Business Transformation is a given in the lifecycle of organizations.  If an organization or business desires to continue growing gainfully, it has to keep Restructuring and Innovating with time.  Successful Restructuring can be achieved by pursuing a robust 4-phase approach.  Each incremental phase paves the way for shaping the next phase:

1. Strategic Analysis
2. Structural Redesign
3. Redeployment
4. Renewal

Redeployment is the most critical phase in the Restructuring process.  It presents an opportunity to progress towards strategically directed performance goals and establish the foundation for a new Organizational Culture.

Carrying out an efficacious Redeployment, however, necessitates navigating around the pitfalls that threaten the process.  These snags include:

• Lack of detailed planning on how Redeployment will be handled

“If you fail to plan, you plan to fail” is an oft repeated adage that has wisdom based on experience of many failures throughout history.  The Redeployment plan should be thoroughly discussed and developed at the Redesign stage, giving out details of all aspects of Redeployment.

• Restricted access to information approach

Organizational leadership often try to avoid sharing information due the fear of losing control.  During the tumultuous phase of Redeployment, leadership should be communicating with the employees quite frequently to alleviate any concerns and build their trust.

• Failure in immediate and full disclosure of information

Timely and full disclosure of information is absolutely essential for the process to run smoothly.

A robust communications system has to be put in place for dissemination of timely information predominantly in the Redeployment phase as employee apprehensions are at the highest level in this stage.

You can learn more about the pitfalls during Redeployment here in the editable PowerPoint on Redeployment after Restructuring.

Redeployment, in order to be successful, has to go through 7 steps that need careful planning and execution with precise timing.  These 7 steps include:

1. Continuously maintaining a robust Communications Plan.
2. Developing an employee assessment system based on the newly-defined business needs and goals.
3. Creating a system of reviews and appeals.
4. Deploying an internal placement group.
5. Launching a severance plan for those who decide to leave the organization.
6. Providing training to employees at all levels for them to be able to develop competencies required to assume the responsibilities in a transformed organization.
7. Planning for the renewal phase following redeployment.

Let us delve a little deeper into this second step:

2. Develop an Employee Assessment System based on the newly defined business needs and goals.

The system should assess potential employees against required competencies for the position.  A matrix should be created to serve as an assessment tool to structure the selectors’ thinking. Each competency should be assigned a weight and the cumulative score should be the sum of weighted scores of each competency.  Input should be based on interviews with candidates, feedback from managers and supervisors.  The matrix should be used as a tool only and selection decision should not be predetermined rather based on all aspects, i.e. qualitative as well as quantitative.

The selectors should be trained to ask targeted questions to assess competencies and document them properly.  Assessment should be divided into 3 sections:

• Go/No-Go section to assess the candidates’ ability to meet the minimum requirements.
• Evaluation of each candidate against the competencies mentioned for each position.
• Document modification in decision due to absenteeism, affirmative action concerns, etc.

Interested in learning more about the Redeployment Steps?  You can download an editable PowerPoint on Redeployment after Restructuring here on the Flevy documents marketplace.

Do You Find Value in This Framework?

You can download in-depth presentations on this and hundreds of similar business frameworks from the FlevyPro Library.  FlevyPro is trusted and utilized by 1000s of management consultants and corporate executives.  Here’s what some have to say:

“My FlevyPro subscription provides me with the most popular frameworks and decks in demand in today’s market. They not only augment my existing consulting and coaching offerings and delivery, but also keep me abreast of the latest trends, inspire new products and service offerings for my practice, and educate me in a fraction of the time and money of other solutions. I strongly recommend FlevyPro to any consultant serious about success.”

– Bill Branson, Founder at Strategic Business Architects

“As a niche strategic consulting firm, Flevy and FlevyPro frameworks and documents are an on-going reference to help us structure our findings and recommendations to our clients as well as improve their clarity, strength, and visual power. For us, it is an invaluable resource to increase our impact and value.”

– David Coloma, Consulting Area Manager at Cynertia Consulting

“As a small business owner, the resource material available from FlevyPro has proven to be invaluable. The ability to search for material on demand based our project events and client requirements was great for me and proved very beneficial to my clients. Importantly, being able to easily edit and tailor the material for specific purposes helped us to make presentations, knowledge sharing, and toolkit development, which formed part of the overall program collateral. While FlevyPro contains resource material that any consultancy, project or delivery firm must have, it is an essential part of a small firm or independent consultant’s toolbox.”

– Michael Duff, Managing Director at Change Strategy (UK)

“FlevyPro has been a brilliant resource for me, as an independent growth consultant, to access a vast knowledge bank of presentations to support my work with clients. In terms of RoI, the value I received from the very first presentation I downloaded paid for my subscription many times over! The quality of the decks available allows me to punch way above my weight – it’s like having the resources of a Big 4 consultancy at your fingertips at a microscopic fraction of the overhead.”

