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Currently viewing the tag: "Transformation"

Learning n Development

Survival of a business in this digital age largely depends on its ability to timely embrace Digital Transformation.  Digital Transformation entails using Digital Technologies to streamline business processes, culture, and customer experiences.

In order to compete today—and in future—and to enable Digital Transformation, organizations should work towards fostering a culture of continuous learning, since Digital Transformation depends on learning and innovation.  The organizations that holistically embrace this culture are called “Next-Generation Learning Organizations.”

The next generation of Learning Organizations capitalize on the following key variables; Humans, Machines, Timescales, and Scope.  These organizations incorporate technology in enabling dynamic learning.  Creating Next-Generation Learning Organizations demands reorganizing the entire enterprise to accomplish the following key functions to win in future:

  1. Learning on Multiple Timescales
  2. Man and Machine Integration
  3. Expanding the Ecosystem
  4. Continuous Learning

Learning on Multiple Timescales

Next-Generation Learning Organizations make the best use of their time.  They appreciate the objectives that can be realized in the short term and those that take long term to accomplish.  Learning quickly and in the short term is what many organizations are already doing, e.g., by using Artificial Intelligence, algorithms, or dynamic pricing.  Other learning variables that effect an organization gradually are also critical, e.g., changing social attitudes.

Man and Machine Integration

Rather than having people to design and control processes, Next-generation Learning Organizations employ intelligent machines that learn and adjust accordingly.  The role of people in such organizations keeps evolving to supplement intelligent machines.

Expanding the Ecosystem

The Next-generation Learning Organizations incorporate economic activities beyond their boundaries.  These organizations act like platform businesses that facilitate exchanges between consumers and producers by harnessing and creating large networks of users and resources available on demand.  These ecosystems are a valuable source for enhanced learning opportunities, rapid experimentation, access to larger data pools, and a wide network of suppliers.

Continuous Learning

Next-generation Learning Organizations make learning part and parcel of every function and process in their enterprise.  They adapt their vision and strategies based on the changing external environments, competition, and market; and extend learning to everything they do.

With the constantly-evolving technology landscape, organizations will require different capabilities and structures to sustain in future.  A majority of the organizations today are able to operate only in steady business settings.  Transforming these organizations into the Next-Generation Learning Organizations—that are able to effectively traverse the volatile economic environment, competitive landscapes, and unpredictable future—necessitates them to implement these 5 pillars of learning:

  1. Digital Transformation
  2. Human Cognition Improvement
  3. Man and Machine Relationship
  4. Expanded Ecosystems
  5. Management Innovation

1. Digital Transformation

Traditional organizations—that are dependent on structures and human involvement in decision making—use technology to simply execute a predesigned process repeatedly or to gain incremental improvements in their existing processes.  The Next-generation Learning Organizations (NLOs), in contrast, are governed by their aspiration to continuously seek knowledge by leveraging technology.   NLOs implement automation and autonomous decision-making across their businesses to learn at faster timescales.  They design autonomous systems by integrating multiple technologies and learning loops.

2. Human Cognition Improvement

NLOs understand AI’s edge at quickly analyzing correlations in complex data sets and are aware of the inadequacies that AI and machines have in terms of reasoning abilities.  They focus on the unique strengths of human cognition and assign people roles that add value—e.g., understanding causal relationships, drawing causal inference, counterfactual thinking, and creativity.  Design is the center of attention of these organizations and they utilize human imagination and creativity to generate new ideas and produce novel products.

3. Man and Machine Relationship

Next-generation Learning Organizations (NLOs) make the best use of humans and machines combined.  They utilize machines to recognize patterns in complex data and deploy people to decipher causal relationships and spark innovative thinking.  NLOs make humans and machines cooperate in innovative ways, and constantly revisit the deployment of resources, people, and technology on tasks based on their viability.

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Supply Chain InformationSupply Chain Management is getting more and more complex.  The pressure on the Supply Chain information to be made public is also increasing day by day.  With the popularity and widespread use of social media, it has become more and more difficult for organizations to hide information pertaining to supply chain practices, employees’ treatment, suppliers’ processes, or waste materials generated that could affect the environment.  Social media often publicizes negative reports on companies’ supply chain practices—its best to have a robust information disclosure strategy before anything like that ever happens.

