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