Waarom innovatie continu moet zijn

/in , , /door

Innovatie is een hot topic op het moment. Veel organisaties investeren tegenwoordig in een of andere vorm van een innovatie lab, of een intern accelerator programma. Of ze starten kleine startup-achtige bedrijfjes, los van de hoofdorganisatie, om nieuwe producten of diensten in de markt te zetten. Of ze nemen een startup over. Velen experimenteren met concepten als lean startup, business model innovation, of design thinking om hun innovatiekracht een boost te geven. Wat deze bedrijven gemeenschappelijk hebben is dat ze zich realiseren dat hun business model niet eeuwig houdbaar is en dat verandering steeds sneller gaat. Wat ze vaak ook gemeenschappelijk lijken te hebben is de gedachte dat je innovatie ‘extern’ van de rest van de organisatie kunt organiseren. Dat lijkt ook samen te hangen met de gedachte dat je  maar één keer (tegelijk) succesvol hoeft te innoveren om weer een tijd veilig te zijn. Maar is dat wel zo?

De meeste beslissingsmakers zijn het er wel over eens dat hun business model onder druk staat of op enig moment onder druk zal komen te staan. Ze beseffen dat ze een vorm van innovatie nodig hebben. Toch zijn er vele voorbeelden die aantonen hoe lastig het is om op tijd te innoveren. Toen de iPhone werd geïntroduceerd vertelde RIM’s CEO Jim Balsillie aan een Reuters verslaggever dat de introductie van  Apple’s iPhone geen grote bedreiging was, maar niet meer dan de volgende concurrent die de smartphone business instapt. We weten allemaal hoe het met RIM, de maker van de Blackberry, is afgelopen. Toys ‘R US voelde voor mij altijd als een solide naam. Ik besefte me niet eens dat het bedrijf al uit de vijftiger jaren van de vorige eeuw stamt. En toch vroeg het bedrijf in september 2017 faillissement aan. RadioShack was tientallen jaren een bekende naam in de US en toch ging het bedrijf in in 2017 voor de tweede keer failliet. Wat deze bedrijven gemeenschappelijk hebben is dat ze eens zeer succesvol waren, maar er om een of andere reden niet in slaagden om snel genoeg het roer om te gooien teneinde relevant te blijven.

Een andere naam uit vervlogen tijden is Palm. Wat de case van Palm extra interessant maakt is dat ze niet begonnen als een hardware bedrijf. Ze ontwikkelden software voor de dices van anderen. Devices die grotendeels commercieel faalden. Maar Palm slaagde erin zichzelf opnieuw uit te vinden en stonden haast synoniem voor de populariteit van de PDA. Ze hebben zelf meerdere pogingen gedaan zichzelf opnieuw uit te vinden gedurende hun bestaan zoals met de opkomst van de smartphone en met de introductie van het WebOS platform. Maar geen van deze pogingen kwam in de buurt van het succes van hun eerste reïncarnatie. De geschiedenis van Palm lijkt te suggereren dat om op lange termijn te overleven je jezelf op tijd opnieuw moet uitvinden. Eén keer is echter niet genoeg, omdat elk business model op den duur aan zijn einde komt. Dat zou betekenen dat de sleutel naar lange termijn succes niet zozeer het vermogen om te innoveren zelf is, maar het vermogen om dit continu te doen. Dus het is niet de innovatie zelf die telt, maar het vermogen steeds weer nieuwe wateren te verkennen; het groeien van nieuwe succesvolle businessmodellen, en op tijd je weer terug te trekken ten faveure van nieuwe veelbelovende business modellen.

Continue innovatie is relevant als de levenscyclus van een businessmodel kort, of onvoorspelbaar is. Of allebei.

Continue innovatie is pas echt relevant als de levenscyclus van een businessmodel kort, of onvoorspelbaar is. Of allebei. Naar onze mening is dat tegenwoordig het geval in de meeste branches. Laten we onderzoeken hoe dat komt. De belangrijkste overkoepelende reden is dat barriers of entry voor nieuwkomers dramatisch verlaagd zijn:

  • Toegang tot informatie en kennis is vrijwel gelijk voor iedereen tegenwoordig. Je markt beschermen door middel van superieure marktkennis was ooit een standaard manier om je concurrentievoordeel te verdedigen. Maar dit gaat nauwelijks meer op.
  • Toegang tot talent is veel gemakkelijker. Mensen kunnen tegenwoordig overal werken. We hoeven niet per se elke dag bij elkaar te komen in hetzelfde kantoorgebouw.
  • Kapitaal is makkelijker verkrijgbaar. Ondanks dat investeringsmaatschappijen tegenwoordig hogere eisen lijken te stellen, zijn er nog genoeg andere mogelijkheden zoals accelerator programma’s, startup boot camps, en corporate incubator programma’s. Angel investors zijn ook een goede optie voor velen, en crowd-funding platforms groeien nog steeds.
  • Kapitaal is niet alleen makkelijker verkrijgbaar, je hebt er ook minder van nodig. Het ontwikkelen van een product of dienst, vooral online, is nog nooit zo goedkoop geweest.
  • Volgens Ash Maurya kun je een bedrijf tegenwoordig vanaf elke plek ter wereld starten en laten groeien. Geografische grenzen zijn er nauwelijks meer. Sterker nog, je kunt zelfs een globale speler zijn. Hal Varian, Chief Economist at Google, zegt hierover:

Als het einde van de 20e eeuw het tijdperk van de multinational was, dan is de vroege 21e eeuw het tijdperk van de micro-multinationals: kleine bedrijven die mondiaal opereren.

