Crowdsourcing | On Digital Strategy

The Hardest Lesson of Digital Transformation: Designing for Loss of Control

January 4, 2016 5 Comments

It goes hand in hand with another key principle that sets digital strategy well apart from many other traditional ways of achieving organizational objectives. One of the counterintuitive lessons of digital and social business is that the network itself can and should do the majority of the work, if you’ll only build a little social capital and then enable interested participants — people, in other words — access to a platform that allows the co-creation of shared value at scale. Oh, and yes, you must provide a good motivation for doing so, but they’ll often figure that out too.

By “majority of the work”, I mean that aligned stakeholders in digital platforms that allow participation will help produce literally nearly everything of value to them, from co-creation of content, activities, ideas, to even the very management, governance, and gardening of the digital ecosystem itself. The lesson here is clear from the consumer world where pioneering services such as YouTube, Facebook, and LinkedIn have long proved the viability and repeatability of this model on a global scale: Today’s most successful open digital platforms create virtually nothing themselves directly. Instead, they have gone through great lengths to provide a carefully constructed platform for their communities of millions and millions to do it indirectly instead.

It’s the asymmetric warfare model for the digital age and far too many organizations do not fully understand how profoundly the rules of business in the digital era have changed. Consequently, they are often at loss on how to lead the organization to better adapt. The test question is this: How can any traditional, internal, do-it-all-the-hard-way model for value creation compete with the hypercharged mass of networked participants — aka social business — that digital savvy organizations have gathering around them and are choreographing to create far richer results, often many orders of magnitude richer than the old guard methods?

While the consumer space has seen the most success with this model, we now have good evidence that this is happening in the traditional enterprise with organizations like Bosch, Deutsche Bank, and a good number of others, that the same approach is making it into the business world. For the organizations that can fully tap into their stakeholders and inspire them to co-create the future together, nearly anything is possible, and consequently the competitive stakes are unsurprisingly, enormous and have been reshaping industries for the last decade, first media and software companies, and now nearly every industry with the rise of the sharing economy.

But successfully adopting a native digital perspective requires mastering a mindset that traditional management culture is both unfamiliar and rather uncomfortable with. Frankly, of all the top obstacles to digital change, very few are technological. They are almost always barriers created by people, and of the mental barriers, this is perhaps the most foreign concept of all: Deliberately giving up control in a conscious and designed way over your organization’s digital results, while guiding the emergent outcomes in directions that are good for both your business and your stakeholders. As I’ve been clear about before, this very much does not mean all positive control, just the non-essential elements (which admittedly is still most control.)

The motivation for doing so is very clear: Industrial age management structures, while effective (albeit with considerable cost) at producing linear output predictably, actually fail to tap into the lion’s share of potential value. A recent study by Cross, Rebele, and Grant of several hundred organizations only underscores this point:

[The] research we’ve done across more than 300 organizations shows that the distribution of collaborative work is often extremely lopsided. In most cases, 20% to 35% of value-added collaborations come from only 3% to 5% of employees. As people become known for being both capable and willing to help, they are drawn into projects and roles of growing importance. Their giving mindset and desire to help others quickly enhances their performance and reputation. As a recent study led by Ning Li, of the University of Iowa, shows, a single “extra miler”—an employee who frequently contributes beyond the scope of his or her role—can drive team performance more than all the other members combined.

The key is understanding why this is such a powerful concept and the key to digital business, is realizing that the more control you give up and relinquish to the network, the more value comes back through peer production. A lot more. The secret lies in having something of value in the first place, that can be somehow enriched by others. This is where having a digital platform becomes essential, one that is designed with an effective architecture of participation that opens up your data, processes, distribution channels, supply chain, or anything of value that is digitally connected in some way to your organization.

The good news is that what a successful architecture of participation looks like, at least applied in generic terms, is increasingly well understood for many important digital business activities, even if it surprisingly is missing even today from many views of the digital enterprise, such as this one from McKinsey.

Common Architectures of Participation

Architecture of Participation	Target of Open Participation	Extended To	Typical Value Change/Magnitude
Crowdsourcing	Any type of digital content	Interested parties	10x-1000x
Working Out Loud	Work narrative, process, product	Any stakeholders of work output	2x-10x
Affiliate E-Commerce	The digital sales funnel	Any interested entity with traffic	1.5x-5x
Open APIs	Corporate data	External partners desiring to innovate with the data	1.5x-100x
App Stores	App ecosystem	Developers seeking customers/revenue	100x-1000x
Online Customer Service Community	Customer issues/problems	Those willing to help	1.3x-3x
Digital Change Agents Platform	Unmet digital needs in the org	Those interesting in solving them	1.3x-3x

What’s worth noting is the powerful amplification/scaling effect that digital architectures of participation have. That’s because the cost of being connected to everyone who is already connected drops, like everything digital, quickly towards zero, as does the cost of creating and operating a platform that provides your carefully exposed points of participation to those stakeholders.

In effect, nearly no older way of working, managing, or doing business can fight the power laws of digital systems, which continually apply exponential forces to make value creating activities much faster, cheaper, higher volume, better quality, and so on.

This then is one of the key drivers to digital transformation and why it has such urgency. To get to the other side, however, requires a major shift in understanding where the majority of business value comes from, how best to capture it in digital markets, and what kind of thinking it require to design products and services that operate in an increasingly peer produced world. In other words, genuine hard work of creating the cultural, process, and organizational shifts that will lead to digital adaptation.

Perhaps most importantly is understanding is that shifts in mindset are the key to entry to digital business in general. When thousands of startups do little but obsess around the clock about how best to use the mass global connectedness we’ve attained with the Internet to achieve the previously unachievable — and most traditional businesses are not — we will almost certainly miss the very opportunity we were trying to accomplish with our old command and control methods. For sure, the jury is still out for many on the digital economy and who will ultimately be the beneficiaries, but to not even understand the game means that organizations are flying blind. And that’s the worst environment to achieve control one can imagine.

Note: I’d be rather remiss in not giving original credit for the Design for Loss of Control meme to the great JP Rangaswami. The concept goes right to the core of how to remove the many significant barriers that hold back digital in most organizations. Startups famously don’t have those blinders build it, the rest of us have to do a lot of relearning, and JP was instrumental in helping us see that.