– Roderick Cameron, Founding Partner at SGFE Ltd

“Several times a month, I browse FlevyPro for presentations relevant to the job challenge I have (I am a consultant). When the subject requires it, I explore further and buy from the Flevy Marketplace. On all occasions, I read them, analyze them. I take the most relevant and applicable ideas for my work; and, of course, all this translates to my and my clients’ benefits.”

– Omar Hernán Montes Parra, CEO at Quantum SFE

COVID-19 has forced organizations to adapt to the new norm of Remote Work.  Many people consider telecommuting as the future of work.  Employers who allow Remote Work have seen enhanced employee morale, output, and efficiency.

However, Remote Work setting is far from business as usual.  Management needs to understand and manage the intricate differences between in-office and remote teams.  To make Remote Work successful and to manage remote teams, leadership needs to follow 5 guiding principles:

• Assemble a group of people— skilled in Remote Work setting—to supervise and support other employees to work remotely, assess any challenges, and create workable solutions in real time.
• Develop and share (across the organization) a comprehensive reference guide—e.g., a repository, manual, or a web page—documenting exhaustive information on process changes. This will keep all stakeholders informed and prevent any uncertainties.
• Communicate with the employees transparently and frequently, foster informal communication, and provide easily accessible video conference facilities for people to adjust to and incorporate change.
• Keep the number of tools to handle documentation and communication to a minimum.
• Manage the Remote Workforce by establishing candid, ongoing communication channels, trust, and shared objectives. Transition from an in-office setup to a remote environment takes time.

Likewise, remote employees need to follow certain guiding principles to undertake their responsibilities effectively and deliver on their tasks efficiently.

• Establish a dedicated workspace.
• Make their families understand the significance of their work—that they perform from their virtual offices—and respect their work hours.
• Set alarms to remind when to take a break or end work, so as to work in a healthy routine. Use breaks to recharge your brain or to do errands.
• Communicate informally with your team.
• Try out unconventional workdays and routines that work best for you.
• Adopt this transition

Conventional on-site work settings have clearly defined processes, team structures, interactions, and Organizational Culture, which are lacking in most virtual environments.  The transition from on-site work to work-from-anywhere demands concrete steps to make it viable.  It is critical to adopt Virtual Work mindset and best practices since every organization today, in one way or another, is a virtual company—e.g., global operations, sites and offices across different locations.

This necessitates dedicated efforts to nurture and promote a virtual-work focus and Culture, rather than managing Remote Work with a traditional mindset.  Organizations need to incorporate these 5 best practices to make the transition from conventional to work-from-anywhere environment smoother.

1. Document everything
2. Have more structured meetings
3. Align values with expectations
4. Create ergonomic home offices
5. Adopt a self-learning mentality

Let’s delve deeper into these best practices.

Document everything

In office settings, people can run into other colleagues easily to ask queries or just to communicate with them.  This is at times disturbing and counterproductive.  Work-from-anywhere environment demands documenting every critical piece of information, creating guidelines and manuals, and implementing documentation best practices.   This facilitates in:

• Creating a reliable, primary source of information for everyone to seek answers to their queries.
• Building successful Virtual Work environment.
• Clearly outlining organizational objectives.
• Visualization and clarity of teams’ collective goals and performance results.
• Orientation of new hires by providing answers to everything that comes to their minds.
• Offering more inclusivity, as the information is not confined only to the ones present at the physical water cooler, but is available for the entire organization.
• Precluding a sense of exclusion in the ones who are not part of a physical office.
• Gathering more diverse ideas.

A handbook culture is even better than “water coolers”—as it saves time by eliminating the need to bother other teammates and ask questions from them.  It enables learning, finding answers or information more readily, and curtailing rework arising out of gathering and updating information over and over again.  Documenting everything instills a sense of ownership, courtesy, and concern for others in virtual teams.

Interested in learning more about the other best practices to transition from in-office to work-from-anywhere environment?  You can download an editable PowerPoint presentation on how to transition from In-Office to Virtual Work Setting here on the Flevy documents marketplace.

Do You Find Value in This Framework?

You can download in-depth presentations on this and hundreds of similar business frameworks from the FlevyPro Library. FlevyPro is trusted and utilized by 1000s of management consultants and corporate executives.  Here’s what some have to say:

“My FlevyPro subscription provides me with the most popular frameworks and decks in demand in today’s market. They not only augment my existing consulting and coaching offerings and delivery, but also keep me abreast of the latest trends, inspire new products and service offerings for my practice, and educate me in a fraction of the time and money of other solutions. I strongly recommend FlevyPro to any consultant serious about success.”

