Saturday 13 October 2018


Most Established Organisations Will Descend into Oblivion During the Next Decade

In the next ten years, most established organisations, following their natural instincts, will do everything possible to sabotage themselves. As a result, they will lose relevance and fade away, consumed by a new wave of disruption.

Global stock investors are highly attracted to the FANG stocks (Facebook, Amazon, Netflix and Google – now Alphabet), given their fantastic performance and spectacular returns for stockholders. This group of companies has a remarkable intersection with the largest companies in the world by market value: Apple, Amazon, Alphabet, Microsoft, Facebook and Alibaba. Exceptional performance and impressive growth... What is the secret? What do these companies have in common? The prevailing view maintains that they are all technology companies, but they are not! However, they do all share an interesting common pattern

Today’s business world is vastly different to the one we experienced just a few years ago – the pace of change is astonishing. Several factors contribute to this reality; cultural, generational, social and technological; but the strongest driver of this tectonic shift is undoubtedly customer expectations. It is no accident that ‘User-Centred Design' is such a popular discipline these days. Hyper-personalisation and continuously improving, zero-friction experiences will be the arsenal for organisations that survive the next decade.

This change of context is well understood, as is the urgency to respond. Unfortunately, this is where most organisations’ understanding stops. They generally see investment in technological innovations as the required response; a more customer centric delivery model is also supported these days. More advanced thinkers contemplate reformulating their business models, and yet the most important factor in the survival equation is rarely considered...

It would be naive to think that we could compete in high profile, off-road car races by taking a normal sedan, painting it with race stripes, installing last generation accessories and hiring a high-performance driver. The most important element in a racing car is the mechanical ingenuity and the substantial power required under the hood. 

However, organisations are naively pushing themselves in new directions and facing challenges with new capabilities based only on changing the most visible things. They are not addressing the essential elements of the new type of successful organisation. 

The next few years will be characterised by the need for a dramatic shift: the 'operational revolution'. Some organisations will understand that soon, the backbone of the business is far more important than the front-end: it is not what is visible, but what it is inside that counts. Unfortunately, this is not generally understood, and most organisations will continue to be affected by 'industrial inertia'.

The dominant mindset in the business world today is still based on the principles of the Industrial Age, which underpinned the business successes of the majority of members of governing and executive bodies. Most organisations still operate based on scientific management; command and control; quasi-military hierarchy; organisational design following the business functions; supply-centred focus; linear strategic planning; homogenisation and standardisation of the workforce; and traditional application of the “fear factor” to seek performance. Looking ahead, applying these concepts is simply self-sabotage, however general professional development practices and business instincts are intrinsically linked to this obsolete paradigm. Dan Schulman, CEO of Paypal, recently said: “The biggest impediment to a company’s future success is its past success. I believe this issue is much more profound, and expands across multiple experiences, across markets and sectors, going far beyond the intra-company past success.

Returning to the FANG companies, let’s try to detect the pattern across the most successful organisations of the 21st century: under the hood, they all have quite a different engine. These organisations have a potent combination of management by values; an entrepreneurial, freedom and responsibility culture; firing up their workforce by igniting positive psychology; demand-centred focus; encouragement of diversity and differences; adaptive strategic planning; and organisational design optimised for continuous delivery. 

They also understand the difference between the Third Industrial Revolution and the Fourth Industrial Revolution. They leverage the most powerful force of this century - computer technology. Instead of thinking of IT as a supporting capability, the Fourth Industrial Revolution identifies IT as the core of business value generation. Facebook is not a technology company; it is a media company. Netflix is not a technology company; it is an entertainment company. Amazon and Alibaba are not technology companies; they are retail companies. However, technology is placed at the core of each company, enabling them to be super responsive to the fast context changes, and to deliver superior, hyper-personalised customer experiences. In the coming decade, it will be crucial for organisations in the finance, education, media, retail, tourism, health, trading, entertainment, professional, scientific, administration, real estate, logistics and government domains to change their DNA to survive. There is no alternative.

Interestingly, the following three pillars: change of organisational configurations; flipped cultural philosophy; and technology at the core, are strongly intertwined. Software engineering has been at the forefront of challenging the traditional processes of product and service delivery. Concepts like Agile, DevOps and Continuous Delivery, which emerged from software factories, are now affecting the wider organisation fabric, and have permeated in those pioneers that have technology at their core.

The end goal for businesses is still the same: customer hyper-centricity, responsiveness, and continuous premium personalised delivery; but we need to transform and boost the essential enabling capabilities to make our efforts effective and sustainable.

Trying to force our old, reliable, 'industrial' car to reach new speeds and undertake off-road challenges by installing innovative navigation technologies, improving driving skills and underpinning it with a good marketing campaign, would be not only futile but hazardous. All organisations will be exposed to more complex and fast appearing strategic challenges. It is time to forget everything that we believe works and embrace a completely new, philosophically different business-enabling framework.

The Law of Requisite Variety states: "The only way you can control your destiny is to be more flexible than your environment.” The trouble is, our environment is becoming more flexible every day.

The 2020's will be the era of a new breed of organisation, combining adaptive organisational design, supercharged culture, digital backbone and obsessive customer centricity. Leaders of this era will require the courage and skills of explorers and pioneers to successfully navigate these unchartered roads.

This is the time of tremendous risks and huge opportunities.

This is the time of the FLUID ORGANISATION.

But what is the architecture and core components of a fluid organisation? What is the suggested roadmap? What are the critical success factors? How do we manage the transition?

Well, all of that is a completely different story... 

(To be continued... )


Summary of Chapter 1:

  • During the next decade most established organisations will descend into oblivion, attached to the industrial model and incapable of responding to new contextual conditions.
  • The recent waves of transformations, digital and customer orientation, still challenging for many, won't be enough to ensure survival.
  • Organisations will need to become "fluid": Adaptive Organisational Design + Supercharged Culture + Digital Backbone + Obsessive Customer Centricity + new Leadership Style.

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