Het concurrentie landschap is hierdoor behoorlijk op z’n kop gezet. Maar de meeste organisaties zijn ontworpen om een langdurig concurrentievoordeel te verdedigen. Ze zijn ontworpen om het laatste restje efficiëntie uit een business model te persen voor het op te geven. Als gevolg hiervan zijn ze slecht toegerust voor snelle en herhaaldelijke innovatie. Dit verklaart mede de populariteit van het extern organiseren van innovatie, weg van de kern van de organisatie, afgeschermd van de gebruikelijke bureaucratie. Maar er is een nog belangrijkere consequentie die business leiders zullen moeten begrijpen en accepteren als ze ook maar een kans willen hebben om hun organisaties langdurig success te blijven bezorgen:

Een duurzaam langdurig concurrentievoordeel bestaat niet meer…

Laat dat even bezinken…. Een concurrentievoordeel wordt over het algemeen omschreven als het vermogen van een organisatie het beter te doen dan zijn concurrenten. De Engelse term hiervoor, Competitive Advantage is ook de titel van een boek uit 1985 van Michael Porter, onmiskenbaar het standaardwerk op dit onderwerp. Het grootste probleem met Porter’s model is zijn aanname dat een concurrentievoordeel duurzaam kan zijn, wat inhoudt dat je je voordeel langdurig succesvol kunt verdedigen. In de hedendaagse wereld van snelle veranderingen en hoge complexiteit is dat een gevaarlijke aanname. Het bedrijvenkerkhof ligt vol met ooit bekende en succesvolle bedrijven die te lang vasthielden aan die aanname. Rita Gunther McGrath, een bekend expert op dit gebied, zegt het als volgt:

When competitive advantages don’t last, or last for a much shorter time than they used to, the strategy playbook needs to change.

Het tempo van verandering is simpelweg te hoog voor een strategie, gebaseerd op duurzame concurrentievoordelen, om bij te blijven. De verlaagde toegangsbarrières maken het heel moeilijk om een concurrentievoordeel langdurig successful te verdedigen. Daarbij, wil wil er nu altijd in de verdediging zijn? Daarom moet innovatie continu zijn. Maar dat brengt ons terug bij de vraag of het verstandig is om innovatie te externaliseren. Ik denk dat je mijn mening inmiddels wel kunt raden. Dat is het niet. Een accelerator programma kan best een aantal waardevolle ideeën opleveren. En een interne startup kan best de levensvatbaarheid van een business model aantonen. Maar tegelijkertijd is er niets fundamenteels veranderd in de organisatie. Terwijl een klein agile deel van de organisatie met nieuwe ideeën komt, is de rest van de organisatie nog steeds gericht op het verdedigen van een langdurig concurrentievoordeel, op maximalisatie van efficiëntie, en op schaalvoordelen. Het is nog steeds dezelfde trage olietanker. Wat gebeurt er als nieuwe businessmodellen uiteindelijk geabsorbeerd worden door de moederorganisatie? Op termijn heb je weinig bereikt. Wat er nodig is, is wat wij een Adaptieve Organisatie noemen:

De Adaptieve Organisatie is in staat zichzelf continu opnieuw uit te vinden.

Natuurlijk is het goed nieuws dat organisaties het initiatief nemen voor innovatie programma’s. Ik ben echter bang dat de tijd zal uitwijzen dat de huidige trend van het externaliseren van innovatie, uiteindelijk tot teleurstellende resultaten zal leiden. Het voelt ook alsof senior management niet 100% aan boord is: ze leunen nog altijd op de huidige organisatie zoals die is, en innovatie is een show die zich deels achter de coulissen afspeelt en makkelijke geannuleerd kan worden als de populariteit achteruit gaat. Ik zou willen eindigen met een quote van de beroemde Peter Drucker:

Because the purpose of business is to create a customer, the business enterprise has two–and only two–basic functions: marketing and innovation

Meer weten over continue innovatie? Volg onze training Continuous Innovation of neem vrijblijvend contact met ons op.

 

Bronnen:

[Dabrowski, W. (2007). “Update 1-RIM Co-CEO doesn’t see threat from Apple’s iPhone”. Reuters.]

[Hal Varian (2011). Micro-multinationals will run the world. http://foreignpolicy.com/2011/08/15/micromultinationals-will-run-the-world/]

[McGrath, Rita Gunther. (2013). The end of competitive advantage. Harvard Business Review Press. p. 4.]

Why innovation needs to be continuous

/in , /door

Innovation is a hot topic nowadays. Many organisations are investing in some form of innovation lab or internal accelerator program. Or they separate new business ventures from the main organisation by starting a startup-like small company. Or acquire one for that matter. Many are experimenting with concepts like lean startup, business model innovation, or design thinking to give their innovation powers a boost. What these companies have in common is they realize their business models won’t last for ever. What they also seem to have in common most often is the idea that you can successfully externalize innovation from the rest of your organisation. This seems to tag along with the idea that you only need to innovate once (successfully) to be safe for a while again. But is this true?

Most decision makers agree their business models are or will be under pressure. They need some form of innovation. Yet there are plenty of examples that illustrate how hard it is to innovate in time. Upon the introduction of the iPhone, RIM’s CEO Jim Balsillie, told a Reuters reporter that the launch of Apple’s iPhone wasn’t a major threat, simply the entry of yet another competitor into the smartphone market. We all know how that ended.  Toys ‘R US always seemed like a rock solid name to me. I didn’t even realize the company dated back to the fifties. Yet, the company filed for bankruptcy in September 2017. RadioShack was a household name for decades in the US after it filed for bankruptcy for the second time in 2017. What these companies have in common is that they were once highly successful, but didn’t manage to turn the ship around fast enough to survive or stay relevant.

Another faded name is Palm. What is interesting about Palm was that they did not start out as a hardware company. They first provided software for other brands devices. Devices that largely failed commercially. But somehow Palm reinvented themselves in-time and popularized the PDA. They actually tried to reinvent themselves a couple of times during their period of existence with the rise of smartphones, and with the introduction of their WebOS platform. But none of those attempts rivaled the success of their first reincarnation. The history of Palm seems to suggest that in order to survive in the long run a company must reinvent itself in time. But one time is not enough as the new business model will eventually fade as well. This would mean that the key to long term success is not so much the ability to innovate but the ability to do it continuously. So it is not the innovation itself that counts, but the ability to continuously test new waters; grow and nurture successful business models, and pull out in time in favor of new more promising opportunities.

Continuous innovation makes sense when the life-cycle of a business model is either short, or unpredictable. Or both.