– Bill Branson, Founder at Strategic Business Architects

“As a niche strategic consulting firm, Flevy and FlevyPro frameworks and documents are an on-going reference to help us structure our findings and recommendations to our clients as well as improve their clarity, strength, and visual power. For us, it is an invaluable resource to increase our impact and value.”

– David Coloma, Consulting Area Manager at Cynertia Consulting

“As a small business owner, the resource material available from FlevyPro has proven to be invaluable. The ability to search for material on demand based our project events and client requirements was great for me and proved very beneficial to my clients. Importantly, being able to easily edit and tailor the material for specific purposes helped us to make presentations, knowledge sharing, and toolkit development, which formed part of the overall program collateral. While FlevyPro contains resource material that any consultancy, project or delivery firm must have, it is an essential part of a small firm or independent consultant’s toolbox.”

– Michael Duff, Managing Director at Change Strategy (UK)

“FlevyPro has been a brilliant resource for me, as an independent growth consultant, to access a vast knowledge bank of presentations to support my work with clients. In terms of RoI, the value I received from the very first presentation I downloaded paid for my subscription many times over! The quality of the decks available allows me to punch way above my weight – it’s like having the resources of a Big 4 consultancy at your fingertips at a microscopic fraction of the overhead.”

– Roderick Cameron, Founding Partner at SGFE Ltd

“Several times a month, I browse FlevyPro for presentations relevant to the job challenge I have (I am a consultant). When the subject requires it, I explore further and buy from the Flevy Marketplace. On all occasions, I read them, analyze them. I take the most relevant and applicable ideas for my work; and, of course, all this translates to my and my clients’ benefits.”

– Omar Hernán Montes Parra, CEO at Quantum SFE

Product managers, marketers, and designers are often confused as to what they should do to increase the chances of customers’ engagement and uptake of their offering.  Changing individuals’ behavior to enhance engagement, productivity, innovation, and happiness isn’t straightforward.

It takes a lot of effort, time, and resources to execute initiatives aimed at transforming behaviors and Organizational Culture.  However, most people aren’t interested in changing and like the status quo to prevail.  This is where Behavioral Economics can help to know how customers behave, interpret their decision-making methods, and create solutions targeting those behaviors.

Product designers and marketers aspiring to drive acceptance of their products can make use of the 3 Bs of Behavioral Change to change understand consumer behavior. The 3 Bs of Behavioral Change classify the 3 elements essential to change behaviors, i.e.:

1. Behavior
2. Barriers
3. Benefits

Understanding and employing these 3 Bs helps the designers and product managers instill change, inspire design and strategy-related decisions, increase the acceptance of new products / features and product engagement levels, and build new behaviors in people.

Let’s discuss the first 2 elements in detail.

Behavior

People have an inherent tendency to maintain the status quo.  Behavioral change necessitates:

• Identifying individuals’ existing attitudes.
• Assessing and tackling psychological biases affecting individuals’ decisions.
• Carefully tracking behaviors that need to be changed.
• Ascertaining the most important desired behavior and exact action that is imperative to drive results.
• Getting the buy-in from all stakeholders on the key behavior.
• Deciding if the behavior should be permanent or transient.

Examples of key actions to change behaviors include spending 30 minutes thrice weekly doing cardio exercises and consuming salad at lunch daily to stay healthy.

Barriers

Understanding the barriers in behavior adoption assists in creating effective solutions to improve uptake of key behavior.  The second step to induce behavioral change is to reduce barriers in its adoption.

• Every decision that a product user has to make, no matter how negligible, increases resistance in the likelihood of completing a specific behavior.
• These actions and decisions, that an individual has to take in order to achieve the desired behavior, create points of friction in embracing key behaviors.  For instance, people often find it difficult to decide when presented with complex choices. They tend to procrastinate or become a victim of decision paralysis.
• Removing the points of friction and resistance from any key behavior necessitates documenting and streamlining all decisions. The path of least resistance leads to desired key behaviors.

Examples of barriers include the thought process involved in the decision to select where to have dinner.  This thought process is, in fact, a psychological barrier in actually going out and having dinner.  Likewise, the decision to walk or drive to a restaurant is a logistical barrier and a point of friction that warrants making a decision.

To eliminate these barriers, we can either remove barriers entirely or just simplify the decision.  For instance, elimination of a non-critical, open text field from a sign-up form—that probed the users about their business, which requires significant time to think and answer—can increase page-over-page conversion.  In case choices are helpful for the users and cannot be eliminated, then it is best to simplify the decision process by giving fewer options instead of many, or by suggesting “recommended option” to the users.

