COVID-19: When we rebuild, we need a new blueprint

The COVID-19 pandemic has underlined a number of issues with the design of our organisations in both public and private sector. We have been shown to be ill prepared and slow to adapt in the face of such a challenge. There will never be a perfect response. These challenges are unprecedented. But organisations that had prepared for dramatic but much narrower changes in their own sectors will have fared much better than those that were optimised for the status quo. Because though the scale and breadth of the challenge might be different, the fundamentals of the response are the same.At the core of any new model must be this principle: build for adaptation, not optimisation. Whether the change that disrupts your world is affecting just you, or everyone, it is going to come. And as I argued in High Frequency Change, our hyper-connected, low friction world, means the challenges that come may be many and varied. They will only be visible on the near horizon before they arrive and turn your world upside down. You have to be ready to respond.So the question becomes about your objective: are you here to make hay while the sun shines? Or are you preparing for the inevitable rainy day? Do you want maximum profit today? Or do you want to build sustainable success?If you want to build sustainable success, then you need to change the way you think about your business.

A new blueprint

In Future-proof Your Business, I make the argument, and offer the tools, for three fundamental changes in the way we design and operate our organisations. It is focused on a business audience but the lessons are just as valid for the public and third sectors.

Focus on the future

Most organisations are terrible at planning. It is true of their annual budget, frequently a drawn-out and rancorous affair that does little to inform business operations. It is true of their strategy documents, often disconnected from the budget that supposedly backs them. For the most part, outside of some critical moment's in the business life cycle, we only do real strategic planning under duress. I prescribe that every leader should spend 1% of their time focused on the future. This isn't a day of dreaming, but the use of structured tools to scan the near and far horizons and reset the direction accordingly.

Accelerate decisions

We move too slowly in response to even the most powerful stimulus. We need to accelerate business decision-making if we are to be truly resilient. That means speeding the flow of information to the core decision-makers. But more importantly it means distributing the decision-making more widely. Future-ready businesses give their people the autonomy, the responsibility and the tools to react to changes in the environment.

Structure for agility

Giant monolithic operations, directed from the centre, have little hope of responding at speed, or of ensuring the right response for every one of their stakeholders. Distributed organisations, networks of semi-autonomous components, can react much faster. Like a box of self-assembling Lego bricks they can reorganise to meet each challenge.

Future-proof Your Business

Given the relevance of these tools and messages at this challenging time, my publishers and I have decided to bring forward the launch of Future-proof Your Business in its digital form. Rather than launching at the end of July, it is available from today on the Kindle store. An audio version will be following as soon as we can make it happen.I will be doing a series of digital seminars around the launch with partner organisations. Already in the diary is a talk and Q+A hosted by Herb Kim for BIMA at 6:30 pm on the 23rd April. And a session with Downtown in Business at 2pm on the 24th. Watch my social media for more details and joining instructions.Future-proof Your Business is available now on the Kindle store. Download your copy.

The future of strategic planning

In the early days of my last start-up, CANDDi, I remember my co-founder, Tim, telling me about a technology he wanted to use. Graph databases. We were building a platform to help people understand the relationship between lots of different sales and marketing data points: interactions with sales prospects on the web, email, social media, phone. The value was in the relationships between these data points. By understanding the relationships, we could map someone’s journey through the sales cycle. We could understand which of those touchpoints were effective. And maybe predict when they were ready to buy.Graph databases, Tim explained, were focused on the relationships rather than the data points. Because that’s where the value was.

Building networks

This nugget stuck with me for a few years until I was asked by the chief executive of a London borough council to help him design a council for the future. The model I came up with was in some ways like a graph database. A network of nodes rather than a monolithic whole.The reasons for creating this network model were many. Local authorities, like most large organisations, have many disparate functions. Like most organisations that have grown organically, they can be quite chaotic in form. Skills and capabilities are unevenly distributed. As is control: too much at the centre, not enough at the edges. Faced with falling funds and rising responsibilities, the organisation needed to be more efficient but also more agile. Able to adapt quickly to rapidly changing circumstances.I don’t believe you can ever try to squeeze such an organisation into a totally rigid model. Nor do I believe there is much value in trying to do so. But I thought there was a better organic form that might offer the required agility. Restructure the organisation around nodes of capability. Distribute more power to each of those nodes to give it a level of autonomy. Arrange those nodes around the citizen (a term I prefer to ‘customer’ in public service) in concentric rings, from those that face them on the inside, to those that face the rest of the world on the outside. In the middle, the nodes that do the data and processing that drives it all.I called this model ‘Stratification’ because of those layers.

