Innovative technologies are sweeping away everything: organizations, work practices, offerings, hierarchies, and even business models. Those days are long past when business models used to stay static for years to no end. They are now under threat more so than anything else, since any technology-driven entrant can knock an established business model down in no time.

In order to stay in the game, organizations need to evolve their business models tenaciously.  Business Model Design is grounded on tacit industry beliefs around Value Creation. These rigid underlying industry beliefs become widespread opinions and are deemed unchallengeable. For instance, in the telecom sector, success relies on customer retention and average revenue per user, whereas views and hits trigger profitability in the media business.

Incumbent companies are able to displace conventional business practices and current approaches of value creation by reassessing and challenging the widespread, hindering beliefs that support them. But such business model innovation is not as simple as it seems.

Approach to Business Model Innovation (BMI)

The approach to displace conventional business practices and methods of value creation commences by ascertaining the most significant beliefs or ideas about value creation in the industry, and clarifying the notions that trigger these beliefs.

The approach to Business Model Innovation (BMI) comprises the following 5 steps:

1. Identify Existing Business Model
2. Determine Foundational Beliefs
3. Challenge Underlying Belief
4. Sanity Test Our Reframe
5. Formulate New Business Model

Let's take a deeper look at the 5 steps to the BMI Approach.

Identify Existing Business Model

The first step requires delineating the dominant business model in the relevant industry and determining the long-established beliefs regarding their value creation method.

Determine Foundational Beliefs

The next step is to reveal the supporting notions that help establish that belief—i.e., notions about customer needs, technology, laws, costs, and ways of doing business. For instance, financial service providers have a strong belief that customers desire economical, yet scalable automated systems. This assumption is based on the advantages that economy of scale of IT products offers to them.

Challenge Underlying Belief

This step entails challenging the foundational belief and creating a radical new premise that no one currently in the industry wants to believe. For example, challenge the minimum IT systems’ scale requirement belief of the financial service operators, i.e., what if IT could be based almost entirely in the cloud, diminishing the need for minimum economic scale.

Sanity Test Our Reframe

A newly established (reframed) belief or idea may or may not work. It is important to test the reframed belief first. Applying a reframe that is industry proven, even if it is from a different industry, may work. Innovative business models can be utilized in varied industries.

Formulate New Business Model

The last step entails translating the reframed belief into your industry’s new business model. Once companies reach a reframe, they begin to test and adopt new mechanisms for creating value—e.g., new ways to communicate with clients, operating model, or resource allocation.

4 Areas of Business Model Innovation

Implementation of a new business model necessitates analytical evaluation of 4 main areas of the existing business model. There are opportunities for rethinking and innovation present within each of these 4 components, regardless of location:

1. Customer Relationships
2. Key Activities
3. Strategic Resources
4. Cost Structures

Digitization is a common factor in these 4 areas, which disrupts customer interactions, business activities, resources deployment, and economic models.

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Financial downturns and intense competition has put a lot of strain over boards and directors to perform better. The effectiveness of the board of directors varies from organization to organization.

An accomplished chairman can make the board more constructive and practical by establishing high standards and helping members improve their participation.

In 2013, McKinsey & Company carried out empirical research to uncover effective board practices. The study analyzed 772 corporate directors, representing both public and private owned businesses globally, from a broad range of industries.  The objective was to unearth the practices, traits, time allocation, devotion, and strategic priorities that differentiate between an effective versus unproductive board of directors.

The research revealed stark differences in the way directors distributed their time in boardroom activities and towards the efficacy of their boards. Differentiated based on the range of issues directors handled and the time they dedicated, the directors assessed the impact of their work and their board’s competitiveness as:

1. Low Impact Board
2. Moderate Impact Board
3. High Performance Board

Let's take a deeper diver into the 3 board types.

Low Impact Boards

The directors in the low impact boards are observed to execute—at the basic level—functions, such as assuring compliance, evaluating financial reports, and analyzing portfolio expansion options. The low impact boards focus on eliminating biasness from their decisions. Only a minority of directors in this group practice human resource rationalization, deliberation on strategic alternatives, portfolio synergies creation, and strategic alignment.

Moderate Impact Boards

Boards with a moderate impact are observed incorporating trends and adapting to changing environmental conditions. The focus of moderate impact boards is on analyzing strategic alternatives. Majority of directors in these boards practice adjusting strategy based on environment, staying ahead of trends, engaging in innovation, and analyzing portfolio diversification options.

High Performance Boards

A large majority of directors in this group are seen actively taking part in performing all the key functions in their board practice. High impact boards have an even richer set of strategic priorities than the low or moderate impact boards. In performance management, for example, more involved boards conduct regular performance discussions with the CEO, examine leading indicators, and aspire to review robust nonfinancial metrics.

High performing boards look inward, analyze value drivers, discuss alternative strategies, and evaluate the distribution of resources. More engaged boards do not limit a CEOs’ right to set a company’s direction, in fact, they are supportive of management.

