Too many transformations are still failing or simply failing to start. There are many reasons for this, but the least of which is typically technology. The terms ‘disruption' and ‘exponential growth’ have dominated the news cycle since the start of Covid-19 and have become mainstream, albeit in a non-technology context. Since then, much of the organizational narrative surrounding us has been about adapting to the ‘new normal’ with more digitally-driven customer interactions and remote working enabled processes. Yet, the more likely reality is that “there will be no new normal, there will only be a series of not normal episodes that defy prediction and are unforeseen by most of us until they happen”, according to Jim Collins in Beyond Entrepreneurship 2.0 (2020).
Hindrance to transformation and barrier to innovation
For organizations, whose leadership was already struggling to meet the challenges of digital disruption and transformation in an increasingly uncertain context (pre-Covid research by ExO Sprint Coach Tania Hodgkinson), future orientation and digitalization became more important than ever, as many faced the challenge of making their business model work in the socially distanced and locked down world.
The greatest hindrance to transformation pointed to the barriers and assumptions within the leadership team. The purpose of the research was to understand the narratives that leadership teams embrace when strategizing, or not, for disruptive innovation. That these innovations will be disruptive is not in doubt, but the question for many leadership teams is, in what manner and how will they lead a transformation of their business?
Leadership narratives are still about‚ why‘ rather than, how’
Exponential technologies are for the most part still not on the strategic agenda of senior management in the majority of organizations that are not in the technology sector. According to the research, the majority of the leadership narratives are still about‚ why‘ rather than, how’ to do such transformations. The overriding perception is that interest in innovation, of any kind, is mostly reactive, in response to a possible threat - and the current threat is Covid-19 - rather than resulting from a proactive vision of future growth opportunities.
A more recent update of this research by Tania Hodgkinson in collaboration with Kevin Allen, Chief Community Officer at OpenExO, and the most active and experienced members of the OpenExO community, sought to measure to what degree leaders are aware of and understand the scope of the challenge now. The level of practical experience of respondents across many organizations and industries gives us a high level of confidence in the findings.
Leaders still lack an understanding of the threat of disruption
These findings span respondents’ experience working with leaders and organisations in 41 countries - from both American continents to Europe, Asia, Australia and Africa. Over 80% of them are professionals that are either internally engaged in, or externally engaged for, the support of exponential transformation with leadership and organizations. Over 90% are experienced to highly experienced business professionals. Their experience spans 14 industries.
The data collected highlights that still too few leaders and leadership in organizations (15%) truly understand the risk of being disrupted by exponential technologies. Only a similar proportion (16%) grasp the extent of the impact that exponential technologies will have on their specific business. This means that more than 4 out of 5 leaders are still lacking that understanding.
The paradox of understanding vs. driving transformation
Compared to the pre-Covid research mentioned above, an increasing number ( 39%) of respondents suggest that leaders are realizing their own responsibility in driving exponential transformation. They also suggest that one in three leaders recognize the urgency to act to ensure the resiliency of their business.
It shows that leaders are increasingly aware of their own role in driving the transformation and its urgency, despite not fully grasping the impact of the risk of disruption nor the significance of the impact. The OpenExO approach has proven to be very effective in shifting the mindset of sprint participants. With typically 4 sprint teams, 20-24 people undergo a profound mindset shift over the course of 10 weeks. The challenge for the leadership team is different. We have seen senior leadership on board with the idea of making a significant leap into the future before the start of the sprints, then only coming back into the process at the disruption session in week 5, or even only at the end of the sprints.
This can be challenging: to be presented with what can be an overwhelming amount of initiatives that have the potential to move the organizational needle significantly. In fact, we sometimes see leadership simply not understanding the initiatives as they haven’t been through the development journey that the sprint teams have. As a result, the opportunity is not recognized and then not funded. The organizational impact could even turn out to be negative as it leaves the sprint participants feeling frustrated and unwilling to put the effort in again at a later date.
Leaders are ultimately responsible for putting innovation at the core of the business, yet are less prepared than at any point in their history to make these strategic decisions. Faced with a pace of change that makes immediate action necessary, it means many organizations are instead opting for a ‘wait and see’ approach. This then can lead to a creeping inertia, making the game of catch up even harder and the risk of external disruption even greater.
Leadership development and a new mindset
There is a necessary revolution in leadership development needed according to global research by Peter Hawkins. The biggest departure for leadership teams might be the need to accept a new way of thinking, and thinking non-linearly. They need to take time away to work on the business instead of in the business, and to work on learning how to think in the era of exponential technologies. It will also mean letting go of traditional hierarchies and silo-ed working in order to embrace networked and collaborative organizational structures that can respond faster and more autonomously to continued change. It means learning to lead systemically as a leadership team.
This requires a fundamental shift in their role as well, from directing to enabling. Letting go of the threat of loss of control to counter the threat to survival. Considering the average tenure of senior management today, investing in innovation strategies whose return might not happen under their watch requires a strong and shared organizational vision. This undoubtedly will require bravery, an understanding of how courageous they are and a strong shared purpose.
When leading systemically, innovation not only has to be ‘everywhere’, but it will happen collectively and be collaboratively sourced from across the organization or even outside it. Beyond creating alignment, leadership teams will need to create a culture where innovative people can thrive, a culture of courage because not all innovations will succeed, and therefore also a culture where a collective responsibility of innovation is nurtured and where employees are given the confidence to experiment and think beyond the usual processes.
So if transformation is about leading differently, leading systemically and developing a culture of learning and innovation across the wider leadership team and organization first, then leadership team members need to be strongly involved in the ExO sprints themselves to also develop the exponential mindset during the ten-week process. In reality and in practice, this is often a time commitment that the leadership team cannot subscribe to. How else could the senior leadership team develop the exponential mindset that their ExO sprint teams develop?
At the end of 2020, the management board at both Fraport Twin Star Airports in Bulgaria embarked on their ambitious Fit4Future project with a leadership team coach and ExO Sprint coach Tania Hodgkinson from InnovThink. It was designed as an integrated project encompassing systemic leadership development, exponential training, and future visioning with over 50 members of the leadership team participating, including the management board. This resulted in five concurrent Sprints, but with two additional levels of supporting members from across the leadership team and board actively participating. Like two concentric circles around the sprint teams, the leadership team is actively involved in supporting and mentoring, even if for only a couple of hours per week sometimes, and attending every end-of-week sprint results presentation.
Embedding over 50 people, half in leadership and senior leadership functions in the project enabled the CEO, Dr. Frank Quante, and his management board to role model and implement transformational change and thereby spark a learning and innovation culture in what is traditionally considered a linear and asset-based business. In June this year, they were nationally recognized as the most innovative employer.
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