Author Archives: disruptdigital

Robots, Work and Looking in the Mirror

by Ella Hafermalz

“With flexible rosters, firm boundaries, and the occasional correction of mistakes, the job gets done to my satisfaction.”

A typical scenario of managing casual employees? Not quite. I’m talking about dealing with Roomba, my new robot vacuum cleaner, which is sent off to the nether regions of my house in search of dust and debris. It’s a great addition to the household, but it’s also caused me to reflect. Why is it so easy to compare a robot to an employee?

We are fascinated by robots at the moment. With a flurry of films featuring the jerky movements of lovable, loyal, complex and terrifying androids, it’s evident we are trying to figure out what place these bots will have in our homes, work and society. Will they defend us from criminals, or become the aggressors (Chappie)? Will they care for us when we’re old (Robot & Frank)? Become our intimate partners (Ex Machina)? Or our oppressive masters (Robot Overlords)? Amongst all this hype of what could be, it’s easy to look past the current state of affairs.

There is a theory based in psychoanalysis which argues that scary movies reveal what society is repressing. Film theorist Robin Wood says that “the true subject of the horror genre is all that our civilization represses or oppresses”. Such films let us deal with a fear that is too close to home by disguising the threat as something else. In the 1960s, alien invasion movies related to paranoia about the spread of communism. In the 1980s, the painful transformation in The Fly drew on the fear of AIDS. So what does our fascination with and fear of robots tell us about our current society? In watching robots ready to rise up and give us a hard time, what is it we’re trying not to think about?

Here’s where Roomba comes in. The fact that the way I treat my robot vacuum cleaner sounds familiar to many of us, particularly those who have worked in retail or hospitality, might give us pause for thought. The casualization of the Australian workforce and increase in insecure, fixed-term contracts over the past five years has contributed to many workers being considered replaceable resources. They just need to be programmed for a weekly schedule, shown the rules, and turned around if they tip themselves over. If the stumbles and mishaps occur once too often however, or if productivity slows, just swap them out for a new model.

While casual workers are increasingly staying with the same employer for longer, “they are still used instrumentally and strategically by employers in ways that permanent employees are not”. A newer aspect of this is the new jobs of the sharing economy – where casual staff are on call to tick off your to-do list and pick up your dry cleaning. Maybe the robot films and Artificial Intelligence hype reveal something about our discomfort with this state of affairs.

When workers are treated like things that can be replaced, we de-humanise ourselves. Not only does it make our workforce more susceptible to automation in the future, it means we are treating each other like machines now. If we favour mechanistic management over meaningful relationships and work is reduced to a set of tasks, it’s no wonder the monster-figure of the robot is tapping us on the shoulder.

But the robot isn’t threatening us with lasers and bullets, it’s holding up a mirror.

VR ventures into the world

by Mike Seymour (@mikeseymour)

It is said that you need the ‘right’ tool for the job, but sometimes a tool can find the ‘right’ job.

VR or Virtual Reality is being hailed as a huge break-through for entertainment and games, especially with the up-coming release of the new Oculus Rift (Crescent Bay), Valve’s Vive and the new Sony Morpheus. There are enormous amounts of research funds being thrown at this cutting edge technology, with most of the biggest players in Silicon Valley and the film industry looking to use this new shiny high-tech tool.

At DISRUPT.SYDNEY in September, Skip Rizzo from the University of Southern California will present his team’s work on using VR for helping with post-traumatic stress disorder (PSTD), as well as equipping those who are going into war zone with the emotional tools needed to deal with the stress and horror of war. This is proving to be an incredibly effective and powerful use of VR.

This remarkable research from the dedicated team at USC’s Institute of Creative Technologies builds on the ground-breaking and defining work of Marc Bolas and his team in developing VR for the last 20 years at USC. Collectively, this group of people from multiple disciplines has been building the field and creating the future by not so much using the latest tools as inventing them.