High Performance Boards – Key Traits and Commitment Requirements 

• High performance board necessitates dedicated and committed directors who can allocate sufficient time to their job. McKinsey survey revealed that directors on high performance boards spend about 40 days a year on their boards, whereas individuals from the low or moderate impact boards work only 19 days a year, on average.
• Higher-impact board members devote around 8 extra workdays a year on strategy related tasks.
• They build a better perception of their companies and help senior management test their strategies.
• The directors serving high performance boards are more effective and more satisfied with their work.
• High performance boards spend more time on Enterprise Performance Management, M&A, Organizational Health, and Risk Management activities.

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New market entry provides potential opportunities for organizations to grow. But penetrating a market and establishing a new business is fraught with complications and failure. Attempts at entering a new market often fail, in fact, research suggests that for every successful market entry about 4 fail. The reasons for such high failure rates involve timing, scale, competition, capabilities, and predominantly irrational decision making.

The decision to successfully enter a market necessitates detailed analysis. These critical decisions often get flawed by Cognitive Biases—the systematic errors in the way people process information—resulting in huge financial implications.

Cognitive biases distort executives’ perception regarding their firm’s capabilities, potential market, and competition. These biases trigger misleading beliefs in executives—such as, their existing capabilities are in line with what’s required in the future, or that the market entry move will go unnoticed by the competitors. Removing biases out of decision making is an arduous task, as not many executives are able to identify the biases that manipulate their planning and decision making processes.

Cognitive biases damage a firm’s market entry planning and decision making processes. Market entry analysis requires a robust methodology. A 2-step methodical approach helps executives understand the Psychology of Market Entry Analysis and eliminate cognitive biases from their crucial market entry decisions: 

1. Develop a Reference Class
2. Remove Bias from Decisions

Develop a Reference Class

While making such critical decisions, most executives count on their gut and consider only their company’s inside view. This approach is misleading and prevents them from developing an outside perspective based on previous market entry experiences, and assessing opportunities against certain success parameters.

Executives can utilize a reference class—group of similar decisions that other firms have taken in the past that provide valuable benchmarks for decision making. A reference class of should be thoroughly evaluated in terms of circumstances that warranted those decisions and the outcomes that those decisions leveraged, to generate empirical predictors of success.

The approach saves the decision makers from falling into the “confirmation trap,” which urges them to seek information that confirms to their hypotheses only. It also drives the analysts to explore more options and data. Companies in various sectors understand the importance of drawing a reference class, while some don’t consider looking at the experience of outside companies worthwhile and encounter failures as a result.

In preparing a reference class, executives need to explicitly review 6 key factors that serve as predictors of successful market entry. These predictors of market entry success help the executives decide whether to go ahead or drop their entry decision.

1. Size of entry relative to minimum efficient scale
2. Relatedness of the market entered
3. Complementary assets
4. Order of entry
5. Industry lifecycle stage (more on this can be found here: Consolidation-Endgame Curve)
6. Degree of technological innovation

Remove Bias from Decisions

Biases in corporate decisions are a product of behavior, training, culture, and human nature. These biases deviate the executives from thinking rationally, and prevent them from organizing and analyzing data properly. Executives need to work on identifying, labeling, and eliminating biases from their decision making process.

Removing cognitive biases objectively leverages improved chances of success for the organizations; this entails targeting the following 5 core issues:

1. Value Proposition
2. Market Size
3. Competition
4. Market Share and Revenue
5. Costs

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Transformation programs targeted towards boosting organizational performance have been prevalent for quite a while now. But, such initiatives aren’t easy to manage. The foremost challenge for the senior leadership is to motivate people to modify their behaviors and practices.

For the transformation to be successful, it is critical for the top management to establish the magnitude of change necessary to realize the required business results, before initiating performance improvement projects. They can select from the 3 levels of change. The first level is where firms operate directly to achieve results, without altering the work practices of their people. At the second level, people are compelled to alter their ways in line with their current behaviors in order to achieve a new target. The third level involves a fundamental cultural transformation, changing the mindsets of the whole organization—e.g., from reactive to proactive, strong tiered to forthcoming, inward focused to external focused.

Senior management can get valuable insights from psychology to understand the attitudes, personality types, and thought processes of individuals to improve performance. Utilizing these insights several enterprises have generated amazing, deeply embedded shifts in the mindsets of people. Transformation initiatives that employed psychological developments related to the ways people contemplate and perform are more likely to revolutionize work practices, shift behaviors, and generate improved results.

Change will only be acceptable to employees if they are inspired to think about their responsibilities in a different way. This entails understanding the 4 core conditions of Psychology of Change Management that are essential to alter the existing mindsets of people to the desired mindsets:

1. Belief in a Purpose
2. Reinforcement Systems
3. Ability to Change
4. Consistent Role Models

Let's take a deeper dive into the 4 core conditions to alter the mindsets of people. 

Belief in a Purpose

The first condition to bring about transformation is for the people to have faith in the rationale for change. As per Leon Festinger’s theory of cognitive dissonance, a distressing mental state occurs in individuals when they find that their beliefs are contradicting their actions. Festinger observed that it is necessary to eliminate cognitive dissonance in people by changing either their actions or their beliefs.

