It’s all too easy to underestimate institutional inertia. Cultures that have grown up over decades can be large, unwieldy and complex – even, at times, paranoid and complacent. I call them “zombie organizations” and they must be fought at every turn. Why? Because the speed of change in many industries is now measured in months, not years. And the advantages flowing from customer experience excellence or service innovation is now achieved sometimes in a matter of weeks! I am lucky enough to talk to many business leaders as part of my job (last week I posted about what I heard in Sweden). They’re scanning markets, monitoring competitors and listening to customers, all with the healthy fear that a recent tech innovation or well-capitalized start-up will blindside and rip their business model to shreds (blockchain anyone?). The pressure is relentless. And many have now realized that their corporate culture will kill (or enable) the great shift into software.
Surviving a seismic shift as big as this one means driving new cultural codes and behaviors into the organization. Creativity, inventiveness, and agility are the cultural watchwords for the software age. But culture must extend beyond social engagement to the kindred of mission and values that ensure people want to work for your organization and work together to ensure its success. Culture is now under pressure: The way we put people to work and the talent companies’ need is changing as workflow flips around machines and the pressure for hyper-innovation ratchets up the pressure on people even more. In fact, value chains are being torn asunder as organizations and industries blend talent, disciplines, and technologies in a supercharge wave of innovation with, yes, compelling outcomes for customers, but it’s taking its toll on people tasked with delivery. In fact, instinct tells me many large; unwieldy firms are struggling with their culture as organizational flexibility, agility, and cohesiveness break down as the stunning pace of technology change continues. Something has to give.
The first step is recognizing that the roles and tasks your employees undertake are increasingly “digitized.” Capturing value from the virtual means organizing, distributing, and performing knowledge work in entirely new ways. And here lies the tension. The top-down changes in a business model/operating model are clashing with the bottom-up changes in how people now work and the emerging realities of the 21st-century career (more meaningful work, autonomy, equality and where corporate “reputation’ matters more than ever). Moreover, talent is globally distributed much more than ever before, while a diverse range of working styles challenges the cohesive core that was normal for an organization ten years ago. Cultural norms it seems, have to work through partnerships and ecosystems. Open platforms, APIs, sensors and the Internet of Things (IoT) have led to a global explosion of entrepreneurial activity which uses the building blocks of ubiquitous connectivity and cheap processing power to create digital assets and micro-services for almost anything. Increasingly digital and intelligent products and services are no longer standalone entities but components that interact within an extended ecosystem. Work teams are starting to blend as workflows shift—check out big Finance co-opting Fintech to drive better customer experiences, or big-pharma embracing digital health initiatives, and there is the eco-system play in manufacturing 4.0, (the list goes on; no industry is immune). Culture is fragmenting across a diverse range of players and its challenging leaders to move from rigid, command and control structures to more fluid, contextual and modular approaches.
I am writing about this now at the CFOW. Perhaps your firm needs new organizational structures and a cultural ethos that works across an extended work team. These structures need to be aligned internally with a customer group or emerging niche—and perhaps in the not too distant future, teams from different organizations start co-locating together. These structures will blend the skills, capabilities and innovative thinking, inside, outside and across the organization and beyond while the culture needed grows like connective tissue. It is hard to do moving from the traditional and functional, rules-based culture and its structure which is all about control, towards more fluid, modular and contextual constructs. But it has to be done. Because, compared with more nimble and collaboration-orientated competitors, the metabolism for cycling ideas and innovations must increase to survive—companies need to develop flatter corporate structures, smarter governance, and rapid decision-making, freeing them up to cycle faster than they have ever before. Culture matters.