Continuous innovation only makes sense if the life-cycle of a business model is either short, or unpredictable. Or both. We argue this is the case in most industries nowadays. Let’s investigate why. One of the major reasons is that barriers of entry for newcomers are dramatically lowered:

  • The access to information and knowledge is now almost equal for anyone. Protecting a market by superior knowledge once was a standard way to protect your competitive advantage.
  • Access to talent is easier. People can work everywhere nowadays, we don’t necessarily have to gather in the same office building everyday anymore.
  • Capital is more easily obtainable. Although investment funds seem to have raised the bar lately, there are still many accelerator programs, startup boot camps, and corporate incubator programs. Angel investors are a valid option for many, and crowd-funding platforms are still growing.
  • Access to capital is not only easier, companies typically also need less of it to start. Launching a product or service, especially online, has never been faster and cheaper.
  • According to Ash Maurya you can launch and grow a business from anywhere these days. Geographic borders are down. Even more, you can be a global player too. As Hal Varian, Chief Economist at Google, puts it:

If the late 20th Century was the age of the multinational company, the early 21st will be the age of the micro-multinationals: small companies that operate globally.

The competitive landscape has been majorly disrupted because of this. However, most companies are designed to defend their business models over a long period of time. They are designed to squeeze the last bit of efficiency out of a business model before giving up. As a consequence they are ill equipped for fast and repeatedly innovation. This explains the popularity of organizing innovation away from the core of the organization, shielding it from the slow bureaucracy of the organisation.  There is an even more profound and important consequence that business leaders need to understand and accept in order to have a decent chance to lead their organizations to long-term success:

A sustainable competitive advantage no longer exists.

Let that sink in for a minute… Competitive Advantage is mostly described as the ability of an organization to outperform its competitors. It is also the title of the 1985 book from Michael Porter, undeniably the textbook on this subject. The biggest problem of Porter’s model lies in the assumption that a competitive advantage can be sustainable, that is: you can successfully defend your competitive advantage over long periods of time. In today’s world of fast change and high complexity, that is a dangerous assumption to bet on. The business graveyard lies full of once well-known and relevant names of companies who held on to that belief for too long. Rita Gunther McGrath, a renowned expert in this field, puts it this way:

When competitive advantages don’t last, or last for a much shorter time than they used to, the strategy playbook needs to change.

The pace of change is just too high for a strategy based on sustainable competitive advantage to keep up. The lowered barriers of entry make it very hard to successfully defend a competitive advantage, and besides, who wants to be on the defense forever? Therefore, innovation needs to be continuous. But that brings us back to the question whether it is a good idea to externalize innovation. I think you can guess my answer by now. It is not. While an accelerator program can come up with some promising new business ideas, and a startup like separate company can prove some viability in a new opportunity, nothing has fundamentally changed to the core of the organisation. While a small nimble part of the organisation comes up with new ideas, the rest of the organisation is still aimed at defending a competitive advantage, at maximizing efficiency, and gaining economies of scale. It is still a slow bureaucratic oil tanker. What happens if the new business models eventually are absorbed into the mother organisation? In the end you have gained little. What’s needed it what we call an adaptive organisation:

The Adaptive Organization has the core ability to continuously reinvent itself.

Although it is applaudable that companies take initiative in innovation programs, I am afraid that the current prevailing strategy of externalizing it, will bring disappointing results in the long run. It also feels like senior management is not all in: they still bank on the current main organisation, and innovation is still a separate show that can easily be canceled once its popularity starts fading. Let’s finish with a quote of the famous Peter Drucker:

Because the purpose of business is to create a customer, the business enterprise has two–and only two–basic functions: marketing and innovation

If would want to learn more about continuous innovation, you can attend one of our Continuous Innovation workshops. Or contact us for a talk.

 

Sources:

[Dabrowski, W. (2007). “Update 1-RIM Co-CEO doesn’t see threat from Apple’s iPhone”. Reuters.]

[Hal Varian (2011). Micro-multinationals will run the world. http://foreignpolicy.com/2011/08/15/micromultinationals-will-run-the-world/]

[McGrath, Rita Gunther. (2013). The end of competitive advantage. Harvard Business Review Press. p. 4.]

Shifting the Burden – Using Systems Thinking to build high-performing teams

/in , , /door

Systems Thinking provides us with useful insights how organizational systems work. The insights are often surprising in the way they help explain common dysfunctions in organizations. It is a pitty that beyond the field of organizational scientists it doesn’t seem to be very well known. Systems Thinking is part of the foundation of Agile: Agile scaling frameworks like LeSS and SAFe both explicitly mention Systems Thinking in their underlying principles. Yet, rarely do I come across agile coaches that even have a mediocre understanding of ST. Most have even never heard of it. If you really want to understand the barriers of agile in organizations, both Systems Thinking and Complexity Theory, also not that well-known, are crucial. Because even agile coaches or should I say especially agile coaches, fall into the traps of local optima and symptomatic solutions. So let’s explore how Systems Thinking can help in building high-performing teams.

If you have a headache and you take an aspirin and the headache goes away, then you might just be happy with that and not worry about why you had a headache in the first place. Next time you get a headache, you just take another aspirin, because it worked the first time. Pretty soon you will get used to it and always keep aspirin around and never look for a more fundamental solution to headaches. Taking aspirin will make it less and less likely that you actually adjust your health so that your body works right in the first place.

Systems Thinkers discovered patterns of cause-effect relationships in organizations that are called archetypes. Shifting the Burden is one such archetype, and the headache story above is an example of it. Here’s how it works: We have a problem symptom. There is a fundamental solution to the problem, although it usually works at a delay. The fundamental solution gets overlooked very often because of short-term thinking, pressure within the organization to come up with a quick fix, and a poor understanding of the relationship between cause and effect. Instead we ‘shift the burden’ to other solutions, easy fixes that seem to work well. Unfortunately we only deal with the symptom and not the underlying problem. Covered up by the symptomatic solution, the underlying problem grows worse unnoticed. We use more and more of the quick fix solution because that seemed to work, further reducing the pressure to seek a fundamental solution. Eventually the organization’s ability to solve the underlying problem gets undermined.

Another common example in the agile world is a manager that is trying to empower teams by delegation. But as the team struggles he steps in to help them, with all good intentions. Over time this reduces the ability of the team to solve issues themselves. Instead they increasingly get more dependent on the manager. The overprotective scrum master is another well-known phenomenon in this category. Although often praised for the good relationship he or she has with the team and the great atmosphere in the team, the scrum master unintentionally effectively has become the leader of the team, with everyone depending on him or her.


