Agile, Adaptable, Innovative, and Efficient – these are key attributes of organizations that will thrive in the rapidly changing, highly competitive environment that is the digital economy. Sustaining this kind of continuous reinvention requires a well-conditioned organization that is comfortable being uncomfortable. The question for today’s leaders is, what does it take and how can you ensure your organization – and workforce – is up to the challenge?
Every business conversation these days seems to start (or end) with digital transformation; the process of becoming a digital organization. But what is a digital organization? We researched many sources and could not arrive at a common definition. We did find that there are many interpretations of the combination of ‘digital’ and ‘organization’. Some definitions include digital strategy and creating a digital experience for customers and/or employees. Others focus on agile transformation and a collaborative culture. Still others refer to the implementation of digital technologies.
Our position is that it’s not about becoming a digital organization, as if digital is some kind of end state. It’s about transforming into an organization that is able to bring digitally-enabled innovation to market and continually adapt to remain vital, competitive, and a place where human beings can thrive. It’s about getting your organization and your workforce ready to perform successfully in an economy defined by rapidly changing technologies, business models, customer expectations, and skill requirements. And it’s not simply a problem that will be solved – what is digital today is not what was digital five years ago and is not what will be digital five years from now. It is a complex challenge that will continue to evolve and change, and an organization will need to evolve and change along with it.
Don’t Blame Digital. Blame Change.
One of our first observations is that the greatest challenges of ‘digital’ are not really about technology. Technologies are enablers and tools that we use to improve our business processes and create new products and services or enhance existing ones. We have lots of experience doing this. Perhaps digital technologies are different in that they both drive and enable change. It’s true that AI-, ML-, and digital-savvy talent is somewhat scarce, but the more troubling obstacles to the success of 21st-century organizations are related to the speed of change and the upending of traditional organization structures, leadership practices and the systems that drive and reinforce human behavior. These kinds of disruptions tear at the very fabric and foundation of most contemporary organizations.
Change is difficult for any business and it can be easy to think that the path to becoming a digital organization is by implementing any number of the thematic practices of ‘digital first’ companies (Google, Facebook, Airbnb, et al.) such as a flat organization, customer-focused culture, empowered managers, project-based staffing, cross-functional teams, agile development, etc. – the list goes on. In our experience managing numerous transformation programs for Global Fortune 500 companies, these kinds of practices alone have rarely resulted in sustained competitive advantage. Why? They tend to be implemented and – often after a lot of effort and resistance – become the new end state. Once in place, people think they are done transforming. Sustainable advantage and long-term success come from an ongoing investment in managing, getting better at, and becoming more comfortable with change itself. Few organizations make this kind of continuous commitment or investment.
The Alpha Organization: Shapeless, Formless…Like Water
“You must be shapeless, formless, like water. When you pour water in a cup, it becomes the cup. When you pour water in a bottle, it becomes the bottle. When you pour water in a teapot, it becomes the teapot. Water can flow, and it can crash. Become like water, my friend.”
Bruce Lee, Founder of Jeet Kune Do
Bruce Lee famously used the example of water to explain the core principles of his mixed martial arts fighting system. To paraphrase, Bruce said one should not have or adopt a style, but rather one should adapt one’s style to one’s opponent and situation. In searching for our own useful metaphor, we agreed that much like a mixed martial arts fighter, an organization needs to be like water to adapt to new challenges and opportunities in the market, and to continually and effectively respond to change. But like the shapeless, formless warrior that is the cornerstone of the Jeet Kune Do philosophy, organizations need to be more than adaptable. They need to be agile and efficient. If we stretch Master Lee’s water metaphor a bit more, we could say that organizations need to be innovative as well. After all, a persistent drip will help a flow of water find a path forward and eventually discover an ocean. We call Adaptable, Agile, Innovative, and Efficient the four disciplines of the Alpha Organization.
What is the Alpha Organization? Why introduce another buzzword into the already confusing digital organization debate? Good question. Simply put, we couldn’t find a good term that embodied the four disciplines we saw as essential to organizational sustainability and success. So, we borrowed from the concept of the Alpha member found in many social animal groups with the idea that the Alpha Organization has a mix of adaptability, agility, efficiency, and innovation that enable it to compete and survive in a rapidly changing market environment and competitive landscape.
But before we go any further, let’s clarify what we mean by the four disciplines.
Adaptable is the ability for an organization to adjust to new conditions; to modify its form or structure or capabilities for a new use or purpose, and to remain vital and relevant in its market.
Agile is the ability for an organization to move with speed and coordination – often including a change in direction – in response to changing conditions and emerging opportunities in the market environment. While the principles from agile development methods contribute to speed and coordination, we are not equating the organizational attribute of agility with Agile methods such as DSDM, SCRUM and XP used in software and product development.