Executives must appreciate these external forces and information transparency demands, and react proactively to build and maintain competitive advantage for their organization.  They need to be able to, first, accurately predict the data requirements of various stakeholders and then unanimously decide on the type and frequency of the information to be shared.  A reactive information disclosure strategy is less time and planning intensive, but it does limit the chances of first-mover advantage over competition.

Supply Chain information can be classified into 4 categories:

  • Critical
  • Strategic
  • Non-critical
  • Optional

Critical Information

Organizations using this information category know that they have certain glitches in their Supply Chains that could potentially be a source of criticism from NGOs and the media and may bear adverse effects on their reputation.  This includes information concerning unhygienic or inferior quality products; unfair supply chain practices; or environmental problems.

Strategic Information

Even though stakeholders do not ask for this information, this information category is considered strategic as disclosing this data can boost brand value and product differentiation.  The strategic information category is high value to the organization but is low on risks for the supply chain.  For example, in the beauty, fashion or food products industry, sharing information about organic ingredients may be instrumental in achieving product differentiation and brand reputation.

Noncritical Information

Disclosure of this information category is typically un-called for and has negligible effects on brand value.  This information category has low value for the company and has low risks for the Supply Chain.  For instance, needlessly sharing child labor data in regions with actively enforced child welfare laws.

Optional Information

This information category is a matter of internal supply chain consideration and has no bearing on the customer.  The optional information category is low value to the organization and is actually highly risky for the Supply Chain.  For instance, potential quality issues and defects in the supply chain that are identified and resolved during quality control, and do not affect the finished product.

There isn’t a one-size-fits-all strategy that organizations can adopt to ensure a viable and high-quality Supply Chain Information Disclosure.  However, the approach needs to be evolving based on individual circumstances.  Senior executives should promptly respond to public inquiries, ensure fair treatment of employees, and guarantee compliance with basic human rights to protect their organizations’ reputation.  Experts suggest the following 8-phase approach to address and improve Supply Chain Information Disclosure.

Appreciate the criticality of Supply Chain information disclosure

The first step is to analyze the forces that demand increased supply chain transparency and ascertain the importance and priority of information for the stakeholders.  Once it is established, the leadership must take actions to address the information requirements of key stakeholders.

Appraise Supply Chain data collection abilities and resource requirements

The next step is to assess the competence of the organization—and that of the suppliers—to gather quality supply chain data.  The executives should also evaluate the costs and resource requirements to enable improved information disclosure.

Determine the existing and desired levels of Supply Chain information

The third step is to ascertain the existing knowledge of supply chain information among the executives and suppliers.  The leadership needs to identify the desired levels of supply chain data collection and sharing capabilities, and invest to fill any gaps between the existing and desired supply chain data collection and sharing competencies.

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Learning n DevelopmentTransformation of an organization into a Next-generation Learning Organization (NLO) is a challenging endeavor.  The main hurdles include convoluted hierarchies, bureaucratic red tape, delayed decision making, and complicated organizational systems and processes.

To develop a learning organization, leadership needs to trim down bureaucracy and complexities.  They should make the best use of technology to gather holistic real-time data, deploy Artificial Intelligence at scale, and develop data-driven decision-making systems.

Five Core Pillars of Learning are essential for the creation of a Next-generation Learning Organization, including:

  1. Digital Transformation
  2. Human Cognition Improvement
  3. Man and Machine Relationship
  4. Expanded Ecosystems
  5. Management Innovation

Let’s take a deep dive into the first 3 Core Pillars.

1. Digital Transformation

The first pillar is Digital Transformation.  Next-generation Learning Organizations (NLOs) are characterized by their speed of learning and their adeptness to take action based on new insights.  They use emerging technologies to automate as well as “autonomize” their businesses, without relying too much on human intervention and decision-making.

By autonomizing, the NLOs enable machines to learn, take action, and evolve on their own based on continuous feedback.  They create integrated learning loops where information flows automatically from digital platforms into AI algorithms where it is mined in run-time to gather new insights.  The insights are passed to action systems for necessary action that create more data, which is again mined by AI, and the cycle continues, facilitating learning at fast pace.