The picture above is a causal loop diagram that explains the generic Shifting the Burden archetype. The diagram depicts the quick fix solution that temporally lowers the problem symptom, and the fundamental solution that would lower the symptom as well, although usually at a delay. There’s a side effect loop that shows we get more dependent on the quick fixes as we use them undermining our ability to address the actual underlying problem.

Now let’s get back to our team. I have seen many teams like this where the team itself insists they are a strong team: they tell each other lots of stories about their private life, they have drinks together and organize the occasional team event. But if you observe the team a little closer you will notice most conversations are quite shallow, everybody’s playing nice to each other. The teams reaction to conflict is to cover it up. As a result the team does not learn how to deal with conflict. The more they revert to the symptomatic solution of smoothing things over, the less the team will be capable of working on a fundamental solution, which could be working on team cohesiveness by creating trust, coaching the team in conflict resolution and a shared sense of accountability for results. This is described in the first part of the diagram: causal loops B12 and B13.

In a complex system however all parts of the system are interconnected and a change in one part can inadvertently lead to a problem elsewhere. We often find series of interconnected shifting-the-burden structures where one fundamental solution is another problem’s symptomatic solution.

So how does the fundamental solutions become the symptomatic solution of another problem? While team cohesiveness grows a team identity starts getting developed.  They slowly develop a ‘them-against-us’ mentality towards other teams or the surrounding organization. People outside of the team start perceiving the team as inward-thinking, taking care of only themselves, even if not in the interest of the larger organization. Conflict with the rest of the organization starts to grow.

The fundamental solution of building team coherence to the conflicts-within-the-team-problem has now become a symptomatic solution of a new problem: conflict between the team and it’s environment (causal loop B15). The team tries to deal with the new conflict by closing their ranks, sticking together, which in the ends only decreases their ability to fundamentally deal with the rest of the organisation in a constructive manner.

So now we need to look at a fundamental solution to his problem, like helping the team to build a better understanding of the part they play in the larger organization (causal loop B16). You could encourage the team to explicitly define some of their team goals as contributions to higher organisational goals. This is actually a very powerful way to deal with the issues we inherit from today’s silo organisations: give teams or departments a goal they cannot achieve by themselves, but only by collaborating with others.

This practice is in contrast with the popular agile practice of giving teams their own domain to focus on. We are strongly apposed to this. The logic behind it is to encourage teams to take ownership of their own area. But teams don’t work in isolation. They are part of a bigger whole, and this practice will unavoidably lead to local optimization and inward-focusing teams. Systems Thinking can help you understand and predict that.

Note that we covered only one Systems Thinking archetype in this article and only a fraction of the concepts behind Systems Thinking. Nevertheless there are valuable lessons for agile coaches or anybody working on high performing teams:

  • Always focus on the fundamental solution vs a symptomatic solution. Withstand organizational pressure for quick solutions. There are no quick fixes to complex problems.
  • Note that a fundamental solution often needs to be discovered. In many cases it is not a matter of analyzing, but of discovery through experiments.
  • Be aware that the more one applies a symptomatic solution the less one becomes able to come up with a fundamental solution.
  • Realize that a fundamental solution can at the same time be a symptomatic solution for another problem.

Do you want to know more on what Systems Thinking can do for your team and organization? Attend one of our Management 3.0 workshops.

Notes:
[Martin Knapovsky. Shifting the burden archetype. https://www.knapovsky.com/shifting-the-burden-archetype/]
[Daniel Kim. Shifting the burden revisited: Turtles all the way down. https://thesystemsthinker.com/shifting-the-burden-revisited-turtles-all-the-way-down/]
When your only tool is a hammer

If your only tool is a hammer…

/in , , , , /door

The environment of organizations changes at an increasingly fast pace. Complexity and uncertainty are on the rise. But the set of tools that management uses to manage and design their organizations, is changing very slowly. There is an increasing mismatch between the applicability of tools used and the problem domains of modern organizations. How can we assess which domain we’re in and if we are using the appropriate tools?

There’s no denial that organizations operate in a world of fast change, uncertainty, and constant flux. Windows of opportunity open and close faster and faster. Maintaining a sustainable competitive advantage is pretty hard these days. It also seems apparent that most organizations are ill equipped for dealing with rapid change. One indicator is the life expectancy of organizations. It seems to be shrinking at an alarming rate. Professor Richard Foster of Yale University led a Innosight study that shows that a 61-year tenure for the average firm in the S&P 500 index in 1958 narrowed to 25 years in 1980, to only 18 years now. Even more, at this rate by 2027, over 75% of the S&P 500 will be companies you have never heard of. That’s pretty alarming, isn’t it?

There’s obviously work to do for the management of any organization. Complacency is your biggest enemy in this world, it is a one-way street to irrelevance. The business graveyard is full of companies that either reacted too slow or not at all to change. We don’t pretend to have a silver bullet that transforms any organization into a resilient adaptive organization that can deal with anything. But a first step is to be able to asses which problem domain were in and if the tools we use match the domain. Unfortunately, many organizations stick to tools they know like hierarchy, centralization, focus on efficiency, strict rules and processes, linear planning, etc. There’s nothing wrong with these tools per se, it is just that they were designed for organizations that existed about 100 years ago. Many management tools are, more or less, still the legacy of Frederick Taylor’s Scientific Management and Henri Fayol’s functions and principles of management. The world has changed dramatically since then. In the Western economies there aren’t that many industries anymore where these tools work well.

Every organization, department, team, or process is situated in a specific problem domain, each with its own appropriate tools. So how can we tell which one we’re in. A very useful tool here is a sense-making framework called Cynefin. The Cynefin framework has four main domains, and a fifth one called disorder, that each describe the context in terms of the relationship between cause and effect. The four main domains are called obvious (I still prefer the old term ‘simple’), complicated, complex, and chaotic. The disorder domain is used in case it is not clear in which domain we are.

For a detailed description of the Cynefin framework, you can read the excellent Harvard Business Review article by the framework’s founder Dave Snowden. For the purpose of this article we keep the explanation short: In the Obvious domain, we can easily categorize the problem we face and pick the appropriate checklist or process description to solve it. Because the environment here is pretty stable and predictable we can focus on optimizing best practice processes. A simple loan approval process is a good example.

