Business Success: The Learning Organization Part I

The technology driven enterprise demands a new leadership paradigm – one that creates a far stronger, more genuine link between the achievement of corporate objectives and the employee’s realization of his deepest, often unexpressed, intensely personal growth needs.

Thus, rather than the mere promise of greater corporate status and power, followership is borne of belief in the leader’s true understanding and caring for the employee’s holistic being and welfare, and thus flows from greater intimacy.
Kendall A. Elsom, Jr., President, CEO Genesis Consulting Partners

The_fifth_discipline_coverIn The Fifth Discipline, Peter Senge introduces five new component technologies, or disciplines that “are gradually converging to innovate learning organizations.” They are systems thinking, personal mastery, mental models, building shared vision, and team learning. According to Senge, organizations that practice these disciplines are adaptable, self-organizing, and have the potential to “continually enhance their capacity to realize their highest aspirations.”

Below are two of the five disciplines.  We will cover the other three in the next blog article.

Systems Thinking
As previously described, systems thinking takes the approach that to have impact, the organization needs to be viewed in its entirety with recognition that the whole is greater than the sum of its parts. While one participates in a system, it is sometimes difficult to see the overall pattern and how that pattern changes over time. Since parts of organizations are connected by numerous interactions, the effect on other parts may take years to play out.
Traditional approaches tend to view each part in isolation, often never getting to some of the deepest issues. Senge defines systems thinking as “a conceptual framework, a body of knowledge and tools that has been developed over the past fifty years, to make the full patterns clearer, and to help us see how to change them effectively.”

Personal Mastery
Senge defines personal mastery as “the discipline of continually clarifying and deepening our personal vision, of focusing our energies, of developing patience, and of seeing reality objectively.” As someone might strive for master status within a trade, mastery is a special level of proficiency or self-actualization. It is a foundational element of the learning organization since “an organization’s commitment to and capacity for learning can be no greater than that of its members.”

Unfortunately, this is where many organizations fall short, leading to vast untapped potential. Most people enter business full of optimism and energy. But after a number of years, they become disenchanted and just put in their time until retirement with minimum effort. Therefore, it is critical for management to hire and inspire toward the goal of each member striving for personal mastery.

Join us next week for the other 3 disciplines.

Business Success: Tips from the Field

All my successes have been built on my failures.—Benjamin Disraeli, British statesman and literary figure

Cherry Woodburn, a business innovation consultant, attributes her passion for innovation to her first manager who encouraged her to try new ideas without fear of recrimination. “If an idea didn’t work,” Woodburn states. “We would analyze the process and learn from the experience.” Here she shares advice on creating a culture of innovation.

Most companies fail to encourage innovation. Large companies in particular tend to be risk adverse and have a mind-set geared toward exploiting ways to control their processes through standardization. Process improvement is beneficial. But a company’s emphasis on reducing variation in its present systems can result in a lack of innovation over the long term. It is a paradox. While companies are increasing the quality of their product, they may be decreasing their ability to innovate.

Businesses need to cultivate innovation in order to compete in today’s fast-paced, innovation-driven economy. Since innovation is now recognized as necessary to keep a business viable and competitive, why doesn’t a culture of innovation spring up organically? Why does it need to be fostered? What keeps employees from naturally bubbling with creativity?

Obviously there are many variables, one of which is a cultural belief that there is one right answer. The natural outcome of this simplistic thinking is a reduction in the dialogue, thereby blocking the exploration of various alternate viewpoints and ideas. Meetings are held to find “the one right answer.” No one really listens to anyone else. Everyone is too busy preparing an opposing response. Underlying assumptions go unquestioned and unexamined. And too often, the person who speaks up or disagrees with the majority opinion is labeled as “not a team player.” Add in today’s hectic pace and a general disdain for meetings, and it is understandable that people look for closure rather than exposure to new ideas.light

However, innovation and expansive thinking emerge from nurturing different points of view. Doing so requires the pioneering spirit of exploring new territory. Innovation by its very nature requires experimentation and failure. Thomas Edison is the classic example. After more than 1,000 attempts to invent the first long-lasting electric light bulb, he was successful inventing bulbs that stayed lit for only a few minutes. One of his colleagues asked, “Mr. Edison, don’t you feel you are a failure?” Without reservation, he answered, “Not at all. Now I definitely know more than a thousand ways not to make a light bulb.”

