Thursday, June 25, 2020

Can You Manage the “Shade of Gray” to Drive Progressive Change?

 It’s important to understand that dynamic business development is multifaceted and accelerates the pervasive digital transformation via continuous balance cycles of participation, adaptability, expansion, integration, innovation, and optimization.

In today’s “VUCA” –“Volatile, Uncertain, Complex, and Ambiguous” business environment, the rate of change has accelerated, indicating that business leaders must learn how to break through the industrial constraints and limitations, gain the great awareness of business ecosystem intricacies and systemic value of organizational processes and capacities, etc. The level of business resilience and maturity depends on how they can manage the "gray area" effectively and strike the right balance of business transaction and transformation.

The “gray area” in change management: The emergence of potential opportunities for exploring digital transformation is likely to follow the nonlinear patterns with exponential speed. To survive and thrive amid constant changes, companies must learn how to manage the “shade of gray” - in terms of “Right, Wrong or Marginally Right or Wrong,” reclaim the right balance of chaos and order, process and creativity, standardization and flexibility, and build strategic and operational agility into their business foundations.

Digital organizations and their people must learn through their interactions with the business environment, it requires the balance of “old experience” and “new ways to do things”; listening and telling; confidence and humility, etc, breaking down outdated concepts or rules and setting up digital principles and processes. By developing a shared view of the digital organization that promotes a deeper understanding of core processes, systems, and transformative competency, as well as adjusting their attitude (emotions, cultures, or circumstances, etc.) to the digital new normal, business leaders can frame change efforts, manage “shade of gray,” and improve its success rate significantly.

The “gray area” in structural evolution: With continuous disruptions and dynamic business environment, the traditional top-down linear management style is frequently criticized for its silo, inflexibility, bureaucracy, unresponsiveness, or lack of innovation. The business managers need to balance control and autonomy, run their organizations at both industrial speed and digital speed. It’s from within the massive gray area between the two styles that movements like digital management come from, and help to push the shift from overly rigid pyramidal organizational structure toward flatter hierarchies, and from process-driven “command & control” to people-centric self-management.

The silo structures and legacy infrastructure limit the pace of their digital transformation. Transactional or operational capability usually makes only minor adjustments in the organization's structure and management, etc. Organizations need to experiment with a more fluid structure that is smarter and faster than ‘pure’ hierarchies, with blurred boundaries maintained by attractions and repulsions, and behave like organisms. An organism is a hierarchical assembly of systems working together as a single functional unit, often as a self-organizing being to achieve multilateral digital coherence. The forward-looking organization explores the new arena to speed up by balancing stability and fluidity; centralization and decentralization, push and pulling, etc, and manage the “shade of gray” effectively.

The “grey area” in risk management: Business opportunities and risks are co-existing in the organizations nowadays. In fact, every opportunity has risks embedded in it; and every risk perhaps brings opportunities as well. Strategic risks which are about uncertainties, inherent variability, and the unknown interdependencies among sources of risks, possibly cause fatal business failures. A business system gains more and more energy until it crosses the point of system resilience. To improve business resilience, organizations should investigate "hidden risks" or uncover gray areas, and manage them well to improve their business maturity.

Both attitude and aptitude matter. In terms of risk avoidance and the risk-tolerance culture, there is a gray area in between, the key is balance. To improve organizational resilience, give enough autonomy to the business for making its own decisions on taking or avoiding risks. The risk management mechanism needs to be well embedded in soft business factors such as corporate culture and put in place a mandated risk tolerance structure via escalation requirements based on current risk ratings. Also, it's crucial to provide information to the assurance lines that evaluate the business risk profile for analytical breakthroughs and managing the “shade of gray” effectively.

Digital businesses are hyper-connected and overloaded with the exponential growth of information, and continually evolve an ever-expanded ecosystem. Thus, it’s important to understand that dynamic business development is multifaceted and gains an impartial perspective by eliminating unconscious bias and uncovering the “shade of grey,” to accelerate the pervasive digital transformation via continuous balance cycles of participation, adaptability, expansion, integration, innovation, and optimization.


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