2. Human Cognition Improvement

Next-generation Learning Organizations (NLOs) schedule time for their people to have unstructured reflection on their work.  While most organizations fear disruption of human work in future by AI and machines, NLOs assign unique roles to their people based on human cognition strengths—e.g., understanding relationships, drawing causal judgment, counterfactual thinking, and creativity.  These organizations are aware of AI’s advantage—in analyzing correlations in complex data promptly—as well as its shortcomings in terms of reasoning abilities and interpretation of social / economic trends.  NLOs make design the center of their attention and utilize human creativity and imagination to generate new ideas and produce novel products.  They assign roles accordingly, inspire imagination in people by exposing them to unfamiliar information, and inculcate dynamic collaboration.

3. Man and Machine Relationship

NLOs foster innovative ways to promote collaboration between people and machines.  They recognize that this helps them in better utilization of resources, maximize synergies, and learn dynamically.

To create effective collaboration between people and machines, NLOs develop robust human-machine interfaces.  The existing AI systems lack the ability to decipher everything, which is an area where humans excel.  NLOs supplement these shortcomings by setting up human-machine interfaces, where humans assist the AI by corroborating its actions and suggesting sound recommendations.  These learning organizations bifurcate responsibilities based on the risks involved, assign humans and machines appropriately against each job, and select a suitable level of generalization and sophistication between humans and machines.

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Process FlowUnsuccessful software applications cost organizations significant efforts and resources.  The reasons for these failed ventures are often attributed to technology issues.  However, the real issue is flaws in business processes—the enterprise application deployment environment and the ecosystem which the application targets.

This calls for ensuring the organizational readiness before initiating technology deployment.  It is for this reason the Business Process Maturity Model (BPMM) originated.  BPMM helps achieve uniform standards, identify weaknesses in workflows, and create standardized tailored processes that simplify the requirements for enterprise applications.

BPMM’s roots can be traced back to the Process Maturity Framework (PMF) created by Watts Humphrey and his colleagues at IBM in the late 1980s.  Process Maturity Framework explores the ways to introduce quality practices in software development.  Humphrey and his colleagues introduced incremental stages to adopting best practices in software organization.  The PMF served as the groundwork for the development of the Capability Maturity Model (CMM) for software in 1991.  CMM then became the foremost standard for appraising the capability of software development organizations.

BPMM ensures the success of enterprise systems by providing proven methods for system requirements validity; accuracy of use cases, and effectiveness of applications; simplification of requirements for enterprise applications; and providing a reliable standard for appraising the maturity of business process workflows.

The Guiding Principles for BPMM

BPMM considers processes as workflows across organizational boundaries.  The key guiding principles governing BPMM are:

  • A process should be analyzed in terms of its contribution to organizational objectives.
  • It depends on the organizational ability to sustain efficient processes.
  • Process Improvement should be ideally executed as a phased Transformation endeavor that aims to achieve successively more predictable states of organizational capability.
  • Each stage or maturity level works as a groundwork to build future improvements.

BPMM Utility

BPMM has the following 4 primary utilities.

  • To drive business process improvement initiatives
  • To gauge enterprise application deployment risks
  • To ensure selection of capable suppliers
  • To Benchmark

BPMM – Conformance

Evaluating the BPMM conformance is about ensuring that the implemented system meets the needs of the client.  Verification of conformance necessitates an effective appraisal technique to gather multiple forms of evidence to evaluate the performance of the practices contained in the BPMM.

The BPMM conformance appraisal should be headed by an authorized Lead Appraiser—external to the organization, trained in BPMM as well as appraisal methods.  The team under the lead appraiser should include some members internally from the organization.  The BPMM conformance appraisal team gathers and analyzes evidence regarding the implementation of BPMM practices, judges their strengths and weaknesses, and gauges their effectiveness in meeting the goals of the process areas at respective maturity levels.

The following evidence is utilized during BPMM conformance appraisals:

  • Review of outputs produced as a result of a process.
  • Review of objects, documents, products supporting the execution of a process.
  • Interviews with individuals that perform a process and those who support and manage it.
  • Quantitative data that depicts the organizational state, employee behaviors, performance, and results of a process.