Additional Reading

Shifting the Meaning of Business Hierarchy to Community

Designing the New Enterprise: Issues and Strategies

Filed under Analysis, Crowdsourcing, Online Community, Peer Production, Social Business, Strategy, The Enterprise, The Future of Work

How Should Organizations Actually Go About Digital Transformation?

June 10, 2015 4 Comments

This is now the question that is top of mind in a large number of enterprises today, as speeding up adaptation to rapidly evolving digital markets is now not just a requirement to grow today, but increasingly to survive.

This is not incautious language and I’ve been pointing to the relatively urgent data for several years: One major slip as organizations fully digitize their workforces, supply chains, and externally facing products and services is easily enough to put an organization into significant and potentially permanent decline.

Recently, I’ve seen increasingly precise frameworks and round-ups — such as this great summary by Fabien Osmont — emerging lately on what companies should be doing to prepare for the full-on of digital transformation. One of the latest is BCG’s new transformation process for CEOs looking to make major changes. I’ve further argued that 2015 is the year that digital transformation should be taken on as a first class citizen all the way up the board of directors, something that’s gratifying being borne out in actual practice now.

Such depictions of the necessary steps are certainly welcome, but should only be used as a starting point and with a large grain of salt given how much we still have to discover: We are still in the cave painting days of digital, as I like to say, and possibly the single most important activity of the entire effort is to be avid learners of the lessons that result. And then respond quickly to them. If there is a second urgent lesson coming from the stories of digital change, is that swiftly making moves builds momentum and can make leaders almost uncatchable. It’s one of the reasons that continuous delivery is a common component of high performing digital teams.

Another item unfortunately missing from almost all of the many views of digital transformation today, is simply the significant inherent structural barriers to change, including lack of effective mindset for digital. The processes and frameworks almost always greatly under-appreciate how much change — which is rapidly growing — in the digital world, and how poorly prepared, both in terms of scalable, repeatable processes for change and to the organization’s natural inclination to pro-actively seek urgent changes out. Over the last several years, it’s become abundantly that traditional, linear processes just aren’t up to the task, yet that’s what most still prescribe.

The inadequacy of traditional processes for digital change and evolution became obvious years ago when we learned traditional project management fared rather badly when applied to IT and software development in particular. This realization spilled over to many other arenas. New open methods emerged that were much more effective in a fundamental digital arena. These included open source methods, agile development, peer production, crowdsourcing, mass collaboration, social business, devops, and so on. Not coincidentally, each one of these advances ended up involving open, self-organizing collaboration among many well-informed individuals, instead of a few central leaders. And each development was a breakthrough in terms of performance, but confined mostly to digital domains.

Now the same is beginning to happen with business, with new digital era management methods informed how we can better run our organizations. Change agents loosely connected to transformation efforts by networks, as I explored recently, are now the order of the day, skipping past those unwilling or unable to join the organization in building towards the future, finding those most passionate about and willing to lead the change with local knowledge and motivation.

Communities of Change Agents Key to Sustainable Digital Transformation

Organizations, if they even hope to have the bandwidth and capacity to sustain change, which I’d observe, is essentially becoming continuously, must structure their digital transformation effort in a new way. Gone is top-down change. Gone are hulking centralized bureaucracies that have limited ability to effect change across today’s large global organizations. Instead, lightweight nimble networks of change agents across departments, divisions, and teams that align themselves to the organization’s journey is what will be required. Is this the open, crowdsourcing of transformation? Yes, and much more.

Based on a growing number of examples from top companies, I believe it’s now clear that new models and methods are the only real way to sustain change and any transformation process must acquire and wield them at the core of what they do. Leadership is still required to focus, guide, and inspire, but the work must be done by the entire organization (or least the parts most willing to.) I’ve synthesized a model for how this will look above, involving all the key stakeholders in the entire organziation. I encourage your input on how we can improve it based on the latest experiences in the field. I believe it’s an incredibly exciting time to be in business, and it will be a rewarding one for those that apply the right new methods, matched to the contemporary operating environment in which we find ourselves.

Additional Reading

The Strategic Role of Digital Networks in Corporate Leadership Today

The Role of the CIO in Digital and Social Business Transformation

Closing the gap between executives and digital transformation

Filed under Analysis, Crowdsourcing, Peer Production, Social Business, Strategy, The Enterprise

What Are the Required Skills for Today’s Digital Workforce?

February 17, 2015 6 Comments

As I spend a great deal of time every year looking at the latest technological advances for the enterprise, I’ve noticed a trend in recent years that’s long been true but is clearly markedly accelerating. That trend is that technology has officially pulled well ahead of the workplace skills of even the most proactive manager or line worker. It’s not that the digital possibilities are getting ahead of our businesses, it’s that high technology itself is proliferating so rapidly in terms of potent and truly transformative new products and services (social software, collaborative economy, wearables, 3D printing, and the whole hype cycle) that it is now very difficult today even for experts working on the subject full time to keep up.

I posited today on Twitter that we need to figure out a way to catch up or, as Andrew McAfee seriously suggests, perhaps the robots will just end up doing everything for us as they might be the only ones that can manage.

Or is there a way forward for our organizations? Are there new ways to think about our digital workplace skills that allows us to take our thinking up to a new plane, the next meta-level of thinking and working where we have much higher leverage, can manage change that is an order of magnitude or greater in volume than today, work in fundamentally better and smarter new ways — and perhaps even work a bit less — yet produce much more value?

We generally recognize that have to do something to improve our digital metabolism, as I see organizations struggle mightily these days with digital change and transformation, and often not getting very far.

Thus it’s become pretty clear that one of two things is going to happen: The world will continue to pull ahead of the average workplace, as our internal rates of change are greatly exceeded by the marketplace. We will steadily become irrelevant and ineffective, eventually replaced by digital startups and better-adjusted competitors. Or we’ll find entirely new ways of improving our capabilities in a way that allows us to maintain some kind of parity with progress in the world. (Whether technology change always represents progress is a discussion for another post.)

