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About change, defaults and disruption

Falling dominos small

Yesterday I was lucky enough to spend the day with sixteen future public sectors leaders, talking about the opportunities and challenges of developing a networked organisation.

One of the biggest challenges we talked about in ‘making change’ is about it being treated in the way CSR is often also described as being the project ‘at the end of the corridor’.

Doubt, cynicism in the future, absence of proof all mean change projects can be seen as ‘good to have’ but put at arm’s length and after a while, in terms of everyday behaviour, the organisation reverts to a something of default setting.

Creating and sustaining the energy of change within a large organisation isn’t easy. It involves knowing where to start in terms of picking an appropriate point of scalable intervention, and enabling various parts of the corporation to become aligned in such a way so what I’ve just described here doesn’t happen, all at the same time.

This matters though, because innovation can be expensive and the threat to existing business from the new ways of working that digital brings is very real.

In the session yesterday we talked about how industry after industry is being up-ended by the web. People used to define Kodak as the leading light of the image capture market, yet this indisputably blue chip brand was blindsided and eventually killed by technology, first by Polaroid then by Instagram.

As fixed, tangible, capital assets become joined by the value of intangible assets on the balance sheet, (as is happening with the power of networked capital value and trust networks; just look at What’s App and Instagram again to realise the value theirs have created), we’ve seen, for example, real estate-heavy hotel chains in the travel and leisure sector come under threat. These businesses, created in first days of airline travel, are finding their business model threatened by the likes of AirBnb, a verified peer-to-peer business network that strips out much of the brokerage element, and in which people feel they have a stake.

Since 2000, 52% of the companies in the Fortune 500 have either gone bankrupt, been acquired or ceased to exist. Closer to home, dominant retail brands like Tesco probably didn’t think they’d get the competition they now have from Amazon, a business that can sell many more kvi’s than a supermarket can put on their shelves, even in superstores. Retail brands have a significant amount of their value in legacy real estate, and Amazon differentiated by making a shift to process and technology to gain advantage.

Ford probably didn’t think one of their greatest business threats in the car market would be an internet company, Google, with their car that also might end up making large elements of the car insurance market redundant because sensors that create point- to- point navigation mean they don’t crash.

Strategic innovation in an established organisation, by nature, is such that it starts off as a bolt-on more than as something inherent within the culture; it follows it is relatively easy for it to be either rejected in favour of the status quo by key decision-makers, or to become seen as an initiative with tactical benefit but that the rest of the organisation doesn’t need to fully assimilate.

It’s possible for organisations to believe that getting actively involved in digital technology and social media is enough. One thing that I’ve seen that strikes me most so far this year is how organisations are busy adapting to digital, but that the technology’s moving faster than they can keep up. The gap between the agility and ability to make impact, between large organisations and start-ups, is growing.

Future leaders of large organisations are racing against start-ups to stay relevant. This asks them to take a systemic view when thinking about change, defaults and disruption. Without that view,  the spread and impact related to the network effect of any change, or innovation project, can be kept at bay.

The big picture is the starting point, referencing what the organisation has in mind as its purpose, what it wants to become, and how it can conceive of itself in the light of the digital opportunities and user needs so it can maintain its relevance. As practical next steps, smart digital, service design and technology strategies can be powerful when applied together, so disruption and elegant transition is combined.

Disruption and elegant transition…these are the twin muscles of effective change, and it might take both to address the default problem.

Image by Chris.

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