BPMM Conformance Appraisals

BPMM Conformance Appraisals help assure the implementation of practices at a level that achieve the intent and goals of the practices and their process areas.  BPMM conformance appraisals are of 4 distinct types:

  • Starter Appraisal:  An inexpensive BPMM conformance appraisal—which takes only a few days—that entails gathering quantitative data by conducting few interviews.
  • Progress Appraisal:  An extensive appraisal that entails quantitative data collection, investigation of all process areas and practices, review of artifacts, and analysis of interviews.
  • Supplier Appraisal:  An appraisal method to select sources and to make informed decisions during procurement contracts.
  • Confirmatory Appraisal:  A rigorous investigation of all process areas / practices where all evidence is accounted for.

BPMM – Maturity Levels

BPMM encompasses 5 maturity levels that signify the transformation of an organization on the basis of improvements in its processes and capabilities.  BPMM Maturity levels 2, 3, 4, and 5 each contain 2 or more process areas, whereas the Maturity level 1 does not contain any process areas.  The 5 successive levels of BPMM are:

  1. Initial

The focus of the BPMM level 1 is on achieving economy of scale, automation, and productivity growth by encouraging people to overcome challenges and complete their tasks.

  1. Managed

The 2nd maturity level aims at developing repeatable practices, minimizing rework, and satisfying commitments — by managing work units and controlling workforce commitments.

  1. Standardized

The focus of the 3rd maturity level of BPMM is to accomplish standardization in terms of business processes, measures, and training for product and service offerings.

  1. Predictable

The 4th maturity level aims at achieving stable processes, knowledge management, reusable practices, and predictable results.  Organizations accomplish these results through standardization and managing processes and results quantitatively.

  1. Innovating

The focus of the organizations operating at the highest maturity level of BPMM is on implementing continuous improvements, developing efficient processes, and inculcating innovation.

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Time for change

Business environment has transformed drastically from what it was a century ago.  It has become immensely challenging due to competition, disruptive technologies, laws, and globalization.  These challenges warrant better performance to address customer needs and to survive—and outpace—intense competition.  Consequently, organizations have become complex.

The work that individuals perform in an organization has also shifted from manual labor and clerical jobs to knowledge-based experiential tasks.  Traditional workforce was required to adhere to commands and stick to routines, whereas today’s workforce needs to be more empowered, innovative, able to adapt to varying circumstances, and render sound judgment.

Adapting with the constantly changing business environment is essential for organizations aspiring to succeed in today’s competitive markets.  In order to stay competitive, more and more organizations across the globe are undertaking Business Transformation programs to reorganize their businesses.  However, a large percentage of such programs fail to achieve the desired outcomes.

For the Organizational Design to be successful, leaders need to be mindful of the revolutionized work settings and business environment of this age.  One of the major factors attributed to these failure rates is utilizing traditional approaches to reorganization, which are proving ineffective in this digital age.  These traditional approaches appreciate “level of control” and power, and underestimate the significance of employee autonomy and innovation. 

The Smart Design Approach to Organization Design

Today’s Knowledge Economy necessitates the employees to be more empowered to decide on their own than merely following commands.  People act in ways that are best for their own interests.  The new approach to reorganization—termed Smart Organizational Design—aligns the workforce’s best interests with the organizational mission rather than seeking control over the employees.  The focus is on changing the environment (context) and mindsets of employees willingly and instilling team work and cooperation, thereby enhancing organizational performance considerably.

The Smart Organizational Design approach entails classifying the existing workforce behaviors, ascertaining the desired behaviors critical to improve performance, and providing environment (context) favorable to develop new behaviors.  The approach encompasses 3 main steps:

  1. Define why reorganization is necessary (objective)
  2. Determine the behaviors critical to support reorganization
  3. How to execute the Smart Organizational Design

Let’s dig deeper into the second step.

Determine the behaviors critical to support reorganization

The next step involves the leadership to determine the “what” element of the Smart Organizational Design approach—i.e., definition of certain behaviors critical to achieve the transformation purpose.  Determining the desired behaviors necessitates thinking through the following 4 critical Smart Organizational Design aspects.  These 4 design aspects work in tandem to shift the environment (context) for the workforce and motivate them to embrace the new behaviors crucial for improved performance:

  • The Organizational Structure aspect—pertains to management reporting lines, spans of control, and layers of hierarchy.
  • The Roles and Responsibilities aspect interprets individual and shared accountabilities to cultivate teamwork and cooperation.
  • The Individual Talent aspect specifies the right skill set and motivation to perform responsibilities of each role effectively.
  • The Organizational Enablers aspect outlines the elements necessary for creating the right context (environment) for embracing the desired behaviors, i.e., decision processes, performance management, and talent management.

