- January 28, 2019
- Posted by: Peter Lunio
- Category: Analytics, Artificial Intelligence, Business Initiative, Business plans, Lean Systems, Operating Model, social housing
The chart below outlines what we at IwP describe as a conundrum that we have dubbed The Investment Conundrum (TIC) i.e:
Technology changes exponentially, but organisational tends to change logarithmically.
As shown in the chart above, we know that technology changes at an exponential rate. This is the phenomenon of Moores law (or more recently every new year allows humans to carry out roughly 60% more computation than possibly could have been executed by all existing general-purpose computers in the year before. )
But we also know that human organisations don’t change that quickly. Changes in behaviour and culture take time. There are only so many changes in people, processes, and technology that an organisation can productively absorb at once — at least without major disruption.
So approximately speaking, organisations change at a much slower rate than technological change.
In our opinion, TIC encapsulates one of the biggest management challenges: how do we manage relatively slow-changing organisations in a rapidly changing technological environment? It is a hard problem.
I’ll describe later ways in which companies can address that challenge. But first, let me provide some context and evidence of this technology gap. Firstly, try asking yourself the following questions
- How do you feel the technology landscape has evolved in the past three years?
- How do you feel your company’s use of technology has evolved in the past three years?
In other words: how fast is technology changing and how fast is your organisation changing with it? We think the data reveals the widening gap of the TIC:
For example, in our recent Social Housing Analytics Survey, over 80% of respondents stated that Analytics and AI would be very important for their organisations yet only 3% had any predictive or analytical tools. (See article; Social Housing and AI some way to go. https://iwp-uk.com/2018/10/04/social-housing-and-ai-some-way-to-go/)
This is TIC in action ie technology is changing faster than organisations.
And while you might predict that the technology landscape is bound to settle down soon, keep in mind that we’re now on the cusp on an explosion of new innovations in virtual reality, augmented reality, the Internet of Things, Intelligent Process Automation, artificial intelligence, predictive analytics and so on. The next three years are likely to see more technological change than the last three. (Sorry.).
Four Ways to Deal with TIC
1. Take a deep breath and recognise that we now live in a world of perpetual change, so we’re never going to be fully caught up ever again. It’s the journey, not the destination.
2. The art of managing TIC largely comes down to deciding which technology changes to embrace — and which to forgo, at least for the moment. We can only absorb a tiny fraction of changes into our existing organisation at any given point in time. Therefore, we must strategically choose the few that we believe will have the greatest impact.
Let the others go. Trying to change too many things simultaneously leads to disaster. Instead, we must ruthlessly prioritise the subset of changes that best align with our company’s strategy. (Having a clear strategy by which to make these choices is essential.)
3. Strive to become a more agile organisation to accelerate the rate at which you’re able to absorb changes. Practices such as lean and agile, as well as other software-inspired management techniques, can increase your company’s metabolism. This is where our partners at Cube Thinking can help out. (Click on the link to find out more about Cube Thinking https://cubethinking.co.uk/;)
By explicitly “designing for change,” you can build an organisation that facilitates new products and services being swapped in, while older ones can be gracefully sundown and removed.
Still, there’s a limit to evolutionary change. Even a highly agile organisation cannot change continuously at an exponential rate.
4. The alternative options are every now and again, we should be prepared for revolutionary change through an organisational “reset.” This is an attempt to make a large jump up the curve of technological change by adopting a whole collection of changes all at o
A “reset” might be achieved through an internal reorganisation or by spinning off a new group that can operate with a fresh start, separate from the inertia of the existing organisation. Digital transformation initiatives typically enable organisations to leapfrog to a new baseline on the technology curve.
Our article on the New Operating model for Digital organisations ( click on the link https://iwp-uk.com/2018/06/04/the-next-generation-operating-model-for-the-digital-housing-association/ ) also describes a number of strategies along these lines for harnessing disruptive technological innovation.
As you might imagine, these resets are often extremely disruptive. They can’t be done at a scale too frequently — although larger organisations may be able to systematically spin up small, “start-up” teams, within an incubator-like structure, without continuously rocking the operations of the parent company.
The ultimate reset, unfortunately, happens when a company fails, e.g. Maplin, BHS Toys R Us and its resources are then reallocated in the open market. As W. Edwards Deming reportedly said, “It is not necessary to change. Survival is not mandatory.”
Our predictive algorithm “metalythics”, helps organisations identifying their current/future strategic change gap. (Click on the link https://iwp-uk.com/2018/06/25/social-housing-is-the-sector-delivering-vfm/).
If you are unsure about which of the options you need to choose in managing your TIC, require some support in predicting your future performance gap or need to better understand how you can harness the new technologies or become more agile. Then drop us a line.
I do believe that TIC expresses one of the toughest management challenges of our time. But as the apocryphal Chinese blessing/curse goes, “May you live in interesting times.”