It is easy to see why some people think the best use of a new disruptive technology is just the chance to do what we have done before but in a new way. For example, TV was initially seen as a great way to have televised radio plays, in almost the same way, we have seen commentators jump on the simple idea of VR providing ‘immersive movies’.

The USC ICT work shows how completely different ideas and applications can be found once you actually experience the new medium and explore its potential. With men and women returning from both years in Iraq and also Afghanistan, the effort to help these people return to their lives and cope with the realities that they had to experience – via professional high tech therapy – may not be the first thing that comes to mind when one hears about VR, but once you experience it, the application of immersive PTSD therapy seems not only valid, but truly compelling.

This need to both learn from experienced professionals as well as experience something first hand is why, in addition to Skip’s insights, the Digital Disruption Research Group will host a workshop with a range of current VR solutions from Oculus Rift to Gear VR and cheap accessible solutions such as Google Cardboard. The team will also explain in easy to understand terms the actual tech behind the newest Lightfield VR solutions just shown in LA (but still unreleased) from the leading graphics conference SIGGRAPH.

vr2

The world of VR encompasses immersive head gear experiences such as Oculus Rift and also extends to augmented reality (AR), which is mostly identified with Magic Leap and Microsoft’s HoloLens. The difference is best illustrated by Google Glass and Magic Leap’s as yet unreleased newer devices. The ‘screen’ of data on the now discontinued Google Glass moves with your head. It is fixed in relation to your eye. The data or overlay of information in the Magic Leap headset will track with the world. This second approach allows for a digital chess board to ‘sit’ on a table in front of you and stay fixed relative to the desk as your head moves – very much unlike the Google Glass display. The idea of mixing computer images on top of your world but locked in sync with real surfaces is expected to be 3 times larger than even the VR explosion. It is easy to see why companies such as Microsoft, Google and Facebook have invested over $3 Billion dollars in this new tech.

Clearly, the landscape of VR applications is a wide vista of opportunities of how this disruptive technology and these coming innovations will find markets and meet needs beyond just being a new ’tool’ for the movie or games industries. Come and help find the new ‘right’ problems – September 25th at DISRUPT.SYDNEY 2015.

vr1

Digital Disruption… How ready are you?

by Scott Ward (@wardsco)

Many years ago I watched a young woman attempt her first bungee jump. The cord was strapped around her ankles and she’d shimmied to the end of the wooden plank and was ready, waiting to jump.

There she stood, staring into the unknown, one hand on the railing as the crew counted down:

“Five… Four… Three… Two… One… Bungee!!!!!”

Her body motioned toward the emptiness yet nothing happened? She remained firmly on the plank!!!

“Fail fast” is the modern mantra, yet most organisations are incapable of doing it.

For most companies failing is a taboo… People are promoted for their successes; remuneration structures recognize our achievements; processes demand business cases; and hierarchies are full of people who, one way or the other, “made it work”.

Yes… Failure is frowned upon within the modern organisation. Yet we live in a landscape where the willingness to fail is the defining component to adapt and survive. The painful truth is that most companies are not set up to fail, which means most are inevitably going to shrink or become extinct.

Like with bungee, jumping into the digital realm requires a leap of faith; faith that the ideas and intuition you hold today will yield value at some point in time… Faith, that if you are sincere enough, set your priorities well and are willing to expose your flaws and can muster grit by leaping into the unknown; your feet will feel that sense of solid ground on the other side of the stream.

There are no consultants that can do this leap for you… it’s a heart-in-mouth experience for all: requiring leadership and courage.

Digital disruption is profound… its not just changing how we connect as individuals, it is altering how we function as organisations; how we spot opportunities; organize our resources; and how we execute on those opportunities.

The emerging business world is connective, intelligent and adaptive.

As one dear friend told me “this shift is the largest realignment of industry since the Second World War”.

So my challenge to you is “what are you doing about it?”

What the woman on the bungee board hadn’t realized is that, despite doing all the preparation she could to ensure a safe bungee, her hand had clenched in fear to the railing and was not letting go for love, nor money.