This means we have to find a way to change our selves and our workplaces, or the market will do it for us the hard way. Disruption is what happens when something new comes along that changes the underlying rules of the game. If we are doing the disrupting, it can actually be very good for us. When it’s imposed on us, then the results usually tend to be unfortunate. So we must be doing the disrupting to ourselves, and that begins and ends with shifting our mindset and perspective, especially in deeply understanding the nature of the truly pervasive digital operating environment we now find ourselves in.

Looking at the state of the digital workplace today, which I’ve been mapping for years now, and we can see from sources of hard data about what’s happening such as Jane McConnell’s terrific surveys, that “most organizations are just starting their journey to an effective digital workplace.” That’s Jane’s quote, but my emphasis: 30 years into the personal computer and networking revolution, and most organizations are still very early in their journey and often losing ground.

What Skills will Self-Sustain Digital Workers?

To be fair to IT and HR departments around the world, the digital workplace target does move incredibly fast and is picking up speed. And there never was a finish line. Fortunately, I believe there are novel, effective and increasingly well-understood new ways for most organizations to address their current digital workplace gaps, and it’s not (just) by “giving up non-essential control”, deploying liberal BYOD/BYOT programs to cultivate employee-led change, figuring out how to do things like learn or change behavior faster, or any of the ten strategies I’ve previously recommended.

No, instead it is by giving our workers genuinely transformative new digital skills that gives them the ability to adapt, provides them with the most relevant digital tools and platforms, conveys new motivations, and fosters the know-how to re-imagine their knowledge work in brand new ways that are much more adaptable, rich, scalable, and resilient — even embracing of — the inevitable march of digital progress.

While no one can yet represent that we have a full understanding of what the key next-generation digital skills of successful organizations are — as they are largely still being discovered — there is a broad realization of the important skills we know of already. All of the skills listed below are ones I’ve either seen being used successfully by large organizations or actively piloted with some promise. These should be on your shortlist as you plan your updates to the digital workplace, as I believe each is essential for working in a much more sustainable and meaningful way in our digital age. The enlightened leaders of today will enable these skills to tap directly into the “New Power” that digital networks are conferring on organizations that are willing and able to adapt.

The Essential Next-Generation Digital Workplace Skills

Working Out Loud

Also known as Open Work or Observable Work, this is the act of lightly narrating your workstream, usually on an enterprise social network, but it can be done using any participative medium. Working out loud allows one to let the network do the work (see below) and breaks down the silos that have rebuilt up with virtual workplaces and today’s far-flung multinational teams. Perhaps most importantly however is that is the key to unleashing agility using digital networks as it automatically collects institutional knowledge and critical methods, makes onboarding new employees much easier, and frees up your knowledge to work for the organization continuously while still ensuring your contribution is recognized. Credit goes to Deutsche Bank’s John Stepper who has done much to make this key digital workplace skill so well known recently.

Digital Sense Making + Personal Knowledge Management

These skills are something we’ve seen CHROs and HR departments consider how to provide in recent years as cognitive overload has become a common workplace malady. We now have many tools, channels, apps, and devices we must use in the workplace, and they will only grow in number, probably extensively. The attention they demand is squeezing out the time to do the quality thinking and analysis that we so badly need knowledge workers to spend time on. Harold Jarche has done excellent work over the years in mapping how activities like Personal Knowledge Management (PKM) is a discipline and practice that digital workers must acquire to navigate today’s knowledge-dense workplaces. PKM provides the tools, techniques, and time for consistent yet meaningful sense making. Next-generation organizations will actively work to reduce needless activities like excessive meetings by creating required time for the strategic activities of acquisition, management, and sense-making of digital knowledge. These skills are foundational to adapting more swiftly and organically to rapidly changing operating environments.

Open Digital Collaboration

As I’ve recently explored, collaboration is becoming the most important strategic activity in organizations, even becoming a vital top-level corporate strategy and major fast-growth new business model as well. Workers today must be experts in digital collaboration techniques, know all the relevant platforms, and maintain an understanding of the current collaborative “channel catalog” at all strategic levels. This includes the team and project levels, all the way up to the very business itself and its relationship with suppliers, partners, and customers. Becoming a connected, sharing knowledge organization using digital tools in global networks has, for example, become a top priority of large organizations like Bosch, BASF, Bayer, Michelen, and many others, some of whom even use techniques to ensure knowledge and observable work are kept out in the open. Open collaboration is a core capability of digital native organizations because it is how network effects and other power laws of networks are triggered, providing the scale and (literally) exponential ability to drive rapid change.

Network Leadership

Today’s digital leaders — whether they are senior executives, managers, team leads, or line workers — must be able to wield influence and guide others over digital channels. Digital networks provide uniquely powerful platforms for self-expression that leaders can use to enlist others in common objectives, gain inputs from colleagues and especially weak ties, change minds, and drive collective action towards outcomes. In the industrial age, leadership was wielded through physical presence and (largely) one-way communication through traditional media. Today’s leaders must deal with networks that can and will engage back, and they must be effective at leadership through two-way dialogue, consensus building, and thought leadership. Showing the importance of this subject in leadership circles, the highly respected Executive Board has an excellent white paper on the Rise of Network Leadership that explores skills that must be developed in our workforce today.

Radical Transparency

In today’s digital world, rightly or wrongly, privacy is rapidly eroding and is now sometimes gone altogether. Forward-thinking organizations are going to take advantage of the change to build more scalable and sustaining trust, stronger relationships with their workforces, communities, and customers, and get the right information from where it is to where it needs to be. We’ve learned that any entity where people believe secrets that affect them are being kept is rightly regarded with considerable skepticism and growing cynicism. Edelman’s yearly Trust Barometer, whose results have been tracking the plummeting levels of trust worldwide in the last few years shows that the rules have changed. It’s often said that sunlight is the best disinfectant, and the proof in new ways of working has been the consistent positive results that more open and better networked organizations receive. Achieving this level of openness, however, will be one of the most challenging yet vital changes for most organizations to make: Creating a culture of sharing and near total transparency that drives much better decision making, faster feedback loops, stronger relationships, less searching for information, less customer and workforce frustration, and yes, especially more employee engagement.