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BehaviorInculcating productive workforce behaviors is of utmost significance in Business Transformation, successful Strategy Execution, and Performance Improvement.  However, making people embrace productive behaviors involves a concerted effort across the organization.

The realization of Transformation, Strategy, and Performance improvement goals can become a reality by developing a thorough understanding of the 4 components of Organizational Behavior.  These components act as powerful levers in shaping the desired behaviors in the workforce:

  1. Organizational Structure
  2. Roles and Responsibilities
  3. Individual Talent
  4. Organizational Enablers

These Organizational Design levers work effectively when combined and aligned.  Let’s discuss the first 2 levers in detail now.

Organizational Structure

Organizational Structure represents the management reporting lines that create the organization’s spans of control, layers, and number of resources.  Organizational Structure is a foundational driver to Organizational Design, which also has a strong positive bearing on promoting the behaviors critical to improve the overall performance of the enterprise.  This is owing to the power that a position exerts on the subordinates based on factors that are important for individuals—e.g., work, compensation, and career ladder.

The Organizational Structure indicates an enterprise’s priorities.  An organization is typically structured in accordance with its top most priority.  For instance, functional organizational structure is adopted by enterprises having functional excellence as a priority.  In present-day’s competitive markets, most organizations have to deal with several priorities at a given time, which could be conflicting.  However, this does not mean adding new structures on top of existing ones, thereby increasing unnecessary complexity.  Creating overly complex structures to manage multiple priorities results in red tape and delayed decisions.  All roles are interdependent, necessitating cooperation.  This means taking care of the needs of others—instead of just watching over personal priorities—and encouraging individual behaviors that boost the efficiency of groups to achieve collective objectives.

Roles & Responsibilities

Roles and responsibilities deal with tasks allocated to each position and individual.  Organizational Design depends heavily on redefining clearer and compelling roles and responsibilities—to avoid any duplication of efforts or creating adversaries among team members.  In a collaborative culture where cooperation is the mainstay of an organization, individuals should not only be aware of what is required of them, but also appreciate the responsibilities of their team members, the authorities their roles exercise, the skills required, and the metrics to measure success.

A methodical way to outline roles and responsibilities effectively—while minimizing complexity—that encourages cooperation and empowerment is through the “Role Chartering” technique.  The technique requires distinctly identifying all roles on the basis of 6 key factors:

  • Describing shared and individual accountabilities
  • Outlining indicators to track success
  • Specifying who has the right to decide what
  • Indicating the capabilities critical for roles
  • Assigning the leadership traits valuable for the roles
  • Charting the abilities required for accomplishing personal and team goals.

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4 Organizational Design (OD) Elements Essential to Inculcate the Desired Behaviors Across the Organization

Value Chain1The Value Chain concept, first described by Dr. Michael Porter in 1985, is a series of actions that a firm—in a specific industry—accomplishes to produce a valuable product or service for the market.  The value chain notion visualizes the process view of an organization, perceiving a manufacturing or service organization as a system comprised of subsystems of inputs, transformation processes, and outputs.

Another way to define the Value Chain principle is, “transforming business inputs into outputs, thereby creating a value much better than the original cost of producing those outputs.”  These inputs, processes, and outputs entail acquiring and utilizing resources—finances, workforce, materials, equipment, buildings, and land.

An industry Value Chain includes the suppliers that provide the inputs, creation of products by a firm, distribution value chains, till the products reach the customers.  The way Value Chain activities are planned and executed determines the costs and profits.

Value chains consist of set of activities that products must undergo to add value to them.  These activities can be classified into 2 groups:

  • Primary Activities
  • Secondary Activities

Primary activities in Porter’s Value Chain are associated with the production, sale, upkeep, and support of a product or service offering, including:

  • Inbound Logistics
  • Operations
  • Outbound Logistics
  • Marketing and Sales
  • Service

 The secondary activities and processes in Porter’s Value Chain support the primary activities.  For instance:

  • Procurement
  • Human resource management
  • Technological development
  • Infrastructure

Value Chain Analysis Benefits

The analysis of a Value Chain offers a number of benefits, including:

  • Identification of bottlenecks and making rapid improvements
  • Opportunities to fine-tune based on transforming marketplace and competition
  • Bringing out the real needs of an organization
  • Cost reduction
  • Competitive differentiation
  • Increased profitability and business success
  • Increased efficiency
  • Decreased waste
  • Delivery of high-quality products at lower costs
  • Retailers can monitor each action throughout the entire process from product creation to storage and distribution to customers.