Sadly, the culture in many organizations dictates that mistakes are bad and should be avoided at all costs. Employees are criticized or even ridiculed for mistakes. This stems from early learning in institutions where mistakes meant a lower grade and even possible consequences at home. Often this attitude continues into the workplace, where the aversion to mistakes is continued. Consider how these stultifying lessons continue to pile on: Sue gets reprimanded in front of peers for making errors and feels humiliated. Consequence: In the future, she will be prone to hide her mistakes and not deviate from business as usual. In the same company, Tom is written up for insubordination because he experimented with a new way of doing things, thereby not adhering to long-held company practices. As a result of these and similar incidents, people play it safe. Yet the greatest innovations can come from workers’ own initiatives, not just from an initiative pushed down from the top.

The need for innovation is nothing new, but the recognition that it needs to be a core competency—permeating all departments and all levels of the organization—is relatively recent. Much as leaders once believed that quality was primarily the responsibility of the quality department, so has innovation been primarily confined within the borders of research and development. Frans Johansson, author of the successful book The Medici Effect: Breakthrough Insights at the Intersection of Ideas, Concepts & Cultures , advocates that companies also be willing to take their efforts at innovation beyond the borders of their business to include other industries and disciplines. He called this cross-fertilization of ideas the Medici effect, after the fifteenth-century banking family that broke down traditional barriers separating disciplines and cultures to ignite the Renaissance.

A culture of innovation needs to be nurtured until it is deeply rooted into the psyche of every employee. However, this cannot be done successfully with announcements, slogans, or playing on people’s fear of competition. Ironically, innovative thinking also is needed to maintain traditional practices that still add value and to cultivate a daily crop of new ideas. The culture is about recognizing individual mind-sets and accepting perceived borders and limitations in order to question them. These mind-sets typically come from each employee’s individual experiences and culture. They are empowered by past experiences that have become hardwired into the brain. Couple that with the fact that brains are structured to simplify and categorize massive amounts of daily stimuli, and it is no wonder people get caught in a duality of right and wrong. The pattern becomes “Success is good; failure is bad.” When new information is compatible with what is known, it is accepted as the truth; when it does not mesh with preconceived ideas or past experiences, it receives little consideration. As a result, opportunities to innovate and change the status quo are missed. Research shows that the act of recognizing and surfacing unconscious beliefs offers the highest leverage for change.

Understanding and acknowledging the current situation in comparison to the desired state is the first step in any change initiative. It is impossible to change something that is not acknowledged or understood, which makes it difficult to grow into a future culture steeped in innovative thinking.

Begin with asking tough questions of everyone in the organization. Dig up deeply embedded beliefs and assumptions that are, more than likely, not in sync with the stated company vision and values. Here are some questions for starters.

• What are your own and your organization’s assumptions and beliefs related to innovation, particularly innovation that deals with new practices and methods? New product ideas tend to fare better, but, again are they encouraged and tested? Begin a dialogue with employees at all levels and in all departments to learn how steeped the company is in “Business as usual” and “That won’t work here.”

• Has an emphasis on process improvement, standardization, and reducing variation created a myopic focus on improving what you are already doing to the virtual exclusion of creativity and innovation? Think of the demise of the fully integrated steel mills versus today’s mini-mills; think of Kodak improving in film and print while virtually ignoring digital photography for years.

• What are your own and your organization’s assumptions and beliefs about risk taking, mistakes, and lack of immediate positive outcomes? Ask yourself if you stick with a new idea long enough to see results. Tally the number of initiatives that started over the past 5 to 10 years. Then honestly evaluate the number remaining—in other words, those that maintained their initial momentum. Study the gap between the organization’s actual behavior and the values it espouses about vision, growth, and innovation.

