How to manage digital transformation, disruption, and growth
5 mins read
Just as scientists learn from the natural world, we can take inspiration from studying how organisms thrive despite the continuously changing environment they operate in.
Capita’s Chief Growth Officer Ismail Amla, spoke to Vala Afshar about the concept of 'flow' and the potential application to the business world as companies tackle the myriad of existential challenges facing them.
The age of disruption
Businesses are not only feeling the impact of digital disruption on their industries but also internally within their organizations. If businesses want to remain relevant, they cannot keep doing what they always have. Look at the changing shape of the FTSE as an example: Since its inception in 1984, only 28 of the 100 original listed companies have remained on the index. In the US, 88% of Fortune 500 companies in the period between 1955 – 2017 either went bankrupt, merged with other firms or dropped off the list for other reasons.
A methodical, rigid, linear approach to organizational thinking is no longer effective in the face of a rapidly changing world, exponential progress of technology, evolving customer needs and a new generation of employees with different values and expectations. New challenges require a different approach.
Just as scientists learn from the natural world, we can take inspiration from studying how organisms thrive despite the continuously changing environment they operate in. In this article, we explore the concept of 'flow' and the potential application to the business world as companies tackle the myriad of existential challenges facing them.
Constant change has altered how we approach strategy
Any business plan is now subject to several factors that are outside of its control. The current rate of change means that it is almost impossible to imagine what an industry will look like in five years. Planning is the language of certainty, and in today's environment, there is no certainty. Perhaps the only accurate prediction is that businesses will need to learn to pivot and reinvent themselves.
Take the skills crunch as just one example of the challenge. Oxford University's study on The Future of Work found that over half the executives surveyed noted that problems with talent and key skills were impacting business performance, while employees expressed fears that their specific skills would be obsolete in the near future, with only 50% expecting their skills set to be adequate in the next three years. Despite a clear need for a dynamic approach to employment and learning, fewer than half the respondents in the group said that their organization had a culture of continuous learning, or provided consistent opportunities to grow on their skills set for the changing workplace.
In truth, leaders cannot predict the exact skills that will be needed in 10 years. The World Economic Forum suggests that 65% of children now entering primary school will hold jobs that currently don't exist. In a recent Stanford University report on 'Augmentative AI and The Future of Work,' Graham Button noted, "Not only are tasks becoming unbundled from jobs, often in ways that are hard to predict, but people are unbundling from organizational structures and traditional safety nets. They might be spun onto temporary projects, then spun off again, no longer part of a stable work collective." In the face of this skill deficit businesses need a workforce that is adaptable and comfortable with flux, and that can adopt some of the core principles of renowned Psychologist Carol Dweck's Growth Mindset.
There is immense potential tied up in today's uncertainty. If harnessed correctly, it can result in unprecedented innovation and growth opportunities. However, continuous change also creates serious challenges and related anxiety.
Today's working world is characterized by rising stress, increasing pace, compulsory multitasking, and the seemingly endless adoption of new technology and collaboration platforms. In a recent Harvard Business Review study 88% of survey respondents said their employer had recently experienced or was currently experiencing a disruption of some sort. Almost half (42%) have been affected significantly or very significantly by these events, and a significant number (58%) said that the people on their team, in their business unit, or the overall organization have felt a direct impact.
Organizational complexity is weighing down businesses
The factors discussed in the previous section have resulted in greater organizational complexity, which imposes increasing confusion and stress on employees.
In the previously cited Harvard Business Review's study on disruption, two-thirds of survey respondents (66%) complained of overwhelming organizational complexity. There is a pressing need to free up employees from the shackles of bureaucracy if we want to help facilitate the exploration of new ideas. More and more, organizations need to break the mold to become dynamic, responsive, living things. For this reason, agility is one of the core skills a business can nurture – in how their business operates as a collaborative unit, and in its employees.
