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Updated: May 10

What are these Disruptive Influences - First Determinant – Business Model

“News-making digital attackers now successfully disrupt existing business models—often far beyond the attackers’ national boundaries:

  • Simple (later bought by BBVA) took on big-cap banks without opening a single branch.

  • A DIY investment tool from Acorns shook up the financial-advisory business.

  • Snapchat got a jump on mainstream media by distributing content on a platform-as-a-service infrastructure.

  • Web and mobile-based map applications broke GPS companies’ hold on the personal navigation market.

No wonder many business leaders live in a heightened state of alert. Thanks to outsourced cloud infrastructure, mix-and-match technology components, and a steady flood of venture money, start-ups and established attackers can bite before their victims even see the fin. At the same time, the opportunities presented by digital disruption excite and allure. Forward-leaning companies are immersing themselves deeply in the world of the attackers, seeking to harness new technologies, and rethinking their business models—the better to catch and ride a disruptive wave of their own. But they are increasingly concerned that dealing with the shark they can see is not enough—others may lurk below the surface.

Today’s consumers are widely celebrated for their newly empowered behaviors owing to unmet demand and escalating expectations. By embracing technology and connectivity, they use apps and information to find exactly what they want, as well as where and when they want it—often for the lowest price available. As they do, they start to fulfill their own previously unmet needs and wants. Music lovers might always have preferred to buy individual songs, but until the digital age they had to buy whole albums because that was the most valuable and cost-effective way for providers to distribute music. Now, of course, listeners pay Spotify a single subscription fee to listen to individual tracks to their hearts’ content. Similarly, with photos and images, consumers no longer have to get them developed and can instead process, print, and share their images instantly.

They can book trips instantaneously online, thereby avoiding travel agents, and binge-watch television shows on Netflix or Amazon rather than wait a week for the next installment. In category after category, consumers are using digital technology to have their own way. In each of these examples, that technology alters not only the products and services themselves but also the way customers prefer to use them. A “purification” of demand occurs as customers address their previously unmet needs and desires—and companies uncover underserved consumers. Customers don’t have to buy the whole thing for the one bit they want or to cross-subsidize other customers who are less profitable to companies. Skyrocketing customer expectations amplify the effect. Consumers have grown to expect best-in-class user experiences from all their online and mobile interactions, as well as many offline ones. Consumer experiences with any product or service—anywhere—now shape demand in the digital world. Customers no longer compare your offerings only with those of your direct rivals; their experiences with Apple or Amazon or ESPN are the new standard.

These escalating expectations, which spill over from one product or service category to another, get paired with a related mind-set: amid a growing abundance of free offerings, customers are increasingly unwilling to pay, particularly for information-intensive propositions. (This dynamic is as visible in business-to-business markets as it is in consumer ones.) In short, people are growing accustomed to having their needs fulfilled at places of their own choosing, on their own schedules, and often gratis. Can’t match that? There’s a good chance another company will figure out how. What, then, are the indicators of potential disruption in this upper-left zone, as demand becomes less distorted? Your business model may be vulnerable if any of these things are true:

· Your customers have to cross-subsidize other customers.

· Your customers have to buy the whole thing for the one bit they want.

· Your customers can’t get what they want where and when they want it.

· Your customers get a user experience that doesn’t match global best practice.

When these indicators are present, so are opportunities for digital transformation and disruption. The mechanisms include improved search and filter tools, streamlined and user-friendly order processes, smart recommendation engines, the custom bundling of products, digitally enhanced product offerings, and new business models that transfer economic value to consumers in exchange for a bigger piece of the remaining pie. (An example of the latter is TransferWise, a London-based unicorn using peer-to-peer technology to undercut the fees banks charge to exchange money from one currency into another” conclude, Angus Dawson, Martin Hirt Jay Scanlon, McKinsey Consultants in McKinsey Quarterly.

What are these Disruptive Influences - Second Determinant – Strategic Structures

The organization’s strategy is its chosen way of meeting these expectations. While the effectiveness of the strategy radically affects the probability of meeting expectations, organizations with similar strategies differ in their results. These differences can be attributed to the organization’s ability to execute a given strategy. Many international companies have entered into a variety of strategic partnerships, ranging from mergers and acquisitions, through joint ventures, to a range of other more limited projects such as co-production and out-sourcing. They seem to have heeded the words of Ken Ohmae (1989) that, ‘in a complex, uncertain world filled with dangerous opponents, it is best not to go it alone’. However, through it may be true that ‘Globalization mandates alliances, makes them absolutely essential to strategy’ (Ohmae, 1989) there may be a variety of problems that need to be addressed, ranging from a clash of both national and corporate cultures to the fear that such partnerships may in fact be ‘Trojan horses’, allowing potential competitors easy access to home markets, core competencies and advanced technologies.

