How good is your organisation at identifying and developing opportunities both adjacent to and outside your current business model?
For many established organizations, breaking the mould of monolithic structures or mindsets (‘legacy thinking’) in order to identify and develop new ideas, new ways of working, or transforming part of the business model or the way the organization competes in the market, can be a major problem. One way to help break that mould is to introduce a radical new approach to seeking out, testing and developing real change / technology-use opportunities through creating and empowering a dedicated 'Transformation Team'.
This could be a small, ‘ring-fenced’ team of creative, forward thinking IT and business development professionals that have a clearly defined 'purpose' to identify, capture, build and develop new ideas that push beyond the traditional company mindset to create real new value-added business / change opportunities. With an emphasis on mastery and learning and with access to market / external input and research, the team should have the autonomy, support, remit and funding to select and develop high potential ideas [including undertaking ‘smart’, rapid, small and cost effective validation / feasibility tests] and build the business case, rollout and launch strategy / plan.
These resources need to be ‘ring-fenced’, to protect them from being 'raidrd' in times of resource need by the core business, and yet still have access and ability to leverage the specialist resources, knowledge and capabilities of the wider organization – in other words ‘protected’ but not ‘isolated’.
Five keys to success for any such ‘Transformation Team’ should include:
- Senior level support and reporting (up to CEO level) - but with the autonomy to set their own direction;
- Clear definition of team 'purpose' and boundaries;
- A credible leader and careful selection of team individuals based on selecting a complementary set of the ‘right’ skills, competencies, experience and attitudes – which is very different from simply selecting a team of ‘high performers’.
- Ring-fencing the resource so that it cannot be ‘raided’ the moment there is a resource shortage or crisis in the core business / function - which there will be! But still enabling access to the wider organizational resources, knowledge and capabilities.
- Being realistic and ‘Give it Time’. Change does not happen overnight so set some stretching but realistic milestones and targets for rapid delivery.
The world is changing at an unprecedented rate – much of which is being fueled by the so called ‘digital revolution’ - and there is little sign of that rate of change slowing or abating.
Whole industry sectors have been disrupted in recent years and companies that fail to recognize the need to change with the times have a limited life or have already gone out of business. Despite this, many organizations, particularly the large and well established, suffer from ‘legacy thinking’ and are reluctant or even resistant to change, let alone actively seeking out opportunities to do so.
More often than not, the core business unit's priority is to deliver the annual plan, which means doing ‘more of the same’ and increasing productivity; that is, reducing cost while pursuing predictable, iterative growth such as product-line extensions, geographical expansion, and acquisitions of closely related businesses. That is not to say that these things are not important, but it does mean that aspects of transformational change - which could be critical for the longer term future of an organisation - take a very low priority.
If you accept that the ‘core’ business is not really interested in identifying and pursuing new opportunities for transformation change, and would always put it at the bottom of their priorities – which means rarely / never resourcing it, then the only way forward is to create a ring-fenced ‘Transformation Team’ to do the work.
Five keys to the successof any such ‘Transformation Team’ should include:
Senior Level / Stakeholder Support and Reporting (up to CEO level);
Any such effort is doomed to failure without the complete buy in and support of senior level stakeholders – right up to CEO level. Ideally, this is where the initial 'sense of urgency' for formation of the Transformation Team should come from, although in reality it is more likely that a case be made to senior management which they buy in to and support. Either way, a clear understanding and alignment with senior management on purpose, intent, timeline and potential consequences for the organization if the effort is successful, is a ‘must have’ before this is taken any further.
A further factor that needs careful consideration is the reporting relationship of the Transformation Team leader. Reporting to a functional VP or GM may not always be the best course of action when the time comes for a critical decision regarding core vs new – in these instances some form of reporting line directly into the CEO might be the only solution. It is importnat however that the reporting relationship does not undermine the autonomy of the team to set their own direction.
Clear Definition of Team 'Purpose', Activity & Boundaries;
Without this, the team can be in danger of going off in all sorts of directions that may never be accepted by the senior stakeholders.
At the most basic level, high level purpose, goals and boundaries need to be clearly set that differentiate the types of opportunities that the organization will accept and prioritize from those that the company will not even consider. In other words, what is ‘desirable’ to the organization, what is ‘discussable’ and what is ‘unthinkable’ for the organization.
As these boundaries become more defined and widely understood, they help define the key dimensions around which the Transformation Team – and maybe latterly the rest of the organization, is willing to innovate. They can also be used as an effective early stage screen or filter for new ideas and opportunities as they emerge – ensuring that the team is focusing its limited resources on only those ideas that stand the greatest chance of being implemented.
Careful Selection of ‘Transformation Team’ Individuals:
This needs to be based on selecting a complementary set of the ‘right’ skills, competencies, experience and attitudes – which is very different from simply selecting a team of ‘high performers’. The key here is creating a team that is capable, empowered and motivated to deliver the desired result.
