Monday, October 20, 2014

The Future is Social Business EcoSystems


The Future is Social-Business EcoSystems

Building the Case for the Glia Design

Context

Breaking from the pack isn't easy. Yet, as this comprehensive study from McKinsey and Company shows, most companies are mired in being just average. 
For example, we saw that the corporate world, like the world beyond it, has a relatively small number of elites and that, just as society grapples with the contemporary challenge of limited social mobility, many companies seem stuck in their strategic “class.” Escaping the gravity of the corporate middle class, indeed, requires businesses to expand or reinvent themselves unusually rapidly, often in the context of an industry whose overall performance is improving.
What are the implications for being in the middle pack?
  • If you’re in the middle, you mostly face a battle of inches. A fortunate few companies will ride a favorable industry trend. But for the most part, it will take substantial strategic or operational shifts to escape the gravity of market forces. The odds are against you, which elevates the importance of looking at strategy with a high degree of rigor.

Another trend to consider here is the lifespan of companies is shrinking.
 Ultimately, the challenge faced by all companies is to grow at or above the pace of their industry without losing control of their operations. The Innosight study shows that very few companies achieve this goal.
Encouraging? Hardly. What's happening? That technology is disrupting business models is hardly news. That "digitization" is impacting strategy is also not news. Awareness, or ignorance, of the depth and nature of economic environment shouldn't be the problem. So what is?

Leadership

Or, rather, a lack of leadership. Leadership isn't a title on a door. It isn't authority. It isn't management. It isn't being the head of a company or division. These positions are in abundance. Leadership, however, is not. And all the fads around leadership today are more myth than reality.
There is little doubt that many of the problems afflicting modern society are traceable to an extraordinary dearth of leadership.  In politics, business, education and a myriad of other fields, we are continuously reminded of the inadequacies of those in charge.
The challenges don't stop there. The university system that served the industrial era economy reasonably well, does not serve an economic landscape that is much different  from the previous few hundred years. What we have now is an education system training kids for a world than no longer exists.
What about the employee base companies do have to work with? They're mostly not engaged with their work.

For businesses today, leadership is about moving out from the morass of mass mediocrity to a world that gets the most from its talent base, it's people assets, and delights its customers.
This is what is required of leadership today--to guide stakeholders, assets, people and customers from the mountain peak it is currently on, down the slope and through the valley of death, and then create the more prosperous mountain peaks on the other side. Most everything else is mere shuffling of deckchairs on sinking ships.

The Mountain Peaks of Prosperity are Thick with Rainforests

More so than ever before, businesses are the function of ecosystems. Understanding even that is a big step forward. Nurturing the ecosystem upon which the business depends is a bigger step yet. Leading the way towards seeding and growing rainforests is what any responsible leader should be striving towards. Rich, diverse, well conceived and executed social business ecosystems are where the "gold" lies, the future 'engines' of prosperity. 
This isn't a trendy metaphor, but rather a much deeper, richer understanding of how the world is, and how economies function, and their role in a prosperous society. 

+Jennifer Sertl , one of my trusted sources with her finger on the pulse of business today,  returning recently from the Sibos conference, brought these insights from the thought leaders in the finance industry. The financial industry. Not academia. Not flowery optimistic change agents. The financial industry. Let me highlight a few key paragraphs from Jennifer's recent LinkedIn post on the conference:

Swift has an internal innovation lab called Innotribe, which is a group of individuals who travel globally to collect innovative thinkers to bring to Sibos to help bridge the gap between protection and innovation. Two speakers in particular made it very clear that competitive advantage today requires individuals build robust relationships across business sectors. Peter Hinssen asserts,“if you understand networks, you will understand the future.” Things are more relational and less hierarchical. There is too much to know and individuals can no longer be single point sources. Those who will have the best sense of reality are those who live and foster relationships in robust networks. So many people like to be with individuals that are similar in lifestyle and expression. Yet, navigating complexity requires people to be more interested in what they have to learn from one another than what it is that they have in common. Similarly Ann Badillo urges that rather than think of a network as a community, think of it “as a rainforest.” She says,“we need to go beyond building networks to building eco-systems.” This requires a much more robust inclusive design around friends, clients, customers, shareholders.
This may be the best paragraph I've read yet summing up the reasons to move towards a vastly different way of thinking of the business entity and it's place in the socio-economic environment.
Sertl goes on to say:
 Sustainable innovation and entrepreneurial growth come from ecosystems, not mere assets. Ecosystems are environments designed from the bottom-up to foster serendipitous interactions. The ecosystems are nurtured by several key cultural traits: connectivity, diversity of ideas and talents, deep levels of trust, motivations that rise above short-term zero-sum calculation, and cultural norms that encourage dreaming, risk-taking, and paying it forward.
Every single point there is bang on, and can't be separated from the other. This isn't some kind of piecemeal strategy. It's all in, or all out. The losers will be those that could only ever dip their toes in the water, that never dove in and learned how to swim in the new environment. The leaders will be those that inspire all involved to dive in, learn to swim, and learn to synthesize and synchronize.
If you're thinking to yourself that a lot of the culture and culturally rewarded behaviours of today's organization are ill-suited to the new environment, you're absolutely right. Leaders will know how to either sort them out, and rid the organization of the ill-suited, or inspire their charges to embrace the new world, and how to thrive in it. The knowledge needed to thrive in these new environments abound.
In closing, Sertl nicely circles the square with this quote:
 Penny Hembrow, VP of Global Banking at CGI Group, Inc. was an exhibitor at Sibos. When asked about today’s competitive advantage and navigating complexity, she gave a large smile and let out a sigh, “At the end of the day we must never forget that consulting at its best no matter what you do is about problem solving.” One of the biggest challenges we have right now is how to be globally minded yet serve our local communities. We have to toggle all the time between global and local. We might have large global networks, but at the end of the day most transactions are really made in person face to face. Even though it might be difficult, one has to find a way to have one foot planted in the macro and one planted in office in the life of the person you are serving. Hembrow refers to this as “the art of proximity - bringing global relevance at a macro level to the front door of the person you are serving.”
What does this mean? A continued move away from competing on price, and mass production, and towards competing on value and value creation. Which means more and more a world of customization. What does this mean for management? (yes, Virginia, management still matters) That managers are gardeners, who nurture, nourish and feed their ecosystem. Is that being taught at business schools? Probably not. But that is where the followers are, not the leaders.

In my next post I will explore with you what are the necessary design characteristics of a healthy social business ecosystem.