Below the surface of current events, buried amid the latest headlines and competitive moves, executives are beginning to see the outlines of a new business landscape. Performance pressures are mounting. The old ways of doing things are generating diminishing returns. Companies are having a harder time making money—and increasingly, their very survival is challenged. Executives – including marketers – must learn ways not only to do their jobs differently, but also to do them better. That, in part, requires understanding the broader changes to the operating environment:
• What is really driving intensifying competitive pressures?
• What long-term opportunities are available?
• What needs to be done today to change course?
Decoding the deep structure of this economic shift will allow executives to thrive in the face of intensifying competition and growing economic pressure. The good news is that the actions needed to address short-term economic conditions are also the best long-term measures to take ad- vantage of the opportunities these challenges create.
What if you had a way to break out of the trap of diminishing returns, to not only improve performance, but accelerate it? Hopefully, you’d be intrigued. Of course, the approach requires making some shifts that may be uncomfortable, even counterintuitive: let go of the quarterly financial metrics; stop optimizing every business process — it’s not nearly enough; dump the harmony and create a culture where respectful friction reigns.
This new approach has the potential to help organizations get on a different trajectory. It drives a performance curve of increasing returns, where targeted efforts create unprecedented value and where success carries no ceiling for how high you can go.
Why change now?
While previous technological revolutions were characterized by bursts of innovation followed by periods of relative stability, advances in the digital infrastructure show no signs of stabilizing as technologies advance in a range of industries and domains. This new normal is already having a significant effect on the broader business environment. Customers have more power and choice than ever before and are less willing to settle for the standardized products that long drove the success of large institutions.
How are companies reacting to these upheavals? Not well, judging by the performance of public companies as a whole over the 50 years since digital technology first began affecting business. Overall, organizations are having a harder time maintaining market leadership amid intensifying competition in many sectors. Over the past 80 years, the average tenure of a company listed on the S&P 500 today has declined 80 percent.
The methods and practices that led organizations to great success in the past seem no longer to be working—they seem fundamentally broken. The answer to fixing them may very well lie in frontline workgroups, what we’ve defined as the groups of 3-15 people working together interdependently to do the operational work of the organization. It is there that new opportunities and challenges first arise.
How do we help frontline workgroups learn faster and better so companies can adapt to market conditions in environments that are shaped by increasing uncertainty and unexpected events? As the landscape shifts, it’s time for organizations to expand their focus. Of course, keeping costs in check will always be important. But shifts need to be made if organizations are going to achieve and accelerate high performance. I’m talking about focusing on creating new and different value that isn’t squelched by process and rule.
What’s it going to take?
- Focus on exceptions
Organizations that focus on improving their ability to handle exceptions—not just to resolve or eliminate them, but to glean learning and create value from them—will discover a valuable source of performance improvement, especially if exceptions increase. Variances and deviations from the norm are the bane of efficiency but can fuel learning and new ways to improve performance over time.
- Reimagine the frontline
The frontline catches problems first, but the challenges become increasingly complex, and the fixes require more creativity. The typical individual is less effective at developing and delivering creative solutions to address problems than a small group working together in deep, trust-based relationships. Small workgroups require less structure for communication and collaboration. If they’re going to push boundaries, they have to be comfortable making mistakes and rocking the boat. Consider placing external resources, employees who are atypical thinkers like dyslexics, and those with varying areas of expertise onto these frontline teams and task them with challenging what works.
- Accelerate the trajectory by creating value
See, you can’t wait around doing “what works” or you’ll fall behind when it stops working. This business environment is demanding we move at an accelerated pace. For these workgroups to create an accelerated high-performance state, they have to attract people who are committed to learning how to make more and more of an impact. The evolution has to be constant. The chemistry has to be right. There has to be trust among members. And when stars align, there will also be an innate sense of value creation—for customers, for other employees, for partners, and the community.
