My previous blog noted that “technology has been modernized separately, to a meaningful degree, from the people and processes interacting with that technology.” This phenomenon has been driven primarily from the outdated managerial approach that the application of technology simply supports the efficiency of a given product or service. Organizations can no longer use this mindset and expect to sustain advantage. Rather, there needs to be a shift in management strategy. Instead of the tried-and-tired approach of doing more with less (efficiency), companies need to shift their focus to determining how to do more with the same (effectiveness). The shift can have profound implications. No longer does technology just support business value — we now show that technology shapes business value, making technology an integral part of the value equation. This refocuses management strategies on the effectiveness that technology has on a given product or service. In doing so, three imperatives will reshape how organizations are managed:
- Competitive advantages spawn from collaboration between specialties. Organizations must find ways to remove information-sharing barriers among specialties to allow for ideas to cross-pollinate. Without this, these structural holes insulate areas of an organization’s ecosystem, preventing them from adapting to shifting consumer preference and choice, resulting in reduced effectiveness of future output. Investments allowing for more entrepreneurial interactions across specialties will become a management imperative.
- Processes of innovation and production converge. Organizations must continuously find ways to evolve products and services more quickly. When separated, innovation strategy and day-to-day operations generate complexity and rigidity that constrain the organization’s ecosystem from becoming more creative, resulting in reduced effectiveness of future products and services. Investments allowing for greater partnerships between creation and production will become an operating imperative.
- Strategy reimagines capabilities, rather than extending them. Organizations must find ways to systematically manage knowledge as an appreciable asset. The lack of mechanisms to manage knowledge across practices severely limits an organization’s resiliency to the pace of market change, resulting in reduced effectiveness of value streams. Investments allowing for more balance between generating new and preserving current knowledge will become a strategic imperative.
Organizations will be required to generate value from new ideas, knowledge, and technology more quickly than ever before. The process of value creation will no longer be managed to an end but rather as a means. For now, please look out for my next blog post in this series, where I will explore the organizational change management strategies that accompany this new mindset. And please be on the lookout for an upcoming report where Forrester will show the increasing importance of measuring effectiveness rather than our current focus on measuring efficiency.