Moderator
Johan Roos Chief Strategy Officer, Hult International Business School

Speakers
Santiago Iñiguez de Onzoño Executive President, IE University
Patricia Pomies Chief Operating Officer, Globant
Rosanna Sibora Vice President Digital Products & Innovation, Universal Music Group

Setting the Stage

When the pandemic hit, few companies were prepared for the unpredictability of the threats and related challenges that it brought. The completely unexpected need to switch the internal operating system to fully digital within days ruthlessly exposed the flaws and booby traps hidden in many organizations. Operations were not prepared. Staff was not prepared. Management was not prepared. Governance was not prepared. Media discontinuities, paper files, compulsory attendance, undocumented workarounds, and micromanagement became visible as what they are: the legacy debt of an anachronistic business culture that suddenly turned into a very real threat to the business. In many companies, home office was more an incentive-like working model for a small number of employees. All of a sudden, this exotic mode of working turned into the new normal, creating a bunch of unsolved problems for the routines of a legacy business operating system. Managers and employees were thrown into the deep end of a new digital reality where established cultural habits and soft practices lost their impact.

Drucker Forum 2021

This article is one in the “shape the debate” series relating to the 13th Global Peter Drucker Forum, under the theme “The Human Imperative” on November 10 + 17 (digital) and 18 + 19 (in person), 2021.
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Technology – Driver or Threat

Looking back on these early days, it is obvious that the problem had different layers. On the one hand is the problem of how to deal with technology. Often digital technologies are seen as purely an IT matter, leading to a lack of knowledge and understanding in the rest of the company. Also dangerous is the glib assumption that “technology or digital tools will solve the problem and make change happen”, overestimating their impact on deep-rooted procedures and habits, as well as their ability to solve the problem of missing leadership. All this can leave an organization digitally unprepared when a pandemic hits. In today’s world technology cannot be delegated, since everyone needs to have the knowledge, the ownership and the skills to make use of it.

Leadership? Leadership!

On the other hand, there are big issues in management and leadership. The pandemic created a situation of great uncertainty, compacting corporate working routines. From one day to the next people became isolated and invisible behind their computer screens at home. They lost the office as the familiar locus for social interaction with peers, managers and leaders.

This presented a huge problem for leaders, as it is difficult to create a safe social space using narrow band communication through digital channels. Capabilities like empathy, listening and awareness of what happens in the team on a daily basis are easily lost in digital operations, yet are must-haves in situations like the pandemic, with teams and leaders daily dealing with uncertainty, anxiety and stress. Such situations call for the full range of human-centered leadership skills, trust and psychological safety – and not for more micromanagement. Unsurprisingly, the pandemic quickly exposed the many organizations lacking these leadership skills and cultures, greatly contributing to record levels of employee turnover throughout the US, for example.

Understanding the Human Side of Business

The session panelists described the different leadership challenges they were facing, and what they did about it in their respective organizations. During the pandemic, the boundaries between private and professional life blurred. While challenging, this situation also offered the chance to better understand employees and to connect emotionally on a much deeper level than in the office: Seeing their living rooms and getting to know their children and families, leaders could build a new depth of connectedness within the team, develop fresh leadership abilities and stronger social skills.

Expanding on these individual leadership skills, leadership development also took a giant leap forward. It is no longer sufficient to manage known risks and to lead people through best practices with superior knowledge. Uncertainty, i.e. not having superior knowledge, characterizes the new business environment in which leadership has to prove its worth. Leadership, and leadership development then, is all about people and continued learning to understand the nature of new challenges and deal creatively and effectively with them. In addition, this has to happen at all levels of an organization, requiring more leaders everywhere. Discovering and developing new leaders can start small, by combining the need for more learning, training and leadership. Globant, for instance, successfully instituted communities of practice to share good practices among peers. These communities set the stage for individuals who were gifted trainers, and who were good at leading others without having formal authority over them. Talented new leaders rapidly emerged from these communities, equipped with exactly the skill sets required for the new business challenges: Leading others without having formal authority, proactively rising to new challenges and easily adjusting to new technology.