Value Chain Analysis (VCA) Approach

Businesses seeking competitive advantage often turn to Value Chain models to identify opportunities for cost savings and differentiation in the production cycle.  The Value Chain Analysis (VCA) process encompasses the following 3 steps:

  • Activity Analysis
  • Value Analysis
  • Evaluation and Planning

Activity Analysis

The first step in Value Chain Analysis necessitates identification of activities that are essential to undertake in order to deliver product or service offerings.  Key activities in this stage include:

  • Listing the critical processes necessary to serve the customers—e.g., marketing, sales, order taking, distribution, and support—visually on a flowchart for better understanding.
    • This should be done by involving the entire team to gather a rich response and to have their support on the decisions made afterwards.
  • Listing the other important non-client facing processes—e.g., hiring individuals with skills critical for the organization, motivating and developing them, or choosing and utilizing technology to gain competitive advantage.
  • This stage also entails gathering customers’ input on the organization’s product or service offerings and ways to continuously improve.

Value Analysis

The second phase of the Value Chain Analysis necessitates identifying tasks required under each primary activity that create maximum value.  This phase is characterized by:

  • Ascertaining the key actions for each specific activity identified during the first phase.
  • Thinking through the “value factors”— elements admired by the customers about the way each activity is executed.
    • For example, for the order taking process, customers value quick response to their call, courteous behavior, correct order entry, prompt response to queries, and quick resolution of their issues.
  • Citing the value factors next to each activity on the flowchart.
  • Jotting down the key actions to be done or changes to be made to under each Value Factor.

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Digital 2Gordon Moore, Intel co-founder, observed that the number of transistors in a dense integrated circuit doubles about every two years.  He projected that this rate of growth would continue for at least another decade.

His observation, termed the “Moore’s Law,” has correctly predicted the pace of innovation for several decades and guided strategic planning and research and development in the semiconductor industry.  Moore’s law is based on observation and projection of historical trends.

In 2015, Gordon Moore foresaw that the rate of progress would reach saturation.  In fact, semiconductor advancement has declined industry-wide since 2010, much lower than the pace predicted by Moore’s law.  The doubling time and semi-conductor performance has changed, but it has not impacted the nature of the law much.

Although many people predict the demise of Moore’s law, exponential growth in computing power persists with the emergence of innovative technologies.  Moore’s law is only part of the equation for effective Digital Transformation—there are other contributing factors including the role of leadership.

First Law of Digital Transformation

George Westerman—a senior lecturer at the MIT Sloan School of Management—proposes a new law, which states that, “Technology changes quickly, but organizations change much more slowly.”  The law known as the “First Law of Digital Transformation” or “George’s Law” is a pretty straightforward observation, but is often ignored by the senior leadership.  This is why Digital Transformation is considered more of a leadership—than technical—issue.

Just announcing an organization-wide Transformation program does not change the enterprise.  According to George’s Law, successful Digital Transformation hinges on the abilities of senior leadership to effectively manage the so many contrasting mindsets of its workforce, identify and take care of the idiosyncrasies associated with these mindsets, interpret their desires, and focus attention on encouraging people to change.

Above all, the leadership should focus on converting Digital Transformation from a project to a critical capability.  This can be done by shifting emphasis from making a limited investment to establishing a sustainable culture of Digital Innovation Factory that concentrates on 3 core elements:

  1. Provide People with a Clear and Compelling Vision
  2. Invest in Upgrading or Replacing Legacy Technology Infrastructure
  3. Change the Way the Organization Collaborates

Let’s now discuss the first 2 elements of the First Law of Digital Transformation.

Provide People with a Clear and Compelling Vision

Without a clear and compelling transformative vision, organizations cannot gather people to support the change agenda.  People can be either change resisters, bystanders, or change enablers.  However, most people typically tend to like maintaining the status quo, ignore change, or choose to openly or covertly engage in a battle against it.