Digital DIY Know-How

Maker culture, which can be quickly sampled in its current state by a quick browse through the thousands of active projects on Kickstarter, is an offshoot of the Do-It-Yourself movement, a trend towards finding ‘hacks’ that improve something by wielding simple but often unexpected solutions. While I believe this skill is not necessarily natural and amenable to every worker, hacking our workplace has become a common concept, often used to get around workplace barriers or antiquated ways of working without violating rules or policy. More recently, deliberately creating a hacker culture or business has been seen in the rise of hackathons and employee product startups/incubators, and other employee-led change processes. Encouraging digital DIY skills means tapping into a widespread but latent capability for change, improvement, and entrepreneurial spirit. Note: I’ll be exploring this topic more at my Ignite talk at IBM InterConnect next month in Las Vegas, on my session on digital leadership techniques. I’ll post the link to the slides here afterwards.

Letting the Network Do the Work

Perhaps the most truly disruptive of all the skills I’ve listed here, this refers to the technique for using the scale and asymmetric resources on the network (local, enterprise-wide, or preferably, global) to accomplish often otherwise impossible tasks. I’ve explored this strategic technique at length before as well as captured some amazing case studies in efforts like Fold.It. While some of the above techniques will naturally trigger this outcome (Working Out Loud most notably), the best results in my examinations of dozens of case studies comes when it is designed as an architecture of participation.

Are there other skills that should be here? Almost certainly. But as with all change today, so many parallel tracks often form that there simply must be a hierarchy, what’s most important, what’s next, and so on. I will collect and publish our updated view of all major digital workplace skills later this year, but I believe the ones above are at or near the top of the hierarchy and will genuinely enable rapid, transformative change in organizations. Visionary organizations that intend to survive and thrive in the near future will work on developing these skills and creating a workplace where they can be used to their fullest.

I would also like this to be the launching point for a more meaningful collective discussion of what we really need to do to modernize our workplaces for today’s operating environment. Please leave your comments below or better yet, write something that adds to this. Let’s work out loud and let the network do the work.

Additional Reading:

What is the Future of Work

Rethinking Work in the Collaborative Era

Filed under Analysis, Crowdsourcing, Peer Production, Social Business, Social Collaboration, Strategy, The Enterprise, The Future of Work

Let The Network Do The Work

August 4, 2014 6 Comments

One of the most striking things I see when watching organizations make the transition from legacy industrial models of working to new network-based models, is that we keep trying to employ the new tools and ideas in the same old ways. Certainly, it’s quite hard to unlearn the old methods, so deeply instilled are they by prior experience, history, and momentum. But as businesses, even today, we largely still try to create all the ideas, try to control everything, and focus on doing all the work to produce outcomes within the organization, team, or enterprise, with a little help of perhaps a few closely held suppliers and business partners.

In short, most organizations still have an out-dated and overly centralized model for working, and it’s turned out to be a very difficult habit to break. Unfortunately, these old models are also inefficient, highly resource intensive, low in innovation, short-sighted, and ultimately counterproductive, when we have such better — and increasingly proven — models that greatly outperform the old ones.

All too often I still encounter enterprise collaboration efforts, customer communities, and CRM projects that make the same essential mistake: They literally transplant how they do things today into emerging digital environments such as social networks, online forums, and collaboration suites, instead of tapping into the new ways of working that these new digital environments enable. This misses the whole point of adopting innovative new ideas and technologies that can unlock deeper opportunities that just weren’t possible before.

If I have a single key lesson that every organization seeking to digitally transform must learn it’s this: You must let the network do the work. It has the bulk of the ideas, it self-organizes at scale, it needs only a little control and guidance, and it has all the productive capacity, no matter how large your organization.

This was driven home yet again over the weekend when I came across the story of CrowdMed, a service that aims to diagnose some of the trickiest unsolved medical problems of patients with maladies that have resisted all previous attempts. Jared Hayman, founder of CrowdMed, which uses an external community of several thousands doctors and nurses, currently claims a 50% success rate at solving this difficult cases, just by letting the network do the work.

This is just one of thousands of similar stories of network-based peer produced solutions that work far better than their traditional, centralized counterparts from another era.

Of course, the challenge is to retain essential control. I find that the list of reasons companies give to why they can’t plug networks directly into the way they work, into their products and services, into their business models, even into the own personal workstreams is nearly endless: “We can’t trust it”, “We can’t rely on it”, “Our culture isn’t ready for it”, “That’s not how we’ve traditionally worked.” The list goes on.

In the end, unfortunately, these arguments don’t really matter, other than identifying and articulating one’s obstacles to change. That’s because the competitive implications are increasingly clear to anyone who does a cursory examination: Network models are far more cost-effective, richer, and higher scale than old models of working. So we simply must find ways to adapt in order to survive.

At the highest level, the future of the enterprise is inextricably entwined with social business, crowdsourcing, the collaborative economy, etc. These are the network models that are creating the next generation of fast-growing businesses, many, such as Airbnb and countless others.

The fundamental principle then, which we put as fundamental principle #1 about getting value from the network in Social Business By Design, to tap into the most value is really quite simple: Anyone can participate.

When you prevent this from happening, intentionally or otherwise, you sharply limit the value created and opportunity accessed. But most businesses today still let very few participate: They try to do it all themselves. For most types of work, this results in outcomes that are simply uncompetitive and unsustainable in terms of the cost, quality, and effort of the outcome.

So, why aren’t more companies doing making the transition then? I’d argue they are. Most companies are slowly moving towards network models. But far too slowly, given the growing digital competition.

Thus we are still in the midst of a global transition to network models that will likely take many us a decade longer. But the writing is clearly on the wall: Most industries are filling with new digital competitors who understand the fundamental rule of creating value using networks, and unless industrial age organizations can adapt, the upstart will win (and largely have been re: open source, social media, digital ecosystems like Amazon, Google.)

Fortunately, effective transformation is still accessible to most organizations if they are willing to change their mindset and think like digital natives.

Additional Reading:

Shifting the Meaning of Hierarchy to Community

The Role of the Leadership in Digital and Social Business Transformation

Designing the New Enterprise: Issues and Strategies

The emerging case for open business methods | ZDNet

What Is the Future of Work?