What’s the right structure for a large organisation?

So, what’s the right structure for a large organisation? I tackled this question again when a £250m turnover logistics business asked me to help them to be future-ready. Neither they nor the council were Apple-scale. But I think the answer holds as you scale up.My answer in both cases was similar. It starts with perspective. Every org chart is created from the leader’s perspective, and so has the leader at the top or in the middle. But we know that the most important person in any organisation is not its leader. It’s the customer.Reorganising the businesses around the customer gave us a model of concentric circles: a common interface layer, a common network layer for data, and a common external interface for partners.This, in turn, led to a clear need to define the interfaces at each of these layers very carefully to minimise friction — another way of maximising the accessibility that Steve Yegge talks about in his famous platforms rant.Where things get really interesting is when you diminish the friction not just between layers in this model, but between different services and functions.

Functional vs Divisional

In the classic org models, you would divide the business up by functions (HR, finance, sales, marketing) or by business line (product A, product B, product C). Most companies do a bit of both. The attempts to rationalise this hybrid often end up with a matrix: people have a functional reporting line (more senior people of their discipline) and a divisional reporting line (more senior people responsible for the delivery of products or services).In our model, we proposed more of a service model. Part of this fits with the description of Amazon’s data-driven approach as Yegge describes: there are lots of interfaces that are currently based on high-friction, human-to-human interaction where little would be lost and lots gained by changing them to low-friction digital interactions. But there are also interactions where the human-to-human component is absolutely vital: creative, decision-making, or complex communication. Here we often suggested more of an agency/client approach.

Low friction communications

Such relationships in the past may have been very high friction, hence the perceived need to co-locate people or set out the org chart to define hard connections. But technology has enabled very low friction interactions — e.g. shared documents, instant messaging — that supplement the richer face-to-face interactions that these relationships require.The availability of high-speed digital communication has also reshaped our networks, at home and at work – though those two are increasingly superimposed on one another. When information flows so freely, there is less need to be close to the other nodes in the network, either physically, or legally. Face time with your colleagues remains hugely important. But 90% of your tasks can be conducted by the exchange of digital data.Once that is true, does it matter whether your colleague is in the same office, or even the same country? Does it matter that they are part of the same company?Increasingly, it does not. With the right interconnections, we reshape the nature of organisations, commerce and economies.

The interconnected enterprise

My fascination with the connections that enable this structural shift, from monoliths to networks, was renewed when I was contacted about working with a new client, Console Connect. The company’s raison d’etre is to ease the creation and management of these connections in their most tangible form. The telecommunications links that connect us to our organisations’ disparate nodes around the world and across the cloud. They knew how important the relationships were in any network, and they were working to take some of the friction out of those relationships.The result of our collaboration is a report on what we termed ‘the interconnected enterprise’. It is an evolution of the model initially created for that local authority, that then evolved through my work helping large corporates to structure for agility. A model that was most recently refined in my book, Future-proof your business. You can download the report here.

The future of business leadership

So, what kind of leader is needed in a future interconnected enterprise? I learned a new term while working with BMW and Strategic Leadership: Ambidextrous Leadership. Ambidextrous Leadership is about how you balance the challenges of today and the opportunities of tomorrow. It is about how you deliver operational excellence, while at the same time exploring the horizon for future growth. In the language I use most often, it is about how you balance optimisation, with adaptation.Ambidextrous Leadership is a term that I had not come across before, though it is not new. It appears to have originated in the 1970s, according to this valuable summary, and been popularised in the early part of this century. Since I started researching it, I have found endless articles on the topic. This one from Deloitte is particularly worth a read, and I shall refer back to it below.

Optimisation and Adaptation

I have spent the last few years preaching that organisations must shift their focus from optimisation to adaptation. We are so focused on the performance of today’s business that it feels like a massive effort is required to create more time to focus on the future. But of course, we can’t stop thinking about the business as it is today. It has to keep ticking over and even improving. Ambidextrous leadership is an attempt to create some balance.The Deloitte article linked above suggests two modes of Ambidextrous Leadership. First is a structural ambiguity. This means hiving off the ‘skunkworks‘ division doing the high-risk exploratory activity looking at tomorrow’s business models from the day-to-day work of delivering profit today. The second is contextual ambiguity, where every functional unit and even every individual must have an entrepreneurial, innovative approach alongside their focus on strategic goals.What I realised reading this, is that my idea of Stratification really combines both of these approaches.