Interested in learning more about the details of the 3 Bs of Behavioral Change?  You can download an editable PowerPoint presentation on 3 Bs of Behavioral Change here on the Flevy documents marketplace.

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Mediocre people occupying senior Leadership positions is one of the chief reasons for the fiasco and humiliation that organizations like Enron and WorldCom faced.  The practice of recruiting average people at the top is omnipresent and often goes unnoticed until the results begin to surface, which is typically too late for any intervention.

Smart people decisions matter a lot in achieving profitability.  Research indicates that a return on average human asset of 5% is typical in many industries.  However, a senior executive selection of 2 standard deviations below the average yields -15% return on asset.  An executive selection with 2 standard deviations above average causes 25+% return, which is 5 times the average.  Increased investment in finding and hiring the best senior executives fetches returns to the magnitude of 1000%.

Attracting and selecting the best people for senior leadership positions isn’t a small feat.  The future of organizations depend on it.  However, not too many organizations succeed in getting the right people at the top.  The reason for this failure is attributed predominantly to 3 critical obstacles that hinder in making the right recruitment decisions at such a crucial level.  Wrong Executive Selection decisions due to these 3 obstacles bring about losses and negative returns:

1. Obstacle of Rarity
2. Obstacle of the Unknown
3. Obstacle of Psychological Traps

Let’s talk about these obstacles in a bit of detail.

Obstacle of Rarity

The first barrier to finding outstanding executives for senior positions is their scarcity, as excellent executives are a rare breed.  Sophisticated skills that make an executive standout aren’t common.  They are distributed in a given sample.

Outstanding people perform at a much higher level than that of their peers, particularly at the top positions.  A blue-collar executive with 1 standard deviation above the mean translates to 20% more productive individual than an average executive.  With increasing complexity of job, the difference between the top performer and an average performer increases considerably.

Appointments at the senior positions do not go without assessment errors, which can prove to be extremely costly.  Even an accuracy level of 90% in executive assessment isn’t satisfactory.  This results in a number of mistakenly categorized top performers and rejection of outstanding candidates.

Obstacle of the Unknown

Another barrier to the Executive Selection process is the predictive assessment of candidates on the skills and attributes required and the actual delivery capabilities of the individuals.  It is difficult to assess the unknown.

Competencies at the junior levels are easier to define, but it gets difficult to pinpoint the skills required at the top level.  The skills required at the top keeps on changing due to the evolving political, technological and economic landscape.  The skills required today get obsolete over time.  In case the exact requirements for a position are fully known, it isn’t certain whether a candidate meets the requirements in their entirety.

Accurate assessment of the candidates’ behavior and competencies is difficult but worth investing efforts and resources.  “Soft” skills—e.g., leading people, coaching and developing teams, teamwork, and managing Business Transformation—are what differentiate the senior leaders, but gauging these skills necessitates thorough evaluation and considerable time, which is difficult at senior levels.

Obstacle of Psychological Traps

A number of psychological traps are associated with cognitive biases in humans that hinder the decision making abilities in people and incapacitate the hiring process.  8 types of psychological traps are most common in individuals:

• Procrastination
• Assuming incorrectly
• Impulsive judgment based on first impressions
• Discounting the warning signs
• Covering mistakes
• Bonding with familiarity
• Emotional anchoring
• Tendency to follow the majority

For more information on selection and hiring “the best of the best,” take a look at the Fiaccabrino Selection Process (FSP).  Download a free primer on FSP here.

Interested in learning more about the 3 critical obstacles that hinder right Executive Selection?  You can download an editable PowerPoint presentation on Executive Selection here on the Flevy documents marketplace.

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VUCA relates to threats that people and enterprises often encounter. The acronym reflects the constant, dramatically-transforming, and unpredictable world. The concept originated in 1987, based on the theories of Warren Bennis and Burt Nanus. The term was first used by U.S. Army War College to describe the volatile, uncertain, complex, and ambiguous general conditions globally.

The acronym found traction after 2002, when it was considered an emerging idea to be discussed among the strategic leadership. The term VUCA stands for:

1. Volatility
2. Uncertainty
3. Complexity
4. Ambiguity

The 4 VUCA challenges reflect the unpredictable forces of change that affect organizations, necessitating new skills, approaches, and behaviors to mitigate them. The 4 elements of VUCA relate to how people view the situations where they make decisions, formulate plans, respond to challenges, cultivate change, and solve issues.

VUCA is a practical code for anticipation, understanding, preparedness, and intervention in the wake of uncertainty and confusion. One of the biggest challenges of managing in a VUCA world involves team members who resist change. Simply training the leaders on key capabilities isn’t adequate to avoid failures resulting due to not handling the VUCA issues properly. What differentiates sound Leadership from mediocre management is the leaders’ ability to ascertain key elements that prevent them from adopting resilience and flexibility.