In the Complicated domain things are not as simple and predictable. We need experts to analyze the situation before we can respond. Most of the time there is still a noticeable relationship between cause and effect but it can be separated in space and time making it hard to spot. This is reinforced by management structures like silo’s and KPI’s. We make a decision in one silo, let’s say sales, which has an undesirable effect on another silo, let’s say operations. We don’t see the relationship between cause and effect here because it occurs somewhere else (place) and maybe with a delay (time). Our focus on sales, reinforced by a KPI that just measures sales output, causes us to miss the unintended consequences for the operations department.

The Obvious and Complicated domains together are called the ordered domains. Many organizations think they are in the ordered domains, whereas an increasing number or situations in organizations, teams and processes actually fall in the complex domain, which requires a completely different approach. Because in the Complex domain, good or best practices won’t work. The environment is not stable or predictable, we therefore cannot simply repeat what worked in the past. Nor can we plan the future. We can only discover it by experimenting. The relationship between cause and effect might be there but in most cases can only be seen in retrospect. This is counterintuitive for many managers and therefore hard to accept. There is a dominant tendency to wanting to be able to control and predict the future, even in situations where we can’t, and even if we experience time after time that our carefully crafted plans quickly fall apart.

Now take an invoicing process for example. Most organizations sell something, so invoicing is a common process. You might think invoicing is a predictable stable static process that can easily be handled and optimized by an automated process, and therefore falls into the obvious domain. You are right. The danger is that this makes management rely on processes and rules only. It is not the 95% of correct invoices that matter, but the 5% that are incorrect or exceptional. These are the ones that take up most of the time, and are a danger to the organization’s reputation if not handled well. You cannot handle the exceptional cases the same way as you do predictable ones. But most organizations do. If an exception is found, we create another rule for it. If a customer complains about a wrong invoice we adapt the process. Until the next exception. And the next one. Our system slowly becomes hard to understand and maintain, slow to adapt to new situations, and very costly. And we still find ourselves constantly surprised by new exceptions we haven’t covered yet. What makes matters worse, the way we handle customer complaints on wrong invoices suffers from the same problem: Customers Service reps tend to use strict scripts that handle standard situations well. But the frustration of customers comes from the non-standard mistakes in the first place, and the inability of customer service the solve the issue only adds to the frustration.

Sounds familiar? It is a constant source of airtime for television consumer shows: telco’s, energy companies, and insurance companies getting scrutinized for their inability to properly deal with non-standard situations that appear so obvious for the customer and viewer. It is a classic example of using the wrong tool for the wrong domain. Yet these companies never seem to learn. What’s the standard reply of every spokesperson or executive brave enough to appear before the camera, when asked how they are going to prevent these issues in the future? “We will analyze the process and improve it”. Sigh…

And that brings us to the key takeaway of this article: if you don’t know which domain your situation is in, your will probably treat it as the domain of your preference and the one you are used to. And in many cases that turn out to be the wrong one. You will then be using tools that are not wrong per se, but they are inappropriate for the problem at hand. After all, if your only tool is a hammer, then every problem looks like a nail…

 

Employee Empowerment demystified Part 2

/in , , /door

Empowerment and delegation are management practices that are gaining popularity. However they proof to be hard to implement. In part 1 of this article we explored some of the principles behind delegation and empowerment that help you explain what can go wrong and why it takes time. Next we are going to look at a practical tool from the Management 3.0 toolkit that helps implementing delegation.

Management 3.0 defines seven levels of delegation. The delegation levels and a delegation board help implementing empowerment following the principles we discussed in the first part of this article. Having multiple levels of delegation makes sense. When setting constraints you will find that for some decision areas different levels of delegation are appropriate. The seven levels are:

  1. Tell: You as manager make the decision and you inform others of the decision made. This is obviously the lowest level of delegation. Actually it not delegation at all, but there will be areas where you just cannot delegate decision making.
  2. Sell: You make the decision but you do try to convince others it is the right decision.
  3. Consult: You ask for input, and then make a decision taking the input into account.
  4. Agree: You try to reach consensus as a group on the right decision.
  5. Advise: You offer your opinion but it is their decision to make.
  6. Inquire: They make the decision but you do want to be informed.
  7. Delegate: They make the decision and you don’t even have to know what it is.

The first step is to identify areas of decision making. Be as specific as possible. Don’t do this on your own, do it together with the people you are delegating decisions to. It is ok to prepare a preliminary list of course but don’t fall into the trap of unconsciously choosing the lowest level of delegation for… implementing delegation.

The second step is to go by each decision area and agree on the appropriate delegation level. It is ok to be clear that some topics will have a lower level of delegation for now, after all you are setting constraints. People understand you won’t be leaving everything up to them. Don’t forget the reflexive principle: team members might not feel comfortable with a high delegation level at some areas, even if you feel confident they can do it.

Management 3.0 has nice sets of cards available that represent the delegation levels. You can use these just to make things more visual: it has more impact to point to a card than to say ‘level 4’. You can also use the cards to play Delegation Poker, a derivative of the Agile estimation technique Planning Poker.

The Delegation Board is the final step: it is the visual result of the agreements made. The Delegation Board is a grid that displays all decision areas as rows and the 7 delegation levels as columns. It marks the delegation level for each decision area. Being transparent on the agreed delegation levels is crucial.

An example of the use of the delegation board is a manager who had two goals: the first was to increase the level of responsibility of the team leaders in her group. The second one was a very practical one: to reduce her workload caused by the company policies requiring her to approve everything. She was involved in a lot of processes and decisions of which she felt her added value was limited. The team leaders could very well decide themselves.

You can use the delegation levels the other way around as well. The same manager was in a new role. The boundaries of her authority were blurred. She sometimes felt a lack of authority in areas she would have expected otherwise. Clearly the organization still needed to get used to the new role. In such a situation you can also use the delegation levels to clarify constraints upwards: discuss delegation levels on key decision areas with your manager.

Do you want to learn more about modern management? Attend one of our Management 3.0: Modern Leadership Practices classes.