Stratification and ambidextrous leadership

Typically, the organisation has four layers: a customer-facing layer, a data layer, an operational layer, and a supply-chain-facing layer. Some functions cross those boundaries, but the division is useful because it allows leaders to see where functions ought to be unified and where they perhaps ought to be divided. For example, all customer-facing functions need to be using common language, design and service principles.The leadership of functional units try to optimise for that unit’s narrow purpose. But critically, that purpose can be abstracted away from its role in the wider business. For example, if you have a unit that is fantastic at milling aluminium, it doesn’t have to consider itself as only the aluminium milling unit of the company. Its leadership can be entrepreneurial. They can look for opportunities to make aluminium parts for other customers. Some of these new customers might be inside the business but may will be external.This is a low level of ambidextrous leadership.

How does this affect the future of strategic planning?

The high-level ambidexterity comes from the leadership who have oversight of all the layers and functions. Once the organisation is divided like this, they have a box of building blocks to play with. Leaders can reassemble the blocks to meet new challenges. They can create new blocks without affecting the other functions. They can use blocks from other people’s organisations easily. Or in the worst cases, they can shut blocks down.This approach allows the lower-level functions to keep the priority of delivering operational excellence, something they are well drilled in and something that is often critical to the continued success of the wider organisation. Where they are stretched to think about future opportunities, it is within a narrow context of their known abilities.Meanwhile the senior leadership can take a more long-term, holistic view in the future of the strategic planning process. They should be freed, both in time and responsibility, from the day-to-day operations of the lower-level units, each of which should have its own effective and entrepreneurial leader.

Define interfaces, not connections

If you focus on defining the interfaces between units in an organisation and then optimise those interfaces, you can map it much more easily and more importantly, maintain that mapping. You can see through the organisation and understand value flows and interactions. You can keep goals coherent.

AI, data, and the future of decision making

What does it mean for an organisation to be future-ready? One part of being future-ready is to be ‘hyper-decisive’.At the Prophix Conference in Nashville, I heard from a variety of thinkers and leaders who confirmed many of the key traits that I believe offer a measure of future-readiness. And I heard, and presented, evidence of how far from demonstrating those traits, most organisations remain. Our organisations continue to lack agility because we are poor at collecting information, poor at processing it, and poor at taking business decisions on the basis of that information, relying overly on gutfeel human judgement over good, hard evidence.

The future of decision making

A variety of solutions to this challenge were presented at the conference. Polly LaBarre, founding member of the Fast Company team and author of the best-selling Mavericks at Work, talked about a changing culture of leadership, and the shift from enforcing direction to asking questions. Her instruction was to “walk in stupid” each day.Gary Simon, managing editor of FSN and founder of the Modern Finance Forum, a global network of more than 50,000 finance professionals, highlighted issues from his research into innovation and planning: Most companies still struggle to forecast accurately, reforecast with sufficient frequency, and worst of all, to offer the leadership real insight from those forecasts to drive better decisions.Howard Dresner, former Gartner analyst, founder of Dresner Advisory Services, and the man who coined the term ‘Business Intelligence’, talked about the concept of companies becoming “hyper-decisive”, leveraging “information democracy” across the organisation to allow strategic decisions to be taken rapidly, by people at all levels, based on solid data.

The age of analytics

Notably, while this was a conference hosted by a technology company, the common theme running through these talks was about skills. Walking in stupid each day is about mastering your own ego, but also understanding what questions to ask. It’s about a fostering a curious, analytical, and most importantly open, mind. Turning numbers into insight is about the technical skills of data manipulation and analysis, but it’s also about skills of storytelling and narrative. Information democracy can only become real if the skills of data literacy are widespread across the business.Listening to these leaders talk, I was brought back to one of my most common questions, one that I have written about frequently here: What skills do we need for the future? To me, Polly, Howard and Gary all seem to be talking about the three Cs I laid out back in about 2015 (maybe earlier): curation, creation and communication.All of us need the skills of discovery and qualification, the ability to recognise gaps in our knowledge and understanding, source data to fill those gaps, and validate it (‘curation’). We need the ability to manipulate that information, apply it, and turn it into something of value (‘creation’). And then we have to sell our new creation to our colleagues and customers, wrapping it in a compelling story (‘communication’).

Decisive leadership

Dresner’s vision for the modern management practice continues to evolve, with the idea of being ‘hyper-decisive’ forming the topic of his recent conference at Real Business Intelligence. He defines this as, “instantaneously processing vast arrays of data and information, and delivering actionable insights to a growing community of users.” Technology is clearly part of the answer. It allows us to collect this information in real time, automate some of its processing, and present it in a dynamic fashion. But none of this is of value unless our community of decision makers, across the organisation, is equipped with the skills to use data-driven insights to improve the business every day and foster decisive leadership.