In this age of disruption, Volatility, Uncertainty, Complexity, and Ambiguity are widespread. These elements will be more prevalent across industries and enterprises in future, and if not managed properly can sap an organization’s and its employees’ strengths.

Let’s discuss these VUCA elements individually.

Volatility

The Volatility element of VUCA talks about the distinct situational categorization of people due to their specific traits or their reactions in particular situations. People react differently in specific settings due to social cues. Volatility describes the influence of situations on stereotypes and social categorization, which is the reason why people perceive others differently.

Two factors connect people to their social identities: Normative fit and Comparative Fit. Normative fit is the degree that a person relates to the stereotypes and norms that others associate with their specific identity. For example, a Hispanic woman cleaning a house does not get gender stereotypes from others in this situation, but when she eats an enchilada ethnic stereotypes emerge and the gender is forgotten. Comparative fit relates to specific traits of a person that are prominent in certain states compared to others, which are obvious as others around a person do not have those traits. For example, a woman in a room full of men stands out, whereas all the men are grouped together.

Uncertainty

The Uncertainty element of VUCA pertains to the unpredictability of information in events, which often occurs in the intention to indicate correlation between events. Uncertainty is often counteracted by using social categorization (stereotypes), as people tend to engage in social categorization when there isn’t much data about an event.

For instance, when there isn’t enough information to clearly appreciate someone’s gender — as in case of an author’s name when discussing written information — majority of people presume the author is a male. Social categorization also occurs in case of a race, when people stereotype a certain race to a particular trait. For example, basketball players are most of the time assumed as black people while golfers are expected to be white.

Complexity

The Complexity element of VUCA relates to the inter-relatedness of several factors in a system. Complexities due to interactions and dependencies within groups and categories bring unexpected results even in a controlled environment. There are certain identities in individuals that are more dominant than others. Other people distinguish these identities, make their assumptions about them, and create stereotypes. However, complexity in a person’s personality makes it difficult to socially categorize that individual accurately.

Different categories trigger in the mind of the observer, creating positive and negative perception. It is that positive perception that the observer is more open-minded despite stereotypes and think past the target’s dominant social trait. Complexities in social identities cause some identities to lessen the noticeability of other identities, making the targets unnoticeable and overlooked.

Interested in learning more about the elements of a VUCA environment, its mitigation, and Robert Johansen’s leadership framework “VUCA Counterweight” or “VUCA PRIME?” You can download an editable PowerPoint on VUCA (Volatility, Uncertainty, Complexity, and Ambiguity) here on the Flevy documents marketplace.

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Changing industry ecosystems and competition today demand from the organizations to undergo strategic shifts.  The purpose of a company is undergoing Business Transformation from serving the interest of shareholders to serving all stakeholders that influence the organization.

Shareholders are often considered the only stakeholders that invest in a business.  Senior management needs to be cognizant of the importance of shareholders as well other stakeholders who create value for the organization.  They should work on building a collaborative Organizational Culture and paying heed to the welfare of all those groups that play a role in organizational growth.

This warrants a thorough evaluation of all stakeholders, their long-term interests, and Value Creation—or Value Destruction—potential for the organization.  But first, this calls for finding answers to the following key questions:

• Who creates the most value for the organization?
• Who among the stakeholders typically secure the best deals from the organization?
• Who is the victim of having the worst deals from the organization?
• Who among the stakeholders is potentially untrustworthy?
• Are there any intermediaries or stakeholders fulfilling their personal agendas?

Answering these questions is critical for the executives, otherwise they may risk falling into Shareholder Value Traps.  Recognizing and understanding stakeholder value traps while the managing stakeholders‘ various interests helps executives achieve shared and individual long-term goals.  These 5 common traps prevent stakeholders’ interests to get integrated with the interests of the organization and destroy the value of a company if overlooked:

1. Ignoring cash-flow driving stakeholders while distributing cash
2. Miscalculating reaction from stakeholders
3. Supporting under-performing units
4. Conceding to willful vulture capitalists
5. Misjudging intermediaries role in transactions

Let’s discuss 3 of these stakeholder traps individually.

TRAP 1 – Ignoring cash-flow driving stakeholders while distributing cash

Shareholders are often treated as the critical drivers of long-term cash flows.  However, they are often short-term cash flow generators, whereas other stakeholders who provide their input for the organization in the form of their competencies and experience deliver long-term value.  These real contributors should be given top priority when distributing cash on earnings.  Underestimating or failure to identify the real long-term cash-flow generators can be a fatal value trap for an organization.

