Designing the New Enterprise: Issues and Strategies

I’m looking forward to traveling to Paris, France the week after next to provide the opening keynote to the Intersection Conference. Intersection is an intriguing new multi-disciplinary event organized by Milan Guenther that’s intended to explore how we should design our organizations for the future. Milan also wrote a terrific book by the same name, which I urge you to read as well. The write-up for the conference itself says it best:

The role of design in economy and society is shifting. We see disciplines such as Service and Interaction Design moving beyond individual services and their digital components, to tackle experiences between enterprises and their audiences.

Enterprises and entrepreneurship are everywhere, playing a vital role in our lives. They are ubiquitous in the mass of organisations of all sizes we are in touch with as consumers, employees, investors, or in other roles.

This event is about designing the new enterprise, making it less awkward and more humane. We will explore how to design enterprise-wide brand experiences, social organisations, and digital businesses. To do this, design practitioners, consultants and architects combine methods and models from Service and Experience Design, Information and Enterprise Architecture, Systems and Design Thinking, to drive innovation and transform complex enterprise ecosystems.

Those who’ve followed my most recent musings on how our organizations are trying to change to adapt to a rapidly transforming world, and being changed even more by external forces outside their control know this has been a prime focus of mine. Technology in particular is the author of so much of what is reshaping markets, communities, corporations, and even our cultures. The growing question is whether our organizations will break under the loads of so much change, or are there paths we can navigate and steps we can take to transition more gracefully?

Additional Reading: What is the Future of Work?

Business Architecture: Change and Designing for the Future Enterprise

It’s very clear that most companies feel an imperative to update how they operate to match the current state of the marketplace. But as I pointed out in ZDNet recently, the data shows that the average lifespan of the enterprise continues to drop steadily, due to poor adaptation to the latest marketplace conditions.

In addition, to make matters worse, due to misalignment between our constituents’ respective goals, we also see that most workers in the typical enterprise are generally are poorly engaged. Only 40% of workers are ‘well-engaged’ according to recent analyses. This is a unacceptable state of affairs, but we’ve really only ourselves to blame. I believe we can do better.

How do we adapt sustainably to constant change?

The big question is there an intersection between change, the role and function of businesses, and the future of work that will allow us to adapt more readily? Can we still do this while creating an environment that enables far better and more satisfying work and outcomes for everyone, including employees, customers, and yes, even shareholders? What skills must be brought to bear to realize a fundamental restructuring — in the face of the many major new modes of work — for how we absorb, adopt, and manage the external march of change facing us — and therefore frequently imposing serious business challenges — that we are encountering at an ever accelerating pace?

Personally, I believe getting to equilibrium between our organizations and external change will require a specific set of modifications to the core of most of our organizations. First, achieving this will require a much-more pragmatic and decentralized view of business and enterprise architecture. It will also require that we honestly look at technology and how we metabolize and assimilate it into the way we work and then seek ways to reconcile with it. We’ll also need to cultivate workers that have effective skills in design thinking, which they can use within and across the organization to locally redesign it for current realities. And finally, we need to update how we collaborate in a fundamental and more focused way, and by that, I mean all modes of collaboration between all stakeholders.

These then are the issues I’d like to explore in Paris in just over a week. I hope you will join me. Milan has assembled an all-star cast for this discussion, including corporate strategist, author, and futurist Chris Potts, branding, innovation, and design expert Erik Roscam Abbing, and the lead designer for Dassault, Anne Asensio, to name just a few of the leading thinkers who will be speaking and collaborating there. Either way, I encourage you to join this vital conversation.

For more background, you can also view my Slideshare profile with sampling of my latest keynote decks on this topic.

For More Information:

Intersection Conference - Paris, France - April 16-17, 2014

What is the Future of Work?

Much has been made recently about one of the stand out trends of the times we live in: Everything is becoming infused with technology. Software is eating the world it is said. Some have claimed that next it might even eat the jobs, which to some degree is almost certainly the case. With only a little bit of irony, Hugh MacLeod humorously noted this week that software may eventually eat all the people. But even that could be a bit closer to the truth than some of us might expect.

