Fundamental changes to enable corporates innovating in ecosystems
The speed and complexity of changes in their environment that corporates have to identify, process, and react to is at an all-time high. Among other things, driven by a decrease of costs to launch a “tech”-business and an increase in VC funding looking for “high-growth”-opportunities, startups are crowding into previously well-shielded industries.
Initially, the corporate world responded by acquiring these up-and-coming competitors, to find that transplanting their innovative drive and mindset often resulted in rejection by the new host. For some companies, the Corporate VC approach, which subsequently emerged, works well to avoid that culture clash while making the most of the innovations by either running them completely separate or integrating them into the core business over time.
Yet, many corporate managers feel that their organizations are still too slow to adjust, and they struggle to keep an overview of all the moving parts, not speaking about making the right decisions in the face of ambiguity and uncertainty. Over the past 10 years, researchers and practitioners realized that a more fundamental change needs to happen in large corporates to enable innovation from within-, as well as collaboration beyond the four walls of their organization.
To enable innovation from within, organizations need to provide their employees with some wiggle room to try new things and find ways to serve their customers better. Something that doesn’t sit well with the existing super-efficient processes. To collaborate with partners (e.g. customers, vendors, startups, etc.) on new ideas, employees and teams need empowerment and a certain level of autonomy. That’s even more incompatible with the rigid command & control structures in place and scary to the managers who grew up in them. Despite those challenges, I’d argue few people dispute that change in this direction is needed and a model of aligned autonomy in a shallow, broad, and (to some extent) self-organized corporation is the elusive north star of the corporate world.
This development also brings new challenges to the gild of Change Management practitioners, who’ve become a common sight in large corporates across the world over the last 30 years. For a long time, the drivers of “corporate change” were pretty stable. They went something like this: someone in a position of power decided to induce change on the organization to get from the status quo to a clearly defined future status. It was the change managers job to ensure the people affected by this change were brought along on the journey so the organization could achieve that future status.
Today, the pattern of change is different in at least two ways. Firstly, the leaders are themselves a critical part of the change. In the future version of the corporate, they are no longer the all-knowing expert with years of relevant experience but must rely solely on the skills with which their colleagues work. That requires them to change the way they work and lead. To get there, most also have to revisit their self-image and turn from decider to coach. Change managers in this world become themselves, leadership coaches, helping their clients adapt to the new way of doing things.
Secondly, the future state can’t be as clearly defined as in the past. The change is so fundamental that putting up org-charts of the future organization is not enough. Changes happen in all aspects of the organization, from structures to processes, from purpose to governance. And most importantly, they require people to change their behaviors fundamentally. The future of an organization undergoing all these changes in parallel is challenging to describe. Any attempt risks to be termed “vague”. Change managers are challenged to bring people along on this journey to an uncertain destination, to break the change down into foreseeable & understandable stages while reminding the organization of the elusive goal that’s still behind the horizon.