In the immortal words of John Cleese...and now for something completely different. Something different because I’m throwing down a metaphorical rope ladder from the CFOW ivory tower to validate or better still, challenge, some of my thinking. How? Well I decided to interview Charles Andrew, head of Idea Couture in the UK to quiz him about the ideas set out in my report People—Not Just Machines—Will Power Digital Innovation. Did he agree with them? Read on...
Euan: Thank you Charles for agreeing to this interview and to validate our take on the future of work! A big part of the story explains how new technologies are causing value chains to evolve and organizational boundaries to blur as niches and digital opportunities explode—think of the connected car or the connected home as powerful examples. What is your take?
Charles: Yes – and it’s hard not to! I think the term “value chains” is an interesting phrase because in the end, value chains form around what people value...and these rarely correlate with the ways that industries and companies are formed (which are more about sets of activities or assets strung together). I think digitization creates the potential for more organizational fluidity but it does not automatically answer the questions of what those new forms should be. As long as end customers/users are human, it will be their needs (not always articulated!) that we need to understand as the basis of our organizational change.
Euan: So firms need to think about their customers as people and innovate to satisfy them? With that, how do you view innovation? From the conversations we are having, new technologies and new ways of working are radically changing how people work together to create value. The need to constantly iterate, experiment and innovate are now key requirement—the speed of innovation needs to increase.
Charles: Broadly we see two types of innovation: 1. we know what needs to be done so now let’s do it better (solution = get on and do it - albeit checking your assumptions about the customer perspective on this may be worthwhile!) 2. We don’t really know what our destination needs to be; our initial task is to understand/define it, before leaping into navigating there (this is especially where our firm, Idea Couture can help!) I think that digital capabilities are a necessary, but not sufficient, condition for successful innovation. Some of the eternal rules still apply; a clear strategic goal/vision with the real (emotional) buy-in of the organisation, and design that is sensitive to the real lives and needs of the people it is for. So your report title People—Not Just Machines—Powers Digital Innovation is spot on...
We have read a lot about the “gig economy” and in the report we talk about how sheer blistering pace of business change means leaders need to build their own “gig engines” for work just to keep up. When it’s done right, externalizing digital work can create a more flexible, distributed and transient workforce that can adapt to rapid cycles of business change and reinvention. Where do you see the problems with that view?
Well for me, I believe companies have always struggled with creating a meaningful vision that motivates and directs the efforts of their people and this is set to get worse. It will be even more challenging in a more transient and distributed world of talent that you describe in your report. Consequently, the skills of storytelling will become even more important for leaders; creating a narrative that weaves together the organisation's activities in pursuit of outcomes that have clear meaning and relevance to the people the organisation exists to serve - its customers.
Perfect timing because we’re just about to launch a major piece of work on leadership in the digital age and the “vision thing” really matters. Leadership behaviours that can nourish a vision and engage people into what it takes to reshape a market or industry are now super critical. I do think many organizations struggle however because they aren’t nimble enough to capture the opportunities that are on offer; they find rapid innovation difficult to do. What is your take?
I am not sure that “nimble” always means fast. Nimble means the ability to change (or tweak) direction; not just charge ahead. Successful innovation is rarely about implementing the exact idea that you started with; it is about learning and adjusting along the way. Although easier said than done, accepting that you need to respond to changing customer behaviours is often the same as saying "let others innovate and we'll follow". After all, why are those customers behaving different? Often because someone is already offering them something different (and better).
So how do you begin?
Obviously listening to customers is a good thing...but what is heard from them often suffers from two problems either the 'message' coming from the customer is unclear, or it is only being heard through the lens of the way the organisation (would like to) see the world. Idea Couture's work is often about resolving these challenges. But equally fundamental; 'listening' to customers assumes that a) they can articulate their feelings, b) they can tell us what they would really like. Neither of these should be assumed!
One of the major themes we explore in terms of customer innovation is the concept of the platform. In my view, platforms are quite simply layers of software that surround people, processes and things (Editor note: check out the concept in code halos)—they work by linking digital assets, products and customer demand together to make new services available. They’re a vital construct for innovation and talent and they are beginning to direct the way middle and back-office work gets done. What’s your take?
For me, this gets back to leadership and vision. To conceive of the platform in the first place requires a vision that transcends existing organisational boundaries and understands (and satisfies) the needs of multiple players in that ecosystem. The platform does not create itself; the innovation vision is required to drive it. When people were the 'platform', they could handle fuzziness and imperfections in business processes; people would intuitively adapt what seemed like the 'right' thing to do in varying circumstances. What could be problematic is the platform can 'bake in' processes in more rigid ways. Whilst data analysis can often identify pain points, it can't do it until the pain has already happened (and the customer lost?). Data also finds it more difficult to identify what customers would have preferred if only it had been available (but wasn't). Platforms facilitate more complex bundling of features, which throws up far more questions about customer preferences than in in 'old days' of singular products or services. All these reasons contribute to the fundamental need to build in (real, not imagined) customer/user insight and empathy into the whole process of platform design.
Spot on. Vision is again, essential and problems arise when it’s not just processes that are hard baked into the platform but decision making as well. Our forthcoming report talks about how algorithms don’t make good leaders! (Dare I mention Uber...the illicit tagging of customer iPhones and the squabble with Apple show that Uber needs more EQ in its leadership decisions).
Agree; the focus needs to be on compelling outcomes for customers (and to be bold, imaginative, and insightful about what those could be) rather than "let's apply this and that technology and crank the algorithm". The problem for organisations is that it's rather easier to decide on the latter than the former.
I guess the big question for a leader to ask is this: Is their organizational model really fit for purpose? And the reason to ask is because traditional rigid approaches to organizational management are giving way to something much more fluid and connected...
Yes. And where you have less control, you need to have more vision. Empowerment and distributed activities are in even greater need of a lodestone to harness and coordinate them in the right way. Understanding and defining the PURPOSE of the brand or organisation is therefore even more important than ever in this evolving world of world. And what gives the purpose meaning is where it is not just self-serving but understands and articulate how we intend to serve others (customers). Finally, the power for storytelling is what distributes and breathers life into that vision.
What comes through loud and clear is the importance of vision. The organizations that we work for need a vision of what they could be—the hard-work then begins realizing the vision.
Thank you Charles. Very insightful.