TRAP 2 – Miscalculating reaction from stakeholders

Another trap that most executives fall victim to is discounting potential backlash from weak stakeholders upon unfair distribution of cash / incentives.  Mining value from these victims to support shareholder disbursements can be equally detrimental, as annoyed stakeholders—with the help of social media and NGOs—, legal battles, and financial penalties can devastate a firm’s reputation and financial health.

TRAP 3 – Supporting under-performing units

Senior executives and boards at some organizations foster free riders—stakeholders that sap more benefits from the enterprise than the business they generate—at the expense of long-term value shareholders.  Free riders include an under-performing department close to the board, or a dwindling business unit that is part of a profitable section and whose financials are not categorized separately.

Continued support to these free riders is often at the cost of allocating resources to other potentially more profitable ventures, and this practice has led many companies to losses and even bankruptcies.

Interested in learning more about the Stakeholder Value Traps, types of organizational stakeholders, and strategies to stay clear of the Stakeholder Value Traps?  You can download an editable PowerPoint on Shareholder Value Traps here on the Flevy documents marketplace.

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Transformation from a product-based model to a platform model is a dream for many executives.  More and more product companies are now shifting into a platform model.  The drive behind such a shift is the huge success of platform companies—e.g., Amazon, Google, and Apple.  These organizations started out as a retailer, search engine, and iPod manufacturer respectively, but later transformed into platform models.

However, bringing this transformative vision into reality is anything but straightforward.  Research into successful platform businesses reveals that this necessitates a robust approach comprising the following 4 critical phases:

1. Attractive Product and Customer Base
2. Hybrid Business Model
3. Rapid Conversion
4. Identify and Seize Opportunities

Let’s dive deeper into the first two phases of the approach, for now.

Attractive Product and Customer Base

A platform model is not a remedy to resuscitate products that are on a downward slide.  It necessitates an attractive product that offers a significant customer base and value to help improve customer loyalty and resist rival offerings.  The critical mass of customers also allows the platform company to create value for—and attract—third parties that are crucial for the platform to flourish.

Qihoo 360 Technology, a large internet firm in China, commenced its operations in 2006 by selling an antivirus software, 360 Safe Guard.  To build a broad user base and to gather customers’ feedback on improving the product, the company started giving away the product free.  The company maintained a list of malware as well as a “whitelist” of programs that were safe for the users.  The critical mass of customers allowed Qihoo to:

• Quickly identify viruses on scanning computers
• Improve the antivirus
• Introduce new products
• Attract new customers
• Create new platforms
• Attract 3rd-party software companies to make Qihoo a channel for reaching customers.

Hybrid Business Model

The notion that an organization has to embrace either a product-based or a platform-based business model is far from reality.  Although, both the product-based and platform-based business models need a framework to assign dedicated resources and manage operations, however, Business Transformation from a product-based model to a platform-based model gets simplified utilizing a hybrid approach.  A product-based business model calls for organizations to have differentiated products catering to customers’ needs, to create value.  Whereas, a platform-based business model creates value by linking users to 3rd parties and charging fees for using the platform.  The focus of Platform models is on:

• Inspiring mass-market acceptance
• Increasing the number of interactions rather than meeting specific customer needs
• Connecting users and 3^rd parties to create competitive edge instead of relying solely on product differentiation (product model).

For example, Apple converted itself from a product model to a platform model within a year after the launch of the first iPhone.  Initially, Apple reacted defensively to any hacking attempts and precluded 3^rd party apps on the iPhone, but then decided to create an open platform, and launched the App Store.  The hybrid model and platform mindset created additional income streams and significant revenue for Apple.

Rapid Conversion

To make a product and business model profitable, the conversion of product users into platform users is of utmost importance.  To enable this, an organization needs to develop its platform in such a way that it should present enough additional value for the customers to adopt it and become its users.  Three key elements are critical to accomplish this:

• Deliver adequate value
• Launch connected products consistent with the brand
• Allow 3^rd parties to perform upgrades

If the platform does not offer adequate value for the customers they are not going to embrace it the way they do to a great product.  Similarly, addition of new offerings that are coherent with the brand has a strong correlation with new platform adoption.  New offerings gain traction from a firm’s image and strengthen the brand further.  Likewise, allowing 3^rd parties to make upgrades, improve product offerings, and develop the platform further helps in rapid conversion, additional revenue, and growth.

Interested in learning more about the phases of the approach to Products-to-Platforms Transformation?  You can download an editable PowerPoint on Products to Platforms Transformation here on the Flevy documents marketplace.

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Survival of a business in this digital age largely depends on its ability to timely embrace Digital Transformation.  Digital Transformation entails using Digital Technologies to streamline business processes, culture, and customer experiences.

In order to compete today—and in future—and to enable Digital Transformation, organizations should work towards fostering a culture of continuous learning, since Digital Transformation depends on learning and innovation.  The organizations that holistically embrace this culture are called “Next-Generation Learning Organizations.”