But the point is this: In the last half-decade alone, most of us would admit the societal and cultural shifts that technology and global digital networks have wrought is nothing short of astounding:

Social media is relentlessly chipping away at the power and control that companies and governments have long enjoyed almost exclusively over the rest of the world. Supply chains, talent management (hiring), customer service, product development, and just about every function of business is being transformed by things like 3D printing, social recruiting, customer care communities, crowdsourcing, to only name a few of the more important examples. That’s not even looking at the macro changes (example: Arab Spring), in which digital/social is impacting the fabric of entire nations. In all of these cases, the power and control is shifting to the other side of the network, to what many now call the ‘edge’, where most of us are.

Unfortunately, there remains a constituency that remains stubbornly in the back of the pack when it comes to the large scale changes happening in the world today. Surprisingly, this constituency formerly used to actually lead the technology world. Instead, it is now dragged along by consumer technology companies and their customers. Yes, I am referring to our corporations, to which I’ll add our institutions, including our governments and associated entities.

Related: Rethinking How We Transform Our Organizations for the Future

The Future of Work, Technology, Business, Culture, and Society

I’ve explored many times in recent years how traditional businesses have essentially lost the leadership mantle when it comes to technology. But finally now there is an increasingly concerted effort to take some of it back, to get back in the game, to use the realization that the methods we’re using in large organizations to apply technology to work is often failing, and badly.

This has led us generally to a broader global discussion on the future of work. With our institutions, expectations, and behaviors undergoing a steadily increasing rate of change, where is all this taking us? What will the workplace of the end of the decade look like and work like? That has been a question that’s been coming up more and more frequently. The answers are often focused purely on the externally obvious — and their easily determined — differences, such as the wide range of disruptive new technologies moving into the workplace today. While the technology is certainly a subject of fascination and I’ve been talking recently to audiences around the world about it, it’s not enough. We must move the conversation up a level and talk about the changes to us, the people that make up our workforces and our customers, and which are taking place as our businesses move deeper towards a very different 21st century model of work.

When then does the the future of work look like? Nobody has the full picture of course, but I am increasingly sure it broadly looks something like this:

The Future of Work: The Key Aspects

  • The evolution of the business/worker compact We are on a trajectory that has taken us well away from lifetime employment, guaranteed pensions, and single careers where largely benevolent, parent-like corporations looked after their workers, to a model where the principle actors, both companies and individuals, are much more autonomous, self-interested, and dynamic. Like all things this has trade-offs, but in the large this directly facilitates more rapid evolution of those involved and potentially creates a richer, more rewarding — if seemingly riskier — work environment for us, especially if we’re self-actualizing. There are other implications as well.
  • CSR/social enterprise and the need for business to go beyond a basic value proposition. It’s not good enough just to sell products and services anymore. Companies and their workers must be thinking about the bigger picture as the marketplace is increasingly demanding that the businesses they work with are concerned about overall global outcomes. Sustainability, environmentalism, corporate social good/responsibility, and other urgent qualitative matters of policy and governance are going to increasingly infuse how we work. Doing this successfully will require a very different mindset in our workforce than our traditional organizations typically have cultivated in the past.
  • New modes of management and workforce collaboration. The management theory — or more likely theories, plural, as there are probably several good ways of thinking about it as I’ve recently explored — for the future of work is starting to emerge. The same with team, department, company-wide, and mass collaboration. Then there is the collaborative economy that is genuinely remaking very concept of how business works for the digital era. Read some of Harold Jarche’s latest musings on work to get a sense of what the mechanics might look like, as well as Stowe Boyd’s recent thoughts on going back to the fundamentals with social business thinking.
  • New transformative workplace technologies. Everything from wearable tech to mind/machine interfaces and increasingly commonplace social business tools are changing how we will work. This will further change expectations and possibilities. I’ve explored the important technologies to watch this year, but there are many others in the wings and they will only come faster and be increasingly impactful. Our businesses are also becoming platforms in every sense of the word, becoming technologies in their own right. As Fred Wilson observed yesterday, it’s increasingly urgent for organizations to find — and become — the next platform.
  • New approaches for addressing diversity and inequality. While still I’m on the fence about the best ways to address these, you can be sure there will be enormous investments made through the rest of the decade by businesses, government, and other institutions to start tackling the structural issues in the global economy. We’ve increasingly learned and come to accept how much they impact business performance and the bottom-line.
  • A shift in the fundamental relationship between workers and business. This can be most clearly seen in the inversion of the traditional model of business, realized directly by the flourishing of vast numbers of self-organizing online communities. Now people can just come together online and create shared value without an intermediate organization that would otherwise have to the resources required to meet their needs. What does this mean for how important the traditional model business and work will be to people? The classical enterprise clearly isn’t as necessary as before for many purpose. Now we need to look ahead and see how these trends will affect how we structure, manage, and operate our organizations.
  • Co-evolutionary changes in society and global/regional culture that impact the workplace. Technology improves what’s possible by dramatically lowering the effort, time, or cost of doing something, or even makes something entirely new possible that was simply impossible before. This sets expectation and enables/encourages new types of behavior in people and society as a whole. These soft changes in us then drive the exploration of new technologies guided by behavior changes and new norms. We need to better understand where this co-evolutionary process is taking us, as well as anticipating how these new directions will impact it will affect our businesses.

