Towards Transformative Learning.

Towards Transformative Learning.

Complexity, emergence, ambiguity, transformation, agility, etc., are words that have become more and more mainstream over the past few years. VUCA and #futureofwork are commonplace memes now. Organizations are trying to play catch-up as waves of technology take over our lives, work, attention, and energy. The human mind cannot keep pace with this change. Organizations are merely reflecting the confusion each one of us feels. There’s a scramble to “keep learning” — new skills, new technology, new business processes, new ways of interacting with the customers/consumers/co-creators. The learning curve seems endless; exhaustion and cynicism are replacing enthusiasm and enquiry. Fear of losing jobs to AI and Robots appear to be rapidly becoming a reality. Gallup’s Employee Engagement report is now well-known.What has all of this got to do with Organizational Learning? A great deal, I would say. And most organizations recognize this is critical; hence, the growing popularity of terms like “collaborative learning,” “continuous learning,” “agile learning,” “lifelong learning,” and so on. Against this backdrop of incessant change, advent of the uber-technology era, climate crisis, and socio-political upheaval, I would like to propose that organizations have to learn but learn differently. I propose a shift to “Transformative Learning.” This enfolds other forms of learning within itself but adds another dimension to the whole.Transformative Learning goes beyond the cognitive to integrate the heart, gut, body, and intuition. It is now scientifically proven that our gut and heart also have brains of their own, and send us critical information. However, our cognitive side is so over-developed that we habitually ignore what our heart is telling us and overlook our gut feel, often to repent later. Neither of these forms of sensing and sensemaking find a place in our current organizational setup. And this is to our detriment.Going back to the quotation above from Aftab Omer, there are two pieces which I feel are critical to shift from regular ways of learning to transformative learning — from information to imagination and from intended learning to emergent learning. For an in-depth understanding of Omer’s perspective, I recommend his article, Imagination, Emergence, and the Role of Transformative Learning in Complexity Leadership. In this piece, I’ll focus on the two aspects italicized above — imagination and emergent learning — and their relation to Transformative Learning.I have tried to capture the Organizational Learning shift that I am speaking about in a diagram below:

From Intended to Emergent Learning — Transforming how organizations learnThe lower two quadrants of the diagram illustrate the different forms of learning that typically take place in organizations today — this is Intended Learning. This kind of learning is based on information, knowledge (from the past), skills and competencies needed for the present, and learning programs designed to tackle the rise of new technology in the future. This happens through specific Training and different modes of Ongoing Learning supported by the organization and also driven by the learners themselves. This learning is crucial in maintaining business-as-usual, gives the organizations its competitive edge, helps to build new skills, and give rise to innovation. This kind of learning is perfect during conditions of stability and gradual change.But not when change is exponential, continuous, and ambiguous. When there are complete paradigm shifts and the world has to be re-envisioned. When the way we see ourselves and our relationship with the world around us need to be re-imagined. I recommend listening to this video by Tomas Bjorkman for a deeper understanding of these shifts.To deal with these shifts, we need to move from intended learning to emergent learning. Intended learning happens from a place of knowing and against a set of specific goals. Emergent learning happens from a place of reflection and sensemaking.In the upper two quadrants of the diagram above, I have shown some of the capacities and conditions necessary for emergent learning to take place. These are still very nascent ideas that I am mulling over even as I write.Imagination — In these times of Volatility, Uncertainty, Complexity, and Ambiguity, Imagination has a key role to play. I do not mean wild imagination here but the ability to envision possible futures even though the present situation is far removed from that possibility. (Man’s landing on the Moon was imagination once.) This kind of Imagination is a skill that requires honing and deliberate practice. It is aspirational in nature, sees and envisions new possibilities, and gives voice to what is wanting to emerge. (I have capitalized “Imagination” to distinguish it from imagination or wild flights of fancy and daydreaming.)Sensing and Sensemaking — The ability to “sense” is rooted in deep, non-judgmental, unbiased observation, feeling with all our senses, and the capacity to step back to see the connection between seemingly disparate situations, contexts, or challenges. “Sensemaking” is where Imagination and Sensing come together. It requires a leap of faith coupled with all that has been seen, heard, felt, and intuited. IMHO, in the VUCA world, organizations can no longer thrive without Imagination.Negative Capability — John Keats, the Romantic Poet, wrote about Negative Capability. And the words are as applicable today as they were during his times. I wrote a detailed post about it here, but I will repeat Keats’ quote:“The concept of Negative Capability is the ability to contemplate the world without the desire to try and reconcile contradictory aspects or fit it into closed and rational systems. …I mean NEGATIVE CAPABILITY, that is when man is capable of being in uncertainties, Mysteries, doubts, without any irritable reaching after fact & reason…” ~ John KeatsNegative Capability, as described by Keats, is a component of Imagination where we are willing to suspend judgement and immerse ourselves in the situation without a need to resolve it. If one can stay long enough with uncertainty and ambiguity, it is possible to reach a deeper place of knowing from where a more suitable and elegant solution emerges. I can think of no better capability to be cultivated, nurtured, developed, and honed in today’s organizations.Holding of Paradox — In our binary, “either this or that” approach, we forget to explore the space in between, the spectrum that holds all the interesting shades of grey. Or even the space completely outside of the spectrum. As Niels Bohr said, “the opposite of a profound truth may well be another profound truth.” Staying with a paradox requires us to slow down, listen deeply, and be comfortable with contradiction and ambiguity. This is not a cognitive skill that one can learn from a training program or by reading a book. Its an inner state that needs to be cultivated with curiosity, patience, and perseverance.Not seeking Closure — The human brain has a deep-seated need for closure. We cannot live with incomplete stories. And this very human pattern plays out in organizational decision making, and especially so when there is acute pressure to adhere to a timeline. Yet, this is often the enemy of deep, transformative learning and keeps us stuck in our old patterns, repeating the same mistakes, and facing the same crisis. This requires us to train our minds and hearts to stay open, and cultivate curiosity, courage, and compassion. Otto Scharmer’s Theory U is a powerful process that can help organizations move towards building “Negative Capabilities”.Letting go of Linear Logic — The scientific, mechanistic, Industrial Era has essentially built in us a love for linear cause and effect. However, the complexity of the VUCA world no longer lends itself to linearity; instead we live in a world where “everything is connected to everything else”. This requires us to step back, widen our perspectives, let go of our need for closure, and sense into the bigger patterns at play. This calls for us to hone our pattern-sensing skills, look beyond immediate connections, and stay with a situation in a mode of open observation.Holding Space for Self and Others — Holding space calls for us to stay in a facilitation mode — one that is characterized by openness, non-judgement, an awareness of one’s inner state, and an ability to listen deeply. Organizations today are characterized by speed, efficiency, and accuracy. However, as I have written earlier, complexity and uncertainty require us to slow down. It requires us to go from rapid-fire action to observation, reflection, and thoughtful response when the time is right. Again, this is not a cognitive skill that can be acquired over a couple of training sessions. This is an inner state of being where we learn (gradually) to slow down, become mindful, and aware. And it takes relentless practice, support, and working with other individuals on the same journey.Generative Conversations — Otto Scharmer speaks about Four Levels of Listening that leads to Four Levels of Conversation. Those who are Coaches and Facilitators know the importance of Listening at Levels 3 and 4 (refer to diagram below). It is Empathic and Generative Listening that hold and create space for something new to be born. This kind of listening is rarely practiced in organizations. However, it is precisely this that can truly transform organizations and the individuals who are collectively taking this journey.