It is critical for the people to believe in the overall purpose of the transformation initiatives that the organization has, or is planning to initiate, and understand the part that their jobs can play in the company’s growth. 

Reinforcement Systems

Psychologists interested in encouraging organizational human resources adopted B. F. Skinner’s theories of conditioning and positive reinforcement. Just as the subjects of Skinner’s experiments were inspired to accomplish the dull task of traversing a maze by providing the right incentives, organizational designers accept that the right incentives and reinforcement systems constructively influence people to do their jobs efficiently. These reinforcement systems include reporting structures, operational processes, and procedures—setting targets, measuring performance, and presenting rewards.

Ability to Change

Change initiatives often tend to urge people to act differently without training them on the ways to adjust broad guidelines as per their specific circumstances. For instance, change initiatives may require people to become “customer-centric,” but if the organization did not focus on customers earlier, the people will have no clue as to how to implement this value and what would entail a successful result in this case.

As substantiated by David Kolb’s four-phase adult learning cycle, to make adults learn they need much more than listening to instructions about a subject in one session. They need time.

Consistent Role Models

Consistent role modeling is as important in changing the behavior of adults as the 3 other core conditions collectively. Individuals, just like children, choose different role models—personalities in positions of influence, such as a partner, director, a union rep—whose behaviors and actions they mimic. Sustainable change in behaviors warrants top management’s full alignment with the new methods of doing business as well as making role models’ backing up their words with action.

The approaches that the role models employ differ from person to person, however, their behaviors should be in accordance with the guiding principles. You can learn more about the 4 core conditions to shifting mindsets alongside some real-life, practical examples here.

Transpersonal Psychology Workshops

Simply understanding the rationale for change—its importance for the company—does not influence people to adopt the desired behaviors. It necessitates a profound belief that it will be beneficial for their own development and progression. As corroborated by Transpersonal Psychology, the intrinsic craving to develop and grow instills human beings with energy. Leaders need to create an emotional connection for the employees with the new behavior to prompt that change. Transpersonal psychology workshops are of significant assistance in changing mindsets by creating such emotional connections and assigning change a specific value for individuals.

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The problem solving approach to organizational design and management has a number of limitations. It focuses only on what’s wrong, identifying causes, brainstorming solutions, developing action plans, and not taking into account the areas that are working well. Problem solving focuses on the past and excludes possibilities for creativity. The approach is time consuming, costly; harnesses blame game, consistent firefighting, low morale, and discord between teams.

The Appreciative Inquiry (AI) approach to organizational management evolved to provide a constructive alternative to the traditional problem-solving approach, which emphasizes on what works well and builds on that. The AI approach stresses on building internal strengths to find new growth opportunities rather than focusing on weaknesses or issues to be solved. AI is based on discovering what creates energy and excitement, drives the best in people, their organizations, the world around them, and then determining how to create more of it.

AI does not necessitate a modification in the organizational change methodology, rather it’s a basic shift in the overall perspective taken throughout the entire change process to ‘see’ the totality of the human system and to “inquire” into that system’s strengths, possibilities, and successes.

Benefits of AI

AI is a simple technique that leverages several benefits to the organizations implementing it.

First and foremost, the non-threatening and empowering spirit of AI—where people uncover and then improve on the root causes of success rather than analyze problems—acts as a powerful driver of change.

The approach makes the people enthusiastic and energetic; enhances communication, faith, and interactions; builds and develops teams; promotes a culture of innovation and a sense of dynamism; and empowers the people to take risks.

It entails assuming organizations are sources of infinite capacity, imagination, and building community, thus the generative dialogue creates positive connections between people.

Phases of the AI Cycle

A typical Appreciative Inquiry design has 4 phases, more commonly known as the “4-D’s of AI”:

1. Discovery
2. Dream
3. Design
4. Destiny

Discovery Phase

The implementation of AI commences when a group of stakeholders get together to craft positive questions to select an affirmative topic. The topic could be something the organization is doing well and which is critical to its future success, such as, the quality of customer service.

This is accomplished by seeking the most vital moments or occurrences of organizational excellence—small wins where people thought the organization to be most effective, which could be related to leadership, technologies, processes, structures, relationships, or methodologies.

Dream Phase

The Dream phase of the AI 4-D cycle relates to imagining and envisioning the future of the organization. The most critical step in the Dream phase involves motivating the participants to dream about what might be a better organization and a better world. This helps in channelizing the positive core and creating the destiny of the envisioned dream.

Design Phase

This phase of AI focuses on creating the ideal organization in order to achieve its dream. The Design phase is critical for maintaining positive change and responding to the organization’s most positive past and highest potential. The key tasks to be accomplished in this phase include building the organization’s new social architecture, and reinforcing it by enabling comprehensive dialogue about the best structure and processes to support the new system.

