecosystems and platforms
I am constantly drawn to ecosystems and platforms as the connecting mechanism that can drive each of the stages of the three horizon view taken here. It is going to be through greater collaboration, sharing and exchanging we can learn a new form of ’emerging’ management practice
In our past management practices, we have operated and exploited the linear world for ever-increasing efficiencies and effectiveness. This relied on stability, predictability and a willing end-user, ready to accept ‘our’ offer of product or service. All three of these conditions are increasingly absent from our world today and will increasingly be challenged in the future. Our increasing connectivity, brought about by our digital world is giving us increasing volume, richness at increasing speed. We are in a hyper-connected world, potentially global for all of us and increasingly we will operate in interdependent ecosystems that allow us to collaborate and share, driving up awareness and performance.
Classic models of management get broken down in any ecosystem approach, that is why it has such an exciting potential. You have to be open, prepared far more to share, to build trust and seek out increasing relationships and diversity of knowledge and much of that comes from external sources of new knowledge. Collaborating in collective ways helps break down complexity. To be ready to respond we must be ready to seek out unexpected outcomes, to be increasingly exposed to new opinions, experiences and learn from all those adjacencies and external connections help to add and define new potential within our domain of expertise. What will be rewarded in this connecting world is agility to respond, the ability to absorb and learn quickly, and the nimbleness to translate and adapt new learning into insights and eventual outcomes, that build out our businesses, keeping them healthy, growing and sustainable.
Our world is shifting from scalable efficiency to scalable learning
In the work of John Hagel and John Seely Brown and their associates at Deloitte University Press, this scalable change from efficiency to learning is a central tenet of their work. Achieving scale is critical for all in business, be it the entrepreneur or start-up or the large institutions wanting to span the world. If you wanted to scale it had to be “efficient and effective” in our past approaches. Yet as the two John’s point out that is great in the stable, more predictable world or market conditions of the past but not when everything is evolving rapidly or changing before our eyes. The efficiency mantra often allows for applying the “lowest common denominator of need” and reduces the impact of ‘true’ innovation.
But we are now in a world that sees exponential change caused by digital technologies, this is making everything we do as uncertain. We are experiencing consumers increasingly demanding personalized service and offerings, then the past standardizing approach is significantly under threat. We are seeing increasing friction, deteriorating trust and growing gaps in expectancy between “what we want and expect with what we receive” and institutions need to respond to these pressures. It cannot be the approach “business as usual” it needs a new recognition as outlined in my horizon one frame above.
We are recognizing “existing knowledge is depreciating at an accelerating rate”. To create new knowledge we have to step out of our silo of the one institution into a collaborative world, connecting with others where the physical, virtual and management of systems help accelerate learning. Increasingly these learnings will come through ecosystems and platforms where you can meet and exchange in systematic and holistic ways, building growing trusted relationships, sharing and exploring ‘collective’ knowledge to solve common problems.
You move from the need of conformity to be efficient, seeking out where you fit within a ‘given’ system you look for increasing the ‘flow’ of learning by encouraging increasing fluidity and being highly adaptive. Your role is not to fit as such, it becomes how you can separate, identify and deliver more value, to translate and learn faster, to rapidly connect understanding, ideas and potential outcomes for new value.
Balancing fluidity and stability
The world we live in is relentless, it is demanding and constantly changing. We begin to believe it is in a “continuously unstable state” yet it is this ongoing receiving of contradictions we can build a different, more fluid state that is adaptive, responsive and encourages different thinking to break through our bewilderment.
We need to build far more for countervailing functions and opinions, have greater understandings of pattern recognition and maintenance and be highly adaptive in our outcomes. We must start by establishing a different boundary building understanding (governance, risk-taking, ability to recognize managing exceptions are becoming the rule in individual consumer worlds), have a growing identity formation set of mechanisms and responses (in customer touch points, response alternatives, conflict skills to resolve issues early) and develop the problem-solving architecture to be constantly evolving (shared, reinforcing and breaking down present orthodoxies).
Ambidexterity and countervailing processes need developing and embedding. Achieving a constant duality to manage in our three horizons. It is the horizon two exploration and exploitation that allows this change in managing transit from the old (h1) to the new (h3). We need to re-enforce and extend (h2-), we need to ‘undo’, explore and redesign (h2+).
To become fluid we need to absorb and respond at a faster rate and that comes from the increasing flow of new knowledge. We need to be highly adaptive to a constant, multi-faceted world of connections, systems and knowing where the different pieces need to be found, so we can then ‘pieced’ together into the ‘new whole’ you are needing to design, at the individual or institutional design level.
To get to a point of being fluid we need to hone our navigation skills, we need to have more assignment driven work, not stuck in repeating work that can be automated far more effectively in today’s digital world.