Levels of ListeningBecause none of the capabilities mentioned above fall within the typical parameters of tangible, quantifiable, and measurable, they fall off the organizational radar. It’s well-nigh impossible to measure inner growth. Organizations desiring to step onto the path of Transformative Learning need to let go off the old paradigms, and embrace the new in the space of learning.

Agile beyond the fad.

Agile beyond the fad.

One of the challenges of agile is the word ‘agile’. Even now, the word puts some people off. They get, understandably, sceptical about the jargon, dismissing otherwise helpful insights as yet another digital fad.Meanwhile, other people end up embracing nothing but the jargon, without the substance underneath. They start standing up for their meetings and think this will deliver better outcomes for their customers or users.This is an important issue for digital transformation which, after all, is much more about transformation than it is about digital. i.e. good digital transformation is all about culture, and that means it relies on engaging people, communicating clearly on issues of substance, and persuading.

A. Boil it down to basic principles

So how do you do agile without the distraction of ‘agile’?One approach that can be helpful is to focus less on the word itself and more on two irreducible principles for how good products/services are designed.

  1. You should always start by defining your problem in terms of user needs — and,if you have to compromise, you should do so only later, reluctantly and consciously, and only if you have to.
  2. You should always build solutions quickly and simply at first — just get something workable finished. Then, show it to your customers/users to see what they think, and change it enthusiastically in response.

These rules capture many of the upsides of agile without the jargon.They also have the nice property of being both right and revolutionary. They’re right in that, when you apply them well, they lead to better products and services. But they’re also revolutionary, in that they’re the opposite of how most traditional organisations function, so although they sound simple, applying them well is really, really hard.

B. History also helps

The second approach I find useful, as a way of avoiding an unproductive debate about agile terminology, is to bring in some of the history.If you can give a good account of why agile makes sense today, it helps you focus on the substance, and it also reassures people that the ideas aren’t a fad. To do this, you need to show that material things have changed in our economy and that these changes privilege more iterative/adaptable ways of working.So what has changed in the world to make agile methods more effective?My sense is that the answer to this question has two parts, both of which stem from technological changes that have taken place since c.1994.

First, the economics of service delivery have changed.

In the old, pre-digital world, organisations could typically reach thousands of people with one instance of their product or service, and updating these products or services was a costly and imprecise business.To change a product or service was expensive, requiring retooling, repainting, or relaunching. It was also highly imprecise — even after you made changes, you couldn’t be all that sure they had been worthwhile.In 2018, things are different. With digital technologies, even a small organisation can reach millions of people with a single instance of their product or service.Meanwhile, revisions are cheap and, with good analytics, instantly informative. You can tweak a few lines of code and test the new version live (perhaps even alongside the old version). You can then learn, instantly and with statistical rigour, if your changes have worked. (And, if they don’t, you can even revert to the old one.)This simple change in the economics of service delivery means that iterative methods, in which you build something quickly so that you can start changing it sooner, are much more economically attractive than they used to be.

Second, real-world testing now matters more than it used to.