Surely, this list is fairly incomplete. Unfortunately, more change is taking place now than we can really individually know (and is one reason why I believe locally autonomous adaptation is essential to the future of work.) Given how disruptive change has been in the last 20 years, remaking industries, creating giant new entities (Internet, Web, and cloud ecosystems like Amazon, Google), and dramatically changing what’s possible, the next-generation of work is likely to be almost radically different, while also being incredibly interesting. It’s worth it for us to find out as much as we can so we can prepare and anticipate the future, with the goal of avoiding unnecessary disruption — preferably being the author of your own disruption — while capturing increasingly historic opportunities.

Additional Reading:

Ten strategies for making the “Big Leap” to next-gen enterprise | ZDNet

What Most Digital Strategy Underestimates: Scale and Interconnected Change | On Web Strategy

Does technology improve employee engagement? | ZDNet

Can technology improve business innovation? | ZDNet

Rethinking Work In the Collaborative Era

Over the last few years, there has been an enormous amount of industry discussion about how the digital world is changing the way we work. To any reasonable observer, the ways that we communicate, interact, and collaborate with each other are all in the midst of profound change. At least the why seems fairly clear.

At at high level, there appear to be three major root causes for why collaboration — the very core of how people come together and function as a business — is in the midst of reinvention:

  1. Hierarchical management styles break down in the face of the inherent complexity and scale of the modern business environment.
  2. New digital tools have put us in constant and direct contact with nearly every person in the developed world at virtually no cost or effort. Thus businesses are now primarily subject to the power laws of networks, rather than the legacy rules of business.
  3. There has been a sustained shift in the power of creation, as the edges of our organizations and marketplaces now have readily in hand as much — and often more — productive power and reach than our institutions. The obvious cause is today’s pervasive global platforms for self-expression (yes, by this I largely mean social media, but also all forms of digital connectedness.)

Harold Jarche calls the reaction of our existing businesses to this new operating environment the “industrial disease” for which complexity is the single biggest challenge to working effectively:

Today’s complicated organizations are now facing increasingly complex business environments that require agility in simultaneously learning and working. Typical strategies of optimizing existing business processes or cost reductions only marginally improve the organization’s effectiveness. Faster markets challenge the organization’s ability to react to customer demand. Decision-making becomes paralyzed by process-based operations and chains of command and control.

Organizations need to understand complexity instead of adding more complication.

The long and short of it, despite many attempts, is that we still don’t have generally accepted management theories about how to cope with these changes. That’s not today there haven’t been many attempts to describe aspects of it. Over the years these have included Enterprise 2.0, social business, wirearchy, podularity, holacracy, to name just a few of the more well-known ones.

But as we are still in early days — although we’re perhaps past the end of the beginning — of the story of how digital networks are remaking work, and it is still very much unfolding. Frankly, we’re just trying to learn enough about what’s really happening to our organizations to articulate it well. Certainly, the reasons why we must try to understand how work is changing are many, not the least because it’s what we must do to create value for ourselves and society. But we’re finding even how value itself is created and evaluated is in the midst of change.

Network Collaboration: New Modes and Scale of Work in a Digital, Social Workplace

Currently, I believe we’re about to enter another major phase of conception in how we think about work in general, even though we’re not yet done absorbing the last few generations of ideas. This new phase will be more comprehensive, transformative, and almost immediately challenging (yes, even that overused word, disruptive) to our businesses and institutions.

The Three Major Collaborative Changes

Furthermore, I now think we can get a glimpse of this new conception. Over this weekend I came across Eli Ingraham’s terrific exploration on CMSWire of how collaboration is currently changing. I believe she’s come as close as anyone has been able to get in framing up this new way of thinking about the transformation of work in our times.