We need to be more agile, iterative, to be encouraged to be experimenting and exploring. We need to believe and given trust to execute and drive our results into more value-add. We need to seek out empowerment, participate in collaborative endeavors, and most importantly grasp the makeup of value creation. To get to this point we need to build one of those boundary spanning guidelines of a sound conflict resolution pathway for ourselves, our customers and our institutions and these will be ‘living constantly evolving pathways‘ that feed on new learning.
To get to this ‘fluid state‘ we all must strive for authenticity, trust, and recognition. This only will come from a real willingness to seek out diversity in opinion, knowledge and experience, to be highly visible and understanding what that means in risk and reward, looking to constantly enter and exit projects where we can truly contribute to driving up our own confidence and belief, our personal satisfaction and contributing worth.
If we can design a framework that transforms us into being highly fluid and adaptive, we can move through horizon two and its conflicting challenges. We are seeking to balance stability with an ongoing need for dynamism and responsiveness, at agile and fast ‘reaction’ times from our ‘incoming learning’ and ‘outgoing value-added‘ outcome
Seeking out the relevant flows within new knowledge for increasing scalable learning, our new institutional state.
The stock of our existing knowledge is rapidly diminishing, we need to seek out the flow of new knowledge. Our fixed and enduring know-how and sets of experience are being diminished in their value inside organizations. What was once accumulated as ‘stock’ inside the organization was how organizations exploited this for profit. Yet this is under attack from multiple sides.
We are seeing a compression of time in life-cycles, we are not in stable markets but increasingly volatile. New generation replacements, driven along by digital solution power, are pushing innovation through the pipeline faster than before. We are failing to keep up with the knowledge you need. It simply can’t reside in one company, small teams or simply with one person, it requires a network of partners collaborating and contributing their expertise into exploring and exploiting new solutions, tapping into this inter-firm knowledge flow and experience with innovative solutions that are more aligned to customer needs, solving challenges and growing complexity.
The search for knowledge means a higher emphasis on tacit understanding (this link explains tacit knowledge)This understanding comes from relationships and exchanges, from personal stories, experiences, and personal connection. Our ability to tap into this tacit knowledge comes increasingly from these ecosystems and platforms set up to exchange, collaborate, and build a network of common understanding. A common understanding of a problem or challenge, through the diversity and power of the community that works together to find solutions and resolve the multiple issues.
I do think Deloitte’s view that we need to move to scalable learning is essential to achieve. This needs completely new practices to be effectively catalyzing and participating in different knowledge flows, fusing what is gained into new value creation, reducing friction and barriers, constantly refreshing and extracting from the relevant knowledge flows.
Knowledge intensity can risk fragmentation and inequality, it can lead to concentration of market power. It is finding more universal practices can level the playing field. Digital is part of this leveling. We equally have to learn how to create, disseminate and use knowledge differently.
Here I am a particular fan of absorptive capacity that pursues potential knowledge and extracts out its realized value through transformation and exploitation.
As more information comes towards us at increasing volume, we need to find ways to adapt and interpret this. There is a greater set of ‘forces of variation’ for innovation solution selection, all requiring this increased knowledge understanding. To codify and relate to this we need a structure to manage this knowledge flow, hence my belief in us needing to understand absorptive capacity.
In a future post, I will look more at knowledge and all its important components. We totally understate the value and importance of knowledge. It is managing the different types of knowledge that offer us the solutions in our digital age. We need to design a scalable learning approach (horizon 3 outcome) and recognizing all of what ‘makes-up’ knowledge is important to build into this h3 solution.
We need to harness the capacity of learning through the competencies for new knowledge acquiring. We need to replenish the internal diminishing stocks of knowledge with a constant flow of new knowledge. This comes from outside, it comes through networks, relationships and collaborations increasingly built on ecosystem and platforms.
It is our increasing ability to participate in this growing formation of managing knowledge flows, harnessed through digital solutions, as they will move us to value creation. Ones that are increasingly collaborative, between partners but also with customers, all increasingly contributing their knowledge, insights, and needs to finding joint solutions and resolving challenges.
To achieve better outcomes and to drive sustained growth we need different management practices. We require scalable participation (ecosystems) to relate too and generate new knowledge flows. We need to be increasingly responsive, adaptive and fluid in any design of structures and solutions.
Performance requires us to quickly learn and translate, that cannot come from the pursuit of efficiency, it comes from learning to be highly adaptive and responsive, to have a high level of fluidity to fuse all the flows of knowledge into new potential value creation.
We do need this new management model to adapt to the digital world and all the uncertainty of our prevailing conditions of more open competitive and challenging markets, more demanding customers and the constant waves of information and ‘forces of change’ raining down on us. We need a new way of working to counter this.
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Paul Hobcraft runs Agility Innovation, an advisory business that stimulates sound innovation practice, researches topics that relate to innovation for the future, as well as aligning innovation to organizations core capabilities. Follow @paul4innovating