We could leave it there. But I think it’s important not to overlook a second, subtler shift, which explains why real-world testing — and, therefore building a workable product/service as early as you can — now matters more than it used to.At root, this comes down to two mega-trends in our economy: the shift from hardware to software and the shift from an economy based on manufacturing to one based on services.If the archetypal outputs of the old economy were physical objects like cars, appliances, and clothing, the archetypal outputs of the new economy are digital services like search engines, social networks, and banking apps.This changes what you need to know in order to create valuable things.Let’s take the early days of industrialism as a starting point. It’s pretty clear that, right back at the start of the industrial age, knowledge of engineering was paramount over knowledge of user experience. Who cared if your loom/steam engine/high-speed steel was a pleasure to use? The value of innovation lay mainly in whether it worked.Later, in the age of mass-production, the balance shifted. If you’re making a mass-market consumer product, of course it still has to work in an engineering sense — but it also has to be gracefully designed. That’s why the 20th century was captured by the idea of combining form and function. And it’s why the iconic products of this era, from the Coca-cola bottle to the iPhone, are lauded for being both well-engineered and beautiful. They’re a delight to use.Today, the case for graceful, usable, beautifully-designed products/services — beyond those that are purely well-engineered — is surely more powerful than ever.Of course, that is not to say that engineering matters any less. The goal of all good products/services is still that holy grail: a fusion of form and function.But now, more than ever, you simply cannot get away with overlooking — even for a second — the design/user-testing side of things. The age in which you could occasionally get away with shoddy UX is dying, if it’s not dead already.Why? Again, for a really simple reason: because badly-designed digital services are literally worthless. They have no value whatsoever, in a way that isn’t quite true for a badly designed hammer or washing machine.In fact, badly designed digital services often actually destroy value. If you don’t believe me, just call O2’s voice-activated customer service line, as my partner did the other day. She phoned them with a query about her bill and, by the time she got through, she was so furious she cancelled her contract.

Agile without ‘agile’

To get the benefits of agile, then, it can be helpful to downplay the word in favor of underlying principles and reasoned arguments about why these methodologies and mindsets work.Two trends explain the need for more iterative/adaptable methods in service design. One is a change in the economics of product/service design. The other is a subtler shift in the kind of knowledge you need to build valuable things.Together, these trends explain why people who develop products/services today, whether in charities, government, or businesses, should focus more obsessively on user needs and should build workable stuff more quickly than they used to.Agile is not, in other words, a fad. It’s a new way of organising people to do good work, reflecting real changes in the way our economy functions.

By James Plunkett, published in Medium.

The journey to an agile organization

The journey to an agile organization

 

Agility is catching fire, and there is growing recognition of its transformational benefits. But moving to an agile operating model is tough, especially for established companies. There are several paths to agility and many different starting points, yet successful agile transformations all share the common elements described in this paper.

Agile organizations are different. Traditional organizations are built around a static, siloed, structural hierarchy, whereas agile organizations are characterized as a network of teams operating in rapid learning and decision-making cycles. Traditional organizations place their governance bodies at their apex, and decision rights flow down the hierarchy; conversely, agile organizations instill a common purpose and use new data to give decision rights to the teams closest to the information. An agile organization can ideally combine velocity and adaptability with stability and efficiency.

Transforming to an agile operating model

Any enterprise-wide agile transformation needs to be both comprehensive and iterative. That is, it should be comprehensive in that it touches strategy, structure, people, process, and technology, and iterative in that not everything can be planned up front (Exhibit 1).

Exhibit 1

There are many different paths to enterprise agility. Some organizations are born agile—they use an agile operating model from the start. As for others, broadly put, we see three types of journeys to agile: All-in, which entails an organization-wide commitment to go agile and a series of waves of agile transformation; Step-wise, which involves a systematic and more discreet approach; and Emergent, which represents essentially a bottom-up approach.

Born-agile organizations are relatively common in the technology sector (for instance, Spotify or Riot Games1 ), with rare examples in other industries (Hilcorp, a North American oil and gas company, is a case in point). Most organizations must undergo a transformation to embrace enterprise agility. Such transformations vary in pace, scope, and approach, but all contain a set of common elements across two broad stages (Exhibit 2).

Exhibit 2

First, successful transformations start with an effort to aspire, design, and pilot the new agile operating model. These elements can occur in any order and often happen in parallel. Second, the impetus to scale and improve involves increasing the number of agile cells. However, this involves much more than simply rolling out more pilots. Organizations may iterate among these stages as they roll out agility across more and more of their component parts.

Aspire, design, and pilot

Most transformations start with building the top team’s understanding and aspirations, creating a blueprint to identify how agility will add value, and learning through agile pilots. These three elements inform one another and often overlap.

Top-team aspiration

Successful agile transformations need strong and aligned leadership from the top. A compelling, commonly understood and jointly owned aspiration is critical for success.

The blueprint should, at first, be a minimum viable product developed in a fast-paced, iterative manner that gives enough direction for the organization to start testing the design.

Adopting an agile operating model can alleviate challenges in the current organization (such as unclear accountabilities, problematic interfaces, or slow decision making). Yet a desire to address pain points is not enough; there is a bigger prize. As one CEO observed, “I’d never have launched this agile transformation if I only wanted to remove pain points; we’re doing this because we need to fundamentally transform the company to compete in the future.” This aligns with McKinsey research showing that transformations emphasising both strengths and challenges are three times more likely to succeed.

To build the top team’s understanding and aspiration, nothing beats site visits to companies that have undergone an agile transformation. For example, the entire leadership team at a global telecommunications company contemplating an agile transformation invested a week to visit ING (a Dutch bank), TDC (a Danish telecommunications company), Spotify, Entel (a Chilean communications company), and others prior to launching an agile transformation.2

Blueprint

The blueprint for an agile operating model is much more than an organization chart and must provide a clear vision and design of how a new operating model might work (Exhibit 3). An agile transformation fundamentally changes the way work is done and, therefore, blueprinting also needs to identify changes to the people, processes, and technology elements of the operating model. The blueprint should, at first, be a minimum viable product developed in a fast-paced, iterative manner that gives enough direction for the organization to start testing the design.

Exhibit 3

The first step in blueprinting is to get clear on where the value lies. All operating-model design must be grounded in an understanding of how value is created in the industry and how the individual organization creates value. This fundamentally links to strategy.

