Kathy Gibson at the Ericsson Business Innovation Forum in Stockholm – Companies need to change the way they operate if they want to succeed in the fast-changing digital world.
Mike Arauz, partner at the consultancy Undercurrent, believes that organisations need to adapt to both leverage and deliver digital solutions.
“It’s important to realise that the world is defined by exponential change and inescapable complexity,” he says.
This reality means the business context, and the way companies innovate, has to change. Fortunately, the fundamental building blocks are in place to enable this change. “It’s never been easier to bring an idea to life, or to scale,” Arauz says.
The three fundamental drivers behind the revolution are Moore’s Law, platforms and networks, he adds.
Moore’s Law, which is still holding true, means that the leaps in technology are getting bigger all the time.
Platforms, for both technology and knowledge, are allowing gigantic waves of innovation, making it easier for people to build on ideas.
In terms of networks, the world has never been more connected: people to people; people to machines; machines to machines – in fact, Ericsson predicts 50-billion connected devices by 2020.
“This all creates a very volatile environment,” Arauz says.
Two organisations that seem to be getting it together in the new world are Uber and Tesla, he adds.
Uber is a lot more than just a taxi app, but is a new logistics environment, Arauz says. And it has achieved this by building a thin layer of user interface on top of robust platforms that were already there.
Tesla, on the other hand, goes way beyond being a car company. The company has opened up its charging station patents which should spur a network of them across the US. In the meantime, founder and CEO Elon Musk is also head of Solar City, and solar technology is set for massive growth. “Before you know it, Tesla could own and operate a nationwide energy network that fuels car and puts energy back into the grid,” Arauz says.
Meantime, the average company life has reduced drastically since the 1950s, putting additional pressure on companies to change and adapt in order to survive.
Arauz says companies could look to nature and model themselves on the complex adaptive structures that survive and thrive through change and diversity; systems like ant colonies and the immune systems.
He points to seven traits that he believes will help companies to embrace the changing world:
* Embrace uncertainty (not planning) – 100% certainty is a fallacy. And the more long term your planning is, the more uncertain it will be. Companies need to find ways to be adaptive, to test and learn new products and services.
* Serve networks (not hierarchies) – companies take advantage of the network effect; the more people you add to the network, the better it gets for everybody. Think about how you can design for networks and build it into the hierarchy from the beginning.
* Distribute authority (rather than centralise control).
* Promote simplicity (not enable complication) – have a single simple goal or rule.
* Process information (rather than manage information) – about working in public and defaulting to open. You don’t know what information is going to be useful, so the easier you make it for people to access and learn from information the better.
* Encourage divergence (not conformity) – create spaces to try different things because you don’t know what will be the best thing. Create a safe place to take big risks and try new things.
* Enable crossover (don’t sustain the status quo) – you need a method to select and develop the things that work best, ensure that teams are gathering and sharing what they’ve learned and scaling them across the organisation.