Everything changes : competitors, rules, clients, markets. Digital transformation is still a work hopefully ;) in progress but every functional specialist framed it down to its own digital to-do list. Let’s have a look at the bigger picture and see the connection between marketing, HR and management in this transformational game.
Traditional management principles come from the second industrial revolution (around 1870 and later). So many innovations (emergence of unprecedented sources of energy, development of the internal combustion engine, steel industry, synthetic chemistry, successive inventions of the telegraph and the telephone, appearance of the automobile) were then allowed by the centralization of research and capital, structured around an economy and an industry based on the new "big factories", models of productive organizations imagined by Taylor and Ford. Until today, these traditional or “non digital native” companies are designed for control with extreme attention paid to the velocity of top down decision-making or the flexibility needed to adjust on the fly to external changes diagnosed by executives. In others words: these are organizations-centered on processes / products with good reasons: not enough data could define customers ; markets are emergent and consequently the relation between products and customers are quite simple. In this context, marketing strategies are portfolio or product driven, not based on the goal of treating each customer as a unique individual. Taylorism also produced a transactional HR model focused on payroll, labor law enforcement, comp & ben administration later embodied by HR software. In terms of insights about their own staff, softwares tell HR teams what they have, how many, how much they cost and possibly their absenteeism levels and projected retirement date. These are great drivers to save costs but they tell HR leaders nothing about data needed when you manage talents in the digital age : how their people think, feel, make a decision or might be developed a in the future. Executives with a Taylorist mindset, favored Command & Control management because on the client’ side as on the employee’s, standardization secure practices, save again costs and time. Today, The consequence of these Taylorist practices is overcentralization in some areas where the making of decisions should have been delegated, and overformalization in others by expecting IT systems (ERP mainly) to control what direct decision making cannot. In a way, executives are too controlling and too disconnected at the same time. As a result, a typical day in the corporate world is peppered with meetings and PowerPoint presentations. “Planning has, in a way, become the work”(1).
Agility, meaning, networks
On the other hand, leading edge companies born in the fourth industrial revolution, are organized for agility, networks, and for meaning. Every company knows that customers have different values, preferences, and behaviors. Every company also knows that it may be missing opportunities to make meaningful connections if it treat all of them the same way. But only Agile companies are bold enough to give up on causality and work from correlation. It changes marketing! Marketing teams, for instance, use data from Internet of Things (IoT) and platforms feeding unsupervised machine learning methods to group customers who share common characteristics. Generating these clusters of customers in this bottom-up way, as compared to defining market segments from the top-down classic marketing practice, can detect subtleties of behavior that they may overlook otherwise. It helps them to identify and qualify new customer segments. To win in the nowadays dynamic marketplace, a company has indeed to create and deliver new products and services. Agile executives recognize the need for emergent design, meaning that the best products architectures are not defined up-front (or only in a basic form) and are allowed to further emerge while developing a product. Here, the product portfolio is a result of constant experimentation, creating MVPs (minimum viable products) that can hit the market and begin generating feedback. It’s here that the real learning begins. Many product concepts and MVPs are fundamentally flawed, and the best time to figure that out is quickly, before millions are invested in scaling and promoting a system that may not deliver. Agile cultures make small mistakes early and often, and only scale when the fit between product and market is sound. What’s more, products expand and take shape based on market feedback and signals, often much faster and more dramatically than legacy products. Healthy product development is friction-oriented and never-ending. Products become solutions: they solve problems. They iterate based on feedback. They leave open the possibility of future expansion/exploration. They have adaptivity built in from the start. An Agile organization is logically a people-centered organization, be they clients or employees. The emphasis is put on employees as “makers” aka people who have skills (as opposed to credentials). Makers think by doing: experimenting, testing, and learning. It necesseraly impacts HR and management.
Makers need autonomy
Drawing a parallel line, Agile companies acknowledge that makers’ intrinsic motivators include the need for autonomy, the desire to do the right thing, the aspiration to be connected to something bigger than themselves, and the drive to work that feels significant and meaningful. Purpose is pictured as the desire to do work that has greater meaning and a broader impact than simple task completion. The key is that each maker to unleash her/his potential, needs visibility to how their work has meaning and impact beyond themselves to those around them. Agile companies have begun to embrace a new view of business processes: as more fluid and adaptive. In essence, they are moving beyond rigid lines toward the idea of organic teams that partner humans with advanced artificial intelligence systems to exploit the full potential of these technologies. Routine processes are being replaced by Agile project-oriented corporate structures and cross department teams. If their diagnosis shows that structures and processes in place did not allow the expected results, Agile executives change them immediately. Access to data empowers staff on the floor because it is the right level to do so. Manager’s role is, then, to make these people decide rather than decide himself. Management is less than ever a chain in the Command & Control system. Management is more a connexion on the network. Management has to flow with the activity which in itself cannot be predicted or formalized. In the network, authority for making decisions and developing strategic initiatives has to be distributed so that responsibility can flow to whoever is best able to deal with the issue at hand. In the network, control has to give way to collaboration. Networks need formally designated managers but to connect and contribute more than to command and control. HR tends then to go from transactional to strategic: focus is on talent management, recruitment, organizational diagnosis, learning and development, performance management, coaching and development of leaders.
These are just exemples that you could duplicate, say; with supply chain, production, finances...Beyond the tools, digital transformation supposes a coordinated approach to be a success (aka full efficiency drawn from AI), not a siloed conception of apps ;)
Erwan Hernot info@clavaconsulting.com
(1) Alec Ross, The Industries Of The Future
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