Next comes structure. An agile organization doesn’t deliver work according to a classic organization chart; rather, it can be thought of as a series of cells (or “teams,” “squads,” or “pools”) grouped around common missions, often called “tribes.” The blueprinting element should produce a “tribe map” to illustrate how individuals that are grouped get work done, as well as a more recognizable organization chart to show the capability axis along which common skill sets are owned and managed (Exhibit 4).

Exhibit 4

Individual agile cells are defined by outcomes or missions rather than by input actions or capabilities. Teams performing different types of missions will likely use different agile models. However, three types of agile cells are most common. First, cross-functional teams deliver products, projects, or activities. These have the knowledge and skills within the team and should have a mission representing end-to-end delivery of the associated value stream. The “squads and tribes” model developed by Spotify and used by ING, among others, is one example. Second, self-managing teams deliver baseload activity and are relatively stable over time. These teams define the best way to set goals, prioritize activities, and focus effort. Lean-manufacturing teams or maintenance crews could be examples of this agile approach. Indeed, more broadly, lean-management tools and practices are highly complementary with enterprise agility. Third, flow-to-work pools of individuals are staffed full time to different tasks based on the priority of the need. Functional teams like HR or scarce resources like enterprise architects are often seen as “flow” resources.

One telecommunications company identified five major activities across their business and selected an agile approach for each: channel and delivery units (for example, stores) were organized as self-managing teams to increase local flexibility with joint accountability; segment ownership, product development, and enabling teams were organized in cross-functional squads and tribes; and centers of excellence for all other activities (including subject-matter experts and corporate support activities) combined flow-to-work and temporary cross-functional teams for specific tasks.Would you like to learn more about our Organization Practice?Visit our Enterprise Agility page

Working in teams may sound familiar, but at scale this requires change across the whole operating model to provide appropriate governance and coordination. The organizational backbone comprises the stable components of an agile operating model that are essential to enable agile teams. Typically, these backbone elements include core processes (for example, talent management, budgeting, planning, performance management, and risk), people elements (including a North Star,3 core values, and expected leadership behaviors), and technology components. In trying to scale up, many agile transformations fail by simply launching more agile teams without addressing these backbone elements.

The final step of blueprinting is to outline the implementation road map. This road map should contain, at minimum, a view on the overall scope and pace of the transformation, and the list (or “backlog”) of tasks.

The five steps of the blueprint form a coherent approach. A commercial insurer in North America used an agile blueprint to accelerate innovation of digital and business processes. It defined a chapter-based organization structure and created a new organization of product managers (who played product-owner roles in agile teams) to guide teams toward business outcomes. They defined a team structure mostly aligned to customer and internal user journeys, with dedicated teams to grow selected businesses. They created a stable planning and performance-management backbone, as well as a culture of risk taking, and they used an 18-month road map to create all the new positions, train personnel in the new roles, and implement the change in full.

Nothing convinces skeptical executives like teams of their own employees having verifiable impact through agile working. For example, one oil and gas company launched a series of agile pilots through which cross-functional teams managed to design wells in 50 to 75 percent less time than the historical average.

Agile pilots

The purpose of a pilot is to demonstrate the value of agile ways of working through tangible business outcomes. Early experiments may be limited to individual teams, but most pilots involve multiple teams to test the broader elements of enterprise agility. Nothing convinces skeptical executives like teams of their own employees having verifiable impact through agile working. For example, one oil and gas company launched a series of agile pilots through which cross-functional teams managed to design wells in 50 to 75 percent less time than the historical average.

Initially, the scope of the agile pilot must be defined and the team set up with a practical end in view; this might include deciding on team staffing, structure, workspace, facilities, and resources. Next, the way the agile pilot will run must be outlined with respect to structure, process, and people; this is typically collated in a playbook that forms the basis for communications with those in the pilot.

Scale and improve

Agile transformations acknowledge that not everything can be known and planned for, and that the best way to implement is to adjust as you go.

Scaling beyond a few pilots is no small feat; this is where most agile transformations fail. It requires recognition from leadership that scale-up will require an iterative mind-set: learning is rapidly incorporated in the scale-up plan. In this, enough time is required—a significant portion of key leaders’ time—as well as willingness to role model new mind-sets and behaviors. Agile transformations acknowledge that not everything can be known and planned for, and that the best way to implement is to adjust as you go. For example, a leading European bank first deployed four “frontrunner” tribes to test the blueprint in action and adapted important elements of the blueprint across the delivery enterprise. Such an iterative rollout approach enables continuous refinement based on constant feedback and capability building for key roles across the organization, including agile coaches, product owners, scrum masters, and leadership.

Agile cell deployment and support

Agile scale-up first and foremost requires standing up more agile cells. However, an organization can’t pilot its way to enterprise agility. The transformation should match the organizational cadence, context, and aspiration. But at some point, it is necessary to leap toward the new agile operating model, ways of working, and culture. For large organizations, this need not be a day one for the entirety but will likely progress through a series of waves.

Many chose to start by transforming their headquarters and product-development organizations before touching frontline, customer-facing units (call centers, stores, or manufacturing facilities). It is possible to transform one factory or one end-to-end customer journey at a time, but highly interconnected functions in the headquarters may need an All-in transition approach.

The size and scope of waves depend on the context and aspiration. For example, a large Eastern European bank designed waves of nine months, where the diagnostic, design, and selection for 10 tribes, 150 squads, and 1,500 roles were performed in the first three months and then deployed over a six-month period, launching a new tribe every two weeks. Furthermore, the scale-up effort was a top priority for C-suite executives, which dedicated more than 10 percent of their time to the transformation.

Resources to support new agile cells—for example, availability of agile coaches or appropriate workspace—can often limit the speed of scale-up. Failure to address the support of new agile cells can cause friction and delay in the transformation.