Research has shown that that putting a senior executive with credibility, organizational skill, and a deep interest in opportunities beyond the current ‘core’ business, in charge of any such effort is a key to success. These type of individuals typically have the sense of curiosity, external networking, relationships and focus, and the authority to bring others on board with them, that is required to make a real impact.
Although the leader is critical - the team composition itself is more important than the ideas they generate; so for the purpose of the ‘Transformation Team’ in mind here, which is orientated towards the creative use of IT-enabled tools and solutions, the team should collectively possess a deep understanding of the company's markets and operations, as well as have a strong IT awareness, be entrepreneurial and visionary in approach and have some experience in building new businesses / business models.
It should also have the ability and authority to make big decisions quickly and be highly effective in its ability to communicate, collaborate and advise with other operating managers throughout the organization in order to explore, test and develop new ideas. An ability to learn from others – be it individuals, other companies, customers, suppliers or even from completely different industry sectors - is also a key capability that the Transformation team should process.
Building a team capable of delivering all of this not only requires a serious commitment of talent and a sustained focus from senior management, but also the recognition of the need for flexibility in providing the team with different skills as things develop over time. In other words the recognition of the need for some degree of skills turnover.
In summary, create a full-time team led by a dynamic, credible and respected business leader who is capable of working across the entire organization and at all management levels to achieve what is required to be success at what is a challenging and complex assignment.
Ring-Fencing the Resource:
Ring-fencing the resource so that it is protected against ‘raids’ from the core business the moment there is a resource shortage or crisis - which there will always be – is essential. Agreeing on the budget up front and ensuring that the financing for this activity is not called upon by the core business-units is a pre-requisite.
It is critically important that the ‘ring-fencing’ is for the purpose of resource ‘protection’ and does not result in the Transformation Teams ‘isolation’ from the rest of the organization. Although operating independent from the organizations business units, bureaucracy, processes and related rules, the Transformation Team will remain highly dependent on the organization for ultimate success.
A key to the success of any such ‘Transformation Team’ is its access to the comprehensive / specialist knowledge that resides deep within the organization about sector, market, customer, and business problems and how these might be resolved. To tap into and successfully leverage the power of that organizational talent and information pool, the Transformation Team must be closely tied to and have credibility with the rest of the organization. This ability to leverage the internal capabilities of the organization is particularly important as new ideas and models become more developed and need to be tested for their impact and probability of success in helping generate new or enhanced profit or revenue streams.
Be Realistic and ‘Give it Time’.
How many initiatives have you heard of that started off with the best intentions but, after a short period of time with no immediate benefits that could be measured on the bottom line, were shelved? Change does not happen overnight so set some stretching but realistic milestones and targets for rapid delivery of idea development and proof of concept, but not expecting immediate ’transformation’, is key.
‘Spend a Little, Learn a Lot’ and ‘Impatient for Profit, Patient for Change’ are two great sayings that sum up the ideal mindset for this type of activity.
Exploring new ideas should be done in smart, fast, low cost and exploratory ways where the objective is to build knowledge and ‘learn’ at every step of the way. Failure is part of the process, but with every failure there should be a learning that helps progress the activity. Set frequent, stretching but realist milestones and targets that are tied to a series / sequence of events rather than timeline.
All the time focus should be on feasibility and viability testing of new ideas and business models, and introducing these initially in small, low profile ways so that they can be built on and refined before being launched in a larger and more significant way.
A company that can successfully establish and operate a ‘Transformation Team’ in the way that we have outlined here must have an advantage in the market.
Not only would that organization be dynamic, responsive and able to identify and exploit new emerging opportunities, but it would also be an exciting and rewarding place to work. Creating that type of image and brand in the market would also attract high quality and new talent which itself could further breed success.
Another knock on effect of such an activity is that it could make the organization more robust in terms of its ability to quickly identify and respond to traditional and disruptive threats to its market position and business - an advantage that in tomorrows ever changing world is likely to determine who are the winners and who are the losers.
An organization would not go too wrong if it approached this using the Kotter Framework to leading change:
- Establish a sense of urgency
- Get senior management on board and build a powerful guiding coalition
- Create an impelling powerful vision to help direct the activity
- Communicate the vision – get feedback and ensure alignment before moving further
- Create and empower the team - the importance of giving the team the autonomy to set their own direction can not be over emphasized
- Start Small – Think Big…. But learn at every stage and communicate to the rest of the organization – don’t become a ‘secret silo’.
- Be innovative in your approach, adapt and improve as you go along – maybe the first form was not quite right so change it
- When things really do start working and show significant benefits, then share with and encourage the rest of the organization to use the approaches – institutionalize the change.