• Do you encourage experimentation, testing hypotheses, or do new ideas get quashed in meetings or die a slow death as they are analyzed, dissected, and debated?
Think of the ensuing dialogue as preparatory work for growing the innovative capabilities that have been lying fallow due to traditional business practices. When transforming a garden, it is not enough to plant verbal seeds. If the ground has been depleted of creative nutrients due to years of leaching the soil with criticism, tight control, and fear, announcing a new gardening program will not be successful.

By taking time to listen carefully and allow fears to emerge, the organization can begin to prepare the soil. Fertilizing with acceptance and courage allows an innovative culture to emerge. As leaders cultivate the vision, innovation will flourish and generate new ideas for years to come.

Business Success: Innovation in the Marketplace

Engineers say that, a new idea is “invented” when it is proven to work in the laboratory. The idea becomes an “innovation” only when it can be replicated reliably on a meaningful scale at practical costs.

— Peter M. Senge, The Fifth Discipline

Economics of Innovation

To remain competitive, companies must innovate. Without innovation, products and services become more and more alike. In other words, they eventually become commodities. Then businesses have to compete on price, which eventually destroys profit margins. When the market stabilizes at the lower price, investors move to other markets. By contrast, innovation allows companies to differentiate. This enables premium pricing, which eventually leads to higher value. When the market stabilizes well above cost, it becomes easier to attract investors.
“The fundamental principle that drives this argument is that when innovation creates differentiation, it creates attractive economic returns.” [ However, there are other possible outcomes for all types of innovation efforts. The ultimate goal is to calculate “return on innovation.”

There are four other types of innovation

• Differentiation. Innovation designed to capture market share, attract investors, and gain economic advantage

• Neutralization. Innovation to keep up with higher-performing competitors

• Productivity. Innovation to lower costs, thus freeing resources for other forms of innovation

• Waste. Innovation that falls short of achieving any goals

Differentiation is the type of innovation that holds the most potential for economic gains. However, it is often stifled by adversity to risk. A company that is focused on risk reduction stays close to norms and tends to leverage the experience of the market leaders. This is dangerous for companies that hope to take a “value proposition to such an extreme that competitors either cannot or will not follow.”

Companies who seek to be innovative must encourage collaboration. “Breakaway differentiation requires a highly coordinated effort across the entire enterprise.” The idea may come from a small group. But “at the end of the day, every function in the corporation has to realign its priorities in order to amplify the innovation to breakaway status. Anything less is simply too easy for competitors to neutralize.”innovation

Successful innovation requires strong leadership. In most companies, innovation is highly decentralized with multiple projects going on at the same time. This is the best strategy for the incubation stage. But when it comes to selecting the best prospect for further investment, strong leadership is required. “If management does not take a position on innovation strategy, the company’s innovation will continue to bubble up, but they will not be aligned. If all are brought to market- and that is the default option in this scenario—none will achieve breakaway status.”

Taking Ideas to Market

When an organization decides to pursue innovation as a strategy, there are several aspects to consider. First, how viable is the product or service? Second, is the product or service feasible? And third, once it is developed, what is the best way to take the new product or service to market.

Rob Goldberg, an innovation consultant, specializes in helping companies take their ideas to market. He offers the following assessments when considering an innovation project.
Evaluation of Viability

Goldberg uses eight dimensions to determine the viability of products and services.
1. Size of opportunity. What is the size of the market?
2. Growth of market. Is the market growing or shrinking?
3. Strength of customer relationship. Can existing customer relationships be leveraged?
4. Value creating. How do we create a competitive advantage?
5. Degree of government involvement. To what extent is the market regulated?
6. Degree of competitive density. What is the structure of the market, and who are the leaders?
7. Value delivery. What barriers to entry exist?
8. Window of opportunity duration. How much time do we have to launch successfully?

Evaluation of Feasibility

When considering entering the market, there are several questions to assist in assessing feasibility.
• Perception.How much pain is associated with what the company does today? Is there a need for the product or service?

• Competitive density. Are there any 800-pound gorillas lurking?

• Brand image. Can your company deliver a credible solution in this space?

• Innovation. Does the technology exist to develop the solution?

• Experimentation. Does the solution rely on proven technology?

• Business model. Is the company willing to pay for it?

• Return on investment. Does the product or service support corporate hurdles to bring the innovation to market?

• Cost of entry. How do we enter the market?