- Learning evolves
Frontline workgroups need to learn how to create new knowledge—that’s a practice, not a process. This is the kind of learning that occurs day-to-day on the job. It’s why apprenticeships have been so valued over the years. Workgroups can learn faster by taking action and coming up with new ways of doing things that create impact. We’re not talking about posting or sharing existing knowledge, or even formal training programs. We are talking about exchanging rigid processes for better, even if atypical, practices.
A practice vs a process
A process is a single way of doing things repeatedly that is designed to promote a positive outcome. A practice is what will work in a changing environment where the variables are new or different or can’t be easily predicted. There are nine practices that help promote a high-performance trajectory broken down into three categories.
1) PROVOKE. Think differently about the challenge, identify possible approaches, and create better alternatives. Frontline workgroups can frame powerful questions, seek new contexts, and cultivate friction.
2) PROPEL. Commit to a shared outcome and gain additional insight into the next best move to make a greater impact. Frontline workgroups prioritize performance. Take action over inaction. Tackle tradeoffs and track trajectories over snapshots of time.
3) PULL TOGETHER. Harness diversity, learn faster, and come up with ever-higher impact and outcomes. These workgroups reflect more often to learn faster. They eliminate unproductive, unhealthy friction, and by doing so they create an environment that maximizes the potential for friction—and that’s where the best ideas typically emerge.
Interestingly, the practices that can unlock the potential of frontline workgroups are also the ones that harness uniquely human traits and capabilities: empathy, creativity, imagination, and divergent thinking. The practices are mostly technology agnostic. Technology can support the effort, but if the culture is off, the business is going to have a hard time creating accelerated high performance. The more we join together in effective frontline workgroups, the more value we can create.
Organizations are already moving on this
When I first made a call for case studies about workgroups earlier this year, we were hard pressed to find any organizations that used all nine practices. That wasn’t so surprising, because this is cutting-edge stuff. What did surprise me was that on further examination, we couldn’t find any organization that was effectively managing the performance of the workgroups themselves. Performance is historically rewarded at the individual level or the department/corporate level, and still is, even in these newly formed workgroups.
In addition, many of the workgroups that were presented to us came from a variety organizations, in many different industries, from all over the globe. Many of them were created for times when a crisis was unfolding and a response had to be instant and unwavering—as in a natural disaster, or in providing humanitarian aid. Others were deeply customer-focused, finding faster, more in-tune routes to creating new optimal products. You can find the case studies here.
But, there’s always a catch, right?
If you’re truly going to consider this approach for your own organization, we’d be remiss to say there aren’t obstacles. To some extent, you’ll be asking people to give up some common assumptions about how things currently work, how performance is measured—how big organizations function. We identified three shifts that should occur for this concept to take off and achieve an accelerated state of high performance.
Shift 1: From ho-hum performance to the dynamo trajectory
To some extent, you’re going to have to let go of quarterly performance numbers. The horror, I know. The traditional mindset breeds complacency in those that are doing well and doesn’t prepare for what’s going to strike next. The pace of change is too great now, and as a result these metrics can create vulnerabilities. They are a snapshot in time, not a predictor of what’s going to happen in the future. To accelerate high performance, the emphasis for the organization needs to be placed on operating and frontline metrics. That’s where people have the most impact. The financial metrics will follow if you’re truly serious about creating a high-performance trajectory.
Most teams tend to stick with what works. They seek harmony and balance. They focus on performance in the moment. Tomorrow’s frontline workgroups look for and find a better way. They cultivate friction respectfully in a small group of colleagues they trust. They aren’t necessarily the best political players because they’re working against a norm. They might sacrifice short-term efficiency for long-term gain. That’s where your trajectory comes from.
Shift 2: From formal processes to workgroup practices
The value of creating standardized processes is rapidly diminishing. What can be standardized likely will be. Automation, robotics, and artificial intelligence eventually will cinch it. Machines are good, if not better than humans, at doing highly standardized tasks, and they do them more efficiently and predictably. Machines operate well in certain and known conditions. But, we need new practices for everything else. When dealing with the uncertain and unknown, it’s mind over machine that creates the value.