All the time remember - ‘Spend a Little, Learn a Lot’ – and don’t rush to what you think are immediate solutions.
Credit goes to all those that have commented and contributed to this hack
Some great comments and inputs made here so thanks to all those that have contributed.
Since I am now 'out of circulation' until the after the Sprint 5 deadline, I have sent a copy of the first pass of a final draft for this hack to co-authors Peter and Mathew for their comment, edits and asked hackathon co-ordinator Chris Grams to kindly post the final version on the website in time for the close date of Sprint 5.
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This is a good hack and a good discussion, but I would like to ask about the hacks you need to introduce into the management structure. For example, GE does something like this by using a combination of time boxing and tiger teams. Volvo Truck had an innovation lab at the corporate HQ where it brings people together to work on a project that they propose. I am not sure if its still there. They are relived from their regular duties during the project and get the opportunity to present the project to the entire organization.
So here are a few questions in the spirit of making the hack tighter:
Senior level sponsor, what are they sponsoring? I would imagine it will be something outside of their normal scope of responsibilities, otherwise the ring fence appears to be rather limited or narrow and self serving.
Boundaries, Boundaries protect the status quo? How do you keep boundaries from being another form of management control?
Team selection, who picks the team, how they draw people together are big issues to build adaptability? Are there any particular hacks to HR systems and the organization that are required.
Ring-fencing and protecting the team are great things to make the an environment for adaptability. The question is what do you do with the people once the fence goes down? Its great to be off creating adaptable solutions, but your careers is not built on a ring fence.
How do you determine how much time is needed. I know that you often say, it will take as long as it takes, but is there a combination of timeboxing and boundaries that you would recommend? Many firms look at quarterly goals and milestones. While there is nothing magical about a quarter, is that enough time?
I apologize for asking all these questions so late in the process, as I was overwhelmed by work requirements as well, but I hope that these questions help give some shape to the hack
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Sorry to be just now responding to the hack (too many balls, not enough hands these days).
Let me play devils advocate - which by the way is how the transformation team will be seen by the corporate antibodies their activities will provoke.
1 - In many ways, the reason you will need the transformation team is the self same senior management team you are suggesting they report to (remember I am in provocative devil's advocate mode here) - this senior leadership team is the source of creation, perpetuation and propagation of the environment you are trying to change. And the staff / organization knows it. How to deal with the risk of this transformation team being perceived as placating the organization's stakeholders? Think about innovation - A search of annual and quarterly reports filed with the Securities and Exchange Commission shows companies mentioned some form of the word "innovation" 33,528 times last year, which was a 64% increase from five years before that. (http://online.wsj.com/article/SB1000142405270230479170457741825090230991...)
2 - Great innovation and transformation tends to come from outside. Transformation challenges are complex and can only be solved by building bridges across wide-ranging boundaries. I wonder at the value of adding more boundaries? (Devils advocate) Yip, Ernst, & Campbell, in 2009 identified 5 types of boundaries (Vertical: rank, class, seniority, authority, power; Horizontal: expertise, function, peers; Stakeholder: partners, constituencies, value chain, communities; Demographic: gender, generation, nationality, culture, personality, ideology; Geographic: location, region, markets, distance) and my observation is that Innovation and I suspect Transformation happens when these boundaries are bridged. So how do you create team boundaries of crossing boundaries?
3 - I am a big (Devil's) advocate of Dan Pink's Drive thesis ( http://www.youtube.com/watch?v=u6XAPnuFjJc ) which would suggest (my experience concurs) that you would want the team to self select (not to say their can't be some management encouragement and framing) in order to maximize the amount of intrinsic motivation and reward, especially when the corporate antibodies kick in.
4 - The best (productive, creative, unstoppable...) teams are very hard to join and very easy to leave. I would think that for something as important as transformation that you would want that same morphology. In fact, mass migration out of the team would be a good early indicator that there is a problem. along with whom they report to, this is a case of how do you make them "beyond management"?
5 - Give it time, but demand progress (if self selected and intrinsically motivated, that will happen, but just in case) - the key is to move away from a calendar focus (time) to a series / sequence of events. For example, when I am motorcycle touring I never make hotel / camp site reservations - because I never know what I will discover along the way, so I need to be free to explore and might not make a specific destination by a specific time. On the other hand, I know generally where I am heading and can therefore know if I am making progress.
Sorry for the Devils Advocate approach - but hope it helped.
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The leadership I refer to is within the team and not within the business structure. I fully support that this level of innovation will only happen if driven and supported by the CEO or board as per point one on the KSF. Within any team, leaders need to emerge and leadership will determine the direction of the discussion and hence the innovation. A team will not function with multiple people pulling in different directions; in most cases this will result in fragmented sub teams, which might not be a bad thing as each team will attract people with similar interests, aligns with the self select concepts you refer to, and each team might come up with a different way of approaching transformation. This will enable the traditional organisational executive structures to assess various scenarios and select the most appropriate for the company or industry and to their level of comfort with risk.
