Business: Uncovering Opportunities

The effects of a digitized society and economy are widely visible today, especially in the level of competence many business people have in using and understanding new technology. This has caused specialized business disciplines such as management and strategy, Marketing, Finance, or Legal to investigate an ongoing digital shift in business, economy, and society. They attempt to understand the transformation processes and to translate this understanding into actionable initiatives for organizations and their leadership.

Professionals in the area of business strategy and operations are confronted with these kinds of relationship challenges across all industries and subdomains. The task of understanding the potential and influence of a change is undertaken by strategists close to the business decision makers rather than by technologists close to its technical root cause—the underlying trigger that made it happen in the first place. These strategists concentrate on the role of technology as tool or medium, exploring risks and opportunities as well as value propositions.

From a business perspective, the interesting part is how technology supports new ways of communicating, interacting, doing business, or even committing crime, thus causing cultural change in society and affecting the way the economy works. This provides the basis for innovative business models, that change the way a market works and how a business positions itself in it.

Breakthrough innovations that thrive in such dynamic environments, regardless of industry or time, are always based on a spirit of entrepreneurship (or enterprise), which is vital to achieving a transformation in a complex setting. It is fundamentally about replacing something existing with something new that provides more value. It requires actively seeking the opportunities that lie sleeping in technical developments or other transformations, developing a vision of how to realize that value. The hard part is then turning such technologies into a powerful enough idea that it provides the basis for an enterprise, a strong brand, and a compelling offering. Today’s business thinking, particularly in large organizations, is often not ideal to generate and pursue such a vision, largely due to its roots in a worldview of simplified models, such as those used in financial economics.

 The scale and speed at which innovative business models are transforming industry landscapes is unprecedented.

 For entrepreneurs, executives, consultants and academics, it is high time to understand the impact of this extraordinary revolution.

 Alexander osterwalder and Yves pigneur in Business Model Generation

Such thinking focuses on detailed planning, predicting, and measuring. It strives to reduce uncertainty and maximize the chances for success. It assumes a world that can be captured in a mathematical model, where the basis for a successful strategy formulation lies in a thorough analysis of the market environment, leading to a positioning that provides competitive advantage. Many prevalent management paradigms taught at business schools are based on the idea that the key challenge is to improve and recombine what already exists, from improving operational efficiency to increasing product quality, and expanding the featuredriven product matrices used in Marketing.

This thinking is apparent in many business-related knowledge areas, and places a large emphasis on gaining empirical insights through market research and acting upon them. Instead of recognizing the people involved in the enterprise as what they are—real human beings with human needs—it is based on generic concepts of consumers, staff, and shareholders. Difficult decisions are simplified by replacing human participants with rational actors, assigning to them the aspiration to maximize quantifiable values such as return on investment or the number of features in a product.

These models are indeed very valuable approaches to developing an understanding about the economic side of a problem, but their inherent simplifications make them fall short when dealing with the complexity of relationship challenges. While people actually do value useful functionality and often attempt to make rational choices, the reality of social and cultural complexity often results in unexpected behaviors. The economic approaches lack the more qualitative and often quite uncertain human element of any business success, although the strategic significance of addressing these aspects is widely visible.

 The appropriate manifestation and use of technological advancements can bring about powerful change with regards to the mind, body and soul. These benefits are made possible by advances in engineering, yet they will not be found by engineering advances alone.

 Jon Kolko in Thoughts on Interaction Design

Engineering: Exploring the Possible

Successfully applying any technology first requires an enterprise to understand how it works. Therefore, to rely on expertise apparent in engineering disciplines seems to be an obvious choice for a business when a new technology arrives. In many organizations, especially those that have technology at the heart of their business model, engineers are the major force behind innovation and change. In such a business context, innovations as well as the research activities seeking to generate them are equaled by the disruptive effect of new technologies.

The technology-centric mindset is one of creative exploration of the possible and the feasible, seeking to achieve new benefits by understanding and transforming how things work. This is based on deductive, analytic thinking and attempts to predict and control a system’s behavior. While the closely related natural sciences are trying to explain the world as we see it, engineering disciplines use that knowledge to invent new things that did not exist before.

This emphasis on analysis as a thinking mode lets engineering approaches concentrate on the details inside the box, attempting to develop understanding about the hidden causalities, invisible to those people who just use a technology. It enables the planning and construction of new realities, dealing with questions about implementation, maintenance, performance, security, and optimization, and relying on empirical results and formal logic to make it actually work.