Destiny Phase

The fourth phase of the AI 4-D cycle denotes the start of an ongoing creation of an “appreciative learning culture”. The new images of the future are implemented and sustained by fostering a collective sense of purpose. The stage entails continuous learning, adjustments, and innovation to facilitate shared ideals.

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At the pinnacle of the Industrial Revolution, not many organizations realized the complex subtleties of the Financial Capital. The organizations that were able to develop innovative methodologies to administer their financial capital outsmarted the rivals by achieving a competitive edge.

At the advent of the 20th century, two more forms of capital became known and gained prominence, in addition to the financial capital. These assets included: the Human Capital—the value acquired as a result of development and deployment of employees and contractors—and the Natural Capital—the manageable value of land, water, and other environmental resources. Altogether, these 3 assets are categorized under the Traditional Capital.

In this digital age, with the tremendous pace of technological innovation, 3 additional types of capital—referred to as the “BeCoN Capital” or the “Digital Age Capital”— have been found to be essential for creating value and staying ahead of the curve, together with the Traditional Capital:

1. Behavior Capital
2. Cognitive Capital
3. Network Capital

Behavioral Capital

Behavior Capital is gathering and demonstrating data to track the behavior of people, companies, and products. The application of behavioral data has reached new levels, nowadays. Apple watch monitors the heart rate, Google monitors every activity that anyone does on its platform, and GE’s aircraft engine business uses sensors built into its engines and turbines to describe what the engine is doing in runtime and generate high levels of behavior capital.

Cognitive Capital

Cognitive Capital is the set of algorithms that signify codified information streams pertaining to people and organizations in the electronic world. With each passing day, these algorithms are becoming increasingly complex and mature enough to make decisions on their own, or to execute a machine-learning process leading to automated, constantly-progressing sequences.

There are many practical utilities of the Cognitive Capital. For instance, Bridgewater, a large hedge fund, employs artificial intelligence-based algorithms to make decisions. GE’s aircraft engine business utilizes machine-learning algorithms to conduct diagnostics and engine controls. Likewise, Amazon drives algorithms—utilizing specific product sales and customers’ purchase data—that modify prices, formulate deals, and present better offers in real time.

Network Capital

Network Capital is the set of connection points that an organization can utilize to develop and implement a successful strategy. The Network Capital is built by establishing strong connections, affiliations, and linkages. Organizations with large network of affiliates, followers, and loyal customers have a profound competitive advantage over the rest.

For instance, over the years, Netflix has developed scores of followers who watch shows there, share messages with one another on social media about the programs watched, and rate programs. This network not only increases the value of an individual show, but also add to the value of Netflix’s programming.

The Bionic Companies

The 3 forms of BeCoN Capital are most effective when applied together. But their understanding is as limited as the financial, human, and natural capital were in the 20th century. Organizations that are able to develop sound capabilities in the Traditional Capital as well as the BeCoN Capital are referred to as the “Bionic Corporations”. Some of these Bionic Corporations have grown manifolds in a very short time period—e.g., Apple, Alphabet, Amazon, Facebook, Microsoft—and account for around 13% of the capitalization of the entire U.S. stock market.

The Bionic companies have expanded rapidly by utilizing their physical assets—such as, people, land, and funds and investments effectively—as well as by establishing and linking digital cross-boundary platforms and tools that make the most of their BeCoN Capital. For these organizations, developing BeCoN Capital is foundational to their overall Digital Transformation Strategy.

How to Develop the BeCoN Capital

Senior executives in traditional companies who are aspiring to develop their BeCoN Capital to reinforce their growth should start by finding answers to the following key questions:

• Do we know about our customers’ behavior?
• Do we capture it, analyze it, and model the ways it might change?
• If not, why not?

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Expanding into new markets presents lucrative opportunities, as well as risks. Potential threats in new territories include corporate corruption, malpractices, and fraud, which most firms have to face. Corruption and fraud cover a wide array of situations, but it is the unobtrusive yet more prevalent forms of fraud and corruption that create the biggest risks for organizations.

Corporate corruption and fraud can be characterized into 4 distinct categories.  Understanding these 4 categories of corrupt practices prepares the executives to efficiently deal with the troubles they are likely to encounter in their careers.

1. Bribery
2. Grease Payments
3. Extortion
4. Employee Fraud

Bribery

Most corporations in new markets face problems when their people are asked to make payments—by the local government or political figures—in order to achieve a business contract, acquire regulatory approval of a product, reduce taxes, or avoid customs duties. It is illegal in ethical companies to pay bribes by both the local as well as home country laws. Managers hardly ever make payments openly. This is mostly done through agents or dealers, utilizing unaccounted funds, funding foreign trips, giving gifts, and making donations to nongovernmental organizations as advised by the crooked officials.

Grease Payments

Grease payments are demanded for doing routine transactions faster. Most executives encounter requests for grease payment by both government officials as well as by private sector employees. In some regions, even commencement of a business is littered with hurdles at each step where executives are often pressurized to pay grease payments or suffer undue delays in processing simple tasks.