Leadership Development 2.0

Bringing newly-forged leadership talent like this into formal leadership development programs quickly exposes their flaws. Existing programs are too focused on management and leading with formal authority. Reforming leadership education in business schools and development programs inside organizations might sound revolutionary– but it is no less than a necessity for the times ahead.

Future leadership development needs to put much more focus on building interpersonal skills, encouraging entrepreneurial opportunism and continuous learning. The path of leadership can only be an individual journey of exploration, constantly taking advantage of new opportunities to grow and learn in real-world challenges. This setup has a far more experimental nature than in the past, and no pre-cut-out career paths. It requires patience and mentors who really care. After all, you cannot become a good leader unless you have a deep liking for people. Nor can one develop leaders without liking them – they are people too.

Today, we need good leaders more than ever.

About the Author: Janka Krings-Klebe and Jörg Schreiner are founders and managing partners of co-shift GmbH, helping companies to transform into business ecosystems. Their latest book is “Future Legends – Business in Hyper-Dynamic Markets“ (Tredition 2017). Both also contributed to “The Power of Ecosystems“ (Thinkers50 2021).

This article is one in the “shape the debate” series relating to the 13th Global Peter Drucker Forum, under the theme “The Human Imperative” on November 10 + 17 (digital) and 18 + 19 (in person), 2021.
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“Those who only gradually improve their performance in exponential times fall back exponentially.” Curt Carlson, former CEO Stanford Research Institute

Following the business news in the weeks after this year’s Drucker Forum, it became clear that management, as taught at business schools, is headed for irrelevance. Today it no longer solves problems. It creates them. So-called “best practices” of management have caused a multitude of problems that only became apparent after a delay of decades, but are now making themselves felt with force. Every newly graduated MBA contributed in good faith to the spread of these practices. Now that they are being applied in all companies worldwide, their limitations and weaknesses are becoming increasingly obvious.

They fall short in dynamic market environments. They stifle innovation with bureaucracy and rigid processes. They overextend the decision-making capabilities of companies in increasingly complex and uncertain environments. They are way too slow in learning from and adapting to new challenges. They pitch scarce and valuable human assets into senseless battles of domination. They frustrate workers, discourage entrepreneurial creativity and risk-taking, and impede cooperation across domains or companies.

Drucker Forum 2020

This article is one in the “shape the debate” series relating to the fully digital 12th Global Peter Drucker Forum, under the theme “Leadership Everywhere” on October 28, 29 & 30, 2020.
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Relevance lost

In short, our “best practices” have lost much of their business value. But why? First, let’s take a look at why they worked so well for so long.

At the dawn of the 20th century F. W. Taylor established the discipline of scientific management. His approaches created immediate benefits for companies by increasing productivity and quality, and reducing personnel costs. It was, in fact, one of the basic innovations of the second industrial revolution. Business schools emerging at this time adopted Taylor’s theories, weaving them into the DNA of management education.

Strict functional separation of the organization, combined with central control, and a shift of knowledge from skilled workers to management, boosted industrial productivity. This was such an advance that specialization, planning and control came to be regarded as general principles for efficient organization of all kinds of work. Taylorian practices were extended to strategic planning, accounting, people management and product innovation. And it all worked quite well, at a time of predictable market growth, with sufficient unconquered space still available for competitors.

Enter globalization and the internet

Yet this situation would not last forever. Enter the disruptive forces of globalization and the internet. Globally distributed value chains and just-in-time delivery increased the complexity of product markets. The internet democratized communication and opened up markets on a global scale by lowering entry barriers to many industries. Competition became ever tougher. Competitors multiplied, as did customer choice, prices fell and margins disappeared in the blink of an eye. Flexibility, speed and adaptability suddenly were in high demand. “Best practices” aimed at achieving maximum efficiency largely lost their power and thus their usefulness. But they had become firmly embedded as the gold standard of corporate management in the mind of managers who cling on to what they once learned, despite the fact that it doesn’t work any more.

Peter Drucker once wrote that the greatest danger in times of turbulence is not the turbulence; it is to act with yesterday’s logic.

