LEADERSHIP DURING EXPONENTIAL TIMES
Orange Paper Leadership during exponential times
INTRO
Exponential technologies are driving massive waves of change and disruption. Autonomous vehicles, artificial intelligence, and additive manufacturing are some of the technologies which are rapidly giving new shape to the markets we serve. These new capabilities are being accelerated by new business mindsets and business models. A new approach to leadership is required during exponential times. The award-winning book, ‘Exponential Organisations’, provides insights from companies thatare achieving at least 10x performance versus their peers. These organisations have a ‘Massive Transformative Purpose’ which clearly describes the impact they work to achieve. There are other key attributes: z Internal attributes: Interfaces, Dashboards, Experimentation,Autonomy and Social Technologies z External attributes: Staff on Demand, Community & Crowd, Algorithms, Leveraged Assets and Engagement What leadership is required during these exponential times? Nicole Wright, Sullivan & Stanley Partner for Europe, hosted a think-tank in Amsterdam with fifteen experts from various industries to discuss this important topic. Special thanks to Jaroslav Dokoupil, the Chief Learning Officer at OpenExO, for providing the crowd of experts with an introduction to the ExO Canvas and the challenges leaders facein this new context. The experts are listed at the end of this Orange Paper, and some of their quotes are included in the sections entitled “From The Crowd”. Chris Parker Lead Associate Sullivan & Stanley (“S&S”)
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CONTENTS
CONTEXT IS KING
1.
2. VELOCITY OF KNOWLEDGE
3. SAFELY SELF-MANAGING
4. DRIVEN BY PURPOSE
5. ENABLE RIGOROUS EXPERIMENTATION
6. UNKNOWN UNKNOWNS EVERYWHERE
Leadership during exponential times
1. CONTEXT IS KING
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CONTEXT IS KING The speed of change requires us to be situationally aware at a much faster pace. The context surrounding the organisation requires an even greater ability to be aware of changesin the environment and a readiness to adapt. Inside & Outside Historically, a good CEO used to be a good manager and able to oversee everything within the walls of the company. The walls no longer matter as the company is now dependent on what is happening in the ecosystem. The company is even more dependent on people outside its walls than those on its payroll. Those outside the company cannot be managed inthe same way as its employees. They must be inspired. Short & Long-Term Serving customers today must be balanced against serving the customers of tomorrow, and the customers of tomorrow will be fundamentally different from those of today. Investment strategies must adapt to better balance the investment required for short-term tactical improvements with exploratory investments required in order to prepare for the future. Balancing these tensions will require greater discipline in making investment decisions and managing a flexible portfolio of change. Fighting & Growing The context is fundamentally different for those companies fighting for their survivalas against those which are fuelling a hyper-growth strategy. A threat to one organisation maybe an opportunity for another. A leader during exponential times must be able to reframe their perspective based on observations in the market. Contextual awareness for an organisation generates an ever-growing volume of data at everincreasing velocities. It is no longer possible to assimilate this data into actionable knowledge with traditional leadership structures.
“ FROM THE CROWD” “I work with various banks and I tell them to stop worrying about the Fintechs. Worry about the Techfins! They are huge technology companies who can just buy a financial licence and they will come for you.”
“An ambidextrous organisation is one which continually reviews, iterates and learns from its past, whilst focusing firmly on its future. Laser focus on the future requires experimentation with new business models, new solutions and client offerings to ensure the organisation has the capability to react at speed and pivot if necessary.”
Leadership during exponential times
2. VELOCITY OF KNOWLEDGE
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VELOCITY OF KNOWLEDGE The advent of the cloud, coupled with the rise of Application Programme Interface technology, has created vast and rich information ecosystems around organisations, all of which contributes to an overwhelming and infinitely increased volume of data. The data we create and capture today is, in terms of quantity, like a fire hose compared to the dripping faucet of yesterday. The challenge is to convert the data systematically into useful information and actionable insights, at speed, in order to benefit the company. Internal & External Historically, internal data was considered to be the ‘new gold’. Now, the potential value of that data is magnified when combined with an almost endless supply of additional data from external data sources. The capability to combine these data sources, and manage them safely, to gain a competitive advantage is even more important than ever today and tomorrow. However, these opportunities create new and complex risks which need to be closely managed and governed. Human & Machine Waiting days or weeks for a report to be provided by a support department is no longer goodenough. The opportunities created by available data require the wisdom of the company to be codified into algorithms which interpret the data in, or close to, real-time. High performingcompanies have hybrid processes involving humans and machines, which analyse the data for insights. Action & Reflection Your company is being challenged to balance the need for instant reaction, based on the available data, against the need to take a longer-term view, which will reflect on trends not yet embedded into the collective knowledge. Although the opportunities to automate, using data-driven insights increase daily, organisations must give their experts a safe space and the time needed to make informed decisions. The velocity of data, coupled with high volatility and digitisation is driving exponential business change and, traditional operating models and leadership structures are often major barriers to success.