Backbone transformation

Reflecting on its agile experience before scaling up, one executive observed: “Most of our agile pilots are working despite, rather than supported by, our broader organizational ‘wiring’ [processes, systems, and even beliefs and values] that forms what we call the backbone of an organization.” The backbone governs how decisions get made; how people, budgets, and capital get deployed; and how risk gets managed. Taking an organization to an agile operating model requires that this backbone be transformed (Exhibit 5).

Exhibit 5

Capability accelerator

Successfully scaling an agile operating model requires new skills, behaviors, and mind-sets across the organization. This is vitally important and constitutes an intensive phase of an agile transformation. Most organizations require existing staff to take on these new roles or responsibilities, and as such, need a way to build new skills and capabilities. Specifically, any successful agile transformation will invariably create a capability accelerator to retrain and reorganize staff, make the agile idea common to all, and develop the right skills across the organization.

 

A typical capability journey may well have distinct phases. First, organizations need to identify the number of trainers (agile coaches) required, and then hire and develop them; a failure to do so can cause delay and blockage when the agile transformation extends across the whole organization. Second, as part of building capabilities, the organization must define the new agile roles (agile coaches, product owners, tribe leads, chapter leads, and product owners, for example), along with a clear idea of what success looks like in each role. Third, learning and career paths should be set for all staff, making clear the opportunities that the agile transformation opens up. Fourth, the organization needs to enable continuous learning and improvement across the organization (this will entail a large-scale digital and communications program). Finally, it’s necessary to design and run a whole-organization effort to raise agile skills (often by means of intensive boot camps) and ensure that new staff are onboarded appropriately. Larger organizations often set up an academy to consolidate and formalize these functions.

The importance of investing in culture and change on the journey to agility cannot be overstated. Agile is, above all, a mind-set. Without the right mind-set, all other parts of the agile operating system can be in place, and yet companies will see few benefits.

Focusing on culture and the change team

A culture and change team is an essential coordinating element of an agile transformation. But it is not a traditional project-management office; rather, the emphasis should be on enabling the other transformation elements, helping to remove impediments and catalyzing culture change.

As an example, Roche, a global healthcare company, launched a global leadership initiative as a central component of its transformation to become a more agile enterprise. It designed a four-day program with a combined focus on personal and organizational transformation. More than 4,000 leaders have now been touched by the effort, helping to shift the collective consciousness and capabilities for leaders to deliver the change.

The importance of investing in culture and change on the journey to agility cannot be overstated. Agile is, above all, a mind-set. Without the right mind-set, all other parts of the agile operating system can be in place, and yet companies will see few benefits. In contrast, when leaders and teams have a strong agile mind-set, then a clear aspiration alone is often enough for a successful agile operating model to emerge.

Understanding transformation archetypes

All successful enterprise-wide agile transformations include the elements described above, but there are several different ways in which the elements can be combined and sequenced. As introduced earlier, there are three major transformation archetypes:

  1. Step-wise. Transforming to an agile organization often feels like a step into the dark for senior leaders. Perhaps understandably, then, the most common transformation archetype shows a clear distinction between the aspire, design, and pilot phase and the scale and improve phase. Many companies will run multiple rounds of pilots and iterate their blueprint several times before fully committing to scaling up across a large part of the organization. It is not uncommon for this process to take one to two years, as leaders and the organization build familiarity with agility and prove to themselves that agile ways of working can bring value in their organization. Organizations may well go through several subsequent rounds of aspire, design, and pilot before scaling up elsewhere.
  2. All-in. Although less common, an increasing number of organizations gain strong conviction early on and fully commit up front to move the whole organization to an agile model. Leaders from these organizations define a plan to execute all steps of the transformation approach as quickly as possible. Even in these types of transformation it is rare for the whole organization to transform to an agile model in a single “big bang”; rather, it is more common for the transformation to proceed through a number of planned waves.
  3. Emergent. It is impossible—and not very agile—to plan out an agile transformation in detail from the start. Instead, most agile transformations have emergent elements. Some organizations have chosen to progress their entire agile transformation through an emergent, bottom-up approach. In this archetype, an aspiration from top leaders sets a clear direction, and significant effort is spent building agile mind-sets and capabilities among leaders.

“It’s like this,” one CEO explained. “We are 3,000 people on a giant cruise ship. But what we need to be is 3,000 people in a few hundred yachts. So, how do I get my people safely into those smaller boats?” As is increasingly common, the discussion had moved from if an agile operating model was applicable to how leaders could help their organization transform. Navigating an organization to an agile operating model is not easy. The elements of an agile transformation described in this article provide a guide.

About the author(s)

Daniel Brosseau is a partner in McKinsey’s Montreal office, Sherina Ebrahim is a senior partner in the New Jersey office, and Christopher Handscomb is a partner in the London office, where Shail Thaker is a senior partner.

COLLABORATE OR SUCCUMB.

COLLABORATE OR SUCCUMB.

Generating Solutions in an Era of Fast Knowledge Obsolescence.

By Helena M. Herrero Lamuedra

 

Longevity and knowledge obsolescence are disrupting culture attributes and leadership capabilities, among other aspects of our modern lives.

Technology is the driving force behind us living longer, as well as raising levels of uncertainty when solid facts are smashed by new discoveries.

This dynamic is changing forever an organizational cornerstone: POWER.

How can anyone be sure that s/he fully understands the complex problems that organizations are facing today, in an ever-changing environment that sometimes bring unforeseeable rules? The answer is… well, you can’t!

The best antidote to this is to gather the wisdom of the many… so, reach out and collaborate.