Filed under Analysis, Crowdsourcing, Peer Production, Social Business, Strategy, The Enterprise

Going Beyond ‘Bolt-On’ Digital Transformation

May 28, 2014 3 Comments

Much has been made recently of the imperative to fully transition our businesses into the modern digital world. It now hardly needs to be said at this point. There is even some encouraging news for traditional enterprises: The latest data from Forrester shows that companies are indeed at long last making digital transformation a top priority, with 74% of executives saying that they currently have a strategy to get there.

Yet “having a digital strategy” can also mean just about anything, depending upon who you ask. At this point however, there are basically two main forks in the road to digital for most organizations:

There is the ‘bolt-on’ strategy, which typically means adding a few new digital channels to existing touchpoints — typically social and mobile — and maybe creating an associated but minor sideline business with some digital revenue.

Then there is the ‘digital transformation’ approach to digital. It’s a full-on, meaningful reconception of the business, often using a startup or incubator model, with the intent to re-imagine a digital native organization with all that it entails, from new business models, culture shifts, remodeling of the structure and processes of the business, and rethinking of the very foundations of the enterprise across the full spectrum of digital possibility.

Unfortunately, the latter approach also has many of the characteristics that corporate leadership tends to avoid: a) The big bang initiative which has a high likelihood of failure, b) cross-silo involvement, meaning it will encounter numerous bureaucratic and political obstacles, and b) the likelihood of of success being dependent on securing rarefied talent with scarce expertise that crosses the domain of the business, the world of strategic emerging technology, and next-generation IT.

The reality is that both forks have real risks: The bolt-on approach is too little and too incremental to have the requisite strategic impact, though it’s certainly a valid interim approach (as long as it’s not the only one.) On the other hand, the full digital transformation model entails a major investment and commitment across the organization with a seemingly all-to-uncertain outcome.

Yet, the latest data tells us unequivocally that the act of doing nothing — or just too little — is also sure to fail. The march of technology is wiping out traditional companies faster than ever before, and the pace is only accelerating.

Another way of putting it is that the CEOs, CIOs, COOs, and CMOs — the four roles most directly responsible for guiding this transformation — will secure rewards for their organizations that are directly commensurate with their commitment to drive broad digital adaptation and change. For the data is unambiguous: Those that don’t fully align with the state of the marketplace will be absorbed by those that do.

Many industries even today are resistant to digital. Source: Forrester

Thinking Like a Digital Business

What can organizations do if they are serious about their responsibilities to lead the business into the future? Several clear options are emerging:

Seek out digital change. Avoid having it imposed. Successful next-generation enterprises — see the start of my 2014 NGE target here — won’t wait until adopting new digital channels, tech, and business models are unavoidable. They will pro-actively seek them out, learn them early on, experiment, and be ready to grow when they mature. Even fast-followers will be at risk if they don’t avidly seek out new opportunities. Dave Gray has previously pointed out research from Shell showing that the longest-lived companies are pro-active seekers and explorers of new markets. What’s more, digital change is now nearly continuous, and the organizations must establish long-term processes that tap into and pull these changes into a new “digital metabolism” that makes incorporating strategic innovation both routine and sustainable. Organizations that only respond to change will always be several steps behind those that are change-seekers. Finally, be bold it seeking out these changes. As the latest McKinsey report on digital transition notes, the winners will “be unreasonably aspirational.”
Cultivate capabilities to support multiple operating models. As John Kotter pointed out this week, there is now “an inseparable partnership between hierarchy and network.” We will have two and probably more major operating models in our organizations going forward, at least the legacy and the digital. We must operate and exploit each of these systems to their fullest — and together — to produce competitive and effective results today. To get there, successful leaders will strategically enable the shift of hierarchy into much more network-centric models, while cultivating the strengths of both simultaneously. Since most organizations currently have significantly underdeveloped networked operating models, this will require special investment and integration into the digital transformation process.
Understand and absorb the new competencies of digital across the organization. If one thing stands out clearly when I look at digital transformation efforts, is that they are often led by those who are experts in the existing business, who often don’t have the competencies in the digital space. It’s not that it can’t be learned, but it is a fast-growing and already enormous field. The profound difficulties that many transformation efforts have encountered, despite the vast on-hand resources including thousands of workers and millions of customers, has been to the distinct boundary of and very different rules for success between legacy business and digital business. I recently summarized what many business leaders don’t quite get right in their mindset and assumptions when it comes to digital transformation, but it boils down to deeply understanding and emulating what those successful in digital have done to get there. Understand the power laws of digital business, deeply absorb the concept of engaging with and co-creating new products and services with digital ecosystems, and wielding powerful new ways to scale innovation.

This is not to say that businesses have not already extensively digitized. They have, but as Sameer Patel recently pointed out, they generally have not transformed. The single biggest obstacle to successful digital transformation is a broad shift to a ‘native digital’ mindset that will consistently inform broad action. I’ve come to believe that traditional companies can make this transition, but only if they decentralize tech innovation that is coupled with a supportive new network operating model, while carefully controlling downside (typically security, data control, etc.).

So, while bolting-on a digital mindset may lead to some short-term successes, it will certainly stunt the future of your organization. Instead, employ internal and external networks to create a naturally-supportive environment where digital change is far more scalable, emergent, adaptive, and continuous.

Additional Reading:

The New Top Level Operating Models of Business

Digital diaspora in the enterprise: Arrival of the Chief Digital Officer

Filed under Analysis, Crowdsourcing, Enterprise Architecture, Peer Production, Strategy, The Enterprise, Trends and Statistics

Defining the Next Generation Enterprise for 2014

May 12, 2014 Leave a comment

Many of you know that over the last several years I’ve tried to make the case that most organizations are currently falling behind the advancing pace of technological change. That business is so centered around technology today is the reason why addressing this has become a top competitive issue. Becoming better adapted to tech change is even tied to the medium-term survival of many organization as I recently explored in my look at digital transformation.

But to say that technology alone is what is disrupting traditional businesses would be inaccurate. We ourselves have changed — have co-evolved — along with technology. Our mindsets have become expanded by the new possibilities of super-connectedness, new models of working, and pervasive data-based insight that today’s networked revolution has wrought.

That’s not to say there aren’t important pros and cons to these advances as well. Along this journey of global, open, and social digital networks, we’ve also encountered enormous challenges in grappling with issues such as individual privacy and equal access, as well as the inherently large inequalities that emerge from the gaps between the digital haves and have-nots. This is precisely because technology is a profound force multiplier of just about everything it touches. There are other potential worries as well.

