Loose: The Future of Business is Letting Go

Martin Thomas @crowdsurfing

The Future is Loose

o Loose thinking

o Loose organisations

Loose Drivers

1. Chaos, complexity & need for speed

2. New forms of collective behaviour Emergence of new, informal organisational models

3. New generations emerging at top and bottom of corporate hierarchy

4. New technology

5. Failure of tight

1.Chaos, Complexity & Need for Speed

o Macro-economic meltdowno Socio political upheavalo New patterns of consumer behaviouro New expectationso New technology

1.Chaos, Complexity & Need for Speed

Defies rational analysis & neat, simple solutions “The Simple Lie or the Complicated truth?”

“The 21st Century is not a place for tidy minds” Sir Martin Sorrell

2. New forms of collective behaviour Emergence of new, informal organisational modelso Capable of delivering political, social or

commercial change … without structure or formal leadership

Underlines deficiencies of tight, bureaucratic structures that have to deal with them

Arab SpringTea Party Movement

Wikileaks

Shared Grief in Wootton Bassett

3. New Generations

o Emerging at top and bottom of corporate hierarchy– Gen X in the Boardroom with a post-Boomer

mindset– Gen Y entering the workplace with new

expectations

Demanding new ways of working

4. New Technology

o Social media is driving new behaviours & expectations

Dramatizing institutions’ structural, operational & cultural weaknesses

Connected Consumer

Disconnected Corporation

meetsmeets

Why Many Institutions Struggle

o Not configured to work in real time, in terms of speed or resources

5. Failure of Tight

o Illusion of controlo Growth of auditing, risk assessment, compliance,

consulting, reporting, planning & forecastingDelusion of controlDistortion of prioritiesHuge bureaucratic & cost burden Inability to respond to real world

Emergence of Looser Ways of Thinking

o Economists discover Behavioural Economicso Business Schools embrace critical & creative

thinking o Politicians talk of “a post bureaucratic age” &

introduce Big Societyo Conventional political parties challenged by

informal movements e.g. The Tea Party

Thriving by Loosening Up

o Five simple operational & cultural traits of successful organisationsTrustingOpenAgileInformal Collaborative

Tight Thinkers Need Not Apply

o Organisations & people that struggle with this new worldHierarchicalBureaucraticProcess orientedDistrustful

Trusting

o Bedrock of strong internal cultureo Allows shared responsibility & real time

decision making

The best company rulebook ever written?

Nordstrom Revisited

“Prescriptive rules have the effect of infantilising staff & make it harder for them to adapt to different situations. This goes as much for digital communications as for selling socks … Like the Nordstrom handbook we’re trusting staff to follow the spirit, not just the letter, of our guidelines”Meg Pickard, writing about The Guardian’s new social media guidelines, November 2010

Trust & Zappos

o Call centre operational that successfully breaks all rules– No scripts– No time limits– Devolved decision-making

o … because it trusts people on the ground to make the right decisions

o …because it places huge emphasis on recruitment, training & building the right culture

Open

o Transparency & honesty non negotiable

Capable of transforming reputationse.g. Asda & ‘Democratic consumerism’ = commitment to transparency & involving customers in decision-making

Agile

o Ability to improvise & operate in close to real time

o Limitations of excessive faith in longer-term planning

o Speed more important than absolute accuracy

Business plans that used to take six months to develop and approve, can now be put together in a week

Organisational Agility

o Reinvigorated innovation process:– Devolved decision making power from small group of senior

execs to network of cross-functional councils & boards= “a distributed idea engine where leadership emerges organically, unfettered by a central command” Fast Company

– Focus on agility & speed“all the windows of opportunities I’ve missed – areas that got ahead of us that we couldn’t get back into without doing big acquisitions or something – have been when I’ve moved too slow” Cisco Systems, CEO John Chambers

Informal

o NPD: Living life in Beta

o Design: Messy vitality

o Creativity: Authenticity more important than production values

Informality in the Workplace

o Emphasis on freedom & trust

o Encouragement of creativity & individual responsibility

“We’re giving people the latitude to go off & do their own thing. We trust them to do their regular jobs & to experiment, innovate & have fun”Microsoft Snr Mgr, quoted in Business Strategy Review

• No job titles, formal hierarchy or organisational charts• Teams self organise around specific projects

Informality Drives Innovation

o Granted 2,000+ worldwide patents

o “The most innovative company in America” Fast Company

o Consistently ranked as one of the best places to work

Collaborative

o Tapping into spirit of collective self expression

Numbers are Compelling

o 70% of companies regularly create value through use of web-based communities

o Using customer communities to solve customer problems costs 10% of traditional call centres

* McKinsey 2010

Lessons from Software Industry

o Cathedral = traditional, tightly controlled innovation model

o Bazaar = loose, open source approach, harnessing the skills of the wider developer community– Not particularly effective at

originating concepts, which still rely on the spark of individual geniusto make them happen

– Very effective at testing & improvingthem

Collaborative

Opening up new business models

Community Commerce

Self-sustaining creative community Members submit designs => 80,000+

submissions Opportunity to pre test beta versions Community votes => 800+ designs Designers receive $2,500 + marketing advice +

retain IP

No professional designers, no salesforce, no distribution, no market research, no advertising=> $30m revenues … high margins

Community Commerce

People-powered mobile network (from O2) Members receive points for recruiting new

people, making suggestions & solving problems => converted into cash

20% actively involved Aim that 25% of members will get half of cost of

calls returned to them for contribution to community

Plans to involve community in pricing & marketing decisions

Not reliant on call centres, expensive marketing & product support

Formula for Collaborative Success Ensuring strategic focus

Publicity as bi-product not sole objective

Planning – who, what & how? Obama’s 100

Devolving control to community Continuous feedback loops

Anticipating subversion Bieber in North Korea

Managing IP rights

Thriving by Loosening Up

TrustingOpenAgileInformal Collaborative

@crowdsurfing