The future of AI in work

The artificial intelligence (AI) goldrush is on. Every company that five years ago was touting its ‘Big Data’ credentials is now referencing AI as a cornerstone of its business. I’ve heard tales of the most unlikely organisations clamouring for AI expertise to help them solve complex business problems.What we mean by the term AI, is still up for debate of course. Clearly, we don’t mean a generalised intelligence in any way comparable to human. For the most part, we mean some form of machine learning — primarily through large data sets, but increasingly through modelling and adversarial systems — and automated analysis.

Golden data

Data has had a lot of focus as a critical asset, often presented as the gold in this rush. But there are many other critical tools, and the makers of these stand to benefit perhaps more than those holding the data or applying the tools.The obvious companies here are the tech giants that have developed or offer the raw processing power or the core tools of machine learning: Amazon, Google, IBM, for example. But there are others too — like Bellrock, a company I came across recently that offers a platform for more rapidly applying models to data for predictive analytics.There are also the companies to whom you can outsource the ‘mining’ of gold — or perhaps a more accurate analogy might be the production of automated mining systems. Consultancies who can build AI tools for organisations to use. From the very large, like Accenture, who recently showed me an interesting demo of automated document analysis for the pharmaceutical sector, to the relatively small, like US.Ai, whose co-founder I met at a BIMA event recently.

Early days

For all the hype, we are in the early days of artificial intelligence. It’s still hard to know what the most valuable applications will be. But while everyone’s trying to find those answers, those companies that provide the shovels for this gold rush are likely to profit. The future of decision making may lie in harnessing the power of data across entire organisations.

Simplicity is hard. That's why it is valuable.

Simplicity is hard. That’s why it is valuable.

I am subject to one criticism more than any other. That what I do, and what I write, is too complex, too difficult to understand.I am rather bad at dealing with this criticism, for two reasons.Firstly, accepting that what you do is too hard for other people to grasp feels like arrogance. Like you are showing off about your own intelligence.This is, of course, nothing to show off about. Communicating in a simple fashion ideas that you have spent years understanding and expanding, is what takes the greatest intelligence. Accepting that you can’t properly explain the things you say and do is really an acceptance of failure.Which brings me to the second reason I struggle with this criticism: it means more work. I have to go back to the drawing board and revise and refine what I’ve done. I have to think harder, work harder.This has become a constant process for me. Right now I’m re-writing my executive training course in Applied Futurism, teaching executives how to understand and respond to this age of high frequency change. New dates will be announced shortly (drop me a line if you’re interested in attending).It’s had good feedback to date, but this time it will be even simpler. And as a result, more accessible, and more useful.

Engaging with a process

Getting to this point has led me to think more about how humans engage with information, and particularly with instructions. Instructions need context — without it they are meaningless. But everyone in my training sessions, or using my tools, brings with them their own unique context, depending on their cultural reference points, role, seniority and more. How do I ensure the relevance of the instructions so that they connect with the greatest possible number of people?So far I have found three options:

1. Lowest common denominator

What are the social, cultural and workplace touchpoints with which the greatest number of people identify? Focusing on these means you should at least reach a large proportion of the audience. But there will always be people you miss, and always the risk that your experience is so different to that of the audience that you miss people.2. Query their experienceYou can take a question and answer approach to key instructions and information into people’s own experience, letting them fill in their own context to the process. This should reach everyone equally, assuming they can articulate their own experience, but it places a greater burden on the audience, and there is always the risk that their experience doesn’t fit your expected parameters.3. Primal driversThe third, and perhaps most brutal option, is to focus on the bottom tiers of Maslow’s hierarchy: the most fundamental human needs that we all share. If you can communicate your instructions as a way to address these fears, risks and needs, then you should be able to find a language that the whole audience can understand.I’m sure there are other ways to reach a large proportion of the audience and make new information and instructions accessible. These are working well for me so far but I’m always open to learning new ways. How do you do it?

Facing future business challenges

With the exception of the occasional pub quiz polymath, most of us have our specialist subjects when the microphone comes out on a Wednesday night at the local. As you might expect, I’m happy to have a crack at science questions. I’m also pretty good on 80s & 90s pop lyrics. But throw me a question on geography, history beyond the last century, or sport, and I will likely flounder.We tend to think we are the subject matter experts in our own workplaces. We spend hours there each day, toiling away at the same problems, getting to know our own industries. Take a pop quiz on your industry and you would probably do pretty well.

