Sunday, April 1, 2018

How to Manage Digital Tensions for Thriving in the “VUCA” Business New Normal?

The purpose of digitalization is to make a significant difference in the overall levels of business performance and organizational maturity. 

Companies today have huge pressures to survive and thrive in today’s hypercompetitive economic dynamic. There are business tensions between old and new; physical and virtual, silo and connectivity. Majority of well-established companies today are running at both industrial speed and digital speed. It's so easy to get stuck in the “comfort zone,”instead of adapting to changes and bringing advancing thinking and progressive activities to light. Business leaders and managers must contemplate how to break down those old thinking boxes, and manage digital tensions to thrive in the "VUCA" business new normal?

The tension between innovation and standardization: Digital is the age of innovation. Innovation is how to transform novel ideas to achieve its business value and expand the horizon of the business. Standards are a form of embodied technical knowledge accessible to all types of business that enable more effective and efficient product and process development. Businesses need standardization to improve profit through volume. Innovation is outside-the-box, and standardization is inside-the-box. The right tension between innovation and standardization is actually healthy because organizations indeed need both, and in fact, cannot really exist without a healthy balance of both. Strategies must take into account these two main poles - innovation and standardization. People in tactic or operational management usually face a hard time to understand that they actually can go hand-in-hand together in an appropriate way. Consider the continuum between innovation and standardization, the matter is to figure out how and when to apply them in the most effective way. Standardization 'versus' innovation can actually be standardization 'and' innovation for achieving the high-level of digital maturity.

The tension between old and new business model: The essence of a business model is that it defines the manner by which the business enterprise delivers value to customers, entices customers to pay for value, and converts those payments to profit. Business models describe, as a system, how the pieces of a business fit together, it contains numeric values representing one's assumptions about the market and about costs, etc. With the hyper-competition we live in, no competitive advantage is set forever. So, any operational advantage in creating value is likely to be copied fast. To avoid obsolescence, besides its focus on execution, business model needs to allow space for innovation. Thus, it’s no surprise that there is the tension between old and new business model. The emerging digital trends bring significant opportunities for businesses to pursue growth through leveraging the lightweight digital technologies and exploring the new ways to do things. Business model re-invention need to base on the business’s core capabilities, either through providing new value-added services or products to current customers or exploring the new customer need. A real-world business model is analytical, it generates predictions for how to make profits. The designer should methodologically review a list of levers for business model components, and systematically generate the list of potential business model options, and then, narrow choices based on their core capabilities in order to maximize the value via new business models. no matter where you start your business model from (customer needs, technological leaps, market gaps, etc.) will mean very little unless you also simultaneously build a culture that can execute, as well as manage the tension between old and new seamlessly.


The tension between collaboration and competition: Digital does mean the unprecedented level of mass collaboration, also means fierce competition. Competition is part of the natural dynamics of life. Good competition can lead to enhanced quality of life through innovation and progress. But bad competition can produce a myriad of negative externalities. Competition can also create undue stress that may actually prove to be counter-productive to some worker's efforts. “Win at all costs," “compete for everything” attitude that may even bring out the worst in some workers. Whether we like it or not, as long as humans are unique, their mindsets, opinions, cultures, lives, and views etc are equally unique and diversified. That results in both collaboration and competition depending on the context and situations. Managing the tension between collaboration and competition is both art and science. Many times, “Coopetition” is a hybrid word to describe the digital new normal, businesses collaborate to achieve common goals in one area but compete in the other area. Digital leaders today must be able to foster a workplace that thrives on cross-functional communication, collaboration, and social interaction in building business competency.

The purpose of digitalization is to make a significant difference in the overall levels of business performance and organizational maturity. The dynamic design and creative tensions allow the organization to morph as living conditions and organizational capacities change to allow a better fit for the purpose. The trick to thrive is to discover how the business evolves to create new value, and, ultimately, succeed over the long-term.

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