For the employees to embrace change, leadership needs to make them understand what’s in it for them during the transition and the future organizational state.  This necessitates the leaders to develop and share a compelling vision to help the people understand the rationale for change, make people visualize the positive outcomes they can achieve through Transformation, and what they can do to enable change.  A compelling vision even urges the people to recommend methods to turn the vision into reality.

Invest in Upgrading or Replacing Legacy Technology Infrastructure

Problems and shortcomings in the legacy platforms is an important area to focus on during Digital Transformation.  The legacy technology infrastructure, outdated systems, unorganized processes, and messy data are the main reasons for organizational lethargy.  These issues hinder the availability of a unified view of the customer, implementing data analytics, and add to significant costs in the way of executing Digital Transformation.

Successful Digital Innovation necessitates the organizations to invest in streamlining the legacy systems and setting up new technology platforms that are able to enable digital and link the legacy systems.  Fixing legacy platforms engenders leaner and faster business processes and helps in maintaining a steady momentum of Innovation.

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design-learn-pattern-247819

Organizations need to persistently improve the way they do business to stay ahead of the curve. New ideas trigger organizational improvement and build the foundation of a Learning Organization.

Scholars have defined a Learning Organization in many different ways. Some suggest it as an organization skilled at creating, acquiring, and transferring knowledge, and at modifying its behavior to reflect new knowledge and insights. Marlene Fiol and Marjorie A. Lyles describe organizational learning as “the process of improving actions through better knowledge and understanding.” Barbara Levitt and James G. March define organizations as “Learning Organizations when they encode inferences from history into routines that guide behavior. Chris Argyris categorizes organizational learning as “a process of detecting and correcting error.” According to Peter Senge, “a Learning Organization is a group of people working together collectively to enhance their capacities to create results they care about.”

Being a Learning Organization offers several advantages. A perpetual influx of insights and new experience keeps the organization dynamic and ready for transformation; assists in better management of investments, improves efficiency; and helps in developing cost leadership and differentiation strategies. Learning Organizations tend to be more innovative by encouraging people to learn, develop, and by generating a more innovative environment. Shared learning builds the corporate image of the organization and increases the pace of change within the organization. Learning Organizations provide their people the ability to think insightfully about complex problems, take coordinated action, improve decision making, and instill a sense of community in them.

Despite efforts to improve continuously and creating new knowledge, organizations cannot simply become Learning Organizations. They employ various approaches but what they actually need is to become proficient in translating new knowledge into new ways of doing things, and actively managing the learning process so that it gets ingrained into the organizational culture.

Becoming a Learning Organization necessitates mastering 5 key activities. These 5 activities form the building blocks of a Learning Organization and should be integrated into the organizational core to transform your company into a Learning Organization.

  1. Systematic Problem Solving
  2. Experimentation
  3. Learning from Experience
  4. Learning from Others
  5. Knowledge Transfer
5 Building Blocks of a Learning Org

Applying these practices to some degree or in isolated cases isn’t enough. To ensure continued success, these practices should be complemented by distinct mindsets, support systems, and processes.

Let’s now discuss the first 3 building blocks in detail.

1. Systematic Problem Solving

Systematic problem solving is based on scientific methods for diagnosing problems, e.g., the Plan, Do, Check, Act (PDCA) cycle or “hypothesis-generating, hypothesis-testing.” The technique employs fact-based management, relying on concrete data instead of assumptions for making decisions and utilizes statistical tools—such as Pareto charts, histograms, correlation, and cause and effect diagrams—to consolidate data and draw conclusions.

For a real Learning Organization, people need to become more disciplined, pay more attention to detail, assess underlying causes, and analyze data before reaching decisions.

2. Experimentation

Experimentation involves systematic exploration and testing of new knowledge. Experimentation has 2 fundamental configurations; both forms transfer knowledge and yield new insights, capabilities, tools, techniques, and processes:

  1. Ongoing programs
  2. Demonstration Projects

Ongoing Programs

Ongoing programs entails a chain of small experiments aimed at yielding incremental gains in knowledge. These programs maintain a steady flow of new ideas by sending workforce on sabbaticals at different places to learn new work practices and tools from industry and academia, and applying that knowledge to their daily routines. Such programs foster risk taking and a feeling of “benefits of experimentation far outweigh the costs.”

