Create transformative innovation

Decentralised Success

Collaboration is critical, but it’s also tough to deliver. Australian business has a serious problem: productivity has fallen by an average of 0.6 per cent a year for the past seven years, according to Deloitte.

Decentralised Success

This means Australia’s performance is worse than most other developed economies.

That same Deloitte research, found that only about 33 per cent of Australian organisations were genuinely innovative, down 41 per cent on the previous year.

The study’s authors also discovered the main difference between fast-growth companies and the laggards was a collaborative corporate culture.

The message is simple: fast-growing companies make strategic use of a collaboration to stay ahead of competitors.

Change is hard

Although business leaders know they need to become more agile and decentralised in order to become more innovative, many are understandably reticent to embark on a transformation process.

Harvard Business School professor John Kotter observed back in the mid 1990s that nearly 70 per cent of large-scale transformation programs fail to meet their goals; a finding which has been replicated in virtually every study ever since.

The main challenge is that innovation requires empowerment, empowerment requires decentralised decision making, decentralised decision making requires organisational transformations, and organisational transformations are hard to get right.

Despite assertions to the contrary, people aren’t against change – they are against royal edicts. The alternative: change that’s rolled up, not rolled out.”

– McKinsey & Company analysts Gary Hamel and Michele Zanini

McKinsey & Company analysts Gary Hamel and Michele Zanini have picked up on this idea and made transformation the focus of much of their research and commentary.

“The reality is that today’s organisations were simply never designed to change proactively and deeply –they were built for discipline and efficiency, enforced through hierarchy and routinisation,” say Hamel and Zanini. “As a result, there’s a mismatch between the pace of change in the external environment and the fastest possible pace of change at most organisations. If it were otherwise, we wouldn’t see so many incumbents struggling to intercept the future.”

Socially constructed success

To succeed in an era of constant change, the McKinsey research suggests that companies need change platforms, not change programs, and that collaboration rather than command-and-control needs to be the watchword.

Hamel and Zanini say employees simply will not embrace prescribed change. “A change effort must be socially constructed in a process that gives everyone the right to set priorities, diagnose barriers, and generate options,” they argue. “Despite assertions to the contrary, people aren’t against change – they are against royal edicts. The alternative: change that’s rolled up, not rolled out.”

Success Stories

Although many change programs struggle to get off the ground, there are also significant success stories. In 2013, the UK public health body the National Health Service developed and implemented NHS Change Day, described as the biggest improvement effort in the organisation’s history. Using social media tools, the NHS got more than 189,000 people to commit to take action to change health outcomes. The following year the number grew to 800,000.

In a similar vein at US-based medical device company Nuvasive the entire company “hacked” the customer-fulfilment process, via associates from around the globe working with a group of volunteers to develop a common view of the problem along with initiatives to improve outcomes.

These approaches allow for the diffusion of decision making, but require a highly engaged leadership team – starting with the chief executive, says Malcolm Alder, co-founder of Sydney-based strategy firm Orchestrate and a former partner for digital economy at KPMG.

“Leadership by demonstration is critical,” Alder says. “The big question has to be: Does the CEO commit visibly by using collaborative solutions once they are in place? If not, then people lower in the organisation who think it’s a good idea can legitimately ask: ‘Why aren’t you using it?’”

During his time at KPMG, Alder saw firsthand the power of collaboration and workplace democratisation.

“KPMG has an internal crowdsourcing problem-solving platform,” he says. “The company can post a client challenge internally, often for a relatively short period of, say, 48 hours, and garner hundreds of responses. To be able to draw on that level of intellectual horsepower at low cost has definitely proved to be very effective.”

Social business consultancy Kinship Enterprise has developed specialist knowledge in enterprise social networking. “When internal social networks – collaboration platforms – are deployed, everyone again has a voice, and an equal voice,” says Kinship’s general manager, Victoria, Walter Adamson.

Rather than being prescribed, Adamson says “leadership emerges by actions”.

The case for collaboration

Need to boost productivity? Collaboration is crucial:

  • Companies growing faster than their competition say collaboration is a critical component of their corporate strategy
  • Harness your workforce’s intellectual horsepower by creating a social-media type system on which you can post challenges for staff to solve
  • Companies need change platforms not change programs – collaboration rather than command and control is the key
  • The diffusion of decision making and workplace democratisation demands highly engaged leadership – starting with the chief executive.

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