For a brief moment afterward, she stood, looking around mystified as to why she was still on the board. Her feet were tied, she was on the precipice, they’d counted down and in her mind she’d launched…

The woman in question looked back at the crew, saw her hand and started to laugh. The crew again counted down, and this time she leapt…

So I ask you:

Are you taking the leap? Implementing the structures that will allow failure in the smartest way possible? And then taking action that will enable you to master this disruption?

Or…

Are you clenched to the railing, asking for business cases? Having meetings? Spending time in endless workshops?

Yes! there is a need to plan… Yes! there is a need to educate yourself on the shift that is occurring around us… Yes! there is a need to do everything you can to minimize risk and increase your chances of success.

But if you are still standing on the precipice, yet to take action, ask yourself:

Where are you Really up to? How long has it been this way? And at what point do you plan to do something about it?

Join us for DISRUPT.SYDNEY on 25 September 2015 and take the leap!

Why it’s so hard to react to disruption – the VIRUS model

by Kai Riemer

When it comes to Digital Disruption, one of the most vexing and important questions is:

Why do incumbent businesses have such a hard time dealing with digital disruption even when it unfolds right in front of them?

Drawing on my work and experience in this field I have distilled a number of important factors into a framework, which I name the VIRUS model. The acronym emerged conveniently from the process of isolating these factors, but carries a deeper meaning: It captures the ways in which the disruptive product or service is able to emerge slowly, steadily and unrecognised – when symptoms are first noticed by the wider market, it is often too late, and full-blown disease strikes.

VIRUS stands for: Visibility, Information, Risk, Utility, and Speed. Each of the factors are explained below.

VISIBILITY: Can’t fight what you can’t see.
Despite what the name suggests ‘disruption’ doesn’t happen suddenly. The disruptive technology, product or service usually has been around for a while before it unfolds its disruptive potential. Why then do we frequently (dis)miss it? Because the disruption typically doesn’t make sense initially; incumbents literally can’t see the disruptive potential in emerging ideas. This is because disruptive innovation is revolutionary, not just evolutionary, it is path-breaking – it challenges the background on which the industry is currently understood. Therefore it appears as irrelevant, as a niche or fringe product initially. Yet, the disruption happens when it brings about a tectonic shift in understanding of what counts as a valid product, which can catapult the disruptor from the fringe to the core and the incumbents to the margins in a very short period of time.

Think of mp3 and CDs, or the iPhone and Blackberry/Nokia – initially dismissed as fringe products they have redefined the very idea of what counts as music media or a mobile phone – a fact that appears self-evident in hindsight but not while unfolding. Neither the first generation of mp3 players, nor the initial iPhone were a great success, yet both have disrupted entire industries, relegating previous incumbents to the fringes. The problem is to know before the fact which of the many (sometimes competing) emerging ideas will have that effect.

INFORMATION: Information rules!
Software is eating the world, according to Marc Andreessen. Digital Disruptors change the nature of competition in many industries from a dominance of physical assets (hardware) to a business dominated by software and digital information and data. Digital Disruptors are ‘Information First’ businesses; they change the rules of competition by becoming very good at working with data, collecting and exploiting information to add value to the industry. They turn physical into digital industries. Because of the very different nature in their business model, these emerging ideas are easily misunderstood or dismissed initially.

Both mp3 and the iPhone are good examples of this, mp3 has turned a formerly physical into a digital product. The iPhone has redefined the mobile space from a hardware to a software dominated one. Further examples are Uber, Airbnb, Yelp or Tripadvisor all of which redefine business not by owning the physical assets in their respective industries, but by redirecting customer allocation and value creation streams by exploiting information and data in innovative ways.