As The Economist fretted over recently, most technology revolutions have created more employment, not less. We hope that this is true for the next generation, but we’ll see, given how current models show that producer power is generally moving outside of traditional organizations to external networks that have less well-defined employment models:

Everyone should be able to benefit from productivity gains—in that, Keynes was united with his successors. His worry about technological unemployment was mainly a worry about a “temporary phase of maladjustment” as society and the economy adjusted to ever greater levels of productivity. So it could well prove.

Yet to most of us, it’s quite clear that digital channels combined with engagement at scale within them amongst all our stakeholders is at the core of the future of business. But what does this actually mean? What does it look like to most organizations? How can we articulate the changes to structure, process, and management of our organizations in a deeply digital age? It’s my belief we need a comprehensive yet eminently understandable model of how all this reshapes our organizations.

I’ve come to realize we’re trying to hit a fast-moving target with poorly aging models for service delivery and IT governance when it comes to digital transformation. The reality is that it usually takes several years for a large organization to achieve large scale change. By this I mean three to five years, and often more, and that’s just for an individual enterprise-wide initiative.

In today’s operating environment of yearly — sometimes quarterly — waves of highly disruptive enterprise technologies and products, that’s just too long. We need a clearer and more updated sense of where we need to take our organizations, and it must also show us how to increase our technology metabolism as well. This model should include the broad strategic outlines as well as specific adaptations to the latest powerful new digital capabilities such as big data analytics, omnichannel customer engagement, the Internet of Things, social business, and so on. These subjects are all highly strategic to the future of our organizations at the moment, yet they are also interrelated and must fit together relatively well in this model somehow.

Motivation for an Infinitely Renewing Model of Tech & Business

Over the last few years, I’ve adopted a term known as the next generation enterprise or NGE for short. It’s the idea that we can maintain an up-to-date strategic model when it comes to digital transformation. The vision for the next generation enterprise is different from one year to the next and has specific technological phases as well as overall strategic themes at any given time. This vision has its own management theories as well, such as shifting from organizational hierarchy to networked community or reorganizing how we operate to the three new top-level modes, to name just two examples.

In other words, the idea of the next generation enterprise is a relatively complete view — including both business and technology — of the target that typical organizations should be aiming for in their objectives for digital adaptation and growth. For the moment, let’s put aside whether there even is a typical organization, since many of the most important technology innovations are usually agnostic to your particular industry or unique company attributes. In other words, most major technology advances will derail your boat if you ignore them long enough, no matter what business you’re in.

To give us a shared roadmap and a point of reference, I’d like to start putting a clearer definition behind what we think is meant by a next-generation enterprise. Early this year, I mapped out the most important strategic new enterprise technologies, but it was a purely technology view and included a good many tactical elements that aren’t that important when it comes the big picture.

Instead, I’d like to have a more enterprise-centric view that includes the most important advances in business that technology has directly enabled. Some would say that the advent of being digital connected to every human being on the planet at all times (at least in the developed world) is one of those advances, and I agree. This realization is that communities are moving increasingly to the center of our businesses. But it’s more than that. The enclosing strategic conception is really one of ecosystem, whether that’s inside a segment of the enterprise with a single networked team, an external customer community, or a full-on developer network of thousands of application development partners who have welded your digital supply chain to their apps. All of these are ecosystems that must be created (or identified), grown, cultivated, managed, secured, and governed.

In fact, one of the largest issues we have in digital transformation today is that we look at business in a far too simplistic traditional model. In this legacy view, there are functional silos with workers combined with management hierarchies that together actually make decisions and operate our organizations. Then there are suppliers, business partners, and customers, and that’s about it for the big moving parts.

Today’s next generation enterprise plays on a much larger and more complex chessboard. There are thousands of relevant ecosystems that now exist for most businesses, most informal, and across thousands more channels, all with a long tail structure.

This means that while the head of the distribution consists of big channels you’ve heard of — from major social networks and call centers to traditional media and Amazon’s cloud — there are thousands you haven’t heard of and will never be able to deliberately consider and plan for. Business architecture has thus moved from simple planned models to complex and highly dynamic emergent networks across every business function we have. We’ve gone from a few dozen groups of stakeholders to ultimately tens of thousands that we must still manage to somehow. Ultimately, our org structures must adapt to reflect this.

I’ve previously proposed a set of enterprise strategies which have a good chance at addressing many of this issues, which were originally brought forth by the channel fragmentation, scale, and decentralization that we saw greatly exacerbated by IT consumerization a couple of years ago. But I now see that bring-your-own-device was just the forefront of a wave of grassroots led network-enabled change, including bring-your-own-application, bring-your-own-community, and soon, even bring-your-own-workforce.

The Element of The Next Generation Enterprise for 2014

So I’d like to put a stake in the ground and define what I think the next generation enterprise for 2014 should look like. There are several views here, but I’ll start with the more business-centric view of ecosystem and expand to other views as I’m able. In this ecosystem view we have the following components:

A more network-centric enterprise. Less hierarchical and consisting much more of online communities for achieving cost-effective outcomes at scale. This will happen within and amongst the workforce (network/social collaboration), business partners, customers, and the marketplace. Management and leadership through networks will become an essential skills and will require knowledge of the concepts and operation of digital and social businesses.
Workforce communities. While we’ve had a primitive model of team in the legacy workplace, it becomes much more fluid, dynamic, and high scale in the networked world, often directly supported by powerful new collaboration capabilities. Teams-based, project-centric, and — still evolving — process-based work conducted by communities will increasingly become the norm. Why? Because the data has consistently supported that the network/community model provides better business results.
Business partner communities. One of the least developed models of networked communities, there are however good examples that can be pointed to. Strategic partners, affiliates, and suppliers can be engaged together in operations, in particular — as John Hagel famously pointed out — with exception handling scenarios.
Customer communities. This is one of the strongest and most easily started models for strategic community. The evidence for business value is strong enough that I’ve wondered if the window is already closing on customer communities in certain industries. Certainly in my research I’ve found that customer care communities can reduce costs by 30% in the first year alone over traditional approaches. Social support also at the very top of Ray Wang’s social business use cases.
Marketplace. The single most scalable asset that businesses have is networked access to their customers and the broader marketplace. While this constituency also includes regulators and influencers, two groups that can be hard to manage, it also includes online advocates, crowdsourcing participants, software developers, and other interested parties. If you’re surprised to see developers in this list, then don’t be: Developers have become one of the single most important new constituencies as their innovations can drive primary growth and network effects. This is a very different view of business than before, where companies directly engaged their stakeholders.
New channels. The next generation enterprise will still have some legacy aspects including physical offices/stores — just smaller and more virtual — it will be the Web and especially on mobile devices that value is primarily created and captured, both. Social business environments (communities of all functional types and audiences) and the application as the new CRM will be key channels here as well. Ultimately, however, APIs — which I define as open digital supply chains — will be the most strategic channel for many industries because it scales faster and creates far more robust outcomes for very little investment.

