Friday, May 31, 2019

Three Causes of Business Vulnerability

We live in an era, full of uncertainty, velocity, complexity, and ambiguity, the result is the higher risk of priority conflict, change inertia, resource limitation or business vulnerability. 

Digital organizations are organic, complex, informative and hyperconnected. Closer to reality is that change is continuously happening in such a dynamic environment of a company. The inevitable range, breadth, depth, and pace of uncontrollable factors acting on any organizations mean identifying business vulnerability and constant fine-tuning is essential to improve business adaptability, performance, and maturity.

Homogeneity: With “VUCA” digital normality, business leaders today need to keep navigating unknown and build up the team which includes the complementary mindset, diversified background, and skills in order to spark innovation, co-solve over-complex problems, and deal with unprecedented changes and high business velocity. From a decision management perspective, it is a strategic imperative to close cognitive gaps caused by “group thinking” with the thought pattern which is following the crowd but lack of insight to understand things from multiple perspectives. Because often the homogeneous team setting will make team numbers more vulnerable to peer pressure and make biased decisions. Then, ineffective decision-making, especially at the strategic level will make their business vulnerable to emerging events, the ever-expanded business eco-system or even mislead their business in the wrong direction. It is important to be objective and gain a different view in order to develop and have a better understanding of certain topics or problems that may occur and prepare for the different scenario to deal with them smoothly. From an innovation management perspective, homogeneous thinking limits the organization's imagination and creativity. Forward-thinking digital businesses today should look for and promote cognitive diversity, mental agility and encourage thinking differently in order to connect wider dots for spurring creativity. They should develop a highly innovative team including different types of innovators (such as idea generators, innovation navigators, innovation implementor, etc.) A simple way initially to improve innovation in almost any organization is to simply broaden the audience, or expand the collective insight to overcome challenges and connecting unusual dots to catalyze creativity.

Inflexibility: When organizations grow, they often add more rule, processes, people, or technology; all those elements are not isolated, but interdependent. The larger the organization and inputs are, the larger the amount of 'rules' are necessary for its functions, to keep dependent variables and outputs delivery stable. If not handled well, organizations are overly rigid, inflexible and become so vulnerable to the dynamic business environment. Inflexibility is caused by bureaucratic management practices, complicated processes or procedures, legacy IT systems, outdated rules or practice, etc. To improve business flexibility, flatten the overly rigid hierarchy and battle bureaucracy which often stifles changes and creates bottlenecks for cross-functional communication and collaboration. Ideally, digital organizations should be a complex but flexible ecological system starting to appreciate business attributes such as readiness, ownership, integration, open communication, customized structuring, and multifaceted partnerships. To improve organizational adaptability and innovativeness, digital management today requires a different kind of control. For example, the control on desired outcomes, keep the end in mind, not overly control the process of “HOW.” They do not focus on hierarchy but on ideas-generation, information flow, flexibility, and openness.

Complacency: The world is constantly changing, and digital is all about flow. But complacency is at the heart of resistance to change and causes business vulnerability in the face of fierce competitions and frequent disruptions. More often, a complacency mindset lives long after the success that created has disappeared. A complacency mind gets used to reacting, not being proactive. It is the unknown and being afraid of new things and it will be the same for the word "complacency." When business leaders or managers are comfortable with the status quo, they often miss the big picture and become complacent. Collectively, complacency damages the culture and makes the business stagnate. Numerous changes or business transformations run, complete, and then slowly crumble away as people slowly revert to old ways of doing things and get stuck with complacency. To avoid being disrupted, business leaders should be cautiously optimistic, have the right dose of risk appetite to explore the various environment and ecosystems to chase growth opportunities and unlock their performance, set up a prioritization process to remove inefficiency, change things which really matter for the long-term prosperity of the business.

We live in an era, full of uncertainty, velocity, complexity, and ambiguity, the result is the higher risk of priority conflict, change inertia, resource limitation or business vulnerability. Thus, organizations must have solid digital management to keep tuning business success factors for building differentiated business competency; people focus on learning opportunities offered by assignments and developing their professional competency. So, the company can strengthen the weakest link, handle business vulnerability and deal with either internal or external risk effectively in order to achieve the long term business advantage.


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