From the perspective of the individual, collaboration is both an intellectual and an emotional act: it implies the realization that knowledge is a social construct (rather than a privilege of a few) and a mindset shift from entitlement to vulnerability.

From the perspective of the organization, collaboration is the only path forward to ensure a deep understanding of what needs to be solved to effectively evolve. The collective resources of a diverse group are required to design solutions that matter to clients, and the necessary community support to do what was not done before but needs to be done.

How may an organization start to change gears towards collaboration?

  1. Leverage meetings to discuss client pain-points rather than use them as show-and-tell venues
  2. Make sure your lay-out allows employees to see each other and prompts them to hold conversations rather than encourage communication only through emails ccing too many people and
  3. Ask customer-facing employees their opinions and suggestions rather than trying to design solutions from the ivory tower.

In summary, in the long run collaboration is the chance for organizations to meaningfully sustain and increase relevance for clients, employees and investors.

Yoga as a Remedy for Our Stressed, Sedentary Digital Age

Yoga as a Remedy for Our Stressed, Sedentary Digital Age

Most of us spend the majority of our days on our phones, computers, tablets, and in front of our TVs. We also spend the majority of our days sitting or reclining, whether in our cars, at our desks, or on our couches. Just as humans are not meant to be wired all the time, we are not meant to be sedentary for most of our days. It’s not a coincidence that we are restless, stressed, anxious, and suffer constant back and pains.

Yoga can alleviate the stress, anxiety, and aches and pains that come with the digital age, says Peter Mico, a yoga leader and studio owner in Idaho. One of his specialties is training and teaching students with chronic pain. He is also the operator of Blue Earth Yoga, an institute for yoga, health, and longevity which holds retreats around the world that include Blue Zones principles and education. Some of these retreats are also held in blue zones regions. We recently talked with Peter about yoga, the Blue Zones lifestyle, and the yoga moves you can do anywhere, even at work.

How do you see yoga and Blue Zones research intersecting?

PETER MICO: Yoga is more than just a good workout. Just like some of the daily schedules and habits of the elder inhabitants in blue zones, yoga combines movement and stress relief. It’s about being mindful, being in the body, and being in the moment. In my experiences in the blue zones, the older generation is wonderfully grounded and present. So the practice of yoga helps brings us to a place that these cultures have achieved through their way of life, and one that is very different from our own modern lifestyles of constant distraction and stress.

In our society, it’s common for older people to fall and break a hip. Not so often in the blue zones regions. As Dan Buettner has showed us, centenarians in the world’s blue zones are gardening, weeding, and doing yard work well into their 90’s and 100’s. They haven’t spent their lives sitting in cars and desks, they’re regularly getting up and down from the ground. In this way, it’s as if they are practicing yoga all day and every day, promoting good muscle tone and strong bones with full-body movement.

Also, even though yoga is not a religion, it can be a spiritual practice. Even the practice of learning to breathe slowly and deeply from your diaphragm as you do in yoga is like meditation, besides being invigorating and helping to relieve stress. Blue Zones centenarians had spiritual lives even though they came from different religions, and reaped the benefits of regular prayer, meditation, and spiritual rituals.

Besides stress relief and learning to breathe properly, what are some of the other benefits of yoga?

PM: Driving in cars, sitting in the lounge chair watching TV, or hunched over a computer all day creates multiple problems for the spine. That’s a big reason why probably 80% of Americans suffer from lower back pain. Yoga can be very helpful to people with lower back problems, and as a preventive measure so you don’t develop back problems. Its emphasis on posture and alignment, particularly in the sacral complex, is the perfect remedy for these ailments of pain and discomfort. People come to us with major maladies of herniated disks, scoliosis and chronic muscular pain, and find relief after a steady practice of yoga.

The same is true of ‘mouse arm’ and the effects on the cervical spine, which is a big deal.  Allowing the head to hang forward toward the screen, then tilting to look up, then extending the mouse arm forward, and then holding the pose for hours is a recipe for disaster for the cervical spine, especially the C4, C5, and C6 vertebrae. Yoga is a powerful practice for promoting healthy neck care.

 

Office, Desk, or Cubicle Yoga: 4 Essential Moves to Reverse “Computer Crouch” and “Mouse Arm”

For a typical office job of answering telephones and working at a computer, there are a couple of poses that you should do often.

Every 15 Minutes, Sitting Moves:

1. Elbow Hold:

Put your arms up over your head and hold your opposite elbows. Then move your held elbows in four directions: forward and backwards, from side to side, and in small back and forward bends. Do this for 20-30 seconds every 15 minutes.

 

 

 

2. Arm Twists:

Put your arms straight out to the sides with your thumbs up. Rotate our arms forward and then backwards so your thumbs are moving in a circular motion. Do this 10 times. Then repeat with your arms rotating in opposite directions from each other. Do this 10 times as well.

 

30 Minutes, Standing Moves:

1. Baby Backbends: Stand up and clasp your hands behind your back. Arch backwards gently as you open your chest and roll your shoulders back and behind you. Then turn your head side to side, 5 times. Then bend your ear towards your shoulder, 5 times on each side.

 

2.Arm Circles: Put your right hand on your right shoulder. Extend your left arm straight out to the side and bend your wrists so your fingers point towards the floor. Move your left arm around in a circle about 5 times each way. Then repeat this on your right side.

 

What are some yoga myths that you want to debunk for our readers?

 

PM: One is that yoga is just for women. Many women have flexibility and come to yoga for strength. Often men come to the studio with some strength, but are seeking or needing flexibility. People seem to think they shouldn’t come to class unless they are flexible. But class is where you get flexible. It would be like saying you won’t go to the gym because you don’t have muscles.