Nurturing an agile organization
The agile organization is the new dominant organizational paradigm. It doesn't just perform under pressure, it performs better when pressure is exerted. Rather than shattering under stress, agile organizations have anti-fragile properties that enable them to bend and reshape themselves to excel under extreme circumstances. Recent research by McKinsey indicates that agile organizations have a 70% chance of being in the top quartile of organizational health, the best indicator of long-term performance. If agility is the goal, how do we take this deeper into our businesses? What does agility mean at a systemic level? This is where we can take direction from the principle of flow.
Introducing the concept of flow
What is flow and what place does it have in high growth businesses?
Flow is a natural process, a system, and an order in itself. It's characterized by intentional direction, fluidity and the ability to rapidly change course when required. Consider the difference between blood flow and blood spills (or bleeding out), which is one of life or death. Flow is not random, it is strategic, which is why it has innate knowledge that can be passed onto the management of business.
For example, when leaders talk about smashing silos, they neglect to mention that in doing so, resources need to be directed. They can't just be left to dissipate. Living systems, from people to trees, have circulatory systems that direct the flow of resources (for example, oxygen, nutrients, and water) throughout the organism and between the organism and its environment.
Qualities of flow in business
By diving deeper into the way that living organisms function, including businesses, we can better understand the laws, models, and processes that underpin them and their applicability to the business context.
Flow creates anti-fragile organizations that can withstand big shocks
Anti-fragility goes a step beyond resilience or robustness. Anti-fragile organizations and organisms do not just withstand shocks to the system, they evolve as a result. Consider a gecko that loses its tail as a defense mechanism against predators, only to rapidly grow it back, complete with a spinal cord. Anti-fragile organizations respond to potentially disruptive change with game-changing innovations.
Cultivating anti-fragility in a business is crucial. It is far easier to measure and address the fragility of a business than it is to calculate the potential risk of an event, competitor or market shift that may harm it.
Flow encourages an iterative approach to problem-solving
Flow is not married to one way of doing things. It adapts according to what is required, and the information it receives. Today's businesses have the benefit of real-time customer data and feedback to build authentic innovation across the business.
Samsung's innovation strategy provides a compelling example. This leading technology company deploys a 'creative elite' to take the lead with new projects, ensuring that these are aligned to best practices and the highest potential KPI. This team makes use of open innovation, meaning that when new products are released, they engage with structured customer feedback to focus their innovation efforts, which is translated into effective strategies and partnerships with relevant scientific, technological or corporate bodies to push the innovation project forward.
Similarly, software company Basecamp has written the book on changing how we should work, challenging established norms such as the value of meetings and long planning cycles, and using concepts similar to flow to discuss how to improve the productivity of getting great things done.
Flow illustrates the importance of a dynamic organization
Flow is defined by the movement and circulation of resources throughout systems (e.g. bodies, trees, companies) and between those systems and their environments (e.g. business ecosystems, i.e. customers, partners, other stakeholders, and also communities and natural ecosystems). An organization has to be created and sustained as a dynamic, living thing.
A dynamic, agile organization helps keep the flow going, as it engages and empowers everyone at every business touchpoint. This allows individuals to create value quickly, collaboratively and effectively. Agility and culture of flow begin with leadership and extends to the company culture and underlying people processes, which should foster entrepreneurship and skill-building.
Liv Garfield, the FTSE 100 CEO of Severn Trent, employs a deliberate hiring policy that focuses on finding people with the drive, skill, and lateral thinking to unblock or remove any barriers to progress within the business. This is an example of building an organization that promotes flow, finding people to unblock the circulatory system.
Flow thrives on interconnectedness
Like the cells in an organism, the basic building blocks of agile organizations are small fit-for-purpose performance cells. If you look at flora or fauna, they are governed by a system of pipes, arteries and veins, tissues (Xylem and phylem in trees) that direct the flow of resources to where they're needed.