Taking the Innovation to Market

Once the innovation is ready, Goldberg uses a four-stage process to take an idea to market.

1. Requirements analysis defines the WHAT. The goal is to document all function/feature, performance, and user-interfacing requirements of the solution that meets the customer’s needs.
2. Design analysis describes the HOW. Design essentially transforms the requirement into a blueprint that outlines data structures, architecture, procedural detail, and interface characterization that can be created to deliver the desired customer experience.
3. Feasibility analysis determines the HOW MUCH. The aim of a feasibility study is to see whether it is possible to develop the solution at a reasonable cost.
4. Optimization analysis determines WHAT IT IS WORTH. The goal of optimization is to establish the optimum feature set based on economic value and customer preferences.
Depending on the industry and type of product or service, there may be other considerations. But these basic concepts offer some guidelines for accelerating the innovation process within an organization.

Business Success: Fostering Creativity

Innovation is fostered by information gathered from new connections; from insights gathered from new connections; from insights gained by journeys into other disciplines or places; from active, collegial networks and fluid, open boundaries. Innovation arises from ongoing circles of exchange, where information is not just accumulated or stored, but created. Knowledge is generated anew from connections that weren’t there before. When this information self-organizes, innovations occur, the progeny of information-rich, ambiguous environments.

—Margaret Wheatley, Leadership and the New Science
Creativity cannot be forced. It can only be allowed. However, much can be done to increase the flow of creativity.

Actions for Stimulating Creativitycreativity

While most leaders are highly creative, many of the best ideas bubble up through the rank and file. They are the ones closest to the processes or customers where innovation has the biggest impact. Everyone loves to share ideas. So innovation is a resource that is easy to tap. One can take several actions to encourage ideas.

Offer Incentives

Most people love to share their ideas, but some may be fearful of criticism or rejection. So it is best to set rules that no idea will be judged negatively. However, the best ideas, especially those that translate into profits, should be rewarded. An organizational-level program that offers incentives and rewards for good ideas goes a long way toward fostering creativity.

Ask Inspiring Questions

Continually questioning every process is a great way to generate new ideas. Asking “what if” and questions based on curiosity can stimulate thinking. And inspiring individuals to dream or create their own department, process, or even company is a great way to get the juices flowing. Also, challenging a group to solve an impossible problem can lead to amazing breakthroughs.

Create Time and Space to Think

Most people feel so much pressure that just having time to think is a luxury. But this is exactly what is needed to nurture creativity. Some companies are creating relaxing spaces just for daydreaming. Others are allocating time and telling their workers to go for a walk in the woods or visit an art gallery to get out of their thinking rut. A change of scenery is one of the best ways to tap into the right side of the brain.

Design a Creative Workspace

There is so much that can be done to enhance the simplest workspace. Artwork and plants give a cubicle or office a more organic feel. Soft, inspiring music enhances brain function. A view of the outdoors is an ever-changing landscape of color and light.

Enhance Diversity

Creativity can be stimulated by bringing together people of different talents, backgrounds, cultures, and viewpoints. The more varied the experience of the participants, the more each person’s own ideas will be enhanced.

Encourage Mistakes

Mistakes are the portals of discovery. 
—James Joyce

Organizations that encourage individuals to make decisions at their own level will most likely see an increase in errors. This is natural because it is expected that the organization is changing and evolving at a much faster rate. So while there may be a concern about the increase, more mistakes may mean that more new ideas are reaching the experimentation stage. A common theme is “managers must decrease the fear of failure and that the goal should be to experiment constantly, fail early and often, and learn as much as possible in the process.”

Free-form Conferences

In 1985, the organizers of the International Symposium on Organizational Transformation noticed that the best part of the conference was during the coffee break. It turned out that this time of mingling and freestyle interaction also was the part the participants liked the most. So the organizers decided to design the entire conference as a coffee break. In other words, they decided to use open space methodology to design the entire program. “The result is a conference with no agenda, no organizing committee and, surprisingly, almost no stress.”