Today’s market environments are complex and hyper-dynamic. The conditions for success have changed fundamentally. The old “best practices” are no longer even good. Companies need to find better ones if they are to thrive.

New practices for new times

We can do this by overcoming the self-imposed limitations of current management. Why plan in fixed yearly periods, when customers easily turn away from your products at any time? Why wait for the next budget cycle before approving funds for a new market opportunity? Why report and control tasks and resources along predetermined hierarchies, when relevant business activities require fast ad-hoc communication and coordination across networks of knowledge workers?

Today’s market environments call for management practices that can cope with complexity and change, with increasing customization of products and digital processes. In short: With customer-directed innovation at speed. New management principles are emerging from innovative leaders such as Amazon, Haier, Handelsbanken, Nucor, and Morning Star, which have broken up silos and decision-making bottlenecks to focus on customer needs and establishing entrepreneurial skills and incentives throughout the organization. Haier, Handelsbanken and Nucor impressively showcased these new principles at the GPDF20. As these and many more companies around the world demonstrate, such practices are not a privilege of start-ups or digital disruptors. They successfully work for companies of all sizes and industries. But beware: this time it won’t be done with the application of a few new methods at the operational level. The change is more fundamental. It will affect all levels of management.

Frederick Taylor brought one of the biggest management innovations of all time. But his practices have now reached their limits of their usefulness. Today, we need something else. Something better. Something that helps navigating the uncertainties of the digital age. Something that gives purpose again to management.

Change is here. Time to adapt.

About the Authors:
Janka Krings-Klebe and Jörg Schreiner are founders and managing partners of co-shift GmbH, helping companies to transform into business ecosystems, and authors of “Future Legends – Business in Hyper-Dynamic Markets“ (Tredition 2017)

This article is one in the “shape the debate” series relating to the fully digital 12th Global Peter Drucker Forum, under the theme “Leadership Everywhere” on October 28, 29 & 30, 2020.
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Unlike classic collaboration setups, open business ecosystems are not limited in their possibilities. Participating companies can combine their capabilities more quickly in order to jointly exploit new opportunities.

Drucker Forum 2019

This article is one in the “shape the debate” series relating to the 11th Global Peter Drucker Forum, under the theme “The Power of Ecosystems” taking place on November 21 & 22, 2019 in Vienna, Austria.
#GPDF19 #ecosystems

Flexibility and speed in cross-company collaboration is what distinguishes ecosystems from other business setups. Innovation superclusters are a special kind of ecosystem, with one additional distinctive feature: they make it simple to quickly grow innovations to profitable size. Innovators in superclusters can easily partner with corporations in joint businesses. Corporations have these capabilities. They can add the punch to grow innovative ideas into profitable operations. They have the resources, the business capabilities, the customer base and the market access that small businesses still lack.

That is the theory. In practice, corporations struggle to adapt to the speed and flexibility required in ecosystems. Their management practices and governance principles are not adequate for joint businesses. Their management practices are too slow to quickly connect with promising partners and to set up joint business operations. IP-management, risk management, financing and staffing of operations are just some examples where corporations today follow governance principles that simply leave no room for the openness, transparency and trust that is required in collaboration ecosystems. These practices are roadblocks to rapid connection with promising partners and the establishment of joint business operations. Corporations need to remove these barriers in order to participate and profit.

Companies like Haier and Amazon show the way to remove these barriers: Corporations have to internally transform their operations into a highly dynamic ecosystem, and learn to manage and govern them according to principles of adaptivity. This step is essential to develop management and governance practices that are required in highly dynamic business environments. Having these practices in place makes it much easier for them to collaborate with external partners. The practices for joint operations are already established and used every day to run existing operations. Extending them to accommodate new external partners is simple. Previous barriers for joint business operations are gone: All existing business operations run according to principles optimized for joint operations. Then, and not sooner, corporations can participate and profit from business ecosystems, quickly bringing in their corporate power to grow promising innovation into big business.