“FROM THE CROWD” “I think the mistake many larger companies make is that they feel that they can simply copy and then deploy another company’s model of success.”
“An insurance company in Belgium has set up two parallel processes for how they observe trends. One is entirely algorithm AI-based and the other one is human. They run a process ofcontinuous sense-making.”
Leadership during exponential times
3. SAFELY SELF-MANAGING
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SAFELY SELF-MANAGING The velocity of data and the rapidly changing context surrounding the company together mean that the traditional decision-making processes are obsolete. The company must be organised to allow self-management at an appropriate level. The more autonomy and clarity there is, the faster decisions can be taken. However, this needs to be balanced and managed as the growth path can have unexpected turns. When using ‘staff-on-demand’ methods of resourcing, it is even more important to have a framework which clarifies how people can contribute meaningfully. Vision & Adaptation Clarity as to the direction of the company, and its highest priority when faced with multiple options, is required. The greater the clarity throughout the company and ecosystem, the more likely that individuals will be able to identify the appropriate action in any given situation. Autonomy & Control Leadership must also provide clarity as to boundaries. Explicit instructions on the mandate, and permitted or permissible parameters, is required. The wider the parameters in which to operate, the more potential there is for creative problem-solving to overcome those challenges which confront the organisation on a daily basis. Challenge & Support A foundation of support is required for autonomy at scale. Those working on behalf of the company must have the physical and psychological support in which to operate to their maximum potential. Physical support includes the space in which people are allowed to work, and the collaboration systems and operational machinery available to them. However, the best equipment available will not add much the potential value if the emotional support does not allow for respectful challenges and respectful risk-taking.
“FROM THE CROWD” “In a pancake system, you need a very clear vision that is shared with and owned by all so everyone can act autonomously and derive support from others to realise their potential.”
“Haier is a company that has this kind of organisation. It comprises some 40,000 peopleand it was divided into 4,000 microenterprises, each of about 10 people.”
Leadership during exponential times
4. DRIVEN BY PURPOSE
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DRIVEN BY PURPOSE Organisations achieving exponential results are often driven by a Massive Transformational Purpose which is clear in its terms. The purpose-driven organisation is able to benefit from social technologies to share its message and celebrate its achievements. The purpose of the organisation is the foundation for meaningful engagement with all its stakeholders - including employees, customers, shareholders and society. Internal & External The shared purpose of the organisation is the binding glue between all those within it and its surrounding ecosystem. The reason for being enables an organisation to evolve from a command-and-control, ‘egocentric’ way of decision-making, to a eco-centric distributed model which can scale. Friend & Foe An organisation looking to achieve exponential results, or even survive during these exponential times, must be able to connect, meaningfully and emotionally, with the externalcommunity and crowd. These people, upon whom an organisation must count to deliver strategic value to customers, must be inspired more than managed, and your shared purpose is the foundation for that relationship. Self & Others Departments and teams within an organisation are being redefined through the required self-managing structures. Being motivated on a linear career path or achieving the targets of an individual unit is no longer sufficient. Organisational purpose, when matched with an organisation’s internal values, can provide an even more powerful incentive. Financial reward alone is now acknowledged more commonly as. being limited in its ability tomotivate. People are looking for authentic inspiration in the form of their own contribution, by their own actions, to the achievement of the company’s targets.
“FROM THE CROWD” “I always liked the exponential organisations canvas because, as it invites you to think in terms of a massive transformative purpose, it invites people to think positively.”
“One of the big rules of leadership today is to inspire by making the vision and purposeof the business relevant to this generation and the next generation as well.”