RISK: Risk adversity is the greatest risk.
Incumbent businesses become hamstrung by their own success. In stable markets, asset exploitation, efficiency and compliance through process optimisation and risk management through rigorous budgeting processes all make sense and underpin success. However, when markets are disrupted those traits become the greatest risk. When faced with a disruption those structures make it hard to innovate and change, all the while the existing business acts as a powerful disincentive to necessary self-disruption. First, there is the fear of self-cannibalising what is still a profitable business in favour of a new way of doing business that is not yet proven to work. Second, internal incentive structures are built on the old way of doing business, the risk of which is that people will not be inclined to get involved with something that doesn’t add to their KPIs, leading to the “not involved here” phenomenon. Finally, budget processes are based on rigorous cost-benefit analysis; yet benefits are foundamentally unknowable when it comes to disruptive change (as I have argued previously for the NBN example). Risk adversity becomes an inhibitor of the capacity to innovate internally.

Take Kodak for example: Kodak had all the technology and patents to be a leader in digital photography, but could not pull it off for the above reasons.

UTILITY: Different, not just better!
Clayton Christensen in his work on disruptive innovation has argued that new products or services initially start out as inferior to the incumbent product, which makes them appear harmless in the short term, but that they eat away at and slowly emerge as a powerful and disruptive alternative to incumbent products. So, initially the product’s utility appears inferior, but later it’s not. My point is that the change that happens is not just one of linear improvement, but a subtle, yet radical change in the understanding of what counts as utility in the market in the first place. Disruptors are not delivering an initially inferior, then better solution – in essence, they do something different and thereby, over time, redefine the rules of the market. Once this tectonic shift in what counts as utility happens, their product appears as vastly superior – but only on this new understanding.

Take mp3 again – initially it appeared inferior in terms of sound quality to the CD (it still is by the way!). But our understanding of music consumption has changed fundamentally. When the original iPod was released many people asked “what do I need 1000 songs in my pocket for?”. Today we take mobile music consumption for granted, with streaming of anything anywhere a given reality – this marks a tectonic shift in what counts as the actual product!

SPEED: Late but slow…
This last one is the accumulation or outcome of the previous factors. Once the digital disruption is widely recognised within an industry the disruptor tends to have a strong head start on the incumbent players. And because of the inertia of existing business, the shift in perception of understanding, and the ways in which internal structures tend to hamstring the incumbents, reacting to disruption becomes an uphill battle. Remember: disruptors not only came earlier to what is now a different market environment, they are also quicker in execution…

Acknowledgements:
My thanks goes to all colleagues in the Digital Disruption Research Group, and in particular Ben Gilchriest at Capgemini, all of which have inspired and contributed to these thoughts through joint work and discussions. This article was first published on my Research Blog.

Gamification as an assessment tool: why play the game?

by Ella Hafermalz and Kristine Dery

We asked those attending DISRUPT.SYDNEY on Friday (26 Sep 2014) to pose questions relating to gamification ahead of our gamification debate. In a nutshell our attendees wanted to know, what’s beyond the hype? i.e. Is gamification just a new buzzword around digital? Is there anything different here beyond the delivery? Does gamification really add value?

In this post we move beyond all the bells and whistles and try to open up the discussion about gamification warts and all. To do that we have focussed our attention on gamification as a useful assessment tool in the context of e-talent management. We discuss here how gamification might be a useful tool for engaging talent in recruitment, training, and skills assessment.
 
Gamification refers to applying game elements and game thinking to traditionally non-game processes. These “games” are a growing addition to the e-talent management tool kit particularly now that more assessment tools are delivered on-line. Attracting the right candidates, assessing the best talent, and then recruiting them has traditionally proved challenging and expensive. Increasingly organisations are turning to gamification to deliver the elements of fun and competition that attract and retain the attention of their future talent.

L’Oreal, for example, have created the serious game Reveal to help attract and select top talent. After signing up to the game online the candidate navigates through various simulated departments of the cosmetics giant performing tasks and overcoming challenges. If the candidate performs well in a particular department they are advised to consider a career in that area. If performance is exceptional (placing you on the game’s leaderboard relative to other players) L’Oreal’s talent management team deliver further rewards with offers to engage in their recruitment process. This and other serious games and gamified processes that are designed to attract, assess, train, and retain talent are often developed on the basis of psychometric testing principles. Testing talent can be useful, but it’s important to first understand what the data generated from testing will be used for.

