Most organisations are like dinner plates – they are optimised for one function. A plate can bear the weight of food. Even heavy food. It can even bear the weight of a human if placed on the floor. So dinner plates can take a great deal of force. But only in one direction and in a very specific situation (flat on an even floor). If you test the plate by slamming it against the edge of a table, it will break. It was not designed for such a force.
Organisations birthed in the industrial era were built to deal with a specific set of forces, namely market demand for a specific set of products and services, and a specific set of threats. They are thus fragile. As mentioned in a related article, the industrial era enjoyed a certain synthetic certainty that created sufficiently stable conditions for such “one-trick ponies” to thrive.
The day of synthetic certainty is over, and consequently so is the industrial age. We are seeing increased volatility and uncertainty. Everything is connected to everything and so everything impacts everything. Exponential growth in new technologies is creating unprecedented opportunities. Similarly, threats are emerging in unfamiliar forms.
Organisations with a fragile business model will not last long in these tempestuous conditions.
Super-resilience
We need to build organisations that can not only survive in this new world, but become energised by it. Uncertainty becomes rocket fuel. This requires a new operating model and a new type of employee. This ability to grow stronger under pressure is called super-resilience. We need to build super-resilient organisations.
Over the years, I have developed a method to help industrial-era organisations transition to a super-resilient model. Let’s look at some of the key elements of my approach.
Operating model
The most successful operating model ever is that of the tribe. Tribes are optimised for the harshest of conditions. I have studied the work of anthropologists to establish the key success characteristics of tribes. Of the five I have identified, attention and adaptability are the most important.
“Organisations that do not pay attention to the market are at risk of missing out on opportunities and becoming the victim of unanticipated threats”
Ade McCormack, Auridian Consulting
Organisations that do not pay attention to the market are at risk of missing out on opportunities and becoming the victim of unanticipated threats. Sensors and analytics tools are key to this, as is a coherent data architecture. Only when we pay attention can we start the process of adapting.
Managing risk
Risk is traditionally considered as something to be avoided, eliminated or minimised. In the digital age, risk management means risk acquisition. This necessitates more experimentation and consequently more failure.
This will not sit well with organisations that hold Six Sigma and business process engineering in high esteem. These have their place, but industrial-era organisations are unlikely to “efficiency” themselves to thrive in the digital age. Failure velocity, in my view, should be a new organisational key performance indicator (KPI). If it is too low, your organisation is, perhaps ironically, at risk.
Innovation
Increasingly fickle customers are expecting more for less. To keep their attention, we need to develop innovative products, services and experiences. At this point in time, humans do innovation better than technology. It’s worth mentioning that humans plus technology do innovation even better.
To maximise human innovation we need to create the conditions for cognitive flow. To do that we need to look at our natural anthropological drivers. I have identified nine. Examples of these include our need to be mobile, social and curious. Notably, Google’s offices are built to cultivate maximum cognitive flow.
Asset management
Smart organisations focus on growing assets. Impulsive organisations focus on profit. If the famous marshmallow test could be applied to organisations, those that focus on profit would fail the test.
“Smart organisations focus on growing assets. Impulsive organisations focus on profit. If the famous marshmallow test could be applied to organisations, those that focus on profit would fail the test”
Ade McCormack, Auridian Consulting
Of course, investors insist on profits. But smart investors recognise that it would be wise to build a portfolio of assets that can act as a war chest or buffer against an unknowable future.
Talent management
As stated, humans are an important element of successful digital-age organisations. People working for industrial-era organisations have been recruited specifically for their lack of innovation. The factory machine requires compliant, manual-following cogs. Many of these people will not respond well to purposely engaging their brain. But some will.
The people who can turn their brain power into innovative market value will be in demand, because there are so few of them. Job number one for organisations is to secure and retain the best people.
Transformation warning
A word of warning. Any attempts to transform a factory-based model will likely unsettle your people and disrupt your cashflows. I recommend that you continue to run your existing factory for as long as it creates value. By all means digitise it.
Most importantly, you need to create multiple business models. Your factory is plan A, you need to build plans B, C, D and so on. One day, the digital grim reaper will turn up at your factory reception, so you had better have another source of cash to kick in as your primary business.
In summary
Digital transformation is not digitisation. It is much more than that. The aim is not to produce a high-tech (Industry 4.0) factory, but to create an organisation that can deal with an unknowable future. We need to build super-resilient organisations.
This article is the third in a series of three. Read part one and part two.
Ade McCormack has developed an online education programme to cultivate organisational super-resilience. Visit www.dri.guide and select the Business Transformation Programme. You will receive 50% discount with coupon code CWDRI19.