Industry experts

But this presents us with two problems.Firstly, everyone else in your industry is a subject matter expert too. How can you differentiate, personally or as a company, when you all have the same subject matter expertise?Secondly, if the answers we need come from knowledge of our own sectors, why do we ever get disruption? Why do companies get defeated by new entrants and challengers, arguably with less accumulated knowledge?

How will business change in the future?

What we’re really looking for is existential threats and exponential opportunities. Some more mundane, marginal ideas might drop out of the process. But it’s these super-scale challenges that come from left field that are so often absent from the to-do list.Until recently I’ve worried that too much of my work ends up being about threats, rather than opportunities. More than once people have said to me that they only see the pressures on their organisation growing. But I’ve realised recently that you can rarely separate existential threats from exponential opportunities.Few organisations are as unique as they think they are. What are challenges for them are almost certainly challenges for their peers. If you can solve an existential threat, you either gain competitive advantage, or create a valuable solution that you can share. Threat becomes opportunity.

The unknown unknowns

In 2002, Donald Rumsfeld was somewhat ridiculed for his statement about ‘known knowns’, ‘known unknowns’, and ‘unknown unknowns’. But in the last fifteen years these terms have become increasingly widely used. They describe neatly the reality for many planning business strategy: you can account for your experience and project forward based on known factors, but it’s much harder to incorporate things from beyond your own experience.In reality, many of the questions we face — and the answers to those questions — come from beyond our own sectors of specialism. Sometimes it’s new ways of working, systems or technologies, developed in an adjacent sphere that might be transformative to our own. It might be someone else’s solution to a very similar problem.These are not ‘unknown unknowns’, but rather ‘unseen unknowns’: questions and answers that exist and are understood, but that are outside of our current domain.

A wider perspective

This is the role of the Applied Futurist: to bring a different, wider perspective. To bring information from beyond the experience of the client, and a framework to make it relevant to their specific environment and challenges.Where in the past we have talked about futurist consulting, I now realise that this term encapsulates three different elements of a service that helps organisations to ‘see, share and respond to’ a vision of the future.

Foresight

The first element is Foresight. Clients want us to tell them what the future looks like for their organisation, industry or segment. We do this in a couple of ways, facilitating programmes like Scenario Planning or running our own Intersections methodology on the client’s behalf.

Communications

A futurist must also craft narratives that compel people to act. That catalyse change. The skills of communication are clearly required by our clients and so they are a defined part of this service. They find their outlet in strategy documents, and marketing campaigns, or in me sitting in front of a camera or microphone or standing on a stage as a futurist speaker.

Strategy

The third part of what was our consulting proposition addresses the inevitable follow-up question that comes when you tell someone about the future. It doesn’t matter if that future is bright or dark, they want to know: “What do we do about it?” The first step in answering this question is to make the organisation fit for change. Few are. The aim is to help them respond faster, not just to the current set of challenges but to future challenges as well.

The unseen unknowns

When looking to the future, part of the challenge is imagining things that are yet to be. But much of it is helping people to see the unseen, channelling lessons from adjacent spaces into their domain so that they can see how they can — and likely will — be applied.The question is often not ‘if’ change will come, but ‘when’. And the answer only comes from looking beyond your own domain.

Innovation for future business

What does innovation mean to you?“It’s the realisation of ideas, the translation of possibility into material value. The old adage about 99% perspiration is true in my experience through a number of start-ups. The idea is the easy bit. Making it real takes sweat, and investment.”This was my answer when asked by TheBusinessDesk recently what innovation meant to me. But I realised it was one of many possible answers.Innovation is something that every almost company seems to be chasing at the moment, driven in part by excitement about what is possible, and in equal measure by fear of impending disruption and how business will change in the future. These are equally valid motivations. No-one wants to be blown away by Schumpeter’s gale, and that weather front seems to be approaching every organisation, if it hasn’t already hit.

Innovation buzz

It’s easy to be cynical when there is so much buzz around an idea, particularly in business where fads seem to fly past faster than new fashions. But I genuinely believe that high frequency change (as distinct from a more generic argument for accelerated change) justifies renewed focus on innovation for future business, in proposition, process, and culture.So what is innovation? And what is it not?For me, what it is not, is exclusively new ideas. Ideas are frankly ten a penny. Great ideas may be rarer, but to be honest, there are plenty floating around out there. What is generally lacking, is application. Whether it’s a new idea, an old one, or often one borrowed from another place, the key to innovation is making it count.

Fail fast?

Innovation is not always about success either. ‘Fail fast’ has become another over-used term, often with too much emphasis on the ‘fail’ and not enough on the ‘fast’. Because ‘fast’ in this context also means ‘cheap’.We are better equipped than ever to experiment with advanced technologies, and every business should encourage its people to do so, but only within a framework that maximises the chances of success and learns lessons from the natural proportion of failures. Failing fast without learning lessons is just wasting time.