Employee Empowerment demystified Part 1

/in , /door

Most organizations are aware that these times of high complexity and fast paced change are a challenge to cope with, especially for management. It’s not that traditional management techniques are wrong per se, but they are no longer the most appropriate way to face today’s complexity. So organizations are struggling to implement alternative ways of managing: Employee empowerment; servant leadership; decentralized decision making; delegation; self-organizing teams, these are all terms for the same concept: put the authority where the information is. The concept proofs to be pretty hard to implement however. This article is going to demystify empowerment and delegation as well as provide a simple yet powerful Management 3.0 tool that you can start using today.

The reason why empowerment is important is that it enables faster and better decision making. Today’s organizations operate in a complex environment. You cannot rely on following proven optimized processes because the work is not that predictable anymore. We often find ourselves doing things we haven’t done before. We need experts that can analyze complicated situations, and creative workers that know how to quickly create and validate ideas using experiments. These workers most often know the work better than their managers. So let them decide: decisions will be better because they know better. And they will be faster because the hierarchal chain of authority is short circuited.

Exploring principles of empowerment

So let’s assume we have an old school command and control type of manager, called Sam. Don’t blame Sam by the way, because it’s organizations and the education system that create and maintain Sams. Sam participates in a new management program in his company with the purpose of turning managers into servant leaders. Sam gets the reason why. He is enthusiastic about the change, a little anxious perhaps, but his guts tell him this is a more effective way. So he is going for it.

On Monday morning Sam gathers his team members telling them he is going to be a different manager. He will be facilitating and coaching the members from now on, and not be telling them what to do anymore. “I want you guys to be empowered”, he tells them. “You are a self-organizing team from now on”. While the team’s reaction was not as enthusiastic as he had expected, Sam is still confident and excited.

A few weeks go by and Sam is feeling increasingly frustrated. Things are not changing as fast as he had expected. He feels people could be more proactive. Why aren’t they taking initiative?! After all he has given them every room to do so. Why do they not seem to feel accountable for results? He has just told them what results he expects leaving the ‘how’ up to them, just as he was taught in the servant leadership workshop he attended. But it hasn’t led to better results yet. As a matter of fact, he was forced to step in a couple of times to correct mistakes that were made. He begins to feel that at least some team members cannot handle responsibility. Or maybe they just prefer to be controlled.

This is not an uncommon scenario. Agile coaches and Servant Leadership aficionados will tell you people want to have control over their own work. So why does it proof to be so cumbersome and slow to implement empowerment and delegation? Let’s unravel the principles of empowerment and delegation.

The first principle seems to be contradicting at first: Empowerment cannot be successful without clear constraints. “Wait a minute, empowerment was about giving people more control. So what are you talking about when you say you need to set constraints?” Delegation is never absolute, so unless you are very transparent which decisions people can make themselves and which they cannot, they will be reluctant to make any decision. People will feel insecure on making a decision not sure if it is really ok. They might take a backseat waiting for others to go first. They might be conspicuous whether the company really means it and will not blame them for the very first mistake they make as a result of a decision. Although it might sound contradicting, if you set clear boundaries and are very transparent on them, you create a safe environment for taking initiative.

Empowerment is reflexive. Delegation is not a one way street. It goes both ways. Employees have expectations of what they can leave up to the manager too. A team might not feel comfortable with a certain level of delegation for some area (yet), even if you do. As a manager you need to respect that. Delegation does not only go downwards. It goes up too.

Empowerment requires trust. And patience. When you say you are going to leave certain decisions to the employees, you better mean it. Don’t come rushing in with good advice the moment you see some hesitation. Trust them to get it sorted out. Even worse is blaming them for a mistake they are inevitably going to make. Instead of “What were you thinking?!” say “What can we do better next time?”. Your choice of words, no matter how subtle, is crucial. Your mental model might unconsciously lure you into choosing words that have a backwards effect. It will feel frustrating at times, it will test your patience, you will have to stop yourself from stepping in. Don’t get me wrong, I don’t mean just let them sink. You are there to help if they want it. But don’t take over. Trust goes both ways too: you need to trust the workers, but you need to live up to their trust as well. If you don’t the momentum is gone and they will not dare to take initiative anytime soon anymore.

Empowerment is an investment, it may take a while before you get your return on investment. Remember, people are wired for compliance. Not by nature, but by organizations and the education system. It starts as soon as children go to school: Suddenly you are required, both litterally and figurally speaking to color within the lines. Mistakes are structurally corrected. “Making a mistake is wrong” is the unconcious message. All day you are supposed to do what you are told. It gets even clearer when you start your first job. Others tell you what to do and how. All employee engagement programs set aside, people feel they are expected to comply. So when you are genuinely trying to change this in your organization, know it will take a while for people to change.

Understanding these principles is one thing, using them is another. In part 2 of this blog we provide a simple yet effective tool for delegation that honours the principles just discussed.

Do you want to learn more about modern management? Attend one of our Management 3.0: Modern Leadership Practices classes.

Comments on SAFe 4.5: is it all cosmetic?

/in , , /door

Recently SAFe 4.5 was released. Of course there is a lot of information from SAI itself on what’s new in SAFe 4.5, so I want won’t cover all changes in detail here but focus on adding some comments on the significance and usefulness of the changes, or lack of it for that matter.

Cosmetic surgery isn’t always a bad thing

Let me start with something that might feel cosmetic but actually is the most significant improvement in my opinion, namely the fact that the ‘Big Picture’ didn’t get bigger or more complicated this time. From SAFe 3.0 to 4.0 the framework went from three layers to four. In my SAFe courses I sometimes joke that hopefully SAFe 5.0 will not have five layers. I still spend quite some time explaining you should not consider using the Values Stream layer unless it is a very large complex SAFe adoption. While the challenge of coordinating multiple trains in a single Value Stream is of course real, the solution SAFe presents in the Value Stream layer leans rather high towards processes if we consider the Agile Manifesto value Individuals and Interactions over Processes and Tools. In this respect I rather like the most basic coordination mechanism in LeSS: Just Talk. We can come a long way using this mechanism before we actually need to define formal processes in my opinion. It is actually a trap for larger bureaucratic organizations trying to transform to a more agile organization: they have the tendency to model everything in processes instead of telling people to just talk to each other whenever there is something to coordinate.

