Summary : while the need to transform organizations seems to be a given for anyone it seems that the only that are still doubtful are organizations themselves. To be more specific they don’t seem bo be very concerned by the argument that are put forward. Convincing enough to start tactical and window-dressing programs, not enough to start a true management and organizational evolution. Innovation, Gen Y , engagement look important but not vital. The concept of knowledge economy is too theoric. The only thing left is thefact value is moving to services, regardless to the kind of product the service comes with. This “servicization” of economy implies an adapted way to operate and a better use of intangible assets. That’s a key point because if business don’t get this value shift they won’t have any relevant reason to undertake deep changes in a coherent way.
I recently wrote that rather than trying to become an enterprise 2.0 or a social business, enterprises should focus on inventing their own future. Adopt a model that is their own, depending on their context, culture, industry rather than one that seems so generic that organizations feel it has been invented to fit anyone’s needs except theirs.
So I identified a couple of main lines on which change should apply (execution, learling, relationships with the ecosystem) and in a future post I’ll tackle the need to handle them in a coherent way and the levers to use but, first, I’d like to address an essential issue. Why asking such questions ? Why changing ? Why doing so much effort while organizations alwas managed to solve their problems with good old tricks ?
This is a very important point. Without it there is now way to involve people at the highest level of the organization. No chance to stop non-coordinated initiatives and window-dressing programs. No chance to get the needed resources. If there is no shared vision at the highest level on “why” there is no hope to really change things. Either nothing will be done or some initiatives will be taken but without ambition or coherence. So, better doing nothing.
So why changing ? The arguments have been known for years and have been repeated again and again for five years. But we have to admit they were not convincing enough.
â€¢ Web 2.0 is here and we should bring its usages inside the workplace. Is the fact something exists outside enough to bring it inside ?
â€¢ It’s going to be easy…everybody use these tools. But experience shows that these tools are not mastered enough for a business use and business usages are still immature or not existent. By the way, that’s not because something is easy that it’s desirable.
â€¢ Gen Y is asking for it. Today, observations show that, despite having their specifities, Yers are not the expected hurricane. Plus, the previous point is also valid for them ; using Facebook in their private life does not mean they are able to make the mostr of social practices in the context of work. Last thing, that’s not because a part of the workforce is fan a any kind of shiny and trendy tools that the organization needs to change to adopt them.
â€¢ The word has became social. Great ! Can you tell me what it means for my business ? My bottom line ? My P&L
â€¢ We need to increase engagement. Nothing new here. It’s a good old HR concern. And we all know that a social network does not replace an actual HR strategy.
â€¢ The we we work is not working anymore. This argument is the more rational one. But why changing everything ? More pressure and rigor should be enough, shouldn’t it ? Why changing everything instead of fixing things the old way ? Because we’re not good at sharing, because conversations are lost or don’t happen ? We don’t pay people to have conversation but to work. Why should we make it a time-consuming part of work ?
â€¢ The social customer forces us to adopt new approaches. Ok. So lets open a page on Facebook. But I see no reason to change the processes behind the customer interface. That’s business as usual with a new housefront.
â€¢ We must innovate. So let’s open a new online ideas box.
There is a part of truth in all these arguments but, unless people have a special intuition, no reason to undertake deep changes. Keep things as they are, do some window-dressing and everything will be find. Enough to start a couple of programs, not vital enough to really change the organization.
Is there a way to see and explain things differently ?
As I often say, organization don’t change because of a trend, because something new is possible or because it looks nice and funny, but because there is an urgent need that may impact the very existence of the enterprise on a mid or long terme track. Of course, there’s the argument that’s been used for decades, an unanswerable one that never had the expected effects, mostly because we’re still looking at things with the same yes. This argument is the shift to the knowledge economy. In fact, knowledge economy does not exist : both the idea and the need exist but don’t have been turned into a concrete and sustainable model. Why changing management and organization because raw materials have changed ? Moreover, knowledge or not, we’re still selling products or services.
As a matter of fact, the concept of knowledge economy has few value if we do not pay attention to the value creation shif. Of course, business are still selling tangible goods, but value is moving from the product itself to associated services. In more and more cases, goods are a part of a service. Car manufacturers are about to stop selling cars to sell mobility, tire manufacturers are not selling tires to airlines anymore but a give number of landings and take offs, mobile phones are a part of a communication servicer (that’s why they’re often subsidiarized). Take a couple of minutes to wonder if the music industry is facing a product issue or a model one, if the future of music is to be consumed as a service. Even in the service industry, banks start to understand that selling a financial product is not the goal nor the end of something but the beginning of a relationship which quality should be improved. The fact employment has been moving to services has been known for decades and there’s nothing new here. The point is that, regardless of the industry, value moves to services. What changes a lot of things.
If we consider products as constants, differentiation is made through services, the ability to make the product a part of a whole that meeds a given and specific need. Sometimes a unique one. It means that organizations should be able toÂ mobilize resources, knowledgeable people, to know if anything similar has been known or, if needed, to invent something new. It means that initiatives should be initiated by those who work in front of the customer. It needs knowledge and people who detains it to be identifiable and mobilizable. And, because of the short time available to respond, upward delegation has to be replaced by something more effective to solve problems and make decisions where and when the need emerges. This is why more autonomy is needed, why managers need to become more supportive. Last, since it’s less about innovation than recombining existing elements, service innovation becomes a major challenge.
Let’s also add another new variable : customers are more and more becoming a part of the process. They’re even sometimes a part of the execution part. Hence the need for redesigning the way the organization interacts and collaborate with them in an extended value chain. In B2B as well as B2C.
Most of all, in the service economy, customers don’t value what’s been delivered but their perception of what’s been delivered. Some call it the “experience economy” but, beyond the words, there’s a reality. That is the ability of reconfiguration made possible by information in order to deliver more perceived value that is the source of value and competitive advantage. That’s also a challenge in terms of productivity measurement :Â value does not depend on the time spent but on how the time spents impacts the customer’s perception of value.
So we need to change the way we thing, design and execute. This’s where the link between knowledge and services lies.
Information, a good use of it, the ability to reconfigure products and processes is a key lever in a “serviczing economy” because value and competitive advantage will depend on them.
It’s hard to consider knowledge economy as a sufficient argument to trigger a deep and global change if we neglect the “servicization” of economy. But to, admit this point, we need to go one step higher and understand how value is moving inside business models.
Conclusion : if there’s not, at the very beginning, the cousciousness that value models are changing it’s impossible to draw the conclusions that will motivate a radical change (and even if one has the intuitions, it’s needed to justify it). So there will be no good reason to start the right programs, to head in the right direction, in a coherent way, with the needed resources.
In one sentence : if no one tries to understand how value is moving in the model there’s no reason to change anything and do more than window-dressing.