CEOs know that standardized processes don’t necessarily promote innovation. People get stuck on them. How many times has a top sales person hit a wall when they asked someone in the company to do it different and break the rules to ensure a customer’s request is carried out? Friction can be a powerful source of acceleration and learning. If it was a frontline workgroup practice to adjust and think of a new way to service that customer request, think of the improved outcome that would result—and not just in this moment where the change may be a bit painful, but in the value for future customers.
As I examined workgroup examples, I found it interesting that some large companies physically removed their frontline workgroups to a separate location, so the group wouldn’t be as affected by the existing company structure and culture. Making this shift is the biggest obstacle of the three in my opinion.
Shift 3: From skills-based explicit learning to tacit learning
The useful life of many skills is in decline, and it’s creating a constant pressure to reskill. We don’t need to train on what’s known so much. Robotic process automation will change the way we work. People understand that how they do something now will likely change in the future. So it becomes important to construct new frames through which people can learn. It’s my feeling that corporations will start to turn away from expensive skills-based training programs and turn to tacit learning that occurs on the job in a project-based setting. People learn best from doing.
The good news is that frontline workgroups thrive on learning new things and tackling unknown scenarios. When accelerated performance is your pursuit, workgroups learn at a faster clip. It becomes engrained in everyday work. To get on an accelerated trajectory for growth, these frontline workgroups need to celebrate exceptions, not fear them. Learn quickly from their mistakes, reflect, and redesign. And most importantly forge a culture of trust within the workgroup that allows for trial and error.
This isn’t an opportunity for only the organization. Workers can benefit as well. Redesigning business practices can be a key element of redefining work to focus humans on what they do best, while amplifying the potential of human and machine collaboration.
Where to start
Don’t approach this as a big bang initiative or you will likely face resistance, and possibly fail. Take a small-moves, smartly made approach. Identify an opportunity that can be gauged by an operational metric that can have real impact on the company. Next, empower a frontline workgroup. Start with an existing workgroup, give them the new practices to guide them, and let them take on the challenge from there. Add to the team and choose your players wisely. With the right levels of friction and a pursuit of performance, they’ll find new and different ways of creating value. Finally, track the metrics, but make sure this is viewed as a test bed in the organization and give them the resources to accomplish the task. We’re looking for a trajectory, not a quick snapshot on performance measures. If successful, it’s likely other leaders in the organization will follow. Before long, you’ll have an organizational culture that inherently embraces and executes on performance-accelerating practices—an empowered frontline defense. Tell me what you think. Are frontline workgroups going to break us out of the trap of diminished returns and, if not, what will?
Original source articles: John Hagel, John Seely Brown, Andrew de Maar, Maggie Wooll, Moving from best to better and better: Business Practice Redesign is an untapped opportunity, Deloitte Insights, January 31, 2018.
John Hagel, John Seely Brown, Andrew de Maar, Maggie Wooll, Beyond process: How to get better, faster as “exceptions” become the rule, Deloitte Insights, November 13, 2017.
John Hagel, John Seely Brown, Tamara Samoylova, and Michael Lui, From exponential technologies to exponential innovation, Deloitte University Press, October 4, 2013.
Innosight, “Executive briefing winter 2012: Creative destruction whips through corporate America,” accessed September 7, 2013.
John Hagel is co-chairman for Deloitte LLP’s Center for the Edge with nearly 30 years of experience as a management consultant, author, speaker and entrepreneur. He is the author of numerous books, including “The Power of Pull,” “Net Gain,” “Net Worth,” “Out of the Box” and “The Only Sustainable Edge.” Previously, he was Global Leader of McKinsey’s Strategy Practice and Electronic Commerce Practice (which he founded and led from 1993-2000). John holds a B.A. from Wesleyan University, a B.Phil from Oxford University and a J.D. and MBA from Harvard University. Learn more about John’s insights here >>