Creating a culture

Innovation may be cheaper now, but it’s not free. That’s why innovation needs support from leadership, and committed expenditure. There is a natural overhead that comes with change, and every business model focused on sustainable success should be budgeting for it.Putting budget aside is a great starting point for a culture of innovation. It says that you are committed. Package this budget in a framework that encourages feedback, speculation, and experimentation, and you are beginning to create the right environment.

Iteration & recombination

Innovation also doesn’t have to be about big steps. Many smaller steps can be just as valuable, if not more so. This is particularly true in organisations that have lacked a culture of innovation, and where assembling financial and political support for major change can be time-consuming and draining.Smaller steps can start to build up a track record of evidence, demonstrating progress and value. And these small steps particularly don’t need to be about original ideas: small iterations of existing processes and structures can rapidly improve efficiency and customer experience, and eliminate frustration.One of the cheapest and easiest forms of innovation is the application of other people’s innovations to your organisation. Cloud applications are particularly easy to bolt-on to existing processes, and while uncontrolled, this type of ad-hoc procurement risks a future IT nightmare, it can be a great business model for rapid prototyping.

Future disruptive innovation

Disruption and innovation are terms that have become so over-used as to lose their meaning in this accelerated time. But even without this desensitising effect, they are broad, imprecise terms that do little to describe the acute nature of the challenge that some sectors are facing, or the effort required to address those challenges.I recently spent time with a collection of terrifyingly bright people at Accenture’s Dublin innovation centre, The Dock. When I say terrifyingly bright, I mean people with decades of academic and commercial experience with artificial intelligence and other cutting-edge technology, people who left prestigious academic institutions to tackle more practical technological challenges.I’m glad to say that despite their intelligence, they too wrestle with the language of change. But I picked up a few nuggets that I found useful. I thought you might too.

Compressive Disruption

One, from Accenture Digital’s MD Arabel Bailey, was the idea of ‘compressive disruption’. This neatly describes to me the effect of increased competition that technology enables by lowering barriers to entry into markets. Many companies are finding shards of their profitable business shaved off by new entrants, or seeing non-traditional competitors start to squeeze their margins, coming in from other countries or adjacent industries. That sense of compression seems to neatly sum up the effect this has on a business, boxing in their opportunities in the future market.

Above and below

The other was from Aidan Quilligan, global leader of Accenture’s ‘Industry X.0’ practice. He neatly broke innovation down into ‘above the line’ and ‘below the line’, in terminology that will be familiar to any marketer. In this case, below the line innovation is about addressing the cost base. Above the line innovation drives new revenue streams.Most people are focused on below the line activity — at least initially. In an ideal world, resources released by this investment are redirected into above the line innovation. Though that might depend how much work you do below the line, and whether you do it fast enough.

How will business change in the future?

Ultimately, innovation is about survival. As Schumpeter said, “[Capitalism] is by nature a form or method of economic change and not only never is but never can be stationary.”If you want your organisation to survive and thrive then innovation for the future is critical. Create a culture of innovation by assigning clear budgets to it, by inviting contributions from across the organisation, and by creating a framework within which ideas can be tested, evaluated and applied or discarded as appropriate, rapidly and cheaply.

Get used to being wrong

 

We’re not good at being wrong. We chastise politicians for U-turns. We punish business leaders for changing strategies. As individuals we would rather cherry pick facts from the declining pool that support our position, than accept the burden of evidence that tells us we’re wrong.

None of this is helpful. In fact, it’s downright dangerous. Because we’re all going to be wrong a lot. That’s just the nature of things now.

Positions, traditions, ideas and beliefs, whether scientific, religious, cultural, or ideological are all subject to increasing challenge. Many are not equal to the test. The way it has always been is not the way it will always be.

It was ever thus. But our burden is the accelerated pace of change. We will be more wrong, more often than our parents.

We will have to deal with it. That doesn’t mean blindly accepting the new over the old. Every new idea deserves robust challenge. But those that pass the test? We need to learn to be better at accepting.

Most importantly, we need to teach our children to accept new ideas. To recognise when they are wrong and to adapt their position with grace.

Of course, there are some things that don’t change. Fundamental principles that go beyond law, beyond religion, beyond creed. Principles that are more important now than ever. When so much is changing we need a strong moral core.

Wheaton’s law expresses them most concisely. Every important principle in one simple statement. When so much is changing. When you don’t know right from wrong, left from right, up from down, remember this one simple rule:

Don’t be a dick.

