“… find ways to delegate authority, get information directly from the front lines, and make decisions based on a real-time understanding of what’s happening on the ground. Instead of the old approach of “making a plan and sticking to it,” which led to centralized strategic planning around fixed time horizons, we believe in “setting a direction and testing to it,” treating the whole organization as a team that is experimenting its way to success.”
As a follow up on construction/deconstruction thinking Part 1 I will address its impact on the actual structure & operations of businesses.
First. I tend to believe everyone in business understands that the traditional structural organization is changing. And it is doing so painfully and expensively <at a cost>. The change is most typically associated with the transformation associated with infrastructure and technology.
Second. This organizational structural change is tied to the wrong thing. Currently it is being tied to changes as dictated by technology and it SHOULD be tied to thinking construct. The good news is that, regardless of the reason, … the change will be a long arduous shift in the business world as part of a long transition in how business thinks about itself and the best model for conducting a successful business. The bad news is that the businesses that do not adapt are unlikely to survive in the longer term.
This comes down to one basic thought as I discuss the new business model for businesses – however great the costs of this construct change the costs of not changing is much higher.
I described this new business model and thinking back in august 2010 as a more agile organization culture, controlled autonomy, the company has an ability to blend into the marketplace <versus rigid institutions unable to flex>.
Today’s more rigid ‘construction model’, most typically embodied in a hierarchy, is already outdated. And even by ‘updating’ thru accommodating technology what is being built is more a Frankenstein <let’s insert new thinking & new technology within existing company model constructed to enable a different way of thinking/doing> rather than a concept built from scratch <and having a plan of how we ‘get from here to there’>. The future deconstruction model, let’s say it’s a hybrid of a ‘controlled autonomy’ model, is being built in ‘fits & starts’ in today’s business world.
To be clear.
In my eyes the new model incorporates both autonomy & control, therefore, is not a flat organization nor is it purely ‘instinctually based’ <which someone could conclude from my Deconstruction 1 post>.
Autonomy in any organization is a combination of control <as in guidelines, principles and systemic behavior> and trust <in that people are intrinsically interested in making a contribution and learning>. This more agile organization essentially believes, and trusts, employees want to do well and to do good things therefore incorporating a strong value/integrity base into the everyday behavioral attitude.
By the way, this freaks out an older management generation <who tend to believe everyone is out for themselves and throughout their business lives have fostered a ‘kill or be killed’ mentality>. But the smarter more adaptable management have used this ‘ethical core’ philosophy as a way to move from input-driven work models to structures which focus more on evaluating outcomes and acting upon outcomes.
This reflects a shift in an organization culture driven by systemic behavior driven values and guiding principles.
Inevitably this permits more autonomy, better strategic tactics and more fluid responses to customer input … without compromising the culture of the business. This Deconstruction Business Model is more a … well … porous business model.
It is free thinking, adaptable <constantly shifting resources toward opportunities and away from non-opportunities>, emergent, diverse & interpretive based … where the organizational actions rhythm is created by external stimuli … not internally.
Conversely … a Construction Business Model is all about the system. All about rigid systems with space built within for ‘innovation and flexibility.’ In actuality in today’s world the systems cramp and are confined <or confining>. The construction model dictates the organizational rhythm and hopes it can match the behavior patterns of the outside world.
In effect a Construction Model was developed with the intent for ‘predictability’ with the overall approach intended to stabilize demand and make it more predictable. Internally it focused on ensuring managers at all levels had enough information to manage their part of the business. It is basically a centralized administration/management and decentralized operations where the ‘center’ measures, monitors and directs.
Most companies still do this <albeit they argue they have ‘empowered the customer face units’>.
What makes the Construction Model even worse for agility & adaptability is that the Center maintains the setting and control of budgets and ultimately measures performance against this. If the market, and the world, were stable and reasonably predictable this could <notice I say ‘could’ > work but with unstable and often shifting markets <increasing & decreasing quickly> this model is not only inefficient … it is ineffective.
<note: this could possibly explain why so many existing larger businesses struggle>
On the other hand. The Deconstruction Model is all about the people and utilizing their minds and reactive attitude <regardless of their particular skills>. This means the Deconstruction Model is naturally adaptive as it is more built upon ‘see & do’ <I see information and respond this way>.
The conflict between these two extremely disparate models is in process. Pretty much all existing successful businesses with any heritage <company Life> face deep challenges because of this conflict. And most businesses are not handling the conflict well. They are being reconstructed with technology, and technology attributes, driving the reconstruction.in other words … the ‘system’ hasn’t changed but the tools within are being updated.
This is ass backwards.
The model should be constructed with the people and necessary thinking in mind and THEN offer the tools necessary to make that organization successful.
Ok. Getting back to the people aspect. The Deconstruction business Model is driven by its people where the employees guide the strategic choices, or the tactical strategy, rather than strategic tactics that need to be made in real time.
This premise also drives older management crazy. How can something be effective without strategy first and foremost?
Well. Research certainly suggests if you were to choose between organizational culture and ‘strategy’ with ‘creating a productive and profitable organization’ … organizational culture is significantly more effective than any amount of strategy <note: even Drucker has suggested this>. This bears out even more so in turbulent business environments.
Businesses with engaged work forces outperform those without by a significant margin. And when employees are enabled and energized, as well as engaged, profit margins are three times as high as those of companies with low levels of engagement.
To conclude. My thinking on new business modeling represents a fairly significant disruption to the way most businesses operate today.
I imagine it feels even more disruptive because so many older business people are hoping business goes ‘back to the way it was’ <or some version of it> in terms of economic conditions <believing once economic conditions improve habits will return to old ways of doing & buying things>. This old school thought process misses the real issue in that the base business model is changing <not consumer behavior or habits> … changing to meet the strengths and ways of conducting business & Life of a new young generation.
The people who are missing this are most likely the same ones who bought into the “customer is king/queen” thought process and that “the customer is always right.”
The Deconstruction Business Model works because it builds upon a culture where the employee is always right <being fed the most up to date information, have the ability to strategically adapt more nimbly, work within company integrity/values construct> therefore the customer isn’t always given what they asked for … but rather … what they really need.
Originally published December 2013