Eli says that today’s overall changes to work can be organized and described as top-level concepts:

I see three major forces in The Collaborative Intervention: the Future of Work, the Collaborative Economy and Global Solutions Networks. Their tenets transcend geography, generation, gender and any other constructs that divide us. They are about how we co-exist, and co-innovate, on the planet as human beings.

I’ve rearranged it a bit in my framing of these three major and interlocking new dimensions of work in the visual above but I think this is the right articulation.

First, we are seeing the emergence and primacy of network collaboration. Today’s technologies are remaking team, departmental, and organization-wide collaboration, primarily via social tools, online communities, and other new systems of engagement such as rich collaborative experiences.

Second, at the next structural level, we see that businesses are beginning to use industry-wide and/or domain-specific business networks (communities) to come together to solve problems they are not able to solve by themselves. Don Tapscott’s global solutions networks is probably the clearest articulation to date, but the ideas have been evolving for a while.

And finally, third, we have the collaborative economy, best identified and described so far by Jeremiah Owyang, which is how a large section of the global economy is rapidly being restructured around open and highly-scaled digital collaboration between new network-centric businesses and their communities of users.

The implication, if this summarizes the most significant things happening in work today, is that most businesses will have to come to terms with these transformational changes and restructure themselves around them. Given how rapidly this is taking place in certain quarters, particularly the fast-growing and highly disruptive startups of the collaborative economy, they will have to adapt to this new reality fairly soon.

As I wrote recently, digital communities are upending our organizations, and not slowly any longer. But they don’t have to. There is growing and decent evidence that organizations can make the change, if they are fully committed and pro-active. What’s more, the results seem to indicate they’re very much worth making, if you’re prepared to change what’s necessary.

Also Read:

Does technology improve employee engagement? | ZDNet

What Most Digital Strategy Underestimates: Scale and Interconnected Change | On Web Strategy

Social Business: Frameworks for Next-Gen Organizational Structure | Slideshare

Digital Business Ecologies: How Social Networks and Communities Are Upending Our Organizations

As we’ve watched digital networks reshape just about every aspect of business these days, I’ve found that we’ve struggled to come up with the right words and ways to describe a very different way of working. From vast app stores and pervasive streams of big data to enterprise social networks and customer engagement, the rules that Internet-based models of business impose are often very different.

Yet some well-known elements of business haven’t necessarily changed and have only become more pronounced: For example, scale is one of the single biggest challenges in moving to digital and social business, but has also been a challenge in our globalized world for some time. Today’s pervasive network connectedness is making this factor ever more pronounced. For organizations now this typically means having to maintain tens of thousands, or even millions, of simultaneous conversations with the marketplace for critical activities such as marketing, sales, and customer service. It also means most businesses will have to manage an order of magnitude more suppliers, business partners, and other 3rd party relationships (example: open APIs are a great harbinger of high scale in digital supply chains.)

Thus, the challenges of magnitude infuse everything in digital: Distribution, supply, engagement, control, competition, and even — or perhaps especially — security and sustainability. However, in other areas, especially where digital and social networks fundamentally change the fabric of things, we still don’t have clearly identified constructs, or even good words that we can use.

Digital and Social Business Ecologies: How Workforce and Market Engagement Are Blending

For instance, it’s been abundantly clear for a decade now that open digital communities are a new and revolutionary construct that have gone on to literally change the world. From upending media and software (social media and open source communities, respectively) to remaking the fundamental nature of how business in all industries gets done (collaborative economy), large, self-organizing communities are taking the lead. Digital technology even changes the underlying forces of the age-old concept of community. For example, even though the idea of community has been around since there have been people, the digital incarnation seemingly does something a bit different: Instead of forming insular walls that group people together, digital communities tends to group people together and break the walls down.

It’s here that I think we’re missing the name of a key concept, or at least, we’re not using one that needs to be applied here. Specifically, I believe that the relationship between the traditional enterprise and online communities has been greatly underexplored. For sure, we have many good examples now of enterprise communities that have created results across our value chains today.

But what we don’t have is a good understanding of what relationship communities should have to business at a strategic level. Are communities an adjunct to a specific function under certain conditions, such as customer service communities or product development/innovation communities when existing traditional processes underperform? Are communities to be the primary delivery model, or a secondary? My belief is that this thinking is now too incremental.