Measuring business metrics that matter

Every day’s a school day. It’s no different if you’re the ‘expert’ in the room.I recently ran a workshop for leaders at a large global corporation, walking them through the Intersections foresight process and introducing Stratification, our framework for agile organisations.We’re quite upfront that neither of these processes are a ‘magic bullet’ solution. They are simply different ways of examining, and potentially solving, a common problem: How do you build a sustainably successful business in an accelerated age?

How to find metrics that matter to your business

One component of the Stratification framework is a Unit Template, designed to help people understand the inputs, outputs, and key metrics of each business function. I built it as an attempt to segment out the functions of an organisation in a format that could be simply understood as a set of building blocks that — when assembled together — create value.What I had never had to articulate – before a series of smart questions at the workshop – was where this set of functional metrics sat in the overall corporate hierarchy ,  a space often rich with different objectives and KPIs (key performance indicators).This is in part the result of how our toolkit is developed: not through academic enquiry but through experience.In two consecutive consulting projects it was clear that the leadership didn’t yet have a clear definition of the business metrics that matter. While the sales team can be measured by revenue, how do you measure procurement, finance or HR? Even marketing can be tricky: how do you measure business success across departments?

How do you measure business success?

We decided this was an important question to ask. Each of these functions contribute to the sustainable success of the organisation, but putting simple measures on their day-to-day activity to monitor performance is hard.Sometimes people do it, and do it well.Sometimes people create KPIs, but these measures aren’t always well thought-out or aligned to the corporate goals, let alone to each other.For example, manufacturing might have a target for a minimum batch size, because that is what is most economic to produce. But logistics may be optimised around much smaller batches, based on what the customer wants.Often though, people just don’t create these metrics at all. They provide individuals with a set of objectives, against which they can be measured. And they have a corporate set of KPIs to which everyone — notionally — contributes. But in the middle? There is an Objective Gap.When all the numbers are going in the right direction, this is fine. Individuals might get pulled up for failing to hit their targets, but as long as the corporation keeps on a profitable growth track, no-one questions function-level performance.

Dealing with business inefficiencies

When things start to go bad though, problems become visible. Disconnects and inefficiencies become clear. Issues that should have been identified earlier if functions were properly targeted and measured. The objective gap widens.Sometimes these issues are internal. Like the issue between manufacturing and logistics.Sometimes they have an external effect, like the conflict between working capital and service benchmarks — another common issue. If a customer wants products quickly, you typically hold more stock of them to ensure they’re available on demand. But this requires more working capital, as well as storage space. Measure the right things at the right level and you can strike a balance, or perhaps identify the need for a more sophisticated solution. Measure just one, and you will operate to the detriment of the customer or the business.

Small world and big world problems

So, how can you begin to identify the business metrics that matter? You can begin by defining problems.

Small world problems

Corporation tax is what I would term a ‘small world problem’. Over the last few hundred years we have shrunk the world. Transport and communications technologies have brought us closer together. They have allowed companies to operate internationally, and migrate those operations to wherever conditions were most favourable.Because of this, local action is pretty ineffective. Some countries have brought in ‘digital taxes’. But these have limited effect when companies can move their profits elsewhere.The only answer is for everyone in the small world to work together.

Big world problems

Big world problems come about when power is too centralised. Because we can move information so fast now, we’re tempted to hold power a long way from where it is exercised.Brexit is a big world problem. Not because power was unfairly hoarded in Brussels, though that was the perception. But because it was hoarded in Westminster. Many of us felt, and still feel, that we were disconnected from power. That we had little influence over it.You can see this in the way people talk about politicians: “They’re all the same.” It’s hard to see the difference when they are so far away.The only answer here, I believe, is to bring more power closer to people. Make its holders more visible and accountable.

Office politics

These aren’t the only examples of big and small world problems. And they don’t only exist in politics. We can find them in our own organisations.Poor customer service is often a big world problem. Power and control are too far from the customer. The responses are slow and impersonal. As the customer, we feel disconnected from the brand.On the other hand, slow strategic decision making is a small world problem. In a world that expects fast action, it is increasingly exposed.

Characterising big and small world problems

How can we characterise big and small world problems?Small world problems are created or exacerbated by the mobility of people, goods, and particularly information. Their solutions require visibility of the whole and co-ordination from the centre.Big world problems exist where the mobility of goods, people, or information are insufficient to overcome a sense of distance. Solutions require a speed of response and a sense of direct connection, usually only available through some level of proximity.Can you see big world and small world problems in your organisation? And how will you go about solving them? It begins with measuring the business metrics that matter to you.