Many Western companies have been accused of entering into such alliances with Japanese and Korean companies for short-term financial and marketing benefits, given rising costs, difficulties in accessing international markets and the risks of ‘going it alone’ in developing new products and processes. However, the Far Eastern companies have often approached such alliances with a different orientation (Hamel, 1991). They have often been more oriented to learning over a long time scale, acquiring otherwise unobtainable skills, products and technologies (e.g. Philips and Matsushita over compact discs). Unless both partners weigh up the risks and opportunities and both approach it with ‘learning’ in mind, the core competencies of one partner may be inadvertently opened up, leaving it hollowed-out and de-skilled, dependent on external partners for supplies, components, technologies, and new designs. (Dennis R. Briscoe and Randall S. Schuler) Working closely with skilled engineers, scientists and managers leaves many opportunities for learning about converging technologies and future strategies.

Figure – Articulating Strategy

What are these Disruptive Influences - Third Determinant – Design

This ability is a function of the design of the organization and its operation. The design of the structure, processes and technology has to be geared towards performance. Moreover the structure, processes and technology have to collectively make sense. People who are working within the organization cannot rectify inconsistencies in the design of the organization. The structure includes the division of roles and accountabilities across the value chain, levels and geography. The management processes are meant to interconnect roles for meeting the expectations of the stakeholders. Such processes would include Manpower Planning, Resourcing and Performance Management, obtaining feedback and starting planning again. The performance management process would include breaking corporate goals down to individual levels, micro goal setting, establishing connections between financial goals, customer measures, internal process measures and people development measures, measurement of results against objectives and appropriate feedback and corrective mechanisms.

The technology and infrastructure provides the platform that enables the people to perform their roles. Clearly alliance and partnerships involve more than sharing money, technology and products; they also involve sharing people and HRD practices. Collaboration is often limited to specific activities, since in other areas the partners remain competitors. Such competitive collaboration raises new HRD issues, even in more limited ventures such as international research consortia (e.g. ESPRIT), R and D partnerships, marketing and distribution agreements and licensing arrangements. Some types of alliance demand more interaction, such as joint ventures. These often demand a collision or blending of national and corporate cultures and styles (e.g. Olivetti and ATT). In addition to team building and two-way communication, such projects may require ‘dating’ and trust-building on smaller-scale projects like licensing agreements first.

For example, Daimler-Benz found difficulty in adjusting its orderly style to Mitsubishi’s leaderless group approach. There will need to be attention to issues of job design and attention to issues of recruitment, selection and HR planning, e.g. numbers, skills mix, responsibilities. Who do staff work for - the original partner or the joint ventures? Who hires them? How are disagreements handled? If the venture fails, who do its employees work for? Says, Dennis R. Briscoe and Randall S. Schuler in “International Human Resource Management – (1995) Routledge”.

Figure – Disruptive Digital Designs

What are these Disruptive Influences - Fourth Determinant – Culture and People

The people and the talent management processes are the software of the organization. These perform within the context of the above structure, process and technology. Even the best of the performance management processes cannot guarantee performance if this system of structure, process, technology and people collectively do not make sense. This determines established enablement that works on talent priorities, drivers and enrichment. The workforce of all organizations is growing ever more culturally diverse (see also Wilson, this volume). In many countries extensive migration has meant that the workforce often consists of people from a variety of ethnic, racial and cultural backgrounds. Internationalization has stimulated the exchange and transfer of human resources across borders and across continents. Managing this multi-cultural workforce poses a number of new challenges of HRD. Many organizations, such as British Airways (BA), have sought to incorporate cultural diversity into their products and services in order to meet diverse customer needs and to recruit, retain and motivate a culturally diverse workforce. (Dennis R. Briscoe and Randall S. Schuler).

Figure – Disruptive Digital Cultures

What are these Disruptive Influences – Fifth Determinant – Leadership

“First, it was clear to me that the manager’s role as a coordinator of work would come under increasing pressure. Constant improvements in robotics and machine learning, in conjunction with the automation of routine tasks, make management a more unclear practice. What is a manager, and what is it that managers do? Are we witnessing the end of management? Next, I could see an inevitable shift in which a parent-to-child way of looking at the relationship between the manager and his or her team would be questioned and ultimately superseded by an adult-to-adult form. The nexus of this more adult relationship concerns how commitments are made and how information is shared. When technology enables many people to have more information about themselves and others, it’s easier to take a clear and more mature view of the workplace.