About the Author:

Janka Krings-Klebe is a Co-Founder & Managing Partner at co-shift GmbH. She works as a trainer, business coach and keynote speaker on topics around Digital Transformation, Platforms and Business Ecosystems for more innovation.

This article is one in the Drucker Forum “shape the debate” series relating to the 11th Global Peter Drucker Forum, under the theme “The Power of Ecosystems”, taking place on November 21-22, 2019 in Vienna, Austria #GPDF19 #ecosystems

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European industry is under threat from massively growing uncertainty. Trade tariffs, technological disruptions and fast-moving competitors on digital steroids cut deeply into predictions about business development. German managers report that their decisions can’t keep up with the pace of change in their business environment; they feel as if they have lost control. Uncertainty is so pervasive that it turns their former strengths, namely meticulously planning, organizing and controlling resources for highly efficient value creation, into a fundamental weakness.

Drucker Forum 2019

This article is one in the “shape the debate” series relating to the 11th Global Peter Drucker Forum, under the theme “The Power of Ecosystems” taking place on November 21 & 22, 2019 in Vienna, Austria.
#GPDF19 #ecosystems

Mainstream management practices aimed at intensifying the levels of planning and control don’t work in conditions of high uncertainty. In fact, they often lead to analysis paralysis, making the situation worse while the business environment accelerates away. In today’s dynamic markets, they appear as outdated as Soviet-type economic planning.

If managers cannot overcome their predisposition for detailed planning and control, this habit will kill European businesses more reliably than anything competitors or customers might do. In the face of the kind of uncertainty businesses experience today, established best-practice management has no answers. Budgeting, accounting, resource allocation and reporting practices still work in yearly cycles, rendering rapid reallocation of resources to emerging business opportunities next to impossible. Current governance norms rule out engaging with risks that appear to be unpredictable. Together, these practices make it impossible to adapt to new customer needs fast enough, spelling death for innovation. We need to reinvent them for the more dynamic and uncertain world opened up by business ecosystems.

Companies like Haier and Amazon have already demonstrated that it can be done, developing new management and governance practices aimed at creating highly dynamic structures inside their companies. This approach has transformed their companies step by step into open ecosystems where market-based structures fluidly balance available resources and capabilities with customer needs. Now their internal dynamism is so great that structures and business operations can rapidly adapt to emergent customer and market needs.

Business ecosystems such as theirs are built on principles of local autonomy, redundancy, diversity and constant experimentation. They use management and governance practices very different from those of mainstream management. Comparing their decision-making processes illustrates the differences.

In business ecosystems, the majority of decisions are made at the edges, at the point with the biggest impact, usually very close to customers – especially in uncertain or new situations. Governance models ensure that decisions in these ecosystems can and are always made as close to the edges as possible.

This is very different from today’s management mainstream, in which all but the most trivial decisions are concentrated at the top of hierarchies, far removed from customers. Only top management is permitted to take decisions involving risk. Unfortunately, in dynamic situations such as those we increasingly experience today, this course simply leads to paralysis.

Business leaders cannot hope to compete in and with dynamic ecosystems unless they take steps to make their own companies much more adaptive. The secret is to give up control at the edges, and to learn from constant experimentation how to make the most of each new challenge and opportunity.

About the Authors:

Janka Krings-Klebe and Jörg Schreiner are founders and managing partners of co-shift GmbH, helping companies to transform into business ecosystems. Their latest book is Future Legends – Business in Hyper-Dynamic Markets (Tredition 2017).

This article is one in the Drucker Forum “shape the debate” series relating to the 11th Global Peter Drucker Forum, under the theme “The Power of Ecosystems”, taking place on November 21-22, 2019 in Vienna, Austria #GPDF19 #ecosystems

In the following, we will outline how to do it, and do it in such a way that it leads to broader prosperity and innovation for society: A lifetime opportunity for entrepreneurs.

Digitalization today increasingly dissolves the borders between industries and markets. The accelerating market dynamic means that businesses can no longer afford to bet their income on single streams of revenue. They need to simultaneously exploit multiple business opportunities, to explore even more opportunities, and to fluidly scale all operations depending on market demand. This cannot be done with organizational structures and business management systems that stem from the industrial age and are largely based on assumptions of predictable market needs.