The next generation of Learning Organizations capitalize on the following key variables; Humans, Machines, Timescales, and Scope.  These organizations incorporate technology in enabling dynamic learning.  Creating Next-Generation Learning Organizations demands reorganizing the entire enterprise to accomplish the following key functions to win in future:

1. Learning on Multiple Timescales
2. Man and Machine Integration
3. Expanding the Ecosystem
4. Continuous Learning

Learning on Multiple Timescales

Next-Generation Learning Organizations make the best use of their time.  They appreciate the objectives that can be realized in the short term and those that take long term to accomplish.  Learning quickly and in the short term is what many organizations are already doing, e.g., by using Artificial Intelligence, algorithms, or dynamic pricing.  Other learning variables that effect an organization gradually are also critical, e.g., changing social attitudes.

Man and Machine Integration

Rather than having people to design and control processes, Next-generation Learning Organizations employ intelligent machines that learn and adjust accordingly.  The role of people in such organizations keeps evolving to supplement intelligent machines.

Expanding the Ecosystem

The Next-generation Learning Organizations incorporate economic activities beyond their boundaries.  These organizations act like platform businesses that facilitate exchanges between consumers and producers by harnessing and creating large networks of users and resources available on demand.  These ecosystems are a valuable source for enhanced learning opportunities, rapid experimentation, access to larger data pools, and a wide network of suppliers.

Continuous Learning

Next-generation Learning Organizations make learning part and parcel of every function and process in their enterprise.  They adapt their vision and strategies based on the changing external environments, competition, and market; and extend learning to everything they do.

With the constantly-evolving technology landscape, organizations will require different capabilities and structures to sustain in future.  A majority of the organizations today are able to operate only in steady business settings.  Transforming these organizations into the Next-Generation Learning Organizations—that are able to effectively traverse the volatile economic environment, competitive landscapes, and unpredictable future—necessitates them to implement these 5 pillars of learning:

1. Digital Transformation
2. Human Cognition Improvement
3. Man and Machine Relationship
4. Expanded Ecosystems
5. Management Innovation

1. Digital Transformation

Traditional organizations—that are dependent on structures and human involvement in decision making—use technology to simply execute a predesigned process repeatedly or to gain incremental improvements in their existing processes.  The Next-generation Learning Organizations (NLOs), in contrast, are governed by their aspiration to continuously seek knowledge by leveraging technology.   NLOs implement automation and autonomous decision-making across their businesses to learn at faster timescales.  They design autonomous systems by integrating multiple technologies and learning loops.

2. Human Cognition Improvement

NLOs understand AI’s edge at quickly analyzing correlations in complex data sets and are aware of the inadequacies that AI and machines have in terms of reasoning abilities.  They focus on the unique strengths of human cognition and assign people roles that add value—e.g., understanding causal relationships, drawing causal inference, counterfactual thinking, and creativity.  Design is the center of attention of these organizations and they utilize human imagination and creativity to generate new ideas and produce novel products.

3. Man and Machine Relationship

Next-generation Learning Organizations (NLOs) make the best use of humans and machines combined.  They utilize machines to recognize patterns in complex data and deploy people to decipher causal relationships and spark innovative thinking.  NLOs make humans and machines cooperate in innovative ways, and constantly revisit the deployment of resources, people, and technology on tasks based on their viability.

Interested in learning more about the other pillars of Learning?  You can download an editable PowerPoint on Digital Transformation: Next-generation Learning Organization here on the Flevy documents marketplace.

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Transformation of an organization into a Next-generation Learning Organization (NLO) is a challenging endeavor.  The main hurdles include convoluted hierarchies, bureaucratic red tape, delayed decision making, and complicated organizational systems and processes.

To develop a learning organization, leadership needs to trim down bureaucracy and complexities.  They should make the best use of technology to gather holistic real-time data, deploy Artificial Intelligence at scale, and develop data-driven decision-making systems.

Five Core Pillars of Learning are essential for the creation of a Next-generation Learning Organization, including:

1. Digital Transformation
2. Human Cognition Improvement
3. Man and Machine Relationship
4. Expanded Ecosystems
5. Management Innovation

Let’s take a deep dive into the first 3 Core Pillars.

1. Digital Transformation

The first pillar is Digital Transformation.  Next-generation Learning Organizations (NLOs) are characterized by their speed of learning and their adeptness to take action based on new insights.  They use emerging technologies to automate as well as “autonomize” their businesses, without relying too much on human intervention and decision-making.