As we enter the Talent Decade, organisations will rely on their HR function to build ‘effective talent systems and measurement tools’ that will ‘support strategic business decisions and strengthen workforce capacity’ (Canadian Conference Board, 2014). This is where gamification has a potentially important role to play – in the intersection between talent systems that determine the desired characteristics and capabilities to meet strategic goals and the measurement tools that assess current and potential talent.

Reveal and other talent games like it are essentially tools for assessing talent more effectively. Gamification, therefore, is essentially a way of telling a story around data. When a candidate plays Reveal they are generating data. They receive data in the form of feedback, and data is collected to assess their performance. The game is the story that helps to order that data in a way that enables the employer (or potential employer) to understand more about the “player” and make more informed decisions based on information that they would otherwise find very difficult and expensive to attain. The “player” is experiencing the story of the game, which while engaging them is also providing them with insights into the organsiation enabling them to make decisions around whether they want to continue or opt out of the “game”.

As industry professionals start to experiment with gamification, it’s worth understanding more about assessment. Education specialists have a long tradition in examining assessment so perhaps it is worthwhile taking a look at some of their frameworks to get an idea of what lies beyond the “game”.

Education specialists focus on three main types of assessment  diagnostic, formative, and summative. Each type of assessment has a different purpose and is carried out at a different stage in a learning process or, in the case of talent management, a selection or development process.

Type of Assessment

Stage of Talent Management process

What is it used for?

Diagnostic

Attraction and enrolment in the selection process

To assess a candidate’s current capabilities and identify their potential for the role or the organization

Formative

Activities and tasks during the recruitment  process to enable the candidate to display their capabilities and learn

To give real-time feedback on performance to enable both the candidate and the organisation to understand more about each other and assess whether to continue

Summative

Sorting and ranking at the end of the recruitment process

To measure achievement and inform ranking decisions

Games such as Reveal are good examples of how to incorporate more than one type of assessment and to integrate these across the entire gamified recruitment and selection process. Reveal has a diagnostic element because it tells candidates where their aptitude lies. It is formative because candidates learn about the skills needed to succeed in the L’Oreal environment. It is also a summative assessment tool, because performance data is used to select and contact high achievers, who then go to the next ‘level’ of the recruitment process.

Not all gamified talent management applications need to be this sophisticated or comprehensive. Some gamified processes focus on one assessment type. For example, KPMG use their game as a formative process to provide training on the capabilities located within the organisation throughout the world, Deloitte are building leadership training apps using gamified strategies. These examples of gamification are designed to engage staff in the mechanics of games to stimulate learning processes through fun interactions and competitive missions. They provide a degree of feedback to the “players” to indicate the retention of new skills or knowledge, and they might also generate data to further manage the game itself. However, there are no major implications for the player at a summative level and results are typically not used to rank or rate the player in a way that has consequences for their job.  

Gamification can also be designed purely for summative assessment where there are winners and losers. This is the area that has occupied the recruitment space for some time. Typically on-line application systems where CV’s are uploaded and sorted according to key words fall into this category. Candidates search for unwritten rules to play the game to make it through the diagnostics where they are quickly assessed and ranked. There may be a few iterative loops along the way but essentially candidates are moving through a series of diagnostic/summative loops as the organisation attempts to sift talent. This process, while taking on gamified practices, is arguably problematic and is simply playing old games using new media. This is, we would argue, not creating new value. If, however, the possibilities of assessment processes are clearly understood then we begin to see new opportunities to generate better results can be harnessed through gamification.

Candidates in gamified processes (such as those implemented by L’Oreal, Google and others) are not simply sorted in a summative assessment process but are engaged through a more formative series of interactions that generate data to allow:

  1. the skills of the player (applicant) to be assessed
  2. the player to get an idea of the organisation and assess their own fit, and 
  3. feedback to be built in to make the assessment a learning process for both parties.

In this way we see gamification move beyond the hype to adding real value both during and after the assessment process in recruitment.

