Throughout history, the industrialization of technology has led to new practices and behaviours within organizations. What matters in competition is not so much the change in technology as the behaviours and practices that it enables (e.g. being data driven is more important than owning a data lake). In the recent past, compute has undergone industrialization to cloud, which has over the last decade led to a significant change of practices known as DevOps.
In 2011 we sought to test this hypothesis and find whether the growth of cloud computing had led to two forms of organization, traditional and next generation. Our report (published in January 2012) showed that two different forms of organization did exist at that time and they had very different behaviours. Its aim was to forewarn our clients about behaviours or practices they needed to examine and adopt. As those practices were still emerging, the report was not prescriptive, but more about setting a direction (e.g. to shift away from learning through analysts toward learning through ecosystems.)
Today we are again being impacted by industrialization in many areas and this change is being accelerated by the isolation economy caused by COVID. Hence, we repeated the study to see if we could find what behaviours would matter.
The table summarizes the changes of behaviour that we found in the 2021 population study and our recommended four-step approach to implementing them. The technological causes of these changes are social media, collaboration tools and visualization of/access to data. It is not an exhaustive list but it does comprise a minimum of next generation behaviours that modern firms should be either exhibiting or striving for.
The traditional company
The traditional company may talk of hybrid models of working but it is biased towards a return to the office. It is a procedurally driven organization whose executives see themselves in the role of heroic leaders (even if they don’t openly say so). Symbols of power matter: the top floor office, the hierarchy, the stories of heroic leadership and top-down direction. Principles are ideas that are rarely stated or enforced. What motivates people in this environment is money. Sustainability is a cost to operations that is done for marketing reasons. Market research is used to justify executive decisions, not to question them. The focus of the company is always on the output; it might talk about ‘community’ but it is really all about the product or the current project. External comms is driven by mass influence – getting others to buy the product. Ethics are an add-on. Awareness of the market is considered a function of leadership and the company regards supply chains as a way of shifting responsibility onto others. As a consequence, it understands its own supply chains poorly. To train its people, the company uses expert tuition and favours face-to-face physical lectures. In terms of future technology, the company considers that AI will replace some jobs and functions currently undertaken by humans. It expects the future of the company to be currently one of decline with difficult times ahead.
The next generation organization
The next generation company is not seeking to return to the office but adapting to a more distributed world. This form of remote working — in many cases enforced by the isolation economy — is now seen as the new norm. The company is driven by guiding principles which are stated and enforced in both recruitment and promotion. Power is distributed to where it is needed. Teams will often swarm around problems; leadership is transient in nature and leaders will arise to fit the problem. In this world, hierarchy is unimportant and few care about the top-floor office or the status symbols of power. Outcome not output matters. What motivates people are customer and societal outcomes. The projects undertaken always consider the wider community and sustainability is not a buzz word but a core belief. In support of this, a deep understanding of supply chains is considered essential, therefore these tend to be modelled as the company holds itself responsible for its entire supply chain. Ethics matter a lot and drive external communication; they are not an add-on. Awareness of the market is systemic (throughout the organization) and not the function of a sole leader but of everyone. To train people, the company uses scenarios and gameplay, usually online. The idea of EVE online being a training tool for management is not an alien concept. The company expects that AI will complement humans, replacing some tasks and augmenting some functions. It considers the future of the company to be currently one of growth with positive times ahead.
Along with identifying the changes in organizational behaviours caused by the industrialization of technology and making recommendations for action to encourage them, this report covers the basic theory of industrialization, the hypothesis generated from it that multiple forms of organization can exist, how this hypothesis was tested with a population study, and the results in detail.
Recommendations for action
Unfortunately, we found contraindications in the study data. This means that some of the new behaviours (e.g. leaderless leadership) will be harmful to companies unless certain pre-conditions are met. Those pre-conditions include the use of guiding principles for orchestration and a focus on a remote-first working environment. With this in mind, we recommend the following steps:
- Assess the state of guiding principles within your organization. To support this, in this report we provide a collection of universal principles (the doctrine table) along with a simple mechanism to test your own against it. Where you detect weaknesses in your principles, resolve these before embarking on any other major programme, whether technological, structural or methodological. Alongside this, continue your efforts to encourage remote working, recover costs from unused assets and resist the temptation to return to the office.
- Provide time for your guiding principles to embed and to reflect on any outcome. Investment may be needed in removing legacy systems, adopting serverless and other areas designed to meet user needs. These investments should be guided by the principles.
- Once you are satisfied that basic guiding principles are in place and remote working has become accepted as a norm, focus on orchestration, structure, increasing awareness, business model and learning. Re-evaluate sunk costs in past technology programmes including existing data lakes or private cloud environments. In many cases, attempts to create siloed data stores or home-grown efforts may well have been counterproductive and will need to be dismantled and costs recovered.
- When those steps are completed, focus increasingly on issues of sustainability, how it influences and is influenced by others, and technology. Many of these questions relate to the security and resilience of the organization itself. At this point, investment in technology areas such as AI may provide valuable complements to human capability, depending upon your context.
Do you expect these next generation characteristics to become a new norm?
I expect these next generation behaviours to become accepted as the norm in a decade and for many companies to adopt them as a future aspiration.
Where can I find more details on those next generation practices & how to implement them?
They are emerging behaviours which means we are still learning about them. You are not going to be able to avoid experimentation and many experiments will fail.
To understand why it is so difficult to be precise, consider that our research found over 800 different word sets of the form ‘X vs. Y’ used to describe the differences between traditional and next generation behaviours. When discussing behaviours such as the orchestration of people and resources to resolve a problem, the traditional are described using words such as role-based, slow feedback, homogenous, directed, planned, synchronized, tyranny, accidental, reactionary, centralized command, executive war room, monolithic, over engineered, strategy, hierarchical co-ordination, powerful and charismatic leaders. The next generation are described with words such as adaptable, fast feedback, heterogenous, self-organizing, democratized, intentional, negotiated, collective intelligence, distributed cognition, cell-based, emergent, weak signals, non-hierarchical and leaderless leadership. (This last term often causes confusion: it does not mean that leaders do not exist but that they emerge depending upon the context.)
This is vastly too many to test. We chose specific words based upon impact tests. For example, with ‘orchestration’ we tested top down, heroic leaders and unenforced or unstated principles against swarming of people, leaderless leadership and enforced principles. However, these words are describing emerging behaviours, so their meaning is changing. For example, we are still discovering what leaderless leadership means in practice and any attempt to define it is premature. Instead, we can point to examples like Masks4All, WallStreetBets and other forms of distributed autonomous organizations and provide a direction of travel (e.g. we should focus more on leaderless leadership than powerful and charismatic leaders).
What is the difference between behaviours & principles?
Principles are the simple ideas that lead to specific behaviours. The principles can be provided in many forms (e.g. lessons on things we need to think about; lessons on things we should avoid; described through conversational form; even embedded in parables and fables). Principles are not detailed steps to follow (such as procedures) nor are they hollow words to be ignored. They provide the mental scaffolding that guides how to look at a problem. For example, Amazon’s leadership principle on customer obsession is “Leaders start with the customer and work backwards. They work vigorously to earn and keep customer trust.” Although Amazon’s leaders pay attention to competitors, they obsess over customers. The principles are not just words but are acted upon, measured, te