The institutional inability to deal with dynamic markets offers a big opportunity: To radically rethink business setups and management systems. To be useful in hyperdynamic markets, new business systems must be exceptional in repeatedly doing precisely that which tends to be hard, even impossible, in conventional business setups:

• Connect business operations and markets: Configuring and steering business operations across a wide spectrum of markets, sensing new opportunities and business needs.
• Act on opportunities: Raising awareness for opportunities, exploring their potential for business, and dedicating certain operations to new opportunities without disturbing others.
• Flexibly scale operations: Ramping the possible transaction volume of operations up and down according to market demand without losing flexibility or disturbing other operations.
• Simplify transactions: Ensuring a simple, fast, cheap, secure, and safe transfer of goods, data, and money.
• Adapt to changing business contexts: Changing the purpose of assets and investments according to new opportunities or business needs without disturbing other operations, and fluidly integrating new capabilities into business operations.

The Amazon ecosystem demonstrates these business skills. The company decided early on to use digital technology as a super-efficient, super-scalable backbone for all of its internal operations. In 2002, in an unprecedented move, Jeff Bezos ordered all business units of Amazon to turn into independent, but closely connected services, communicating with each other exclusively through digital interfaces, and able to profitably offer their services internally as well as externally. This order forced all his business units into an entrepreneurial mindset, where every service has a clear focus on customers, value-add and efficiency of all operations.

However, despite all of its success, we are not completely satisfied with Amazon’s approach. Large and fast-growing companies have to watch the impact of their business on the development of society, progress and innovation. This places a big responsibility on them. They can either contribute to a deepening of economic and social disparities or they can pave the way to more and broader participation.

How could the next evolutionary step of companies contribute to more prosperity and inclusion in society? Companies can take advantage of digital technology to incrementally transform themselves into open entrepreneurial marketplaces offering all kinds of business services externally and internally. Every service in an open marketplace connects to its users through highly effective and efficient transactions and collaboration platforms and standards. With these new technologies, companies can collaborate and share their business capabilities across industries. The more companies share their business capabilities in such a way, and the more freedom exists to choose business partners on connected marketplaces, the better for overall competition: Choice prevents the establishment of monopolies, that today can easily force others into unfavorable contracts. Open business ecosystems systematically distribute risks of individual operations across many participants and markets, making the whole environment very resilient to disruption occurring in one of its parts. The multitude, variety, and modular interoperability of its business operations enable it to quickly act on a wide range of business opportunities across markets. The more opportunities it can tap into, the more potent and attractive it becomes as a breeding ground for innovation and problem-solving, combining capabilities that formerly were structurally disconnected or unable to work together.

Well-known examples like Amazon and Haier are showing today what we expect to become the norm for future business operations in all industries. These companies can set up and manage their heterogeneous business operations with frameworks of distributed accountability, offering strong incentives and opportunities for anyone to turn into an entrepreneur. They can unlock the hidden entrepreneurial potential in society much better than other business setups. They can democratize the process of becoming an entrepreneur; by making it much easier and by removing many risks that today still are associated with this decision. They can offer strong economic incentives to share critical assets that are needed to establish a business. Designed in the right way and established with an appropriate system of governance, open business ecosystems can provide anyone with the opportunity to become an entrepreneur on their terms.

This inclusive nature of open business ecosystems will make it possible for a much larger pool of people to become entrepreneurs at some point in their life, to do meaningful work, or to solve urgent challenges for the benefit of society. As a result, more people will be able to take advantage of their talents, making their lives richer in experience and meaning, and themselves financially more independent. Open business ecosystems offer a great opportunity to fundamentally improve working conditions for the benefits of individuals and society, contributing to broad progress and prosperity.

About the authors:

Janka Krings-Klebe, Joachim Heinz and Jörg Schreiner are the founders and managing partners of co-shift. As strategic advisors they prepare businesses for digitally connected markets. This blog post highlights some topics out of their latest book Future Legends – Business in Hyper-Dynamic Markets (Tredition 2017).