Don't break the rules - become flexible and agile
I've read yet another good and insightful piece on success in digital transformation, which relies on an unfortunate metaphor - one about "breaking the rules". I've been around consulting just long enough to have "broken the rules" in the business process re-engineering wave, the ERP wave, the CRM wave, the Six Sigma wave, the innovation wave and now the digital transformation wave. Each one of these relatively significant changes in how business operates had experts writing about "breaking the rules". In fact by now, if you've lived through several of these management phenomenon you should be a rule-breaker in chief. But all of this rule breaking begs a few questions:
The Rules
If we are going to talk about "the rules" of business, most management gurus think there are only a few, and those are very flexible. My favorite set of rules was put forward by Peter Drucker, who said a business had only two imperatives: marketing and innovation. He felt everything else were costs. If we were naive enough to ask any business executive about "the rules" of their business, they'd likely chuckle. There aren't any rule books, except what regulatory bodies produce. Businesses form their own, mostly intangible "rules" based on past history, profit guidelines and management experience. These are then supported by managers who want consistency, low risk and low variability. The rules - such as they are - are unwritten, informal and based on maintaining existing capabilities and processes.
Breaking the Rules
Since every major management phenomenon over the last 30 years (BPR, Six Sigma, ERP, Innovation, Digital transformation) starts by arguing we need to "break all the rules", we clearly need to take a long, hard look at how businesses operate, and how the internal, informal thinking is created and propagated, because every new advance seems to require that we break the rules and start afresh.
Or, perhaps what we really need to do is to create organizations that are more nimble, more agile, much more dynamic and capable of evolving as new thinking evolves and as customers and markets evolve. In other words, it's not the rules that need rethinking - it's how we organize, structure, compensate, incentivize the organization and how deeply we engage with existing and future customers.
Not rules but engagement
Rules are restrictive and binding, they keep ideas, people and processes in line. They create fixed ways of thinking and lead businesses down blind alleys, because allegiance to the 'rules' becomes more important that seeing what's actually happening and reacting to the emerging changes in the worst case or working proactively to adapt to operational and market changes in the best case.
The experts who tell you to "break the rules" are suggesting that we should remake a business and then conform to a new set of rules that apply to the latest emerging phenomenon. If the new phenomenon is "digital", then we must all become digital, and quickly lock in this operating model. This only leads to new, definitive operating models and rules. Instead we need to break this cycle and create organizations that are much more adaptable, flexible, fungible and that can evolve and adapt quickly as markets, competitors and customers evolve and new capabilities or threats emerge.
Less efficient but less dramatic
The challenge with a more flexible and dynamic organization is that it will be by definition less efficient and perhaps less profitable than a more 'rules' driven, efficient but inflexible model. Investing in adaptability means more training, more consistent change over time, better systems and communication. However, a more flexible and adaptable business model will be more engaged with customers, much more able to change as new thinking and new models emerge. A more flexible and adaptable business won't have to periodically "break all the rules" and adapt - or appear to adapt - the latest management thinking. Flexible and agile models will simply incorporate the best parts of new thinking and new engagement models on the fly.
Periodic drama or constant evolution
So the real question is - do you prefer periods of steady state operation periodically interrupted by the drama of adopting new management thinking or a constant evolution based on more agile and flexible business models? Many of the operating models we see today are structured for a time when change was slower and less dramatic. They are built for a time when there was less change and more certainty. They are increasingly unprepared for a more dynamic market and more fickle customer base. These older models that require constant rule breaking are living relics of a past which simply haven't recognized they are anachronisms soon to become living fossils.
What will be more interesting is to see how newer business decide to structure themselves, the operating models they adopt and the corresponding agility and flexibility of newer models. For some, there may be a little bit less profitability and efficiency but much greater adaptability and far less periodic drama as new thinking emerges or new demands unfold. Isn't that what we ultimately want - implementing the best thinking and engaging customers in the best way possible, as quickly and efficiently as possible?
- Who is setting these 'rules'
- Where are they written down
- How might we restructure or rethink the rules
- Are these rules really just the embodiment of culture, past thinking and lethargy
- What are the "new rules" about how we should structure and manage companies for maximum efficiency
The Rules
If we are going to talk about "the rules" of business, most management gurus think there are only a few, and those are very flexible. My favorite set of rules was put forward by Peter Drucker, who said a business had only two imperatives: marketing and innovation. He felt everything else were costs. If we were naive enough to ask any business executive about "the rules" of their business, they'd likely chuckle. There aren't any rule books, except what regulatory bodies produce. Businesses form their own, mostly intangible "rules" based on past history, profit guidelines and management experience. These are then supported by managers who want consistency, low risk and low variability. The rules - such as they are - are unwritten, informal and based on maintaining existing capabilities and processes.
Breaking the Rules
Since every major management phenomenon over the last 30 years (BPR, Six Sigma, ERP, Innovation, Digital transformation) starts by arguing we need to "break all the rules", we clearly need to take a long, hard look at how businesses operate, and how the internal, informal thinking is created and propagated, because every new advance seems to require that we break the rules and start afresh.
Or, perhaps what we really need to do is to create organizations that are more nimble, more agile, much more dynamic and capable of evolving as new thinking evolves and as customers and markets evolve. In other words, it's not the rules that need rethinking - it's how we organize, structure, compensate, incentivize the organization and how deeply we engage with existing and future customers.
Not rules but engagement
Rules are restrictive and binding, they keep ideas, people and processes in line. They create fixed ways of thinking and lead businesses down blind alleys, because allegiance to the 'rules' becomes more important that seeing what's actually happening and reacting to the emerging changes in the worst case or working proactively to adapt to operational and market changes in the best case.
The experts who tell you to "break the rules" are suggesting that we should remake a business and then conform to a new set of rules that apply to the latest emerging phenomenon. If the new phenomenon is "digital", then we must all become digital, and quickly lock in this operating model. This only leads to new, definitive operating models and rules. Instead we need to break this cycle and create organizations that are much more adaptable, flexible, fungible and that can evolve and adapt quickly as markets, competitors and customers evolve and new capabilities or threats emerge.
Less efficient but less dramatic
The challenge with a more flexible and dynamic organization is that it will be by definition less efficient and perhaps less profitable than a more 'rules' driven, efficient but inflexible model. Investing in adaptability means more training, more consistent change over time, better systems and communication. However, a more flexible and adaptable business model will be more engaged with customers, much more able to change as new thinking and new models emerge. A more flexible and adaptable business won't have to periodically "break all the rules" and adapt - or appear to adapt - the latest management thinking. Flexible and agile models will simply incorporate the best parts of new thinking and new engagement models on the fly.
Periodic drama or constant evolution
So the real question is - do you prefer periods of steady state operation periodically interrupted by the drama of adopting new management thinking or a constant evolution based on more agile and flexible business models? Many of the operating models we see today are structured for a time when change was slower and less dramatic. They are built for a time when there was less change and more certainty. They are increasingly unprepared for a more dynamic market and more fickle customer base. These older models that require constant rule breaking are living relics of a past which simply haven't recognized they are anachronisms soon to become living fossils.
What will be more interesting is to see how newer business decide to structure themselves, the operating models they adopt and the corresponding agility and flexibility of newer models. For some, there may be a little bit less profitability and efficiency but much greater adaptability and far less periodic drama as new thinking emerges or new demands unfold. Isn't that what we ultimately want - implementing the best thinking and engaging customers in the best way possible, as quickly and efficiently as possible?
Voted 2nd best innovation blogger two years in a row!
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