Extortion

In some countries with ineffective rule of law, dishonest officials demand money from businesses by coercing their executives or threatening their operations. Executives new to such places typically fall prey to these coercers and succumb to make payments. Such threats and intimidation are often real based on the coercers’ reputation and past actions.

Employee Fraud

Another common menace in corporate organization is the involvement of senior executives in fraudulent activities, such as receiving kickbacks and commissions. Many a recent surveys and studies on global fraud have revealed the involvement of senior officials of multinational organizations in the developing markets. Greed is the major factor that tempts senior executives to undertake such fraudulent activities—such as faking the books, stuffing the channel with stocks, and forging parallel agreements with customers.

Preventing Corruption and Fraud 

It is typically the materialistic politicians and dishonest public officials that are held responsible. However, corruption in most circumstances arises out of reciprocal obligation. The leaders or executives who succumb to the demands of the crooked officials or politicians are equally responsible for the act.

To avoid the threats of denting their reputation, organizations must ensure to make dealing with corruption a fundamental organizational capability. A simple way to do it is to devise something beyond policies and controls—such as building a culture of ethics and compliance, or operate ethically in any market around the globe.

It is critical for the organizations to create internal capabilities to resist corruption and inculcate behaviors and mindsets persistent with strong morals to endure such potential threats as they occur. The 4 principles to combat Corporate Corruption are of great assistance to executives in this regard:

1. Have Basic Controls in Place
2. Invest in Core Functions
3. Have Strong Local Leadership
4. Tough It Out

Have Basic Controls in Place

Combating corruption becomes easier by establishing appropriate policies, rules, codes, and compliance measures. This starts with assigning appropriate budgets to conduct audits and compliance reviews, training teams to abide by anti-bribery and corrupt practices laws, taking action against corrupt employees, and defining a formal code of conduct for every employee. Effective processes for discounts, gifts, travel, and charitable contributions be laid out; and there should be proper communication of all these policies, codes, and rules to all stakeholders including the customers. Likewise, proper fraud investigation processes should be formulated, which should be quick, focused, rational, and impartial.

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The Digital Era has brought on critical challenges for companies to meet new consumer demands for marketing. Digital Marketing is undergoing transformation at an astounding rate. There is a radical shift towards “on-demand” marketing, where marketing is becoming consistent, pertinent, and receptive to customers’ demands, delivering heightened experiences literally anywhere with ease of access along the consumer decision journey.

On-demand Marketing is being driven by the constant growth of technology and consumer expectations. Today, product information is available to everyone instantly through efficient search engines; social media inspires consumers to communicate and appraise their user experiences; and mobile devices provide the digital environment a ubiquitous element. In On-demand Marketing, consumers assess brands by their proficiency to judge expected growth in consumer demand and deliver improved experiences. These experiences are “ever-present” interactions that offer high value and are radically customized and easy to access across the entire consumer decision journey.

The war to provide heightened consumer experiences between brands is sure to get even more intensified with time. To prepare for the future and to cope with consumers’ on-demand challenges, marketers will have to keep themselves abreast with customers search habits, continually improve their search positioning, employ innovative methods to positively influence consumer experiences, and utilize sophisticated tools to gather the right data across the Consumer Decision Journey.

Likewise, companies will be needed to integrate people of various departments to understand consumer decision journeys driven by their positive experiences, line up the senior leadership around a well-defined data strategy, and revisit the delivery processes related to every customer touch point. This aids in a deep-down analysis of Consumers’ Decision Journeys and designing Customer Experiences that match the consumer’s demands.

With the evolving digital technologies, consumer demand will potentially grow in 4 areas:

1. Omnipresent Interaction - 24/7
2. Ability to do new stuff with the ever-increasing data pools
3. Accurate usage of consumers’ data to fulfill their needs
4. Ease of use

1. Omnipresent Interaction - 24/7

The consumers today require omnipresent, always-on, and prompt interaction. Marketers are getting cognizant of this, and are developing more personalized services for the customer. The newer digital technologies will help further integrate data on all interactions a consumer has across the decision journey. This is the essence of Omni-channel Marketing.

2. Ability to Do New Stuff with the Ever-increasing Data Pools

With the huge and multiplying reserves of data, the consumers will need to do amazing new stuff in new ways to generate value. Today’s digital ecosystem is able to economically integrate unique sets of information for various new disciplines. The current pace of technological advancement would make digital interaction an exceptional experience. It is time businesses foresee future consumer interface and interaction requirements, and revisit their offerings.

3. Accurate Usage of Consumers' Data to Fulfill Their Needs

Latest mobile apps help perceive how a product—e.g., cloth or eye wear—will actually look like on a particular customer. In future, the demand for more personalized apps will grow drastically. Through each of their interactions, the consumers create new data logs that add to their existing digital description, helping in perfecting their potential impact. Consumers are eager to provide more data provided it is used to offer helpful feedback, deals, and services.

4. Ease of Use

Consumers always prefer to choose quick and simple interactions over complex digital interactions. Many organizations have started approaches to streamline their processes and make customer experiences more engaging. Evolving technologies will surely help redesign and simplify disjointed customer interactions and experiences.