In the book Open Space Technology: A User’s Guide, Harrison Owen offers ideas for running all types of programs with minimal structure. He suggests that gathering in an open space that is outside of the day-to-day experience allows ideas to emerge. “If the aim is creativity and innovation, knocking out the stultifying drudgery is step one. Step two is removing expectations, developing trust and getting back to a sense of play, according to Professor Lizbeth Goodman, director of the SMARTlab Digital Media Institute at the University of East London. She uses theater games and voice work: shouting, singing, and laughing. “People remember some previous version of themselves that hadn’t yet been taught to think in boxes. When you free up someone’s body movement, you free up their mind.”

One company builds a conference by bringing in top experts in their field. The attendees hear each expert in a morning plenary session. Then small teams book time with the experts for a few days. “It’s this combination of structure and absolute freedom to brainstorm, along with up-close access to successful mentors, that feeds the ‘anything is possible’ atmosphere.”

Although the format has been used primarily in the media arts industry, the model works for all types of companies. One event brought together “top-level professionals from across the biopharmaceutical, FMCG [Fast Moving Consumer Goods], petrochemical and chemical industries.” The invitation-only event allowed the participants to design “their own agenda of interactive-workshops, personal meetings, networking sessions and keynote presentations.”

Several companies offer these conferences in different formats, but the overarching concept is simple: Reduce the structure and let the ideas flow.

Enterprise Business Intelligence: The Good, the Bad & the Ugly

The all-too-familiar promise of enterprise business intelligence is the ability to optimize decision-making at every level of the organization through a blend of systems and technologies that leverage highly useful, accessible, accurate data. In many industries, BI use is so pervasive that it is essential just to remain competitive! But many organizations never realize the full value simply because they are not agile enough to adapt to the new speed and complexity. leadership_techniques

The good: Great opportunities

Enterprise BI solutions offer a powerful competitive edge in today’s fast-paced, high-tech, global economy.

For years, organizations have been automating their reporting and online analytical processing capabilities. Recent trends are moving toward advanced analytics as the central focus of BI. This includes data mining, predictive analysis, complex SQL, natural language processing, statistics, and artificial intelligence. Advanced analytics provides a competitive advantage as it allows organizations to detect and model patterns and trends in all areas of their business, such as market shifts, supply chain economics, cost fluctuations, and more.

The bad: Typical challenges

Given the myriad of enterprise-BI solution options, just getting started can be challenging. In addition to the standard solutions that have been in use for many years, new Web 2.0 services, virtualization, social networking, and software-as-a-service options are available now, too. With so many choices and possible implications for the business, the decision-makers need to be thinking about how to optimize the balance between customer and shareholder value while considering all the financial and political implications.

The ugly: The real competitive advantage

Following an enterprise BI implementation, the expectation is that our day-to-day tasks will get simpler and more satisfying. After all, we have streamlined and automated many of the left-brain linear processes, freeing us to focus on expansion and innovation. But the reality is often very different. What many leaders don’t fully comprehend is the destabilizing effect that enterprise BI can have on an organization. Successful BI implementation requires a level of agility that is not inherent in most organizations.

Optimizing the benefits of BI in our continuously changing business climate requires the adaptability to manage the enormous complexity of redesigning processes, management structures, and measurement systems. In other words, to really understand and leverage the benefits of enterprise BI, we must understand the effect on all aspects of the organization — especially our culture and human capital. So what can we do?

An evaluation of interpersonal skills is a good first step. Why? Because in our new interconnected, interdependent organizations, team members must be able to connect and collaborate. This requires effective communication skills and a culture of trust. Skill-building in effective communication is a great place to start. Team-building and leadership development also deliver great value. Team-building develops a culture of trust. And with the current pace of change and need to adapt constantly, everyone is called on to be a leader at times.

Building adaptability through collaboration taps into the innate wisdom of the organization. The total benefit to the organization is often greater than the sum of the parts. This unleashes enormous energy for channeling into designing strategies for innovation, greater efficiency, and increased profits.

The finale

Whether you are just embarking on a BI solution, already have one in place, or are somewhere in between, it is worthwhile to assess and develop the interpersonal skills of everyone in your organization. The effectiveness of your BI solution will depend on the cohesiveness and agility of the CIO and his or her team. The failure of BI is typically blamed on the technology. But in truth, it is often a people issue.