Self-assessment tools, particularly those that enable people to diagnose what they do and how they do it, can help employees pinpoint their own productivity issues. They have less need for the watchful eyes of a manager. Third, it seemed to me obvious that technology would tip the axis of power from the vertical to the horizontal. Why learn from a manager when peer-to-peer feedback and learning can create stronger lateral forms of coaching? Moreover, technology-enabled social networking is capable of creating robust and realistic maps of influence and power — so no more hiding behind fancy job titles. in “Rethinking the Manager’s Role Lynda Gratton, MIT SMR 2016”. She continues, “finally, the rise of platform-based businesses such as Uber Technologies Inc. has everyone excited about platforms and how they can create a fertile arena for new businesses to be built while also acting as a conduit for flexible ways of working”.

Figure – Disruptive Digital Leadership

What are these Disruptive Influences – Sixth Determinant - Organizational Outcomes

Organizational Performance is the outcome of the interactions between these organizational variables discussed above as performance determinants that deals with intellectual talent. Each of these variables is an independent and dependent variable at the same time. Each variable influences the other all the time. Structures influence behavior and behavior makes structures succeed or fail. As a consequence, the interactions between these variables are not linear. These interactions are, therefore, cyclical, reciprocal, analytic and systemic. These systemic relationships make the task of the organization designer and the chief executive complex and difficult. Unraveling mysteries of organizational performance is therefore, a complex task that requires clarifying the systemic relationships between these variables. Most analyses that seek a linear explanation hence fail to yield results. For this to be effective we need to find effective ways to approach the systemic problem.

Lambda Solutions, Sean Hougan says, "2015 is the year to invest in talent analytics and workforce management systems because we now have enough information to know that they are extremely effective. Talent analytics drive hiring, retention and identification of high-performing candidates. Bersin by DELOITTE, notes that one client found that traditional rubrics of hiring candidates such as the university they attended, their GPA, academic activities and GPA were not indicative of high-performance. With the right data and a talent analytics program, the organization was able to identify factors that were actually indicative of a candidate’s performance. Thus, an additional reason to get started building out talent analytics programs is because there is a significant time investment. Josh Bersin estimates that it takes between 2-3 years to “build a holistic talent analytics team".

What are these Disruptive Influences – Seventh Determinant Systemic Problem

1. Comprehensive Understanding of Business Realities

In order to make a substantial difference to a systemic issue such as organizational performance, a thorough understanding of the client’s business and organizational realities is essential. Such a study should include the organization’s environment (current and expected) including competition, regulatory environment, relative strengths and weaknesses, business processes, geographical presence, employee profile and technological infrastructure.

2. Causal Loops and Archetypes

In an interdependent system such as the one that operates in a company, the real inter linkages are not apparent. There is, therefore, a tendency to look for the root cause of the problem outside the system, whereas the problem lies within the system. Problems continue through causal loops that interact in the form of typical “archetypes”. Piecemeal solutions quite often exacerbate the problem, since they reinforce some of the causal loops. The solution lies in collectively discovering the archetypes, breaking the destructive loops and creating winning loops. Systems Thinking offers a technique of analyzing complex circular relationships of this nature. Causal loop diagrams help unravel the cause effect relationships between the variables and determine the areas for impact.

3. Interactive and Partnering

Such interventions are best achieved by a group of people who work on understanding the causality amongst the various factors and opportunities for interventions. The company should work closely with the facilitators. The facilitating team should bring in complementary skills necessary for an assignment of this nature and learn from each other during the process.

4. Phased Approach

A phased approach ensures that the management and the facilitators can review the engagement at key points and decide appropriate course for the way forward. A phased approach offers opportunities for reviewing scope at the end of every stage, making midcourse corrections, changing pace of the project, and adding resources if required.

5. System Diagnostic

The focus is on establishing the inter linkages within the system through problem definition and analysis. This can be achieved through interviews with senior management, branch managers, customers, employees and unions.

All the disciplines are to be practiced alongside each other and they have an impact on one another as well. As Hodgkinson (1998) describes, the intellectual learning organization is a process rather than a state, something that all members of an organization have to work on all the time, yet can never be fully realized. Pedler and Aspinwall (1996:182), too, stress that the learning company must remain a particular vision, to be realized in the context of a unique organization. Even though this may be the case, they consider it possible to generalize about organizational learning. People in companies learn from the problems, dilemmas and difficulties they encounter, together with their attempts to overcome them. Companies have much to learn from each other, too, but this can only be achieved if the contrasts are raised and the differences between them made explicit. In other words, there is no such thing as the learning organization, but a variety of learning organizations that embarks upon the knowledge transformation journey that can benefit from each other's experiences.

Figure – Disrupting Systemic Needs

Ganesh Shermon

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