So the Big Picture didn’t get any bigger this time. Actually it got a lot cleaner. The most significant change in this regard is the configurability of the Big Picture. SAFe now has four base configurations targeted at a specific context. Each configuration only displays the constructs that are relevant for that configuration, making the big picture a lot easier to read. The four configurations are: Essential SAFe, Portfolio SAFe, Large SAFe, and Full SAFe. Selecting a configuration and watching the Big Picture change accordingly is actually quite fun and insightful.
Second, the Big Picture got a visual make-over making it less cluttered and easier to read. SAI claims they actually added more stuff then they removed so kudos to the visual designer.
Third, the Value Stream layer is renamed to Large Solution. Again, this seems purely cosmetic, but as I said I spend a lot of time explaining to people you don’t need to do everything on the Big Picture just because it is on there. Calling it Large Solution will definitely make it easier to understand you only need a large solution when you have a… large problem.

Now you might wonder why I spend so much time on cosmetic changes. The reason is the ‘completeness’ of the Big Picture is both a blessing, you click on anything and instantly get tons of information on the topic, and a curse. Organizations have a tendency to want to implement everything on the Big Picture because they think they are supposed to. The overview can also be quite overwhelming at first glance. And it also makes SAFe an easy target for a sometimes rather loud group of agilists, sitting comfortably high on Mount Stupid, shouting down that SAFE is not agile at all, usually while having no more experience than glancing at the Big Picture at scaledagileframework.com. Yeah, I could just ignore those people but unfortunately they tell their tales to customers as well. If you haven’t heard of Mount Stupid, also known as the Dunning-Kruger effect, it is the phenomenon that people who are the most ignorant on a subject are also the ones most eager to share their opinion on it. Sounds familiar?

Lean Startup

Of course there are more substantial changes too. But you can read about those in detail on the SAFe website.

One is the integration of Lean Startup. A very welcome addition, no doubt, but to be fair there was nothing in SAFe 4.0 that prevented you from using Lean Startup within SAFe. I have actually promoted the fact that everything is a hypothesis that needs to be validated as fast as possible from the start. I have also seen companies use Alexander Osterwalder’s Business Model canvases and Value Proposition design; or Ash Maurya’s Lean Canvas successfully within SAFe. We don’t need it on the Big Picture for this. But the guidance is of course welcome.

Other changes

The role of DevOps is growing in SAFe 4.5 which is a good thing. Not much I can add to that. Continuous Delivery is emphasized more and has gotten a bit more substance. Good, but you were supposed to take Continuous Delivery very seriously anyway already.

Now we all know that delivery and releasing are not the same but they are related of course. One noticeable change on releasing: it has gone from Release on Demand (v3.0) to Release Anytime (v4.0) and back to Release on Demand again in v4.5. Make up your minds guys. 😉

What else? The Implementation Roadmap is there, but to be honest it was already published before the release of 4.5. The implementation roadmap is a big step forward from the rather ridiculous 123 model that seems to have dropped of the Big Picture. Thankfully. Tons of useful information there but one major flaw still remains: It is still a more or less linear process. I strongly feel that a change process should also be iterative, based on experiments and short feedback loops. I recommend looking at Lean Change Management and combine it with the Implementation Roadmap.

Conclusion

So although there are lots of useful additions and changes to SAFe 4.5 the most significant changes are the ones that might appear purely cosmetic at first glance. I think those can actually prevent some organizations from falling into common traps.

How to help management towards servant leadership?

/in /door

During a recent Management 3.0 training I provided one of the attendants had a question on how we could help management towards a change in their role. How can we motivate middle management in particular because for them a management transition towards servant leadership potentially has such a huge impact. How do we deal with the question “If I am going to loose control because I am supposed to delegate authority downwards, what is it that I get back?”

This question led to a good discussion in the group, but even after the course the question stuck to me. It is an important question that deserves a thorough answer. And that’s the reason for this article. In this article I will attempt to provide suggestions on ways to help management fulfill a different role. I will try to use the tools and knowledge that Management 3.0 provides.

A little bit of background information: Management 3.0 is a body of knowledge that concerns itself with a different way of fulfilling the role of management in organizations. It replaces direct control of people with the creation of an environment in which employees can be motivated, can take control, and can learn continuously. The need for this different role of management is twofold: On one side the environment of organizations is changing increasingly fast and is rapidly getting more complex. Traditional management methods do not handle this complicity very well. On the other side it just makes work more fun, which eventually will also lead to better results as is indicated by numerous research.

Organization with a desire to become more adaptive can use Management 3.0 principles to achieve this. For teams and individuals this often has a direct positive impact because they get more autonomy, more chances to take initiative and opportunities to develop themselves. For senior management it is a strategic choice they deem necessary for the long term succes of the company. But for middle management, as we often experience in our consultancy work, this change has the biggest impact. They have to let go of a style of management that has been imprinted in their minds for years. They are suddenly expected to to adopt practices that feel alien to everything they have ever learned on the subject of management. Many times they have to implement this change while they are still being ‘managed the old way’ themselves. No easy job. In this situation it seems a very relevant question: How can we help the manager in this transition?

The original question was formulated in terms of “We are taking something away from the manager. What does he get back in return?” I think this is a bit of a trap. It can understandingly be the line of reasoning for the manager in question himself, but I think we must be careful to follow him in this line of reasoning. It is not a simple exchange. The ’thing’ we are taking away is something that has been an intrinsic part of the manager’s fundamental believes on management for years: “If I am to be responsible for something, I expect to have the authority that comes with it”. He knows how to do his job the current way through and through. The new way of management is probably largely uncharted territory for him. And even for someone who truly believes in the need for change, it is going to take a while to really appreciate ‘what you got back’. Besides, ’taking something away’ suggests a sudden change, and reality teaches us that a careful coaching is crucial. And even then it will often feel as a sudden change anyway, because the positive consequences are only seen later.

So what are the step we can take?

 

Start with personal motivation

Start with gaining insight in what the person in question truly motivates. A helpful tools for this within the Management 3.0 toolkit is Moving Motivators, which is a set of 10 intrinsic and extrinsic motivators we can use to get an understanding of what matters to someone and get him going. Some people are motivated by status for example. For others the relationship with coworkers is very important.