Ella Hafermalz is a PhD candidate in Business Information Systems at the University of Sydney and is a qualified teacher. Dr Kristine Dery is a Research Scientist with the MIT Sloan School of Management and has expertise in HR and digital technologies.    

Waiting on the Riverbank: Intent Casting in Practice

by Kristine Dery, informed by interview with Ruben Martin    

Today I decided it was time to buy a new printer. This is not an activity that I want to spend too much time doing and yet it is an important purchase. I largely work from home, or cafes, or bookstores. It is an enviable way to work for the large part but it does require good support technology to maximise the upside without getting the downsides that come with minimal office support. The right printer, I have discovered, is critical. I know exactly what I want: a smallish unit, colour printing, scanning, copying, and wireless to print from any of my mobile devices. All I need is to be matched with the printer that meets my needs. Simple? Not so. Our Business-to-Consumer (B2C) retail model requires me, the customer, to do all the work. You see, the brand decides what to make, the retail network decides how it will be distributed, and the marketers decide what they will tell me about in the way they think that I want to hear it. This leaves me, the customer, to sift through all the messages of all the brands to find a printer that meets the needs that I have already determined. And apparently this is “customer focussed” retailing! Not so.

Doc Searls, alumnus fellow of the Berkman Centre for Internet & Society at Harvard, suggests that the capabilities of the new digital landscape will shift the power of the buying process to the consumer…a process he called Intent Casting. Rather than me having to search through the plethora of product to short-list my printer, I would simply lodge my intent to purchase on-line and the appropriate printer would find me. Suppliers of printers that met my set of criteria would compete for my business either by being first or the best matched respondent. The intent casting model suggests a dramatic shift not only for traditional business models in the distribution of products and services, but also for how companies are organised and communicate internally in order to make this shift. The B2C model is flipped on its head to become C2B and with it comes a new way of thinking about customer relationships.

We have already seen shifts in this direction as users engage with digital platforms and new business practices emerge. Two industries that have seen intent casting disruption are recruitment (e.g. Linkedin) and taxis (e.g. Uber). Traditional recruitment processes started with a company posting a job description and waiting to see who applied. Applicants would either be those in the market already for a new role or someone who found the job ad by chance and was persuaded to think about making a change. Linkedin provided a marketplace where those seeking employment could cast their intent by positioning themselves in the market using key words, blog posts, and network connections thereby creating connections that build relationships and job opportunities. Equally those seeking to employ have access to search mechanisms that enable them to cast very targeted propositions. Not only has this disrupted the recruitment industry by significantly reducing the need for many of the traditional recruitment agent’s activities but it has also created a significant shift in the way recruitment practices are constructed and organised. Uber is based on a very similar model that places the customer at the forefront of the process with capabilities to select the type of taxi service based on their pre-constructed cost or service quality parameters and then cast their intent to a community of service providers who then connect with the customer to deliver the product. Delivery is then monitored by the customer and product satisfaction is co-created with both the customer and the driver having the capability to post descriptions of their experience. Uber drivers have a relationship with the customer from the moment they respond to the cast intent until completion of the service.

In addition to changes at the C2B level, we are starting to see organisations such as Quivers disrupting the B2B market by introducing intent casting models to change the relationship between the owners of the brands and the retail network. Traditionally the brand (e.g. Nike, Prada) distributed their product through retailers who then in turn developed the relationship with the customer leaving the brand at arms length. Quivers is a channel disrupter focused on “Conscious Commerce” that enables the customer to determine their product choice from the brand website and cast their intent to buy via Quivers to a predetermined group of retailers giving them all the opportunity to respond and fulfil the order. This preserves the brand’s relationship with their retailers but gives the brand control over the customer experience by collecting purchase data that can then be used to deliver better outcomes for the brand. Rather than retailers being the centre of the buying process and able to offer a range of brands to the customer, the brand takes control of the decision process but then casts the customer’s intent to the retailer who in-turn fulfils the order direct to the customer. Retailers in this B2B intent casting model have to be constantly connected and capable of instant responses to claim the order ahead of competitors, which requires new skills, mobile technologies and new priorities.