When approaching relationship challenges that are embedded in enterprise challenges or opportunities, a technology-centric perspective helps to extend the boundaries of what is possible, developing technical solutions that might prove disruptive to the current state. Technology-centric, algorithmic thinking is the basis for any automation in the enterprise, and the key prerequisite for all the advanced interactive systems and infrastructures most people use now every day. Those inventions were made possible by engineering and IT professionals, making faster data processing, larger storage capacities, artificial intelligence, touch interfaces, and other inventions available to people via smaller, more powerful, and more accessible devices. Engineers understand and build things that, to most people, seem to be magical.

Technology-driven innovation has caused major transformations in life and business—especially when looking at larger time scales and key inventions like the computer. However, there is a shift in perception going on even in engineering cycles that just adding more capabilities, more information, and faster processing is not the answer to all challenges. Engineering-driven innovation is primarily about what is possible, not what is desirable. It fundamentally cares about the details, develops an understanding of structures that a single mind cannot possibly tackle, and develops solutions that are complicated in nature in order to solve a complicated problem. With the ongoing digitization of everything, many realize that the engineering mindset, while offering tremendous opportunities for innovation, is ill-suited to converting them to value.

People: Understanding The Human Condition

All innovations are fundamentally about people. Any decision made in the areas of technology and business results in perceivable social outcomes. With all the technology there is and all the business models that make its usage viable, what matters in the end is whether it is possible to give it a meaningful role and purpose in our personal or professional lives. Only if that role is anticipated and understood can a change be an opportunity to a business, for example, by turning a new technology into a new product or service offering. Today’s entrepreneurs still lack business tools to incorporate human-centric thinking into their strategy, sparking the increasing need for business executives to reconnect with the people side of business. To do so, they have to turn to insights from disciplines exploring the subject of all our endeavors: the human being, the human condition, and society.

Business practice today employs a large variety of knowledge areas around the humanities and social sciences to better understand people and the relationships between them. Disciplines such as psychology, anthropology, sociology, communication studies, linguistics, and cognitive science provide detailed insights into how people are experiencing, thinking, and collaborating in the enterprise. Using varying scientific backgrounds, these fields explore human nature in all its diversity, and provide a basis for grounding a business strategy or initiative in a larger theory of human and social behavior. They help us develop an understanding of fundamental and universal elements of any enterprise as a social system, such as values and cultural norms, routines and habits, motivation and communication. Applied in the right way, they provide explanations and predictions regarding the way people act and react to change. They allow us to learn about people and their behaviors, and to inform our decisions, strategies, and leadership.

In modern organizations there are many practices and professionals with a professional background in humanities and social sciences, such as HR, Marketing, or Organizational Development. Although they share the general subject matter—the study of human beings—their individual focus, philosophies, approaches, and work methods vary significantly. A key challenge in the enterprise context is therefore to identify a human-centered approach that is suitable for contributing valuable insights given a specific challenge. The traditional role of these disciplines in the enterprise suffers from being marginalized as a part operationalizing a given business strategy.

In their book Subject to Change, the authors from Adaptive Path take a look at the ways that today’s business practices incorporate knowledge about people in their activities. The discipline of human factors enables us to optimize the usability and efficiency of technical systems, but thereby reduces people to being just a part of the system to be engineered, without considering the emotional or subjective aspects of their experience. In a similar fashion, consumer psychology is misused by traditional Marketing and advertising to detach a story from the actual product or service, to simply convey a persuasive message. Just as in the case of applying simplified economic models to relationship challenges, these applications suffer from a too simplified model of people in relation to the enterprise—as robots functioning in a machine, part of an efficiency-driven automation, or as mindless consumers subjected to sales-driven persuasion efforts.

Applied in isolation, these approaches all fall short of addressing relationship challenges. In fact, most people problems can be considered wicked problems by themselves, simply because the human reality is so complex and difficult to grasp. This has caused some business people to believe that their way to success has a lot more in common with fine arts than with applying scientific approaches. Indeed, there are many success stories that seem to follow a rather intuitive and expressive approach, driven by a strong idea and a charismatic leader. In reality such success is usually based on an intuitive, empathetic understanding of people. Even if not consciously pursued, the element of appropriately addressing the intended audience is present in any success story.

Enterprise teamwork

Virtually all transformations a business undertakes require specialist expertise and deep domain knowledge. If a transformation is so important that it is on the executive agenda, it must be done the right way, typically by involving expert knowledge. Therefore, most organizations bring together many professional backgrounds, even though the structure of disciplines and practices present in an individual enterprise varies widely depending on the respective industry and market segment.