Using this model, we can also baseline the various states of maturity of each part of the modern enterprise ecosystem for comparison, as in how far along are we? The essential point here with this view of the next-generation enterprise is that it’s the current target model, not what you should look like today. It’s what you should be aiming for, although you should certainly have some elements of it in place today (see figure 2.)

What do you see as other essential views of the next generation enterprise? What else needs to be added?

Filed under Analysis, Crowdsourcing, Enterprise Architecture, Network Effects, Social Business, Social Media, Strategy, The Enterprise Tagged with NGE2014

Shifting the Meaning of Hierarchy to Community

April 28, 2014 1 Comment

Over the last year or so, a fascinating bow wave of interest has been converging on a growing cadre of companies who appear to be doing something quite novel and seemingly new. Specifically, these organizations have apparently thrown off many of the traditional structures and processes of corporate management. Interestingly, all of these organizations are focusing on change through people first, technology second, if at all.

Though sometimes employing the language of social business, these innovative organizations aren’t just centering their efforts at rethinking their business around digital/social. Instead, they are focused primarily on fundamentally changing their thinking and behavior around work itself. This is something Hugh MacLeod noted last week that is likely to literally become one of the next big industries, albeit in a virtual sense, as we seek en masse to adapt our organizations to much faster rates of change and innovation.

Ironically, as the changes being made aren’t primarily technological but cultural, it’s the organizations which don’t have a strong or healthy culture that are finding that technology revolutions like social media are greatly amplifying their shortcomings in this regard.

Some of the notable exemplars that have been held up as poster children for this trend include Southwest Airlines, W.L. Gore, Valve, Zappos, and Morning Star. All of these firms have realized in some form a contemporary new and self-organizing way of working that pushes action, responsibility, and change directly to the edge of the organization, where workers are essentially free from unnecessary bureaucratic and political constraints to take initiative, make decisions, and act on their insight.

It’s not fully clear yet if we’re seeing the emergence of a broader trend or if these are isolated examples, but the overall success of these organizations is well-established, as most of them are leaders in their industry. Side note: By isolated examples, I mean in the traditional enterprise space. There are countless successful examples in the digital space.

So, as we try to understand these examples, I’ve wondered what is really happening in this new wave of how we manage and structure the traditional organization. Fortunately, I do believe we’ve started to get a good sense of this and it helps us understand how these ideas could possibly work. An important discussion recently of these changes by Steve Denning makes a rather convincing case that hierarchy is not exactly what’s being eliminated in these new models. Instead, hierarchies themselves are shifting from org charts, fixed responsibilities, and formal titles to a more fluid and competency-based model:

Thus I often hear it said, and see it written, that firms […] have done exactly that, i.e. “gotten rid of managers” and “abolished hierarchy.”

This is a misunderstanding. This is not what these organizations are doing or what the ongoing paradigm shift in management is about at all.

In networked organizations, where work is self-managed, there are still managers. The managers have become enablers of self-managing teams and networks rather than controllers of individuals. In those organizations, someone has to sign checks. Someone has to sign legal documents on behalf of the organization. Someone is legally responsible for what is done by the organization. That someone is a manager. A manager after all is simply someone who is responsible for getting things done. If anything is to get done, an organization has to have managers.

There are still hierarchies in a network, but the hierarchies tend to be competence-based hierarchies, relying more on peer accountability than on authority-based accountability, that is, accountability to someone who knows something rather than to someone simply because they occupy a position, regardless of competence. It is a change in the role of the manager, not an abolition of the function.

Based on my work, I think Steve’s analysis is very close, yet not the entire picture. The part that is missing is that indeed there is a broader move in many organizations towards a networked structure, one based on earned, peer recognized competency and manifesting itself in loosely-coupled, dynamically formed, and freely participative teams (pods in Dave Gray’s language.)

It’s a Community, It’s a Networked Hierarchy

However, it’s also becoming increasingly clear to me that the part of this story that is left out here is the very notion of the enterprise itself. Our increasingly antiquated view of companies as self-contained entities with leaders and workers working within rigid and slow-to-change functional silos that are also supposed to provide all the ideas and all the motive force is no longer effective or accurate. In fact, the single most disruptive force shifting hierarchy is the same force that is also expanding the meaning of hierarchy beyond the boundaries of the organization.

This force is community, and by that I generally mean online communities, although their incarnation in the digital is not always required, as we clearly see from the examples above. I’ve long believed that communities are moving to the very center of our organizations — this means operations, structure, and yes, even business model — and it’s really the community model that is being replicated in today’s new corporate hierarchies.

What does this shift mean to businesses, specifically? Functioning organizations will soon rely on, as they already do to hundreds of organizations today, communities that will deliver essential capabilities to the enterprise that used to be intrinsic to self-contained organizations: Marketing, advocacy, pre-sales support, product development, customer care, operations, and other functions. There are excellent examples of community-centric versions of all of these functions happening at scale in traditional enterprises.

So while I do find it quite interesting when we look at new models for recasting the classical notion of the workforce — and look at the classical workforce only — it’s essential that we don’t merely regard the subject through the myopic lens of the old org chart. Instead, we must use the deeper understanding that networked organizations are hybrids that fully merge traditional workforce and online community. Again, the more transformative examples seem to focus on the people more than the technology, though the latter — especially social technologies — does seem vital, as long as it’s not put first.