In business, we have hierarchical flows of information that flow downwards. Think of the thin lines on org charts that illustrate the direction of decision-making and authority in businesses. Shouldn't the lines be thicker and they should flow across and up too, directing information in the most efficient way to the places that most need it? CRM can be an important part of that system, enabling flows of information throughout departments and also across departments, from marketing to sales to service. All parts of the organization that serves customers should be connected by integrated flows. In a flow model, the relationship between departments is more important than the departments themselves.
In business, this can be put in practice by putting together a 'team of teams,' which captures the agility a small team but scales it across a wider organization, much like cells build, renew and replenish across the human body. The McChrystal Group, a consulting firm founded by war veteran General Stanley McChrystal runs according to the principle of a networked 'team of teams,' characterized by radical transparency, widespread information sharing and democratized, empowered decision-making. The business is committed to knocking down silos and is governed by a new set of laws, focused on the intentional flow of information and resources. This has created a business that is quick-witted, resilient and adapts to changing circumstances in a manner akin to the dynamics of the battlefield.
Flow is responsive
Leading tech companies such as Google, Haier, and Tesla constantly scan their environment and evaluate the progress of their various initiatives. They have the processes in place to expand on a winning concept or shut down an underachieving one thanks to fast resource-allocation processes. People, technology and capital can flow from low-growth to high-growth areas in the business, as and when they are needed.
Haier has taken this to the next level with the creation of over 20 departments and divisions called 'micro-enterprises,' which are scaled or shut down according to their progress. Each micro-enterprise competes to design and build products for Haier users, as well as for the staff and capital to do so. This results in a decentralized approach to innovation that, while brutal, leads to calculated risks and experimentation.
Flow illustrates that a business needs more than just positive revenues to thrive
We exist as part of a greater, interconnected whole. We have internal flows of blood, but the exchange between our bodies and the environment of air is just as important. We breathe in oxygen-rich air, which then gets transported through the blood to places in the body that need to use it to convert sugars into energy. We breathe out carbon dioxide-rich blood, which is a by-product of those energy transformation processes. Trees use the carbon dioxide in the air for photosynthesis which creates the sugars in the first place. The source of all our energy is plants. So we get oxygen, and food, and water from the environment. And of course, we get lots of other information as well from our senses that enable us to be responsive to the world, to react appropriately to our immediate conditions, and also to get information that can help us make longer-term decisions.
All companies need to have the same thing. We need to have money coming in of course. In the producer/provider-customer/consumer model, producers convert money into offerings (that is they use the money to hire talent and buy raw materials and equipment all of which is used to make their products and/or services which get released to the market), while customers convert offerings into money (that is, they buy products from the market, releasing money back to the company). Our marketing and sales departments are critical to that primary resource flow. The better functioning they are, the better the flows. We also need information, talent, and all of this needs to be refreshed so our skills stay up to date, so we can be responsive to changes in the environment, so we can even effect change ourselves (through strategy, innovation, M&A, etc.) and even modify our environments (which is what "disruptive" companies do and what niche constructors and invasive species do in nature). Today's businesses also need to consider working in complementary ecosystems with like-minded companies and working what sets them apart as an attractive ecosystem partner.
Life depends on movement and connectedness. We see flow as a fundamental redesign opportunity for companies, both in terms of what they offer and in terms of their internal operations. Our research has shown that like sharing ideas, designing for flow is not a zero-sum game. A flow-based design leads to success for customers, for the company, and the community, business ecosystem or environment. Flow is a triple threat.
Chief Growth Officer at Capita
Ismail is leading business development, sales and marketing to support our transformation and organic growth plans. In 2018 he was named as one of the top 100 most influential Black, Asian minority ethnic (BAME) leaders in the UK tech sector by Inclusive Boards.
Chief Digital Evangelist, Salesforce
Prior to his current role, Vala was Chief Marketing Officer at Extreme Networks, and previously CMO and Chief Customer Officer of Enterasys Networks. With over 444,000 Twitter followers, producing one billion impressions in 2019, Afshar has been recognized as a top influential digital business leader for CIOs and CMOs.