To influence consumer experiences, organizations should work on restructuring the marketing function to foster collaboration across departments and start building on-demand marketing capabilities sooner than later to reap benefits in the long term. To build On-demand Marketing capabilities, companies will need coordinated efforts across the board to shine at 3 levels:

1. Create Interactions across the Consumer Decision Journey
2. Make Data and Discovery a Continuous Cycle
3. Deliver New Skills and Processes

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Digital natives are threatening the way traditional organizations do business. The dated authoritative structures and imposing mindsets of the executives of traditional companies are in stark contrast to today’s technology-savvy startups and digital-native companies.

Traditional firms are running out of time to revisit their strategies and promptly transform in accordance with the rapidly evolving markets and business environment. They need to focus their attention towards eliminating bureaucratic challenges, such as resource scarcity, fragmented processes, siloed environments, as well as lack of innovation. Conventionally-run business entities can learn a few tricks from agile organizations.

Agile companies develop small teams—comprising a few people who possess the required key skills to accomplish strategic initiatives—as their basic organizational unit. Rather than converging information technology professionals in a centralized department, agile firms group software designers and engineers in individual teams, to work uninhibited on high-yielding initiatives.

This necessitates the senior leaders to create an enabling environment for the small teams to flourish, by offering them adequate authority required to match the pace of the digital economy, equipping them with top talent, offering suitable tools to act promptly, and constantly gauging their performance. The leaders need to let the small teams make everyday decisions independently, allow them to escalate the judgments only in dire circumstances, and take time-consuming administrative tasks off of them.

The approach for the organizations to empower small teams and smoothly transition to Agile way of working consists of 4 key steps:

1. Create independent teams in impactful areas
2. Place strong performers on the independent teams
3. Provide teams with a clear view of their customer
4. Allocate resources up front and hold teams accountable

1. Create independent teams in impactful areas

The first step for an organization to embrace Agile method of working is to create independent teams in impactful areas. Autonomy is clearly beneficial for team building, particularly for teams working on functions serving the customer directly or affecting customers’ experience.

It is equally important that the executives choose teams of people possessing different skills and capabilities.

2. Place strong performers on the independent teams

The second step to a smooth transition to Agile ways of working is to place strong performers on independent teams from the start. Senior executives are often reluctant to put their top performers on autonomous teams—considering the task far from being mission critical—since their inclination is to rather have them engaged in strategic endeavors.

Selecting the right, talented people paves the way for the teams to thrive and helps train managers shortlist and create more autonomous teams, and provide teams with a clear view of their customer.

3. Provide teams with a clear view of their customer

The third step in empowering small teams is to provide the teams with a clear view of their customer. Agile and digital-native companies place a consistent emphasis on improving customer experiences which offers the independent team an opportunity to have a clear and consistent perception of business priorities.

4. Allocate resources up front and hold teams accountable

The last step for an organization to embrace the Agile way of working is to allocate resources up front and hold teams accountable. Teams working on client-facing roles almost always acquire the resources, information, consents, and finances required for new projects. Their issue is not scarcity but rather sluggishness. 

Interested in gaining more understanding on how to effectively Empower Small Teams? You can learn more and download an editable PowerPoint about Empowering Small Teams here on the Flevy documents marketplace. 

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Time Management is a critical capability for individuals as well as senior leaders. Leaders are often under pressure to allocate adequate time on strategic priorities.

There isn’t a one-size-fits-all formula designed for appropriate time management that works for all executives. However, research on the practices utilized by the leaders effectively managing their time reveals that that they assign a significant percentage of their time in meeting external and internal stakeholders. Specifically, they were allocating two-third of their time in making key business decisions, engaging and motivating people, setting direction and strategy, and managing external clients.

Leaders stressed with time constraints can immensely benefit from the Principles of Executive Time Management. Application of these principles vary from executive to executive and from situation to situation, but they provide effective measures to manage time appropriately.

1. Create a "Time Leadership" Budget
2. Consider Time When Introducing Change
3. Ensure Time is Measured and Managed by Leadership
4. Refine the Master Calendar
5. Provide Leading Administrative Support

Create a "Time Leadership" Budget

The first principle in managing the executive’s time warrants budgeting time for priority initiatives and following a methodical process on its allocation. This step entails avoiding random assignment of executives to engagements and, instead, encouraging regular assessment of leadership time and involvement requirements for each project. The task also includes an evaluation of each executive’s commitment on all tasks—such as key initiatives, engaging and coaching team members, and meeting clients.

The evaluation uncovers the breadth of leadership available in an organization to drive its strategic initiatives. The time budgeting exercise also allows the companies to halt pursuing new projects once the leadership capacity runs out, and lessens the leaders’ administrative responsibilities until this leadership constraint is managed.

To resolve the human resource constraint, organizations can set up governance committees to administer time budgeting for strategic projects with a mandate to review and approve them, and plan time commitments required from the leadership and each leader’s availability.