Any domain comes with its own terminology, approaches, context-specific experiences, and ways of thinking. This leads to the familiar silos around specific domains, bundling specialist expertise and experience, and avoiding exchange and collaboration with other domains. This is widely visible on many organizational charts and the problems are apparent in daily business — specialist groups such as HR, IT, or Communications end up in having a separate department, culture, silo of competence, and agenda.

But capturing and tackling a relationship problem requires connecting different domains, to manage the many challenges of complexity and interaction, to bridge silos established by separate groups, and to overcome the uniform thinking they employ.

Even in a small enterprise, there is no single person able to cover every domain involved in such a challenge in full depth. When the problems to be tackled are merely cross-cutting concerns appearing regardless of competence area or unit, each of those areas has to deal with the issues, but cannot solve the problem in isolation. To approach such a problem, work needs to be partitioned between different people with a deep expertise in their respective domain and also the power and influence in the enterprise to make change happen. Consequently, any resolution depends on some excellent teamwork.

In a famous talk on design Thinking at TED, Tim brown from IDEO identified different areas of innovation that cross the domains of business, technology, and people, and a need to address these overlaps to seize the opportunities therein. building on that idea, here is our classification of innovations in the enterprise:

The Role of Connectors

All three of the perspectives explored before provide valuable input to get to a meaningful, feasible and viable outcome. Creating and sustaining fruitful enterprise-people relationships facilitated by information systems requires aligning technical, business, and human elements to serve a common purpose. Cross-functional teams are essential for exploring the problem and ways to resolve it holistically, determining the opportunities and constraints, stakeholder concerns and success conditions. A key challenge is the multi-competency required to come to a good result. This makes it necessary to establish a connection between those elements, and among the people advocating for them.

Using our interpretation of Tim Brown’s framework, almost any significant innovation can be seen as an enterprise innovation, because it touches all three areas and benefits from all types of innovation. However, people deeply grounded in a specific domain tend to focus on that area alone, especially in the enterprise context where such areas are established groups such as departments or homogeneous teams. Collective thought processes and groupthink in organizational structures focus on the familiar terrain, preventing anyone from stepping out of their silo.

To overcome this separation and consider all types of innovation, many organizations use generalist roles typically called architects, designers, or consultants. They work in cross-domain teams to apply a high-level view, bridge viewpoints, and deliver a holistic perspective. These roles act as connectors between viewpoints, translate into the different expert languages, and align efforts in pursuit of a common goal.

People in connector roles have to balance the different modes of thinking and possess domain knowledge in different areas. They apply formal rigor to design a system that fits, but balance this with a strong emphasis on so-called soft skills such as leadership, social dynamics, communication, and creativity. They engage in a social planning process involving all experts, team members, and stakeholders. Such a way of thinking has been labeled integrative or hybrid thinking, building on the idea of design thinking and emphasizing the idea of connecting different domains, problem spaces, and viewpoints.

 Innovation, however, demands that you see the world through multiple lenses at the same time, and draw meaning from seemingly disparate points of data.

 Dev Patnaik, CEO and Managing Associate, Jump Associates

What if…?

Relationship challenges in the enterprise require a holistic answer by achieving a coherent vision of its future state. A fundamental assertion established for wicked problems is that any attempt to think them through completely before acting is doomed to fail. They cannot be solved, since their fundamental tradeoffs prevent any solution from addressing them as a whole. They have to be approached differently, by envisioning a positive outcome for a change, ensuring its meaningfulness, viability, and feasibility, and trying to influence the system to get there. Instead of relying too much on detailed analysis, hybrid thinkers rely on holistic synthesis to generate options and enable decision making.

More than just bridging domains and translating between them to address complex relationship challenges, enterprises need to use the linked views of hybrid thinkers to generate visions of the future by asking “What if…?” questions as a starting point for purposeful innovation. This follows an idea that Charles Peirce called abductive logic, or as Roger Martin puts it, the logic of what might be.

In order to generate such a vision as the basis to tackle complex relationship challenges, enterprises need to develop a design competency. Design can be employed to go beyond what exists today, extending the boundaries of thought, and creating new options for strategy and future development.

AT A GLANCE

Relationship challenges faced by enterprises as complex socio-technical and socio-economic systems come close to wicked problems. They require holistic, cross-domain thinking beyond the conventional analytic and decision centric mindse.

Recommendations

Involve expertise and methods from different professional backgrounds, including those with business-, technology-, and people-centric perspectives

Establish innovation teams across organizational boundaries, fostering a culture of shared problem ownership

Place hybrid thinkers in connector roles to translate between domains, bridge viewpoints, coordinate efforts, and synthesize holistic approaches

Use an enterprise-wide design approach to turn this synthesis into tangible visions of a meaningful, viable, and feasible future