Competition has been a core tenet of the modern business system but, increasingly, is giving way to its inverse: collaboration. It’s a rational CEO response to the dawning realisation that the best talent is probably not inside your organisation, nor the best decision-makers on your board, or in your management team.
In an illuminating Ted talk Don Tapscott retells the story of his neighbour. He owned a gold mine with one problem: he couldn’t find where the gold was. Or rather his geology department couldn’t find it, so he took the very unusual step of publishing their research online and offering a half a million dollar prize to anyone who could use it to tell him where the gold was hiding. The prize was quickly claimed - not by another team of geologists but a computer graphics firm that built a 3D map of the mine to help it look for the gold. They found $3bln worth of it.
According to the KPMG’s recent Global CEO Outlook 58 percent of leaders now see such “partnerships or collaborative arrangements with other firms” as a way to drive shareholder value. Yet this comes at a time when we are evolving away from the ‘internet era’ - where organisations built relationships with others - to a ‘social media age’ - where people build relationships on platforms directly with other. In the emerging collaborative paradigm ‘platform-less’ organisations are increasingly superfluous to a process where cars are shared through Uber, accommodation through AirBnB, content on Facebook and funding on various crowdfunding site.
Traditional organisations have lost control of key relationships. Such disruption is uppermost in the minds of CEOs. Eighty-eight percent are concerned about “the loyalty of their customers and 82 percent about the relevance of their products and services.” For, while a lot of lip-serve was paid to customer-centricity over the past decade, very few organisations restructured internally away from pushingproducts down these new, segmented channels. The lack of authenticity in many an organisation’s claim of customer-centricity has left many with dangerously-skewed visions of what their customers really want. For example, the mess Renault made communicating with its female audience at a new car launch showed (see insert).
“Renault sent 30,000 amicable, anonymous letters to their female clients in the Netherlands. A handwritten letter that started with ‘Hey darling’ and signed with ‘Love, M.’ suggested that it was a personal note from a friend. [The result was] four hundred direct complaints from ladies to the brand itself, including twenty-five women who took their complaints to the Advertising Code Committee.
Renault explained: “The idea of the campaign was that one friend is writing to the other and includes some news about her new car. It wasn’t intended to offend women or cause them problems in their relationships. But [we now accept] that the request to have a drink soon from a suggestive sender gave a lot of women the wrong impression” (Peter Plevier, press chief Renault Netherlands). Renault sent 30,000 personal letters of apology and while it didn’t, ultimately, harm the brand it made Renault realise that women want to be addressed in a different way.” (‘What women want: Exploring quantitative patterns underlying qualitative stories’. Jansen & van der Borg (2009)
Customer loyalty requires building authentic relationships, based on listening and mutual trust. Feedback loops free of delay and distortion are needed to pick up the signals amongst the noise when customers hit your value chain so you can quickly act upon them. It’s arguably this collaboration that will differentiate the leaders from the also rans in the ‘collaborative economy’.
An overwhelming majority of CEOs admit it’s “important to specifically include innovation in their business strategy with clear targets and objectives” revealing the persistence of 20th century - management by objectives - thinking. As innovation is concerned with the new and unknown, emerges through experimentation and requires a healthy attitude towards failure then targets are serious category errors.
Peter Drucker, the ‘father’ of management by objectives recognised that innovation - the business of tomorrow - requires different mandates, mindsets and measures to flourish. He wrote:
“Innovative organisations realise that one cannot simultaneously create the new and take care of what one already has. They also realise that maintenance of the present business is far too big a task for the people in it to have much time for creating the new, the different business for tomorrow. They also realise that taking care of tomorrow is far too big and difficult a task to be diluted with concerns of today. Both tasks have to be done, But they are different.
Innovative organisations, therefore, put the new into separate organisational components concerned with the creation of the new.”Yet ‘separate organisational components’ - incubation labs - are insufficient to trigger innovation if they’re permeated by the culture of the ‘business of today’. When this occurs, these separate components are “structured, resourced and governed to produce [only] incremental improvements to today’s business models.” This is contributing to the concerns of over half of CEOs that their organisations are not disrupting business models while two-thirds fear they are being disrupted themselves. While the CEO mantra globally is ‘disrupt or be disrupted’ the reality is few of today’s most successful organisations are capable of doing the former.
‘Technology solutionism’ has become a silver bullet, but technology advances more rapidly than the human ability to adapt to it, contributing to declining productivity growth in most developed economies: Eurozone productivity growth is a feeble 0,3 per cent; Japan 0,4 per cent and even the US has slowed to 0,3 per cent (compared to an average of 2.4 per cent from 1999 to 2006). Technology alone isn't the solution to competitive challenges.
Most IT help desks and accident investigation teams will tell you that it’s usually human error at fault. While recent research into neuroplasticity suggests experiences continue to remodel human brain functions throughout adult life the reality is we’re continually playing catch up with the rapid pace of change. Today’s knowledge workers spend, on average, half the week managing emails, looking for internal information or tracking down colleagues who can help with specific tasks. Technology entraps as well as enables.
Seemingly impervious to declining productivity despite technological advances CEOs will make data and analytics “a top area of investment over the next 3 years.” Big data may it seems may have become like teenage sex - everyone is talking about it, though nobody really knows how to do it, but as everyone thinks everyone else is doing it, everyone claims they are doing it to. Improved analytics has significant potential but should come with significant caveats: hard data may tell you 'who' said or did 'what', 'where' and ‘when' but it can’t tell you why.
And in the words of Aristotle: “We do not have knowledge of a thing until we have grasped it’s why”. Genuine insights leading to breakthrough action requires something more than just data.
Recent AI advances are impressive but are still as far from replacing the natural human ability to make sense of the world around us so we can at effectively in it: something 150,000 years of human development and civilisation testifies to. What’s required is not technology that seeks to replace human judgment about complex challenges, but augments it - makes us more human; not less. We require tools to ‘fit the hand’ rather than vice versa (which, as many talent management departments are finding out is a rather thankless task).
Technology and better data analytics has an important role to play but CEOs should remain wary of delegating critical decisions requiring human insight to algorithms designed by people they don't know and who may not know their context. Genuine innovation doesn’t come from just connecting the dots but ‘seeing’ when the dots that should be there are not and exploring why. To become more adept at this CEOs need technologies that amplify, not abrogate, their natural sense-making capabilities.
Shape the Future
Don't just adapt to it