So back to my printer. Had I been able to engage with an intent casting platform I would have framed the perfect cast, waited quietly on the riverbank and waited for the fish to bite. Now that sounds like the way to shop.

You’re It! Play the #twitag game at Disrupt.Sydney 2014

by Ella Hafermalz

Are you on twitter? Coming to Disrupt.Sydney? Join in the #twitag game. Enlist someone at Disrupt.Sydney and take a selfie with them – post the photo on twitter with the hashtags #disruptsyd and #twitag and tag your selfie buddy to pass the challenge on to them. Our organisers Kai and Kristine have already started the game, see their example here – it’s Kristine’s turn now. Advanced players should include an interesting fact about their selfie buddy, so we can all get to know each other a little better!

Disrupt the disruption – and take a breath!

bScott Ward 

I recently read an article called “The last true hermit”. It was about a guy who had spent 27 years living in pure solitude
in the forests of Central Maine USA.

For 27 straight years he didn’t speak to a soul
except for a single “hello” when bumping into some bushwalkers one time.

The article related that for all of those years, he’d
spend his beautiful days simply experiencing and contemplating the world around…

As someone who lives and breathes the dynamic connectivity
that comes with working in digital transformation, the story of this man’s
solitary existence stood in stark contrast to my own daily experience.

It made me think of all the ways we now connect
with each other and how subtlety pervasive and convenient technology has become;
I was amused to discover, after reviewing the apps on my mobile phone, that I
have over 38 different channels to connect with people on a single device!

Don’t get me wrong, I love the access our new
world offers. I love that old monopolies and long held bastions of power are
been turned upside down and redistributed along lines more reflective of merit.
I love the potential we now have to tap into, harness and direct the brilliance
that sits across all humanity… we truly are in an age of miracles.


Be it environmental, political, medical or whatever your passion, now is the
time to get amongst it and lead the charge in directions that are meaningful to
us.

However… amongst all this change…. amongst all the
hype that comes with breakthrough discoveries… the experience of the hermit
reminds us that there is an elegant beauty that has been with us throughout all
the ages that sits beyond the complexity of technology.

We need social networks that disrupt!

by Cai Kjaer

Social networks have always existed in one form or another, but the rise of social media platforms has been able to enable the creation and sustainability of these on a massive global scale.

Initially, companies – driven by ROI considerations – seemed reluctant to embrace these tools inside the firewall, but times have changed. This is clearly evidenced by a rapid growth in the adoption of enterprise social network tools as reported by IBM’s Center for Applied Insights in their report Raising the Game that was published in August 2014. Based on a survey with nearly 1,200 decision makers the researchers found that enterprise social platforms in the period from 2012 to 2014 had moved from piloting to adoption.

It appears that executives are realising that ‘social’ is not about goofing around the water cooler, but is ultimately all about organisational performance. The growth of the enterprise social software market is another sign. From about USD$1b in 2010 it is expected to grow to USD$8b in 2019. If it didn’t deliver tangible benefits companies wouldn’t invest.

The increasing importance of networks to deliver business outcomes is now also being addressed by well-known management experts. Harvard Professor John Kotter who made Organisational Change a must-do, outlines in his most recent book XLR8 (pronounced ‘Accelerate’) how organisations need to adopt a ‘Dual Operating System’. According to Kotter, hierarchies are extremely good at doing known things over and over again, but are very poor at implementing new practices. Networks on the other hand play a critical role in getting new practices implemented.

We need these social networks to disrupt hierarchies and structures that are so dominant in our organisations. Whether or not networks can completely eliminate hierarchies is yet to be seen, but Zappos is certainly giving it a go. In the meantime we need to create organisations where hierarchies and networks will co-exist.

Corporate Rationing and the Challenge of Disruption

by Simon Terry

The Russians have absolute proof that the Bible is Wrong. According to the Holy Book originally there was chaos and then there was order. The Russians know from experience that this is not so. First there was planning then there was chaos. – Soviet era joke from Russia. 