Consider Time When Introducing Change

The time required to involve, coach, and direct employees is critical in developing the managerial span of control. Inability to set the managerial span of control right can leave the organizational structure inefficient. The managerial span of control is typically viewed from a structural perspective: the broader it is, the smaller the number of managers required and hence the lower operating costs.

The spans of control should strike a balance between not too broad or not too narrow. Getting this balance is critical, since too lean organizations crush the managers with more direct reports than they can possibly manage effectively, whereas too many managers drastically add towards complexity and unwarranted tasks (for example, unnecessary meetings).

Restructuring the department or business unit with a skewed managers-to-subordinates ratio helps eliminate unnecessary work and meeting culture. Similarly, transforming internal governance structures aids in saving significant amount of executives’ time (annually), enhancing strategic focus, and increasing accountability and decision making.

In addition, the leadership should work on simplifying the decision-making process by eliminating multiple boards, authorities, and unnecessarily detailed discussions, to improve the executives’ time management.

Interested in gaining an understanding on the remaining 3 principles of Executive Time Management? You can learn more and download an editable PowerPoint about the Principles of Executive Time Management here on the Flevy documents marketplace.

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What do you think are the symptoms of Poor Time Management?

Time management is a challenge for almost every individual. Executives have been found to be complaining more about the scarcity of time. The advent of 24/7 communications, increasing sophistication, intense rivalry, and financial insecurities have complicated the situation for the executives. Overloaded executives are struggling to allocate sufficient time to focus on strategic priorities and lead new initiatives.

Time management is much more than an individual’s predicament. Its roots can be traced deeply entrenched in organizational structures, values, and beliefs. Leaders who are determined to tackle this issue need to deal with it institutionally.

A 2011 global survey by McKinsey & Company asked 1374 executives (general manager or above level from a broad range of industries) about their time allocation habits. The results revealed a mere 9% of the respondents who were “satisfied” with their time allocation abilities.  Less than 50% of the sampled executives were found “somewhat satisfied,” whereas a third were “actively dissatisfied.” However, 50% of the executives acknowledged that they were not adequately focusing on guiding the strategic direction of the business.

Poor time managers who are dissatisfied with their time allocation practices can be categorized into four major groups:

1. The Online Addict
2. The Cheerleader
3. The Networker
4. The Micromanager

The Online Addict

The executives falling under this group are office centered; prefer utilizing most of their time using asynchronous messaging—email, voice mail, phone etc. The “Online Addicts” spend less time meeting, managing, and motivating their direct reports.

The Cheerleader

The executives within the “Cheerleader” group include those who spend more time meeting their direct reports face to face, however, their issue is spending limited time interacting with external customers. They are less likely than other groups to use email or communicate through telephone. Cheerleaders are employee focused, but less so towards the customer.

The Networker

The “Networker” comprises executives in the CEO or director positions who spend most of their time outside meeting customers personally or telephonically. The issue with “Networkers” is that they assign limited time deliberating, setting direction or devising strategy, and meeting their subordinates in person. “Networkers” are customer focused but lack in terms of devising long-term strategy and engaging their direct reports.

The Micromanager

The executives within this category utilize most of their time alone. They tend to micromanage things, and most of their spend time is spent dealing with emergencies through email or phone. The Micromanagers are operations centric, but are less oriented towards contemplating, setting direction, and meeting people in person.

Symptoms of Poor Time Management

The most common symptoms of poor time management in executives are:

1. Initial Overload
2. Lack of Guidance
3. Ineffective Trade-offs
4. Respecting Time

Initial Overload

Abundance of large-scale projects and time constraints result in an initial overload for most executives that can lead to failed initiatives and missed opportunities. Dissatisfied executives—from the “Online Addict” and “Micromanager” groups—fail to dedicate the required time and energy to engage and motivate their teams that propel successful projects. Thus the organizations face “change fatigue” and lack the vigor to execute important engagements.

Interested in gaining more understanding on the types and symptoms of Poor Time Management? You can learn more and download an editable PowerPoint about the Symptoms of Poor Time Management here on the Flevy documents marketplace.

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Do you know what's the toughest issue with Talent Management? 

A large majority of leaders confront significant impediments trying to bring their talent and business priorities in line. Are you one of them?

The typical approach employed to accomplish this often contains several gaps—starting with recognizing critical roles in the company where leaders tend to fail to notice few key positions that are essential for revenue growth but are not that visible in the hierarchy. The senior executives remain unaware of any discontent boiling in any of the employee groups until it becomes a full-blown crises, and there aren’t any succession plans in place either to fill any void in key roles. These gaps are critical yet common.

The senior executives should have a clear picture of their top talent and the most critical roles. To manage talent, executives have traditionally been using their hunch, recommendations from other people, or looking at the organization chart—assuming (incorrectly) that the mission-critical roles can only be found within the top layer.