Instead, I believe businesses should now focus directly on moving to community-led business structures and processes as a first class citizen. The force multiplier of social technology here has simply proven far too great not to put at the core of our businesses, and not doing so has begun to have significant competitive and sustainability implications.

To get there, we need to talk about digital communities and business in new ways that explain their new relation to the enterprise much better than we do today. I’d like to suggest that as digital business practitioners we starting exploring this landscape in the form of ecologies, when we talk about business and community. Why ecologies? Because of what the term means:

Ecology (from Greek: οἶκος, “house”; -λογία, “study of”) is the study of interactions among individuals and their environment.

Therefore, it behooves us to much better understand — in relation to our stakeholders — the exact nature, interaction, and possibilities of communities and business, a twin environment we’ve not really had before in business as the highest order concepts. The motivation here is that the new fundamental environment for business in the 21st century is the digital network, and specifically, online communities of every description. Given the way they are upending what’s possible in terms of how to achieve just about every function in business, it’s time we capture a more complete conception of their role. I believe this means articulating their centrality to the operating model of many or most activities in the enterprise today.  While that sounds like a bold statement, I believe the results we’ve seen so far (see the nearly 100 case examples we put in Social Business By Design for a small sample) fully bear this out.

As my good friend Stowe Boyd recently wrote [my emphasis]:

We need a CDO-style figure in most businesses — if not the CEO — to make that transition to a postnormal footing, where work technology is at the core of what everyone does, not an afterthought or add-on. The inability of traditional IT to deliver on the promise of today’s technology is the universal business facepalm of our day.

Network technology is dominating the transformation of business today. Now we need to successfully adapt our management theories and practices to this new reality.

Additional Reading:

Digital diaspora in the enterprise: Arrival of the CDO and CCO | ZDNet

What Most Digital Strategy Underestimates: Scale and Interconnected Change | On Web Strategy

A new reality between the CMO and CIO | ZDNet

Enterprises and Ecosystems: Why Digital Natives Are Dethroning The Old Guard | On Web Strategy

Four key takeaways for digital transformation | Econsultancy

How We Gave Up Control Over The Social Web

A short but pithy piece over the weekend by Dave Winer titled “Why the Web 2.0 model is obsolete” got me thinking about where we’ve ended up with social media after nearly ten years. Blogs, wikis, and other tools of easily shared self-expression from the early days have given away in recent years to a much less diverse social media monoculture. A few large social networks now control our social identity, content, and behavior, and through their terms of service, often literally own our online existence legally and de facto.

This evolution was perhaps inevitable given the rules through which networks operate and certainly the result has its strengths. It’s far easier for consumers and businesses to adopt a hosted service than set up their own social presence, with all the complicated bits it requires to set up a fully functional social identity on your own these days. It’s also probably more secure, safe, and reliable long term. It’s certainly the shortest route to connecting with the vast captive audiences that the leading social networks now wield.

Yet in the process of making many short term decisions in the name of reach and convenience, many of us have given away our social capital, and along with it much of our online autonomy and freedom. I’ve long since stopped advising companies to drive their traffic to Facebook (disclaimer: I am a shareholder) and build their own online communities and digital ecosystems if they are intending to be strategic about things like social business and open APIs.

Network Effects, Social Media, and Centralized vs. Federated

The impressive thing is that we’ve largely achieved the original vision of Web 2.0 and it’s just how we do things now. We share by default. We use social media more than any other digital activity. Social media is now woven into so much of what we do today. Yet the majority of all of this user generated content and online community is now centralized in a few large social silos that can no longer talk to each other.

Even worse, if we go the opposite direction that might seem better long term, we’ve discovered issues with that model too. For example, we’ve learned that when we create many smaller, self-controlled, and more autonomous social environments we then create fragmentation. We can’t easily communicate or collaborate with each other across these social islands. Thus, for as many downsides as the monolithic social networks have, they do achieve one important thing: They create a very large single social universe that we can all communicate across.

So what should we collectively do? Should we cave in and trust that the corporate owners of the social world will be benevolent, even when they clearly have business models that are very often at cross purposes to our needs and desires? Or should we find a way to solve the problem of creating our own social corners on the Web and then connecting them together, all while making it very easy to do so? Personally, I’m hoping it’s the latter. Certainly I’ve explored previously how open social standards have a genuine shot at helping with this, even if it might be a bit of a long shot.