Leadership during exponential times
5. ENABLE RIGOROUS EXPERIMENTATION Sullivan & Stanley
ENABLE RIGOROUS EXPERIMENTATION Continuous learning and discovery is the only way to have true agility as an organisation, and the only way to respond quickly to changes in the context of the business. This means acontinuous exploration of the possibilities of new mindsets, business models and technologies. Tolerance & Failure Experimentation, by definition, has an element of risk and there may be failure and waste. It is not possible to learn without being confronted with both things that work and things that donot.. Innovation and experimentation processes should be set up in order to contain the risksof failure. More important still, it is necessary to have rigorous processes in place to internalise the lessons learned. Intolerance & Incompetence The tolerance for failure must be balanced equally with an absolute intolerance for incompetence. As the future survival of the company is dependent on the ability to experiment and learn, those contributors must be held to the highest level of expectations. Scale & Discovery Experimentation, when managed well, means working on small and well-defined actions withpre-agreed expected outcomes. Due to the risk and uncertainty involved, the outcome of these actions is not yet known sufficiently well to be operationalised. A leader during exponential times must provide the framework for investment in experimentation within set boundaries and have disciplined processes either to stop the experiment or transform the learning from it into a scalable solution. Learning happens on the edge of the comfort zone of those involved; providing aculture of rigorous experimentation will give the confidence to push the boundaries of what isknown and comfortable.
“FROM THE CROWD” “When you want to apply a tolerance for failure, you need to have an equalintolerance for incompetence, otherwise it doesn’t work.”
“This is where the danger is, and I’m in the middle of it now. They all like the word‘experiment’ because experiment is, you know, some playground where people are just playing.”
Leadership during exponential times
6. UNKNOWN UNKNOWNS EVERYWHERE Sullivan & Stanley
UNKNOWN UNKNOWNS EVERYWHERE Leadership during exponential times means being faced with new situations which were impossible to imagine yesterday. A big risk for leaders is that they continue to use the same mindset and techniques which worked before. Those success strategies may not be appropriate for the challenges approaching during these exponential times. Self & Organisation The ability to adapt as a leader in these times begins with one’s own self-awareness about where we are coming from. It is not possible to remain the same whilst demanding that the rest of the company makes significant and sometimes painful changes. In a large way, the changes implemented by the leader embody the changes required by the organisation in order to adapt to the new context. Transparent & Confident It is not possible for leadership to have all the answers, and it does a disservice to those investing their energy in the company to believe that all the answers will come from the top. The leadership must be transparent; it must inform those within the organisation when decisions are being taken under massive uncertainty. Many decisions will be taken that will most likely be changed in the near future when the organisation has learned more. Brave & Vulnerable If the organisation is asked to be self-managing and to discover new techniques and behaviours continuously, then the leadership should start by being open with its own journey and what it means. A leader’s admission that the organisation is ‘playing the game to learn the rules’ not only shows authentic vulnerability but also is an invitation to the community to help. The leadership should not be an additional unknown which creates uncertainty. Take care of yourself in order to provide the context and space your organisation needs to achieve success during these exponential times. You and your team will be pushed to the edge based on the uncertainties of the new reality. Do what you need to do to ensure your mental,physical, spiritual and emotional strength are at their peak. This will help you have the bravery to stay the course.
“FROM THE CROWD” “We can’t just say, “Go and be risky” or, “Go and change” or, “Go and be agile”. We need to actually help. For those that want it, we need to be with them all the way and weneed to be able to be with them in the change. We can’t just disappear and then kind of hope for the best.”
“Connected to that, I also want to pick up on what you were saying. I think one of the responsibilities of the CEO during all the changes that we’re having, is to prioritise the change and maximise the change, or if you want to use an oxymoron, not constantly changethe change.”
Leadership during exponential times
SUMMARY Leadership during exponential times requires a paradox of changing constantly while not changing the change. The opinions and recommendations provided give insights on how to lead an organisation seeking exponential results. The key theme throughout the think tank discussions was the requirement to create clarity inthe space for others embark on this journey. Keep the organisation flowing while resisting the temptation to change vision continuously, provide boundaries and support your people need to succeed. Special thanks to the participants of the think tank, in alphabet order: Erik Jan Bijvank Jaroslav Dokoupil Jordy Egging Luigi Maria Fierro Jim Groenen Willem van Groenland Venood Kurup Luciana Ledesma Araz Najarian Michiel Ooms Chris Parker Peter Maarten Westerhout Sandeep Sakharkar Adrian Stalham Nicole Wright Callum Chambers More information about exponential organisations is available: Exponential Organisations’ by Salim Ismail, Michael Malone, and Yuri van Geest‘ Exponential Transformations’ by Salim Ismail and Francisco Palao Many of the experts who have contributed to this have achieved the Certified ExO Foundations credential which is available for free on OpenExO.com. S&S solves complex business problems and can help you succeed during exponential times
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Leadership during exponential times
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