Come back for more business intelligence and change management focused blogs by The OLIVIAGroup! Feel free to comment with questions, insights, or additions to this post. 

A Dynamic Organization Principle #7

Design Decision-Making Systems for Self-Organization

An efficient and effective decision-making system is critical to survival in a complex, volatile economy. Organizations must develop processes that encourage self-organization. Doing so requires an open sharing of the vision, the free flow of information, and strong communication between all levels of management on down.

Decision making is one area where rigor and precision are beneficial in an otherwise fluid atmosphere. Respect for people’s time must be balanced with ensuring that everyone has a voice. Creative incentive packages, such as the ones discussed in Business Intelligence Success Factors regarding collaboration, enhance emergence of self-organization.

Complex organizations require a variety of decision-making styles. Some are designed for day-to-day operations while others focus on long-term issues. For example, formal decision making regarding important issues of management and predefined time periods, such as strategic planning, annual budgeting, and executive committee meetings, is typically well designed and structured. Formal, nonperiodic decision making designed to handle unexpected situations may also follow a set format. Formal decision making is used when a decision is needed with regard to a major restructuring, new directions, or investments and crisis management. Since formal decision making covers a variety of areas and are not planned very far in advance, the attendees may not be known ahead of time. These types of meetings are more common in complex organizations that aim to adapt quickly to market changes. Informal decision making can happen anywhere. It is important for leaders to be aware of the effect of limited input on their decisions. Managers who want to promote self-organizing, team-based, distributed decision making must recognize their power to influence through their conversational style and remind others that their opinion is just one of many that deserves consideration.

To foster self-organization, a company must guide its decision making to resemble that of an entrepreneurial enterprise. For example, reducing the presence of top management in the day-to-day operations is a good first step. Combined with an effective information exchange through every level of the company hierarchy, this shift ensures that the flow of information goes beyond the typical sharing of knowledge to include daily insights, ideas, and issues as they arise.

Self-organizing companies need teams that have a broad range of skills that represent a microcosm of the company. Such companies can adapt more quickly due to competent leadership and decision making at many levels.

Learning by doing serves large companies by reviving the entrepreneurial spirit. New challenges inspire people to connect with others to find solutions and increase learning. This leads to faster adaption of new ideas that energizes the workforce and unleashes innovation.
Complex organizations that share decision making and accountability must also share compensation. Many financial instruments to associate compensation with performance exist, such as employee stock purchase plans, cash bonuses, and stock options. One creative practice by Thermo Electron is the practice of spinouts. The company “hands over day-to-day control of newly formed subsidiaries and fistfuls of share options to the staff. The stock has returned 20% per year since the practice began.”[i]

Come back for the next 3 Principles on Leading a Dynamic Organization! Feel free to comment with questions, insights, or additions to this post. To receive alerts when the next blog is published, click on the RSS feed at the top left of the page to subscribe.

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Business Intelligence Success Factors

Transform challenges into opportunities with emerging Business Intelligence Technologiesbusiness_intelligence_success_factors

Written by an expert in data mining and statistical analysis, this valuable resource unveils the connection between the increased use of BI and the need for new, proven theories and models in BI, as well as the guidance to implement them successfully in your organization. Are you ready to become adaptable? Learn how to harness today’s rapidly evolving global economy with Business Intelligence Success Factors.
Praise for Business Intelligence Success Factors: Tools for Aligning your business in the Global Economy

“Olivia Parr Rud does a remarkable job of weaving together many topics in a strategic way. As ‘quants,’ we’re fascinated with data and fact-based decision-making. But success only comes when you consider the human factor, especially effective communications. Making topics like evolutionary biology, complexity science, and systems thinking relevant for business success is a unique and compelling view. As Max Frisch said, ‘We hired workers and human beings came instead.’” —Anne Milley, Senior Director, Technology Product Marketing, SAS”

Business Intelligence Success Factors is a must-read for anyone implementing BI on an organizational level. This book explains the business landscape and the underlying reasons for our current volatility, offering clear guidance on navigating our information rich global economy.” —Ron Powell, Editorial Director, Business Intelligence Network

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