Another myth is that yoga means contortionism. I don’t believe in celebrating just the big crazy poses or the yoga competitiveness of this body-centric society we live in. I once overheard Richard Freeman (a master yogi) tell another teacher that the most beautiful pose he ever saw was an 80-year-old man doing a backbend. No airs, just a simple backbend with mindfulness. Beautiful.

 

 

 

 

 

 

 

A winning operating model for digital strategy

A winning operating model for digital strategy

Digital is driving major changes in how companies set and execute strategy. New survey results point to four elements that top performers include in their digital-strategy operating model.

For many companies, the process of building and executing strategy in the digital age seems to generate more questions than answers. Despite digital’s dramatic effects on global business—the disruptions that have upended industries and the radically increasing speed at which business is done—the latest McKinsey Global Survey on the topic suggests that companies are making little progress in their efforts to digitalize the business model.

The online survey was in the field from May 15 to May 25, 2018, and garnered responses from 1,542 C-level executives and senior managers representing the full range of regions, industries, company sizes, and functional specialties. Respondents who participated in this year’s and last year’s surveys report a roughly equal degree of digitalization as they did one year ago.

As measured by the shares of the organization’s sales from products, services, or both sold through digital channels; of core products, services, or both that are digital in nature (for instance, virtualized or digitally enhanced); and of core operations that are automated, digitized, or both, as well as the volume in the organization’s supply chain that is digitized or moves through digital interactions with suppliers.

The previous survey was in the field from June 20 to July 10, 2017, and garnered responses from 1,619 C-level executives and senior managers representing the full range of regions, industries, company sizes, and functional specialties. Of those who completed the survey in 2017, 345 also completed the 2018 survey.  suggesting that companies are getting stuck in their efforts to digitally transform their business.

The need for an agile digital strategy is clear, yet it eludes many—and there are plenty of pitfalls that we know result in failure. We have looked at how some companies are reinventing themselves in response to digital, not only to avoid failure but also to thrive. In this survey, we explored which specific practices organizations must have in place to shape a winning strategy for digital—in essence, what the operating model looks like for a successful digital strategy of reinvention. Based on the responses, there are four areas of marked difference in how companies with the best economic performance approach digital strategy.

We define a top economic performer as one that has, according to respondents, a top-decile rate of organic revenue growth (that is, of 25 percent or more in the past three years), relative to other respondents. We also looked at respondents in the top decile for growth in earnings before interest and taxes (EBIT) and have made note of any practices for which the top-decile revenue and top-decile EBIT results correspond or differ. compared with all others:

  • The best performers have increased the agility of their digital-strategy practices, which enables first-mover opportunities.
  • They have taken advantage of digital platforms to access broader ecosystems and to innovate new digital products and business models.
  • They have used M&A to build new digital capabilities and digital businesses.
  • They have invested ahead of their peers in digital talent.

Increase the agility of creating, executing, and adjusting strategy

One of the biggest factors that differentiate the top economic performers from others is how quick and adaptable they are in setting, executing, and adjusting their digital strategies—in other words, the velocity and adaptability of their operating models for digital strategy. Both are necessary for companies to achieve first-mover (or very-fast-follower) status, which we know to be a source of significant economic advantage.

So how do they do it? We looked at the frequency with which companies follow 11 operational practices of digital strategy. With the exception of M&A—which typically requires a much longer time frame than the other ten, often due to regulatory reasons—respondents in the top revenue decile say their companies carry out each one more frequently than their peers (Exhibit 1). The link between frequency and performance also holds up when looking at earnings before interest and taxes (EBIT).5 5.In our analysis, we looked at the relationship between frequency and economic performance in multiple ways. The results indicate that when these digital strategy practices are carried out more frequently, revenue and earnings before interest and taxes (EBIT) are greater. The inverse also is true: when companies carry out these practices more slowly, their revenue and EBIT performance is worse. Exhibit 1

That speed in strategy links with financial outperformance is not surprising and is consistent with our other work on strategy planning. As the pace of digital-related changes continues to accelerate, companies are required to make larger bets and to reallocate capital and people more quickly. These tactical changes to the creation, execution, and continuous modification of digital strategy enables companies to apply a “fail fast” mentality and become better at both spotting emerging opportunities and cutting their losses in obsolescent ones, which enables greater profitability and higher revenue growth.

Invest in ecosystems, digital products, and operating models

The companies that outperform on revenue and EBIT also differ from the rest in their embrace of the economic changes that digital technologies have wrought. Based on the results, they have done so in three specific ways: taking advantage of new digital ecosystems, focusing product-development efforts on brand-new digital offerings, and innovating the business model. We know that digital platforms have enabled the creation of new marketplaces, the sharing of data, and the benefits of network effects at a scale that was impossible just a few years ago. As these factors have converged, the digital ecosystems created by these platforms are blurring industry boundaries and changing the ways that companies evaluate the economics of their business models, their customers’ needs, and who their competitors—and partners—are.

The top EBIT performers are taking better advantage of these ecosystem-based dynamics than other companies—namely, by using digital platforms much more often to access new partners and customers. Respondents at these companies are 39 percent more likely than others are to say they do so. And while the share of global sales that move through these ecosystems is still less than 10 percent, other McKinsey research predicts that this share will grow to nearly 30 percent by 2025, making platforms an ever more critical element of digital strategy. The needs of customers become broader and more integrated in an ecosystem-based world, and the companies that are already active in their respective ecosystems are better positioned to understand these needs and meet them (either on their own or with partners) before their peers do. It makes sense, then, that the top performers seem to be developing much more innovative offerings than their peers.