Demonstration Projects

Demonstration projects are one of a kind, large-scale initiatives that include holistic system-wide transformation targeted at a single site. These projects are executed with a goal of developing new organizational capabilities using a “clean slate” approach.

Self-managing, multi-departmental teams; high level of employee autonomy; considerable “learning by doing;” course corrections; implicit policy guidelines, precedents, and decision rules are the key characteristics of demonstration projects.

3. Learning from Experience

Learning Organizations gain valuable knowledge from their past experiences, by doing an exhaustive and systematic appraisal of past successes and failures. However, not too many managers pay attention to past experiences or reflect on those, eventually losing valuable insights. To inculcate a culture of learning, lessons learned should be recorded and made readily accessible to all employees.

A handful of companies have laid out processes for their managers to contemplate on their past actions and incorporate those in their learning. At the core of this approach lies the belief that distinguishes productive failure from unproductive success. Productive failure delivers knowledge and understanding whereas unproductive success goes unnoticed where nobody knows what went well and why. Learning from experience approach isn’t that expensive—case studies and project reviews can be compiled with little cost.

Interested in learning more about the building blocks of a Learning Organization? You can download an editable PowerPoint on Learning Organization: 5 Building Blocks here on the Flevy documents marketplace.

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customer culture innovationA large majority of organizations rarely focus on gathering and utilizing customer-centric knowledge. So much so that they even introduce a product without having vital insights on the customer and their unmet needs, and they are often clueless about them. Consequently, many product development initiatives fall flat as managers struggle to filter and evaluate ideas.

Most organizations, today, are developing initiatives around Customer Experience Strategy and Customer Journey Mapping. Customer-centric Organizations are deeply focused towards value creation for their customers. They understand the unique customer insights needed to make customer-centric decisions, are able to gather those customer insights, and are aware of the way to utilize the insights in creating value for their customers. By using customer insights, Customer-centric Organizations drive their product innovation success rate significantly higher than the industry average.

In order to develop this capability, organizations need to first utilize a customer-centric research process to gather the customer insights required to drive value creation. This is accomplished when:

  • They know the desired unique customer insights needed to make customer-centric decision.
  • They are able to gather the required customer insights.
  • They realize the proper time and way to utilize the insights in making value creation focused business decisions.

Building a Customer-centric Culture of Innovation warrants a methodical approach. A potent approach to building such a culture of innovation encompasses 3 key phases:

  1. Qualitative Insights: Apply Customer-Centric Fundamentals - The first phase commences by organizing an intensive day-long workshop for each cross-functional product team. The teams engage in a unique customer journey where they employ a “jobs-to-be-done” lens to analyze their market, and identify valuable, qualitative customer insights needed to drive customer-centric decision making.
  2. Quantitative Insights: Quantify Opportunities that Exist - This phase entails conducting quantitative research to rank the most critical customer insights needed to develop customer-centric data model. The insights available through this data set help the company in making customer-centric business decisions for years to come.
  3. Implementation: Leverage New Customer Insights for Growth - In this phase, managers and employees across the organization are trained on utilizing the insights to devise market and product strategies, and to encourage customer-centric growth.
Customer-centric culture of Innovation
Let’s take a deeper dive into the first phase of this process.

Qualitative Insights: Apply Customer-Centric Fundamentals

The first phase commences by organizing an intensive workshop for each cross-functional product team. It is typically a day-long session where the teams engage in a unique customer journey. They employ a “jobs-to-be-done” lens to analyze their market and identify valuable, qualitative customer insights needed to drive customer-centric decision making. The qualitative customer insights developed during the first phase serve as an indispensable, long-term guide in the journey to a customer-centric mindset.

During phase I, each product team is trained on customer-centric philosophy in a workshop settings. The workshop participants participate in qualitative research discussions designed to obtain critical customer information and fresh insights. Upon completion of the initial phase, the product team is able to develop a shared innovation vocabulary and gather customer insights to make customer-centric marketing and product development decisions.

Interested in learning about the third phase of the approach to Customer-centric Culture of Innovation? You can download an editable PowerPoint on Customer-centric Culture of Innovation here on the Flevy documents marketplace.

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