Why risk is greatest when you’re happy and profitable

Do you run a happy ship? Does everyone in your organisation sing from the same hymn sheet? Are you all aligned to the same goals? Do these happy staff stay with you for years and years?

Then you’re probably in trouble. Because experience has taught me that these characteristics are often the precursors to a fall.

I’ll explain.

There are two types of organisation that typically call me up for consulting engagements. A small number get in touch when they’re doing well and they want to identify the next opportunity. The majority call me when things are not going so well and they’re looking to get back on track with some insight into where their market or sector is going.

These latter organisations often have much in common. When you interview the management and staff, you find a number of key characteristics:

• Until recently. the organisation has been profitable for a long time — often growing (or in the public sector, funded with a manageable amount of cash, year on year)
• People stay with the organisation a long time — more than seven years — and often trained with that company
• Staff are totally sold on the company message. Apart from the usual gripes (IT, inter-departmental communication, their boss) you hear the same story about the company and the market from everyone

In these circumstances, something happens. Or rather it doesn’t. People don’t ask hard questions. Because they don’t want to risk the comfort of the warm bath they’re in. And because with so little exposure to what’s going on outside, they don’t know which questions to ask.

If you run an organisation that sounds like this one, get help. Bring in someone with a fresh pair of eyes. Get them to take a good, hard, critical look. Listen to what they come back with, and act on it.

Crucially, don’t let this analyst stay involved too long. Six months at most. Longer than that and they will be infected by the good will and happiness. They will lose objectivity and start to believe things like “that won’t affect us” or “that doesn’t work in this market.”

Once this analyst has done your diagnosis and made a prescription, bring in other people to help you make the change. Specialists in people, technology and transformation.

Six months later, bring your analyst back and tell them to look again. Don’t be surprised if they raise new criticisms.

Repeat the process.

In this environment, the only way you keep your organisation happy and profitable, is through constant evolution.

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Need an analyst to help you see the darkness in your bright and shiny world? You need an Applied Futurist.

Get in touch and we can help you directly, or introduce you to one of our growing number of partners nationwide.

In An Information Age, Knowledge isn’t Power, It’s a Commodity

When politicians talk about a ‘knowledge economy’, it sounds like information is gold. A durable good that can be stored and trickled out to the market to keep its value high.

It isn’t.

Just a decade ago it might have been true. If you came up with a new product, process or business model, you probably had a few years grace before it was replicated. With the wind behind you, you could create a defensible position, for a while at least.

Technology has changed this.

Knowledge isn’t durable like gold. It’s a fast moving consumer good. A low-value, high-volume commodity. The power in knowledge today is not in holding it but managing its flow. Getting it into your business quickly, extracting its value, and moving on.

Most businesses don’t get this. And it’s not the leaders’ fault. We’ve spent years being conditioned into the idea that there is fundamental value at the heart of our businesses. That the way to improve them is to optimise what we do. Boost margins here. Squeeze costs there. Sell more. Charge more.

This is old thinking. Today, agility trumps optimisation.

The value at the heart of your business is constantly being eroded. The gold turned to lead. The power drained from the knowledge.

Technology has lowered the friction in the flow of information to the point where goods and ideas can flow much more easily. Between organisations and across borders.

Other people can do what you do. They can do it faster and cheaper. And do it in completely different ways through totally new channels. Threats can come from nowhere and become existential in a matter of months.

If you want to succeed and sustain in this fast-changing environment you have to make changes.

First, you need to make sure that you are exposed to the information that matters. That inside your market, and in adjacent or relevant markets, you are watching what is happening and taking that learning into your business. Listening to customers, listening to peers, looking for threats and opportunities around the corner. It’s too easy to run with your head down, focused on the challenges inside the walls of your own organisation.

Second, you need to ensure that information flows fast. From the customer, to the decision makers and back again. One of the first questions I ask new clients is about the length of this round trip. The real answer is often around 12 weeks. Too slow.

Ensure that you collect relevant data from your organisation. From customers, partners, departments and suppliers. Make sure that you share this information with the right people, in real time, with maximum clarity. No manual processing. No subcommittees and tiers of review where all meaning gets polished from the data.

Finally, make sure that you equip the people who matter with the power to respond. Take decisions yourself or push power to the edge. Enable people to act on the evidence that they see in a time frame that makes sense. Clue: that time frame is short.

Technology will help you to do some of these things. A well-designed customer interface. Integrated software systems. But these things only add value in a properly-structured organisation with the right behaviours.

Establishing those is much harder than signing a cheque for a new website or social media campaign.