Contrary to the traditional talent management practices, the Talent-to-Value Management approach argues that the key roles and people are scattered across the whole enterprise, and not just present at the top management level. The Talent-to-Value approach necessitates the organizations to carefully link their talent and opportunities to create value by using quantifiable metrics to find the most critical roles. The approach also entails defining the jobs more clearly—so that top talent possessing relevant capabilities assume the key roles—and creating succession plans. The Talent-to-Value Management approach helps companies meet their targets and achieve the return on initial investment. Organizations aspiring to implement the Talent-to-Value management approach can accomplish this by pursuing the following sequential steps:

1. Define the Value Agenda
2. Clarify Critical Roles
3. Identify Talent for Roles
4. Operationalize and Mobilize

Define the Value Agenda

The first step in linking organizational talent to value pertains to evaluating the strategic objectives carefully. The step involves working out the overall numbers and goals—clearly allocated to specific business units, territories, and product areas. The senior leadership needs to take a thorough look at the divisions liable to grow, the impact that the design and manufacturing innovation will have on all business units, international opportunities to be exploited, and digital capabilities. The executives also need to clearly delineate the attributes for success for future leaders—e.g., growth avenues, leading culturally diverse teams, cutting-edge design and manufacturing processes, impact of digital technologies on businesses, and adaptability to unforeseen disruptions.

The clearly defined value agenda enables a strategic discussion on the key roles and the capabilities required by the talented individuals able to fill those roles.

Clarify Critical Roles

The second step demands defining and calculating the numerical value of the key roles in the organization. The key roles are of two types: Value Creators—those who directly generate revenue—and Value Enablers—e.g., people from support functions. This approach is about matching talent and value rather than focusing on individual skills. Outlining the critical roles necessitates answering the following questions, in coordination with the HR team:

• Where does the value come from?
• Which roles are most critical?
• Is there a need to add new roles in line with the new strategy?
• Any major disruptions that might shift role responsibilities?

Interested in gaining more understanding on how to link your Talent to Value? You can learn more and download an editable PowerPoint about the Talent-to-Value Management approach here on the Flevy documents marketplace.

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Not many people have heard about the ADKAR MODEL!

Developed by Jeff Hiatt—the Founder of Prosci (a Change Management research and advisory)—the ADKAR Change Management Model is a potent tool for professionals and leaders responsible to manage and sustain successful change. ADKAR stands for 5 sequential building blocks that are essential to drive successful change at both the people as well as the business dimension:

• Awareness: All employees must be aware of the business reasons for change.
• Desire: All stakeholders should have the desire to participate and fully support change.
• Knowledge: All stakeholders should have a thorough understanding of the change process and its ultimate objectives.
• Ability: All people should have the ability to realize and implement change on a daily basis at the required performance level.
• Reinforcement: Reinforcement to sustain change makes it clear for all employees that there is no turning back.

Transformation initiatives—Mergers, acquisitions, spin-offs, and the like—are always challenging to manage due to reluctance from people (employees, managers, and executives) in embracing the new state, program or behavior. Administering change at the personal or organizational level necessitates innovative approaches to facilitate trouble-free transition to the desired state. The ADKAR Change Management Model is a simple tool where each step of the model outlines a successful journey through change and aligns with specific activities associated with leading change. The model is useful to implement even in situations where an existing transformation initiative is not gaining traction, to identify gaps within the process, and to highlight areas needing focused corrective action to improve change success. To effectively enforce change, an enterprise needs to work on two dimensions:

• The Organization
• The People

For the change to be fruitful, it has to take place concurrently at both the dimensions. To successfully implement the ADKAR model, it is critical to understand all the factors impacting a change initiative and its success. Let’s take a deeper look at each of the change dimensions.

The Organization Dimension

At the organizational level, the structured approach provided by the ADKAR Change Management Model permits leaders and teams to focus their activities on what will drive individual change and achieve organizational results. The organizational dimension is described by concrete attributes of projects or the default sequential steps required to implement a new solution:

• Determine a business need / opportunity
• Identify the project scope and objectives
• Design the business solution
• Develop new processes and systems
• Implement the solution into the organization

The People Dimension

Transformation cannot be realized alone by utilizing project management approaches or other best practices, facilitating change at the individual level helps embed it. The five key outcomes to be realized on the people side of ADKAR Change Management Model are:

• Awareness of the need for change
• Desire to participate and support the change
• Knowledge of how to change
• Ability to implement the change on a day-to-day basis
• Reinforcement to keep the change in place

An organization cannot be treated as a homogeneous mass of people during implementation of the ADKAR Model, since individuals’ capabilities and pace to learn vary dramatically. The sustainability of the transformation initiatives should be periodically analyzed, alongside recognition and rewards for those employees who embrace change. Reinforcement in the form of more training or coaching can help in preventing employees to revert to their old habits and adopting new processes.

Interested in gaining more understanding on how to implement the ADKAR Change Management Model? You can learn more and download an editable PowerPoint about the ADKAR Change model here on the Flevy documents marketplace.

Are you a management consultant?

You can download this and hundreds of other consulting frameworks and consulting training guides from the FlevyPro library.