On average, companies’ digital innovations most often involve adjustments to existing products. Yet respondents at the top-performing companies say they focus on creating brand-new digital offerings (Exhibit 2). What’s more, these respondents are about 60 percent more likely than others are to agree that they are more advanced than peers in adopting digital technologies to help them do so. This result is consistent with our previous findings that first movers and early adopters of digital technologies and innovations also outperform their peers. Exhibit 2

Last, innovation of the business model is more common at the top-performing companies. In our past survey, only 8 percent of respondents said their companies’ current business models would remain economically viable without making any further digital-based changes. In the newest survey, we see that the companies that have embraced digital are well ahead of their peers in their preparation for digital’s new economic realities. At the top performers, respondents say they have invested more of their digital capital in new digital businesses, compared with all other respondents (Exhibit 3).

Our research also shows that companies overall invested a greater share in new digital businesses as the overall digital maturity of their sectors increased. The more successful companies appear to be the ones that made these moves earlier than their peers, rather than being forced into making such investments late in the game.Exhibit 3

Use M&A to build digital capabilities and businesses

According to the results, M&A is another differentiator between the top-performing companies and everyone else. Not only are they spending more than others on M&A, but they are also investing in different types of M&A activities (Exhibit 4). At the winners, respondents report spending more than twice as much on M&A, as a share of annual revenue, as their counterparts elsewhere.

Includes only respondents working at privately owned companies, n = 767. Respondents working at publicly owned companies (n = 318) were asked how much their organizations invested in M&A as a percentage of market capitalization over the past three years. The same is true of respondents reporting top-decile EBIT growth, relative to respondents at other organizations. Exhibit 4

Given the pace of digital-related changes and the challenges companies face to match that speed through organic growth alone, this isn’t so surprising. What is surprising, however, is that top economic performers take a different approach to their M&A activities. While top performers and their peers have used some part of their overall digital investments to acquire new digital businesses in recent years, the top performers are investing more in acquiring both new digital businesses and new capabilities. By contrast, other respondents say their companies focus most of their M&A spending on nondigital ventures—an area where lower-performing companies seem to be doubling down. Exhibit 5

Invest ahead of peers in digital talent

From earlier work, we know that getting the right digital talent is a key enabler for digital success—a point that our latest findings only reinforce. Talent is also a major pain point: qualified digital talent is a scarce commodity, as the pace of digital still outstrips the supply of people who can deliver it. But the top economic performers are making a greater effort to solve this problem. Compared with others, these respondents say their companies are dedicating much more of their workforce to digital initiatives (Exhibit 5).

It’s not just the degree of investment that distinguishes top performers, though. They are also much nimbler in their use of digital talent, reallocating these employees across the organization nearly twice as frequently as their peers do. This agility enables more rapid movement of resources to the highest-value digital efforts—or to clearing out a backlog of digital work—and a better alignment between resources and strategies.

Looking ahead

  • Make your strategy process more dynamic. By definition, a digital strategy must adapt to the digital-driven changes happening outside the company, as well as within it. Given the breakneck pace of these changes, such a strategy must keep up with the pace of digital and enable first-mover opportunities by being revisited, iterated upon, and adjusted much more frequently than strategies have been in the past. Companies need their digital strategies to act as a road map for ongoing transformation—a living organism that evolves along with the business landscape. In other work, we laid out the four main fights that companies must win to build truly dynamic digital strategies.
  • Organizations must educate their business leaders on digital and foster an attacker’s perspective, so people are more likely to look at their business, industry, and the role of digital through the eyes of new competitors. They must galvanize senior executives to action by building top-team-effectiveness programs. Organizations also must leverage data-driven insights to test and learn—and correct course—quickly. And they must fight the diffusion of their efforts and resources—a constant challenge, given the simultaneous need to digitalize their core business and innovate with new business models. These steps will put companies in a better position to move first in delivering new products and meeting customers’ and partners’ evolving needs in the new ecosystems that platforms are creating.
  • Invest in talent and capabilities early and aggressively. Talent is already known as one of the hardest issues to solve as companies transform themselves in their pursuit of digitalization. The results confirm that companies need to embrace this reality and then look at how they can solve it best, whether through smarter, more dynamic allocation of these resources or the use of M&A to accelerate the building of new digital capabilities. Digital is driving an ever-faster pace of innovation, and companies can take advantage of the potential benefits only if they have the capabilities to harness it. For the survey’s top performers, one way forward is leveraging M&A to help build their digital capabilities, rather than trying to build them through a slower, organic approach. These companies are also getting the most from their digital capabilities and investments by deploying them in much more agile ways and creating a more flexible, responsive operating model.
  • Redefine how you measure success. The digital era requires that companies move nimbly in order to succeed. Yet many are still measuring performance with the same metrics they used previously—which were designed for a slower pace of business and a rigid strategy-setting process. Companies must move away from old metrics (market share, for example) that are no longer meaningful indicators of economic success. With markets becoming ill-defined due to shifts in industry boundaries and shrinking economic pies within a given sector, market share is no longer a gold-standard metric or even relevant. Companies need to hold themselves to new standards that will indicate whether or not they are truly leading the pack on innovation, productivity, and the adoption of digital technologies. In our experience, outcomes such as being first to market with innovations, leading on productivity, and working with other businesses in the ecosystem (that is, moving from an “us versus them” mind-set on digital to one of partnership) are better indicators of future digital success.

About the author(s)

The survey content and analysis were developed by Jacques Bughin, a director of the McKinsey Global Institute and senior partner in McKinsey’s Brussels office; Tanguy Catlin, a senior partner in the Boston office; and Laura LaBerge, a senior expert in the Stamford office. They wish to thank Soyoko Umeno for her contributions to this work.MeasureMeasure