In the Soviet era in Eastern Europe jokes about queues and rationing were plentiful. People laughed in an effort to mitigate the real economic damage of central planning. In dealing with disruption, the consequences of rigid corporate planning can have real damage on the ability of the organization to meet the market.

Corporate Rationing

We do not apply the same standards to our companies as we do to our political systems. To achieve their quarterly earnings per share (‘EPS’) expectations, many large corporations resort to central planning processes with a goal of excluding any uncertainty from performance. Budgets are set and allocated in advance to deliver a number. As a result, there is limited flexibility for the organization to respond to changing circumstances or new opportunities.

Budgets are often based on hierarchical silos, further limiting the ability of the systems and processes within the organization to respond. Reallocation of budgets across silos is a major challenge within a plan year, as it has consequences for power and status of leaders, the achievement of silo-based performance and incentive plans and potentially the fate of entire functions.

The consequence of this central planning is that the modern corporation is full of rationing processes and queues. The rationing goes under many names, such as strategic priorities, investment management committees, project pipelines, resource availability, etc. The business impact is that a corporation has many barriers to responding to the market around it. To deliver certainty of the EPS outcome, the organization deliberately constrains its response to improvement opportunities and declines or delays profitable customer opportunities.

Rationing in organisations can be as absurd as that under central planned economies. Resource plans across silos or measures are often mismatched so that a budget may exist for an activity but the ability to hire additional full time employee equivalents or spend the money on vendors does not exist. Growth in sales may not be matched with additional resources to manage onboarding of customers or ongoing support. Frustration of employees inevitably rises.

Rationing also has a consequence for the scale of economic activity that organisations will consider. Given the effort required to manage the way through the rationing queues small projects are often simply abandoned. Many organisations even limit entry to the rationing process to investments of a significant scale. Each of these further constraints creates more areas in which an organistion will not respond and constrains smaller or marginal lines of business.

Consequences for Disruption

If all your competitors ration to achieve comparable metrics of performance this system of corporate rationing is sub-optimal, but rarely fatal. Everyone playing the game plays with an assumption of limited resources. The big players resources will still be bigger than smaller players and dramatic change is less likely.

However, the introduction of disruptive competitors changes the game. Disruptive competitors often deliberately choose different performance metrics to incumbent players as they see the customer opportunity and the business model differently. They are not constrained by the rationing systems that restrict decision-making and action in the larger incumbent players.

Accentuating the difference in approach, many digital disruptors enter markets with an abundance mindset and not a constrained mindset. They embrace risk and experimentation. Many a traditional organization has bemoaned their ability to compete as a large corporate when your new small agile competitor has more fundraising capacity than you, is more willing to deploy capital quickly and disregards the measures of performance that you traditionally demand?

Before an organization can respond to the market in this situation, it needs to tackle the challenge of undoing its traditional model of hierarchical rationing. The organization needs to become more responsive to its market and pursue the economic opportunities in front of it, instead of an arbitrary central plan. Power to act needs to be devolved from central functions and all areas of the organisation need the capacity to respond to demand, threats and opportunities.

These change are easy to say but incredibly difficult. Change on this scale involves the creation of an entirely new system of economic activity. It changes the roles of participants in the system of the corporation from employees, to managers to the shareholders of the organization. That kind of change is complex, hard and takes time that an organization under threat lacks.

Every company that relies on central planning and rationing as part of its management process should consider the implications of this approach and go looking for the hidden consequences. The time to build a more Responsive Organisation is before it is needed to fend off a digital competitor.

At the May Day Parade in Moscow, Leonid Brezhnev and other Russian officials watched as usual as the long parade of Soviet Military power – missiles, tanks, armoured cars and the like. At the end of the parade came a little truck with three middle aged men sitting in it. Comrade Brezhnev turned to the Defence Minister and asked: “Who are they?” The Defence Minister replied “Those are three economists. You would not believe the destructive power that they possess.” – Soviet era joke from Russia