Implications of Networked Work Hierarchies

The move to networked models of work therefore appears to imply the following:

A network of self-interested people organizing dynamically around what needs to be done is more efficient and effective. Forcing work down only through traditional hierarchies produces poorer and much more costly outcomes. This assumes of course, that there are tools, education, and organizational structures to enable the former. Again the evidence is clear that peer production is a richer — if sometimes less predictable — and far more scalable and agile way of working. Therefore:
Greater business value is created with least overhead or friction by self-interested and engaged communities. Organizations that try to “do it all” with their own workforce simply cannot compete.
The individual/organizational bond is steadily becoming the individual/community/organizational bond. Community is a new emerging construct between our institutions and individuals. Like most major changes to the world, this is neither a complete nor total shift, but a gradual change in the center of gravity. Thanks to Harold Jarche, for a summary of his ideas that helped crystallize this particular insight for me.

Consequently, the enterprises that don’t fully appreciate they are now part of a much larger and richer system-of-systems of people — and redesign themselves around this new reality — will increasingly be at risk. To survive, our organizations must pro-actively seek to efficiently ramp up participation in the richer, shared outcomes that only the productive entanglement with communities — internal and external — can produce.

Finally, if you’re not sure this is a big part of our business future, we have only to look at the mass dislocation that the collaborative economy is producing in so many industries, where communities are at the very center of the business model, to see that this is actually happening today and widely.

Filed under Analysis, Crowdsourcing, Peer Production, Social Business, Social Media, The Enterprise

What is the Future of Work?

March 27, 2014 6 Comments

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.

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

Filed under Analysis, CoIT, Crowdsourcing, Peer Production, Social Business, Social Media, Strategy, The Enterprise

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

February 4, 2014 5 Comments

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.

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

Filed under Analysis, Crowdsourcing, Peer Production, Social Business, Social Media, Strategy, The Enterprise

On Web Strategy

June 29, 2011 6 Comments

My old Web 2.0 blog is finally closing due to hosting issues so I’m moving the conversation here going forward. I’m also relocating my large library of old posts and visuals to this blog over the next few weeks. Collectively they’ve had over 12 million views and are witness to an amazing time in the history of the Web, business, and society.

It’s been a profound era of change by any measure, and one that we’re fortunate to live through. Over the last seven years we’ve seen the rise of social media, Web 2.0, Enterprise 2.0, and now social business. Put simply, the Web-based world has changed nearly everything about the way we globally connect together and create shared value. For now, this blog as well as ZDNet, ebizQ, Dachis Group, and Hinchcliffe.org, will be where I will continue exploring the emerging edge of business and technology, with this blog focusing more on the Web itself and my other channels focusing more on the enterprise aspects.

I’m renaming this blog to On Web Strategy because I’ll continue to focus on the way the Web works, particularly what makes it so powerful for those that understand it. There’s lots of exposition available online about the changes taking place today, but not enough exploring the specifics of how Web-based networks are driving pervasive change. Among the endless information streams available now, there’s still room for more thorough examination of the way the Internet is co-evolving into the single most powerful platform for self-expression in history. I believe this is true whether you’re a person or a business; there is no other place nearly as compelling, innovative, valuable, or relevant today. And the Web itself, far from reaching maturity, remains the single most exciting — and most rapidly moving — place to improve and transform how we live and work.

While my primary interest lies in connecting the two too-often loosely connected roads of business and technology, I think the increasing convergence between them is where much, if not most, of tomorrow’s opportunity resides for those that can successfully overcome the obstacles. For its part, social media has become a leading force for value creation in the world along with the rest of our digital footprints, with which we are now creating the richest and most vibrant record of our times. Visionary enterprises are now seeing how to tap into this and join in partnership with the rest of the world to create entirely new types of products and services together with their customers. From the data, it’s clear that social co-creation and other new and closely related models, such as crowdsourcing, are genuinely changing the nature of human activity, especially value creation, control, ownership and other less-tangible qualities like trust, openness, and understanding.

While some organizations and individuals will continue to debate the actual magnitude of the changes that the new low-barrier, high scale, and virtually free tools of self-expression are fostering today in the large, there’s little doubt looking at the macro trends that momentous things are happening. I have certainly been asked, “are these changes as big as the printing press? As big as mass media? How about personal computing” Yes and yes and yes. And much more significant in terms of actual change wrought. I’ve included here a few recent pieces of my research that illustrate the case that the business, cultural, and societal landscape is being remade right now, and doing it quickly in some cases. This includes the following data points:

Trends and Drivers of Work and Life Today

Social is how we communicate today. There has been a generational change of communication from point-to-point (e-mail) to social in four short years (see first figure above). Certainly e-mail is in decline and will be with us for a decade or two, but it has dramatically lost its prominence and relevance in recent years. For now, social media is the way we increasingly prefer to connect and work together. Traditional organizations have had some trouble catching up to these trends, but I’m finally seeing evidence that they’re doing so.
Knowledge work is the driver of our world economy. People-based activities centered around the creation and exchange of information (financial services, real estate, education, media, governing, etc.) are what modern economies are built on (see second figure above.) Methods that greatly improve the creation and exchange of information will have inordinate value, especially models that optimize for it, i.e. social media and by intent, social business. Knowledge work is about 60% of the labor force today and growing steadily. The less valuable service economy is growing as well and is also a beneficiary of these new and emerging forms of communication and collaboration.
Peer production is now the primary motive force for creation and sharing. Centrally controlled models for production in business and government are much less powerful and inordinately more expensive. The creation of information on the “edge”, by individuals, has transformed traditional media as well as the Internet: It’s now made by us, with approximately 80% of information on the Web (see last figure, right) now coming from user generated content. In the future, sensors and other information generators may outpace us, but for now the most important trend is that productive capability has moved decisively into the hands of us out there in the long tail.

What does this all mean? That’s what this blog was developed to figure out. Come back and visit. I’ll be exploring Web strategy and cutting-edge innovations that are likely to have significant impact to the way we run our organizations and live our lives. Please drop me a line if you want to share your ideas, or better yet, contribute them in comments below or in your own blog or social network.

Filed under Crowdsourcing, Peer Production, Social Business, Social Media, The Web, Trends and Statistics

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