Leading digital innovation takes a network

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“Bureaucracy has few fans,” management experts Gary Hamel and Michele Zanini declare in “The End of Bureaucracy” (Harvard Business Review).[i] Some call it a “villain”; others a “disease.” I call it a weighty obstacle to any digital innovation.

Fortunately, as I’ve said before, technology flattens everything. That includes organizations and decision processes. This may seem like a challenging proposition for long-standing companies, but it’s an essential first step for fostering an innovative culture that can fuel digital transformation. Removing the silos takes a mind shift: from controlling every layer to “leading like gardeners,” as retired 4-star U.S. General Stanley A. McChrystal says, “creating and maintaining a viable ecosystem in which the organization operates.”

So how does a 180-year-old industrial enterprise such as Schneider Electric take this leap? By leading digital transformation from within — not just from the top — with a network of digital innovators committed to the journey.

As AWS CEO Andy Jassy says so well, “There is no compression algorithm for experience.” Every digital enterprise, therefore, must empower people to be agile and responsive, while also inspiring them to seek innovative outcomes every day. This mindset needs a culture that fosters creativity, innovation, flexibility, and the freedom to be disruptive.  The Netflix culture deck,[ii] for instance, became famous for promoting empowerment over control.

Fueling a digital culture

As Hamel and Zanini go on to point out, you don’t want to throw out bureaucracy completely, as “it works, at least to a degree.” What does this mean for digital transformation? It’s simple. Instead of dictating digital change as a multi-layered process, use a guiding framework to qualify engagement in a way that doesn’t place innovation at the mercy of the process. Jeff Bezos famously said in 2017 that “Good process serves you so you can serve customers. But if you’re not watchful, the process can become the thing.[…] The process becomes the proxy for the result you want. You stop looking at outcomes and just make sure you’re doing the process right.”[iii]

We keep our eye on outcomes. Our goal — as we progress in our digital journey — is to establish discipline for a limited number of control points such as cybersecurity and a few common standards such as identity, API management, or UX. And from there, we make sure that our digital thinkers can move full speed ahead by using and re-using some transversal primitives while focusing on their stakeholders instead of spending energy convincing internal gatekeepers.  A framework that meshes a license to experiment and innovate with a limited number of explicit control points is a necessary foundation in order to act as a network (as an extended enterprise with its ecosystem of partners).

It’s also important to note that, with digital, customers are more approachable than ever, bringing elements of customer understanding deeper in the organization. Everyone can see bits and pieces of the customer experience, starting with the company’s own website. Take advantage of this reality to foster more customer-centricity within the technology teams. Enable your engineers and developers to innovate more targeted solutions aligned closely to customer needs and opportunities.

An example of DNA convergence

There is no need to re-invent the wheel when you go digital (transform the customer experience) and digitize (create digital offers). We found a way to converge our core business expertise with Schneider’s Digital Services Factory (DSF), developed with Accenture. DSF is an engagement model that provides a roadmap and technology capabilities for developing repeatable, customer-driven digital offers our customers can scale according to their stage in the digital journey. DSF stakeholders can re-use technology primitives along the way instead of restarting from scratch with every idea.

Through the Digital Services Factory, Schneider marries its traditional, deep domain expertise and digital DNA to drive customer-centric technology.

In fact, customers are a core part of this co-innovation approach. We’ve also established multi-R&D hubs to leverage the best of nearby talent pools and the localized extended enterprise to accelerate digital innovation, as our ecosystem is a core tenet of our digital innovation strategy.

For example, our engineers innovated with Bühler — a global market leader in the supply of flour production plants, pasta, and chocolate production lines — to solve Bühler’s need to provide mobile-first, useful, customized information to its customers (Food & Bev manufacturers). By bringing together R&D, the business, and the customer during development, EcoStruxure™ Augmented Operator Advisor paves the way for new digital capabilities and business models for machine builders.

The payoff is in the “middle”

There is no silver bullet for building a culture that fosters digital innovation, but the Agile model is a good entry point that goes beyond just being digital. It influences how you operate: in short sprints, with small teams, in the spirit of collaborative innovation, and in iterations that can reflect concrete customer feedback.

Digital transformation in the B2B world essentially is a long tail-game with a lot of specific use cases. Each scenario is quite different. Success, therefore, depends on conflating deep industry expertise with a disruptive digital mindset. Not one against the other, but instead creating the right conditions so that a network of industry experts and digital disruptors can join forces — in an agile way — to deliver value one sprint at a time.

Niall Ferguson[iv] in his wonderful recent book The Square and the Tower[v] compares top-down hierarchies (the Tower) to the volunteer networking of people (the Square), and shows that real power throughout history often has resided in networks more than we care to know. I would tend to believe that this analogy applies to digital innovation, too. We must balance empowerment and control to solve immediate customer needs while also keeping a creative and committed eye on the digital future beyond.

[i] Gary Hamel and Michele Zanini, “The End of Bureaucracy,” Harvard Business Review. November-December 2018, https://hbr.org/2018/11/the-end-of-bureaucracy
[ii] jobs.netflix.com/culture
[iii] https://www.sec.gov/Archives/edgar/data/1018724/000119312517120198/d373368dex991.htm
[iv] https://www.niallferguson.com/
[v] https://www.amazon.com/dp/0735222916/ref=cm_sw_em_r_mt_dp_U_2j7nCbEHQV8GB

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