The reality is that social media silos are now holding us back, both as individuals and as businesses. We can do much better if we want. But getting there requires a little long-term discipline and plenty of widespread demand. That makes it pretty unlikely in the face of the enormously strong network effects of the largest social networks today. But perhaps there’s a third option to regaining control over our social lives. In fact, I predict the next big breakthrough in social media is likely to come from the need to resolve this tension between the unfortunate long term consequences of centralized social media and the benefits of a much more federated and user controlled model. Unfortunately, recent history has been a steady march towards the former.

So until then, we all need to mull over where our collective decisions are taking us, for as social media is perhaps the greatest communication revolution in history, its intrinsic power cuts both ways.

What Most Digital Strategy Underestimates: Scale and Interconnected Change

Over the last couple of years, I’ve been advising IT and business leaders that they need to gear up their digital/social/mobile strategies to match the advances taking place in the technology world today. On its face, this only makes sense. Technology change continues to accelerate and the growth in the cloud, social media, mobility, big data, and just about everything else is increasingly off the charts as I recently presented to a group of CIOs. As JP Rangaswami once said, we have to design our organizations now so that change is an integral function of how they operate.

Unfortunately, most organizations largely haven’t done this effectively for a variety of reasons. For one, it’s surprisingly difficult to do if your business wasn’t built around high technology from the outset. Frankly, since so many other organizations are having a hard time with it as well, the competitive implications haven’t always been severe.

However, that also doesn’t mean that some organizations aren’t failing outright through poor digital adaptation. Some clearly are, and the closer technology is to how you do business, the riskier slow digital transformation is. Just ask Blackberry, AOL, Borders, R.H. Donnelly, or a long list of companies that haven’t adapted to how digital innovation transformed their industry.

In the last few years, consumerization has emerged as a leading force in most organizations that is driving emergent, grassroots-led tech change due to increasingly pent up internal demand. The signs are all there: Bring-Your-Own-Technology (BYOD, BYOA), Facebook as the largest enterprise collaboration platform, app stores as the easiest + cheapest IT department alternative, and the list goes on. This pressure — combined with the inherent complexity in moving more swiftly towards adopting new technology — by the various stakeholders of most businesses has become increasingly untenable, even with consumerization taking some of the pressure off around the edges.

Technology Change and Proliferation: The Shortcoming of Enterprise IT Models

Yet somehow, many large organizations are currently sustaining it, despite being greatly outmatched by the growing chorus of “more” they get from their workers, customers, business partners, and the marketplace. To keep their spot on the treadmill, some organizations are now looking for new models to keep all of this sustainable. But I believe that we’re now starting to realize what one of the core obstacles is: Identifying the best way for businesses to leverage the vast existing resources they already posses, and then devising and realizing fundamentally new ways to use them to engage at scale across today’s digital channels and ecosystems.

Thus a fundamental mismatch between how our enterprise resources are connected to the digital world lies at the root of poor digital transformation. And the solution is likely a deeply engaged, muli-faceted, multi-channel digital approach sized to the scale of the challenge.

To address this mismatch, businesses have started to make significant changes in how they are organized around technology. The whole conversation about the new role(s) of the CIO, the CMO, and the new Chief Digital Officer are taking place in many industries today. Some of this discussion has started to be effective, and with so many companies struggling to successfully grapple with the torrent of digital innovation today, the window perhaps hasn’t closed.

So now I believe it’s time to tell a more nuanced story. Technology famously drives the leaders and laggards apart. For every Apple, Google, or Facebook, there are many generations of legacy enterprises trying to adapt their old businesses to the new digital landscape. A few lucky ones are protected by regulation, geography, or other happenstance, but most are exposed to the raw digital winds of change. Only a few are making it across the digital divide, while most have reached the limits of growth given the lens through which they originally built and now operate their businesses. But I believe there is a little breathing room, despite the hundreds of digital startups being launched each year to reinvent how we live our lives and conduct our business in radically improved new ways that also upend our existing business models (see the fast growing and rather exciting collaborative economy story for more examples of imminent disruption for many traditional enterprises.)