Efficient is the ability of an organization to identify, target, pursue and realize competitive advantage and counter threats with economic efficacy; to perform or function in the best possible manner with the least waste of time, resources and effort.
Innovative is the proclivity and ability of an organization to design new solutions to stated and unstated problems and/or to invent new ideas for completely new products, services, business models and markets.
Why did we find it necessary to explore this idea of the Alpha Organization? We saw the need to challenge the current discourse on digital transformation, especially as it pertains to the organization and arrive at a clearer, more constructive role for ‘digital’ in the discussion. Much of the current business literature and descriptions of digital transformation initiatives seem (to us) to be overly focused on adopting the leading practices of digital-native businesses, which often serve as poor assumptions upon which to establish an organizational transformation strategy for a non-digital native firm.
As an example, for many consultants and business leaders, digital has come to mean that every organization needs to be more like a software company or a digital-native company like Google or Facebook. That makes sense, right? Not really. The reality is most companies are anything but software companies, yet many of the digital ‘best practices’ are taking cues from software development and IT operations. Ironically, many IT organizations have outsourced – or are in the process of outsourcing – their IT development functions to external parties in order to focus on the diminishing core of their business of IT. Furthermore, IT organizations have struggled to adopt Agile and establish solid DevOps foundations despite decades of assistance from consultants, enabling tools, and infrastructure – virtualization and cloud. Most organizations are settling with hybrid practices that apply various methods for development and project management in a case-by-case, fit-for-purpose way. So, what do we see after decades of Agile? It has proven to be difficult to adopt fully and doesn’t always deliver sufficient value to generate broad appeal within IT organizations much less the rest of the organization.
Moreover, established companies are usually designed for efficient delivery of their existing products and those products are not necessarily going away. There are different paths and sets of choices for companies that may need to maintain multiple business models or micro-cultures across their organization in order to serve both existing and future customers, products, services, etc.
Conditioning Your Organization to be Like Water
Admittedly, it is easier to say that your organization needs to be like water – fluid, light, and adaptable; able to re-form as conditions require – than it is to do. What does that even mean? Perhaps it’s helpful to look at the converse. Most organizations are more like bricks – rigid, heavy, and brittle; they break apart and crumble when under stress or find it difficult to respond to changing conditions. But becoming like water is not a state change, it is a change in the nature and the constitution of your organization. The key is to condition your organization to become more like water, and in doing so, realize a set of people-centered capabilities to effectively respond to and cope with increasingly frequent and constant change. At the end of the day, organizational conditioning is about people – their knowledge and skills, the work they do, how they behave, and how well they are enabled to come together to deliver on the purpose and value of the organization.
What do we mean by conditioning? Conditioning goes beyond the idea of change management which usually involves a change event that triggers a communication program, organizational restructuring, redesign of job roles and training of people. Does this drill sound familiar? Why do we do this? It is because most of us perceive transformation as an event that has a target state rather than as a continuum. The conventional approach toward organizational transformation focuses on redesigning the organization structure, defining new job roles, training the employee for their new job role or the new system or process with the hopes of realizing target capabilities and target operational improvements. Are all of these activities important? Yes. But they are always challenging and rarely completed without a lot of pain. Most organizations fail to consider what they need to do to condition the organization for a single change event much less for continuous change. So, how do you condition your organization for change and what do you condition?
To start, we take a human-centered approach. As humans, we have a body and mind that determine how we behave, are motivated, and are physically, mentally, and emotionally able (and willing) to contribute to the organization, its purpose, and execution of its strategy.
Consider for a moment: Why do athletes exercise? Why do we practice yoga or meditate? Then consider: What do we, as business leaders, do to condition our workforce for continuous change and to provide the conditions that support and enable change? Shouldn’t this matter if we want an adaptable, agile, efficient, and innovative organization? In an increasingly fluid and unpredictable world, the capacity to identify emerging opportunities and respond to rapid change is the key to organization success and sustained competitiveness.
The Mind, The Body, The Soul, The Organization
“To hell with circumstances; I create opportunities.” – Bruce Lee
Many of the companies that used to be the paragon of business best practices du jour – such as GE, Yahoo!, IBM – gained their success doing things a particular way. As things changed, those successful ways no longer yielded the competitive advantage that made them the marquee subject of journals on business management and organizational change. Some of these former icons of business excellence have diminished, while others continue on a long, often painful process of reinventing themselves in an increasingly fluid market where relatively new entrants are defining the present and the future.
Given that change is only accelerating, it is critical that incumbents and new entrants understand the organizational factors that support – or impede – becoming more agile, adaptable, efficient, and innovative to survive and hopefully secure an Alpha position in the market. We have identified four organization dimensions that need to be conditioned – and that must create the right conditions – to support the Alpha Organization: culture, structure, leadership, and people.