By autonomizing, the NLOs enable machines to learn, take action, and evolve on their own based on continuous feedback.  They create integrated learning loops where information flows automatically from digital platforms into AI algorithms where it is mined in run-time to gather new insights.  The insights are passed to action systems for necessary action that create more data, which is again mined by AI, and the cycle continues, facilitating learning at fast pace.

2. Human Cognition Improvement

Next-generation Learning Organizations (NLOs) schedule time for their people to have unstructured reflection on their work.  While most organizations fear disruption of human work in future by AI and machines, NLOs assign unique roles to their people based on human cognition strengths—e.g., understanding relationships, drawing causal judgment, counterfactual thinking, and creativity.  These organizations are aware of AI’s advantage—in analyzing correlations in complex data promptly—as well as its shortcomings in terms of reasoning abilities and interpretation of social / economic trends.  NLOs make design the center of their attention and utilize human creativity and imagination to generate new ideas and produce novel products.  They assign roles accordingly, inspire imagination in people by exposing them to unfamiliar information, and inculcate dynamic collaboration.

3. Man and Machine Relationship

NLOs foster innovative ways to promote collaboration between people and machines.  They recognize that this helps them in better utilization of resources, maximize synergies, and learn dynamically.

To create effective collaboration between people and machines, NLOs develop robust human-machine interfaces.  The existing AI systems lack the ability to decipher everything, which is an area where humans excel.  NLOs supplement these shortcomings by setting up human-machine interfaces, where humans assist the AI by corroborating its actions and suggesting sound recommendations.  These learning organizations bifurcate responsibilities based on the risks involved, assign humans and machines appropriately against each job, and select a suitable level of generalization and sophistication between humans and machines.

Interested in learning more about the Core Pillars of Learning?  You can download an editable PowerPoint on Next-generation Learning Organization: Core Pillars here on the Flevy documents marketplace.

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Business environment has transformed drastically from what it was a century ago.  It has become immensely challenging due to competition, disruptive technologies, laws, and globalization.  These challenges warrant better performance to address customer needs and to survive—and outpace—intense competition.  Consequently, organizations have become complex.

The work that individuals perform in an organization has also shifted from manual labor and clerical jobs to knowledge-based experiential tasks.  Traditional workforce was required to adhere to commands and stick to routines, whereas today’s workforce needs to be more empowered, innovative, able to adapt to varying circumstances, and render sound judgment.

Adapting with the constantly changing business environment is essential for organizations aspiring to succeed in today’s competitive markets.  In order to stay competitive, more and more organizations across the globe are undertaking Business Transformation programs to reorganize their businesses.  However, a large percentage of such programs fail to achieve the desired outcomes.

For the Organizational Design to be successful, leaders need to be mindful of the revolutionized work settings and business environment of this age.  One of the major factors attributed to these failure rates is utilizing traditional approaches to reorganization, which are proving ineffective in this digital age.  These traditional approaches appreciate “level of control” and power, and underestimate the significance of employee autonomy and innovation.

The Smart Design Approach to Organization Design

Today’s Knowledge Economy necessitates the employees to be more empowered to decide on their own than merely following commands.  People act in ways that are best for their own interests.  The new approach to reorganization—termed Smart Organizational Design—aligns the workforce’s best interests with the organizational mission rather than seeking control over the employees.  The focus is on changing the environment (context) and mindsets of employees willingly and instilling team work and cooperation, thereby enhancing organizational performance considerably.

The Smart Organizational Design approach entails classifying the existing workforce behaviors, ascertaining the desired behaviors critical to improve performance, and providing environment (context) favorable to develop new behaviors.  The approach encompasses 3 main steps:

1. Define why reorganization is necessary (objective)
2. Determine the behaviors critical to support reorganization
3. How to execute the Smart Organizational Design

Let’s dig deeper into the second step.

Determine the behaviors critical to support reorganization

The next step involves the leadership to determine the “what” element of the Smart Organizational Design approach—i.e., definition of certain behaviors critical to achieve the transformation purpose.  Determining the desired behaviors necessitates thinking through the following 4 critical Smart Organizational Design aspects.  These 4 design aspects work in tandem to shift the environment (context) for the workforce and motivate them to embrace the new behaviors crucial for improved performance:

• The Organizational Structure aspect—pertains to management reporting lines, spans of control, and layers of hierarchy.
• The Roles and Responsibilities aspect interprets individual and shared accountabilities to cultivate teamwork and cooperation.
• The Individual Talent aspect specifies the right skill set and motivation to perform responsibilities of each role effectively.
• The Organizational Enablers aspect outlines the elements necessary for creating the right context (environment) for embracing the desired behaviors, i.e., decision processes, performance management, and talent management.

Interested in learning more about the other step of the Smart Organizational Design approach and the factors critical for its success?  You can download an editable PowerPoint on Smart Organizational Design here on the Flevy documents marketplace.

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