So we start with personal motivation. The tool offers a set of cards, one for each of the 10 motivators. Ask the person in question to rank the cards in order of importance. Which motivator is most important for him in the context of work? Which ones are less important. Having a conversation on the ranking is the real value of course because then you will explore why some motivators are so important to someone.

Moving Motivators

The second step indicates whether certain motivators are positively or negatively influenced by someone’s current role. Imagine someone values status. Does the current role fulfill that motivator in a positive or negatieve way? Ask for actual examples. Move motivator card that are positively triggered up, and negatively triggered motivators down. This creates a visual image that of course is something to discus again.

Next we do the same looking at the expectation of the new contents of the management role. Are some important motivators that were triggered positively so far now expected to be triggered in a negative manner?

These steps of course provide some important insight to the change team. But more important is the insight for the manager himself. I have experienced that a manager expected some motivators to get negatively triggered by her new role, but she also discovered some other motivators were potentially triggered in a positive way. These are the first step in coaching. This also touches the second goal of this focus on motivation: it gives the manager the feeling that his personal motivation matters. We are not simply taking something away and give something in return. We go on a journey that fulfills a new role in a way in which personal motivations matter.

Purpose

Dan Pink points out that organizations should spend more time on asking WHY we do something and less on HOW the work should be done. He has illustrated this with an example of a research study that was conducted among call center volunteers at a major US University. The call center workers participated in fund raising for valuable scientific research. The researches divided the workers into three groups: One group spend five minutes of reading letters from former call center workers explaining which personal benefits the work had brought them, before they started calling. The second group also read letters for five minutes, but this time they where from people that had received funds and explained what valuable research the money was spend on. The third group was a control group and were allowed to spend the five minutes anyway they wanted. The two groups that read letters before calling outperformed the control group by far. But the group that read letters on the impact of the donations raised twice as much money as the other group!

People are motivated by a higher purpose if that purpose is clear and they know how to contribute to it. Even more so if the purpose aligns with their personal goals and values. So don’t start with HOW the new role of management should look like, but start with the question WHY we are making this change in the first place. Be crystal clear on the purpose of the organization, and give management the opportunity to align their personal goals with the goals of the organization. Don’t be surprised if some managers get so engaged in the process they start looking for new ways to fulfill the management role  in line with the company purpose by themselves.

Offer a generous exit

Helping managers through a change also means helping them to gain insights whether the new role really fits them or not. Don’t expect everybody to be able or willing to take the journey with you. And that should be ok. If the new role does not trigger any personal motivation in a positive way, you will not be doing that person, or the organization for that matter, any favor to force someone into the new role.

It is important to be transparent that the conclusion that a new role does not fit is an acceptable outcome. It is not a personal failure. Offer a generous exit as part of the transition, and be very transparant on this upfront. Realize that it is the organization itself that is responsible for the current management style in the first place. We created the type of managers we know expect to change in a way that differs fundamentally from anything they were ever taught on management. So senior leaders must take responsibility for anyone that is not able to follow in this change.

What does this mean exactly? Take your time for this transition. Don’t force people to fundamentally change their style of management overnight. Sending them to a course is not enough.

Help people towards another job is they are not able or willing to follow the change. This can also be a new job/role within the company! Many organizations we encounter silently broadcast the message that the only way to have a sustainable career in the company is the way up. Moving up the management ladder. But the modern management we are talking about changes more than just the job description of managers: the emphasis on the hierarchical structure of the organization need to lessen as well. After all, we are delegating authority downwards. For some (ex) managers this can feel as a liberation: finally they can find the time to actually work on something and get things done. Many managers have missed the satisfaction of actually accomplishing some task more then they are willing to admit. Embracing Management 3.0 does not entail we have less management as an activity, but it does mean we have less people that are dedicated managers. Management as an activity will be distributed more broadly throughout the organization. But this also can accomplish a new appreciation for craftsmanship as a way to make a career.

 

Change the entire chain

A phenomenon we often encounter is that senior management decides things need to change: employees and teams need te become self-organizing. Middle management need to execute this change by delegating decisions and responsibility downwards. But senior management itself does not change (at least for now). This creates a very difficult situation for middle management: they are expected to decentralize control, while at the same time they are themselves still managed the old way in a command-and-control fashion. We often see that middle managers are still held directly accountable for the people that ‘report’ to him or here.

My advise is very clear: Change the entire chain of authority, both below AND above the middle manager.

Use the chain to determine the needs of people towards middle management in the new situation. Ask teams what they need from the manager to be successful.  Ask senior management what they expect from middle management. This creates both clarity and support.

Coaching

By now it should be clear that thorough coaching is imperative for a smooth transition to a new management style. The most important advice is to take your time. A fast instrumental intervention in which the new management role is determined by others than those are going to fulfill it will not work. There’s a famous quote of Peter Drucker called ““Culture eats strategy for breakfast”. An instrumental intervention does not change values, beliefs, informal contacts, and habits. And in the end nothing will change because of this. Culture will always be stronger then imposed processes, rules, and procedures. You need to realize that a change of the role of management is nothing less than a change of culture.

Coaching means training and helping the group of managers, but also personal coaching. Coaching also means managers are involved in defining the new management role.

Another advice is to start a buddy system that allows managers to support each other and learn form each other. This contributes to reflection on the new role, and they can help each other in challenging situations that will no doubt arise.

 

Coaches will have to be external at first. Because who in the organization is totally free of the principles, values, styles, and habits that we are trying to change? Even the most enthusiastic pro-change manager has to work within the current context and therefore will be influenced by it. But in the end the force for sustainable change needs to come form inside. It is too important to leave to external coaches. So an important task of external coaches is to create internal champions that support and in the end take over the job of the external coach.

Conclusion

The transformation towards an agile adaptive organization calls for a fundamental change of the role of management. Because the new role of management differs so fundamentally from what has been the standard for decades it is imperative that coaching and helping management in this transition is taken seriously. Paying attention to the personal motivators of managers is one important stap. A clear purpose that managers can align with their personal goals, beliefs, and motivators is another. It is crucial to change the entire management chain, not just middle management. Personal coaching, in conjunction with a buddy system, is aimed at creating internal champions. And for those who are not able or willing to make the transition the organization should offer a generous exit that displays the responsibility the organisation has in creating the kind of managers people need to change form in the first place.