The unstoppable advance of Digital Transformation is leaving household names in its wake while creating unlimited opportunities for others. Why is it becoming so hard to survive for many established players? Much of it has to do with the speed of the changes taking place and failure to shift to the mindset required for a new kind of business.
In the iconic movie ‘Glengarry Glen Ross’ from David Mamet’s play of the same name, Alec Baldwin’s character has a bullying mantra for the team of salesmen: “Always Be Closing“. Nothing else mattered, and certainly not the wellbeing or interests of the staff or the customer. The dysfunctional misery portrayed in the movie was emblematic of a business world based on a zero sum game of ruthless competition for individual profit.
We would suggest that the Digital Age has a new mantra and that is ‘Always Be Adding Value’. Why? Because what Digital Transformation exposes is the inadequacy of poorly designed interactions. Everything positive about the Digital Age has to do with speeding up the flow of delivery of goods and services to the end user. The focus becomes radically different and this is why established businesses can struggle. They have not been designed to perform with speed of flow and customer centric thinking at their core. Speed of flow means stripping out everything that does not add value to the process of production or the delivery of a service. This means that only tasks that add value to the process of delivery have a place in the chain of value. Everything else is redundant.
Silos – the number one enemy of Digital Transformation
First and foremost, organizations are tripped up in the process of Digital Transformation because of the way they are “organized”. Before it became obvious that speed of flow has to be the focus, the main concern in most organizations was one of control. How do you control the work of many employees working for one organization? For decades, it was sufficient to ‘divide and conquer’ by placing a few individuals at the head of ‘divisions’ or ‘functions’ and one individual at the top to control the division heads. The problem with this traditional hierarchy is that these divisions quickly become silos, blocking the ability of processes and communication to flow as they should towards achieving the goal of the organization. (See our post Silos – Overcoming the Enemy of Digital Transformation). The most dangerous failing is that the customer is not part of this ‘pyramid’ picture.
As far back as the 1950s, Dr. W. Edwards Deming, the father of the Quality movement, explained relentlessly that organizations have to be understood as one whole system that receives external inputs that are transformed into output for the customer and where a feedback cycle from the customer informs a cycle of continuous improvement. It is a flow-based and customer-centric understanding of what an organization is and how it can deliver its purpose most effectively. Today, any organization that ignores this fundamental wisdom does so at its peril. Digital Transformation is teaching the lesson that Dr. Deming taught so passionately many years ago.
A mindset of flow and purpose
The opportunities that Digital Transformation can bring are manifold, not just in terms of profit but also in terms of meaningful work. When we design an organization effectively for the Digital Age we not only eliminate waste and redundant tasks, we improve the quality of the experience of work for the people that carry it out. By correctly designing interdependencies (who does what, when and why) end to end systemically, people interact in a way that makes sense and adds value and this inherently creates more meaningful work, the end purpose of which is clear. Moreover, a systemic perspective allows organizations to step back and see the bigger picture – that they are part of a larger value chain.
Quality, Involvement and Flow
The mindset that leaders and managers need to equip themselves with for the Digital Age is a whole system understanding of work based on:
- Delivering Quality goods and services and this can be assured through designing correct interdependencies, managing variation to build reliable processes, listening to the customer through feedback and continuous improvement;
- Meaningful involvement of staff based on well designed interdependencies and managing variation in human interactions through “intelligent emotions”, transparency and win-win agreements;
- Speed of flow and this can be achieved through an effective systemic design of the organization that allows processes and communication to flow unimpeded by artificial barriers. We propose a Network of Projects model and Flow can be accelerated by identifying a “leverage point” in the organization (see constraint).
- Continuous innovation and this means continuously challenging assumptions to understand how to satisfy best the needs of the customer. This is a process that can be learned (see Thinking Processes).
Fight fear with knowledge
The speed at which the business world is changing can be exhilarating but it also creates fear and anxiety for the present and the future. The changes required are radical and deeply challenging for leaders whose thinking is stuck in outdated models. It is, above all, a cognitive challenge. The pace of adapting and thriving is dictated by what we have come to call the human constraint, in other words, our ability to challenge assumptions and conceive new solutions.
Digital Transformation is urgently inviting us to shift away from the divisive, siloed and zero-sum game mentality that still pervades so many organizations towards a systemic way of working based on win-win collaboration and transparency. The good news is that the knowledge to guide organizations to become fit for 21st century does exist and it has been with us for some time.
Knowledge goes beyond management “tips” and just “applying” new technology. It requires time and effort. But to quote Dr. Deming, “Learning is not compulsory, but neither is survival.”
Intelligent Management, founded by Dr. Domenico Lepore, specializes in Whole System Transformation, based on the systemic management principles of W. Edwards Deming and the Theory of Constraints. We are trusted advisors to leaders of organizations through our unique, whole system Network of Projects organization design. Sign up to our blog here. Intelligent Management provides education and training internationally on systemic management using the Decalogue methodology .
See our new books The Human Constraint – a business novel that has sold in 28 countries so far and ‘Quality, Involvement, Flow: The Systemic Organization’ from CRC Press, New York, by Dr. Domenico Lepore, Dr. .Angela Montgomery and Dr. Giovanni Siepe.