…and how a steady pace should still be maintained
Companies today are going through a very volatile business environment where new technologies are changing the industries, customers’ preferences are constantly changing and companies need to adapt to the changes rapidly. But managing such a rapid yet cautious change is a challenge for any company today. I have previously written about how to manage change and suggested a framework (you can read about it here); here I discuss about one of the criteria for managing a successful change or transformation strategy: Pacing.
Definition of Pace in Change: not constant
Pace is, in english, defined as the rate of movement, or the speed. In change strategies, pace could be defined as the speed at which the company tries to change certain aspects of its business, such as business units, the technology used or the culture, and the speed at which the change strategy is really implemented. This pace is never constant when you are changing or transforming your business; the pace of change is always volatile because uncertainities exist in the business world.
For instance, if a company predicts that it would take around 3 months to adapt a new technology or a manufacturing practice, the top management may realise that the employees are not open to the new manufacturing practice or they are finding it not so easy to adapt to the new automated work environment. The company could have anticipated it to be easy and useful for its employees but they might not have taken into consideration that mental models that govern the employees’ actions. So now, the company needs to educate its employees and change their mindset first and this would include changing the culture of the employees. Now, the change strategy might take 6 months to be actually implemented.
But how can such uncertainities and even the entire change strategy and its pace can be managed? I suggest, pacing of a change strategy should constitute of two elements: radical or high-paced change and incremental or slow-paced change.
The company should set different milestones along the duration when the company predicts change would happen. Then these milestones should be used to set goals that need to be met. For instance, a company might predict that a change strategy would take 3 years and it could divide this period into 6 milestones of 6 months each (or each milestone could be of different duration). At the milestones, all the radical changes need to be planned such as adapting a new technology or entering a new market horizontally or vertically or even launching new revolutionary products. In between these milestones, the company should focus on the incremental changes such as educating its employees, changing the culture and evaluating the change tactics carried out at the previous milestones.
Advantages of pacing
By evaluating the change tactics carried out at the previous milestones, the company can understand what models are working and what models are not working, and adjust the change strategy at the next milestone.
These slow-momentum periods, between the milestones, also help the company educate and get ready the key players who do not like the status quo to change. Because of these carefully planned slow-momentum periods, these key players will understand that the top management is focussed on change.
Pacing also helps the companies to estimate the resources and efforts it needs to invest to achieve the intermediate goals at the milestones.
It is known that dividing a large task into small manageable tasks makes it easier to achieve the goals.
What we see in the Silicon Valley is what any company can achieve
Whenever we think about innovation, the first thing that comes to our mind is the Silicon Valley. Google, Apple, Facebook, Intel, Tesla, IBM, Fujutsu, Chevron, Gap and many more. What makes them so innovative? What do they do differently than other companies? Can any company replicate this?
These companies might be doing several things but one of them is learning and developing new knowledge. Continuous learning and innovating is the rule of thumb to succeed in today’s competitive environment. But companies need also to keep innovating on small incremental levels in their existing products and services. Google did not just become the best search engine because they have innovated in search; they are the best because they keep on making their products better and better, on small scale, in tiny areas of their code, in the areas which we do not notice. Tesla has to keep innovating in its organizational practices, culture and business on a daily basis so that it is ready for radical innovations in its field.
But how can companies balance these two kinds of innovation: radical revolutionary innovation and slow organizational innovation? I call this the Innovation Ambidexterity.
But it is not an easy task to balance this innovation ambidexterity in reality. Each kind requires different and often conflicting skills, knowledge and cultures. Some companies have different units or businesses to work on industry-changing innovations and others to work on incremental innovations. Other companies have a culture that imbues the entire organization and encourages everyone in gaining new knowledge and achieving innovation on both levels.
The Silicon Valley companies are good at this. Google, Facebook and IBM, among others, focuses a lot on their company culture and even conduct events and focussed programmes to infuse their culture into all of their employees. Gaining new knowledge and skills and constantly innovating lies at the cornerstone of their strategy. Other companies, that aim to achieve such success, should learn from these companies on how to balance this innovation ambidexterity.
Some forms the Silicon Valley companies achieve new knowledge, both intellectual and cultural, are hiring (new employees with a differing set of skills and mindsets), collaborations (with external organizations, people, consultants and even competition where the culture, knowledge, know-how and skills are shared and learned) and observations-analysis (observing what is happening around, in the competition space and the competitors, in the industries that complement or alternate your own industry, and in the world of institutional and governmental policies). Any company that needs to achieve new levels of know-how and intellectual integrity has to understand that the knowledge cannot be found within its organizational structures alone. You should also look outside your own walls if you want to succeed.
Another important thing in gathering new knowledge is to let go of the old knowledge that has become redundant or unnecessary.
Unlearning old habits, forgoing redundant software tools and giving up unnecessary policies is an important step to incremental innovation. organizations and key players in the organization have their own mental models about how the markets work, how their policies are better and what their customers want; and these can severely limit the future innovativeness of the company. If the key players are not even open to knowing what are their customers’ real desires and needs are, how can they encourage any form of innovativeness?
It is also important to empower every employee in the company and encourage them to come up with new and unique ideas to both create breakthrough products and also to make incremental changes to the existing products. This is what the Google’s 80/20 rule is famous for. They encourage everyone to pursue their own ideas, present it to the founders and the top management and implement their ideas as real and commercial products.
Even for this, for encouraging individual contributions, for giving up old models, and for getting new knowledge, skills and know-how, companies need to open their doors to learning from all the resources available to them. If the company learns only from within their boundaries and interfunctional business units, this will limit their possibilities to stumble across unique ideas and innovative breakthroughs. What they will be really good at is just incremental innovation. But the companies that collaborate and share with other companies and resources succeed in rapidly adapting new technologies, encouraging a culture to share and radically innovating.
What we see in the Silicon Valley is not something that cannot be replicated by other companies. It is just what they do better than other companies. Any company can succeed in achieving innovation by having an open culture, a zeal to gather new know-how and a strategy to innovate.
PhD candidate at LUISS Guido Carli, Rome in Business and Management. Writes about Doing PhD, Innovation, Change Management, Organizational Behaviour, Organizational Learning, Strategy Management and more.