Unfortunately the word innovation has become the flavour of the month with many organisations including the word in their publications and strategies without clearly defining what they mean or how they wish to change outcomes through innovation. In many cases a common understanding of the meaning of innovation is not prevalent, from within a company or across industries.
I agree that in many cases innovation that could lead to transformation comes from outside of the company or industry and it takes specific leadership at CEO level to see and acknowledge this and to be prepared to adopt step change innovative transformation; especially given the focus on reporting and meeting shareholder demands. I support your comment that transformation might happen more readily when boundaries are bridged, and expect this will most likely occur when thinking comes from outside of the common culture or structures of an organisation. The old forest and trees analogy.
I think that it is important that this hack explores the formation and life of the teams and expands on the ideas of size and attractiveness of the team, too many in the group might dilute innovation and mass exodus might support step change innovation where those that leave might be uncomfortable with the changes proposed which could indicate healthy change and therefore step change transformation?
I identify fully with your motorcycle touring approach as I follow the same. Makes me want to get out on the road again but will wait for summer!
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Peter / Matthew, Apologies to you both for having been 'out of the loop' for the last week and a bit - a lot on at the moment and so the business has to take precendent over the Hackathon I am afraid.
Anyway I will try and get a draft put together in the next couple of days for you to give your input to. Thanks for your patience / support.
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The struggle that we are facing right now is trying to change the culture in our areas from a heads down approach to an innovative approach. Our company has almost doubled and is continuing to grow exponentially. But, we still have a majority of the staff thinking "small business" like. This is way to siloed for what we want to do.
PS. We need spell check for these blogs :)
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the principles in applying innovation to business vary based on the industry segment, the organisation and the competition. For me one of the success factors is having the right level of understanding and intuition to determine which model suits the environment. The building blocks might be similar but the way of building the structure should vary.
This leads me to the point of the format or structure of innovation or transformation teams. In many cases success will come from a group that is guided by an innovative leader that has clarity on the end goal, even if nebulous, and then shapes and guides a team to come up with solutions that drive innovation that can be implemented and introduced to meet point in time business improvements. I include point in time as macro economic and the broader ecosystem will impact on the readiness of the organisation and market to adopt the proposed innovations. So though I support innovative skunk works or transformational teams, I believe that without specific leadership the link between true step change innovation and operational implementation is widened. Once again these principles need to be unpacked in context (what is the objective of the change and the transformation; is it step change, improvement, or operational excellence). Each will require a different team with different skills and different leadership. No team operates effectively without leadership.
The key to me is to have the insight to determine the expected outcomes and apply the best suited structures to achieve those. Each requiring specific and mostly different leadership capabilities. One size does not fit all.
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Interesting comment Matthew thanks, ... and one that just goes to show that we often face the same problem in widely different circumstances. Contrary to what you might have thought, what you describe is exactly the challenge that this Hack is targeted at ... i.e. to enable us to take a far broader innovative (vs siloed) approach to exploring and delivering new value added opportunities for the use of IT... opening the eyes of the wider organisation if you like... to the opportunities that they have through the use of IT.
I am also interested in your comment about getting away from a 'small business' mindset. Again this demonstrates how we interpret things differently from different perspectives. My professional background has been dominated by 'big company' / 'corporate' environments where we have often looked enviously at the speed, flexibility and adapatability of 'small business'. In my experience the ideal would be a blend of the 'best from both' worlds where you have access to the leverage and resources of a big corporate, whilst applying the more entrepreneurial mind set and approach of small business. From what you say about your company's growth then you are clearly successful, so rather than risk throwing out the core elements of your success, maybe one thing your organisation could do is to reflect on what it is that is helping that success vs what is holdng you back, and then keep or even further strengthen the positives. You might even want to use a 'cold eyes' to help with that since often the real keys to success are so close you dont see them!
The worst case scenario for me would be a 'small business' with 'big company' mindset .... luckily I can't think of any examples, but maybe that is because they don't survive that long!!
I think your experience and knowledge from the small business perspective would be great to help develop this Hack so how about considering joining us?
Anyway good luck in your endeavours whatever.
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I would like to join this hack.
I am sure this is not a new idea and that it has been tried and tested before. Semler comes to mind even though the focus was more on OD. However developing this concept so that it takes on an approach and structure suited to the current wave of technology enablement would be interesting. People behaviour is an interesting dynamic in itself.
email is email@example.com
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It is great that there was sufficient interest / belief amongst you all to want to develop this mini hack further. I firmly believe this could be an extremely powerful approach but to be successful we all know it requires some significant challenges to be overcome. As such I am really looking forward to working with you to help identify the right path to success so eagerly look forward to you signing up.
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