Getting people to shift their mindset and let go of things that have worked in the past is a significant challenge. In his book, “Grow Through Disruption”, Dr. Brett Richards explains that a mindset represents more than how we think; it captures how we feel and how we act as individuals and as whole organizations. The culture that has made an organization successful in the past – e.g., risk averse, function- and/or product-centric, standardized processes, etc. – might be precisely what keeps it from becoming more innovative, customer-centric, and creative. How will people across your organization know how to recognize the shifts that are necessary and quickly modify their behaviors accordingly, but more importantly, their focus? The Alpha Organization does this well.
Hierarchical, top-down command models are getting a bad rap these days in light of the trend toward network-oriented organizations enabled by social collaboration and sharing technologies and increasingly pervasive computing – mobile and cloud. They are not inherently bad or ineffective. They happen to be one of many forms that an organization structure can take and are suitable for certain purposes and circumstances much like the various formations that a military unit uses – such as line, column, square, vee, wedge – to deal with various battle conditions and to gain strategic and tactical advantage over their opponent in the field. The Alpha Organization will be able to shift between a number of organization structures or mix thereof to optimally support and enable the business’ sustained competitiveness.
Technology-driven change is not something that is delegated to the IT function or the digital transformation leader. As we have outlined, digital isn’t just about organizations that deliver primarily digital products and services; it is about those that can operate effectively in a digital economy — which means all of your leaders need at least a basic level of digital competence and confidence. All four disciplines – agility, adaptability, efficiency, and innovation also require coordination across functions, organization units, and ecosystem. Leaders need to be conditioned to recognize interdependencies and the obstacles to change (e.g., measurement and reward systems, skill gaps, process rigidity, belief systems). The Alpha Organization will have leaders who can navigate and manage this new organizational dynamic and direct the focus of the business in a fast-changing digital economy.
Let’s face it, most folks want to have a stable job, send their children to good schools, and save enough for retirement. The last thing they are thinking about – it certainly isn’t the first – is how they will help reinvent your business and manage their personal lives around the anxiety and stress that comes along with change. Are there people in your organization who greatly care about this? Of course, there are. But for your organization to be successful, every member of your workforce – from the front-line, customer-facing order-taker, or someone on the factory floor, to the executive leadership team – needs to be aligned around your strategy and able to understand and deal with the impact of digital change on their job roles and lives. People are the foundation of the organization and determine its ability to be adaptable, agile, efficient, and innovative. Conditioning and exercising people for change will be critical for the Alpha Organization. It means dealing with the humanity of your organization at every level of your organization.
Implications for Business Leaders
The concept of an Alpha Organization encourages business leaders to think differently about organizational change in the digital economy. Business leaders should consider the following:
- Digital transformation: There’s no app for that! – In short, “digital is not a thing you can buy and plug into your organization”. Or that you can copy from some other company that seems to be doing it well. It is complex, multi-dimensional, and involves much more than technology. It’s an ongoing process of changing the way you do business and depends greatly on the right culture, structure, governance and decision-making, leadership, and people, which – for most organizations – will require significant investment.
- Digital organization: Get real with it. What does it mean? – Contemplate what is a “Digital Organization” and what is truly different about it. “Digital to the core.” What does that mean? Ask yourself why you should care? Your stakeholders will.
- Succeeding in the Digital Economy: It is complex and an ongoing challenge – Change is constant and will require that you have a long-term, forward-looking vision on how you want to condition and enable people in your organization to handle change, quickly shift their value creation focus, and develop the desired tolerance for change.
- The hard stuff remains the “soft” stuff: Invest in it, don’t ignore it – Focus on the human-centered elements of change and the role of people in your organization beyond their position in the org chart (e.g., who are the ‘network connectors’ who can be champions for fostering more cross-functional/organizational collaboration?).
- Change and uncertainty are uncomfortable: Get comfortable with it! – People are the most important asset of an organization. Don’t just say it, believe it. Develop an organizational conditioning program that exposes employees to various elements of change continuously over time. Get ready to sweat! It won’t be easy.
Regardless of how you define ‘digital,’ it is not a target state. It is not an inflection point. It is a continuum within a broader continuum of technological progress and innovation that has been in play since the invention of the wheel. As we mention earlier in this note, change is coming at us faster and from more directions than many of us are prepared to handle. It is time to rethink and condition your organization for constant and significant change.
This article is the first in a series that neXt Curve is publishing on the topic of the Alpha Organization and accompanies our original webcast entitled “The Way of the Intercepting Business” held on March 22, 2018. We will continue to share our points of view and recommendations on how organizations need to think about continuous change and the approaches that they can take to condition their organizations to effectively respond to digital transformation and what comes thereafter. In particular, we will present an Alpha Organization Framework – including the disciplines of agile, adaptable, efficient, and innovative and the dimensions of culture, organization structure, leadership, and people – and explore how you can apply principles, practices, and technologies to achieve your digital business goals.