Large companies still retain very significant ecosystems, resources, and network effects if they are willing to use them. While it’s later than many companies think (just one example: a quick look at what’s most popular in the Apple or Android app stores right now shows little presence by today’s Fortune 500, despite mobile’s dominance in today’s world), there are ways to close the opportunity gap with digital. However, at this point, these must be major initiatives at the top of the organization, being led by new business units and IT both. They will have a high rate of failure (just like startups do) but by addressing the scale of the challenge head on, and applying the now many lessons learned we have at our disposal. A great new piece of research from McKinsey highlights this challenge, by asking “how [enterprises can] get beyond the small share of the prize they are capturing today in digital by looking for impact across the whole value chain.”

Most organizations need to update their digital strategies much more often than they are, revisiting their core business models, and making the resulting outcomes far more highly interconnected and organically structured. They also need to inject the solution to digital scale and velocity deeply into their operations. Those that do this well can become the digital leaders and not the legacy laggards.

Imagining the Future of the Enterprise

This afternoon at a workshop in Stuttgart, Germany at the KnowTech conference I explored our latest conception of the many transformative technology changes happening within our organizations today. The majority, if not most of these trends, are now being driven by the so-called “big shifts” — and our response to them as people, organizations, and society — that are largely being imposed from outside the walls of the enterprise. Consumerization is clearly here to stay. This is not to say that businesses aren’t innovating. Certainly they still are. But they are greatly outnumbered and frequently outclassed by the tsunami of new ideas sweeping across us from the consumer world.

The pace of advance today can seem overwhelming. It is new mobile devices, social media, cloud services, avalanches of sensor or crowd-created data, all brought to our doorstep via new digital channels and platforms such as mobile apps, app stores, open APIs, new social networks, gamification tools, to name just a few of the bigger and more disruptive technologies.

To proactively deal with all this, I currently advise most companies to develop a “strategy book” that they can readily use to identify important new advances, understand their abilities and ramifications, and then determine the impact to their business, both in terms of opportunity and challenges. Note: The aforementioned workshops typically provide the basis for such a strategy book and the processes required.

Unfortunately for most companies, there are often more challenges than opportunities, since many of these new technologies go against the grain of how traditional companies are structured and operate. Openness, decentralized processes, mass participation, network effects, and radically new distribution models for communication and work are not merely typical of today’s consumer technologies, it’s how they fundamentally work and compete against each other.

Put simply, to survive these generational shifts, organizations must figure out how to absorb new technology changes effectively and at scale. This will require potent strategies that will begin with requiring genuine rethinking of service delivery within our organizations and ultimately arrive at a profound transformation of the company. This will ultimately include its business models, motivations, and sometimes even its reasons for being. One can look at Amazon as an exemplar of this, starting out in e-commerce, and ending up a true and surprisingly pure digital platforms company, successfully wielding mobile, platforms, cloud, and big data to achieve market domination. Amazon is the most well known, but there are others and the route is repeatable, just as it is sometimes difficult.

The end point of all this is where everything is a service, as Dave Gray famously predicted. But also it’s more than that. The future of the enterprise, what I’m calling the next-generation enterprise, requires a mindset that doesn’t think in terms of fixed markets or point products or services. Instead, we must create, cultivate, and control fast-moving and highly competitive ecosystems of people, information, and value across a virtually unlimited number of channels. Those who can move first, co-create, and own the best class of information and then deliver it in forms the market wants, when it wants it, will be the winners in the short-term and long-term. Companies organized to do any less than this will falter and fade.

Over the last couple of years, I’ve been spending a lot of time thinking about and exploring how organizations can get there. There’s still a lot we need to learn, but we’re beginning to see the broad outlines. Unfortunately, there still more questions than answers, even today. Can most organizations make the transition? Does the transition to a next-generation enterprise have multiple routes, if so, what are they? How much investment is required and what is the likelihood of failure? Can we quantify and manage the risk of transforming? All of these questions and more remain difficult to answer.

Related: How Digital Business Will Evolve in 2012: 6 Big Ideas

However, we do know with a fair degree of certainty that most large organizations will need to begin changing faster — starting now — if they intend to survive. Most will need to become next-generation enterprises in a meaningful way within the next half-decade. And they need to have started several years ago.

As we enter the age of digital engagement, the untapped possibilities still largely exist. Most organizations should be utterly thrilled by the uncharted territories in front of them. Unfortunately, I see that most do not even see these as more than a threat, if they see them at all. That then is the first challenge: Changing how we regard our connection and relation to the world, for the biggest changes happening today are not only digital, but to ourselves and what makes our companies work.

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