Innovation, collaboration and performance: Use new leadership to align IT with business results

The pioneers of management practices still widely used today - such as Frederick Taylor, Henry Ford or Alfred Sloan - were all born in the 19th century. Their theories and inventions - from workflow optimisation, functional specialisation and division of labour to project management - increased productivity in an industrial economy. However, the business world today is based on innovation, knowledge, web-based interconnectivity, accelerating pace of change, increasing customer power and expectations of a Facebook generation - and it demands a revolution in management.

Conventional management techniques must give way to new leadership approaches

With the ongoing economic crisis, increased complexity, volatility and pace of change, it is obvious that traditional management and leadership approaches do not work anymore.

The pioneers of management practices still widely used today - such as Frederick Taylor, Henry Ford or Alfred Sloan - were all born in the 19th century. Their theories and inventions - from workflow optimisation, functional specialisation and division of labour to project management - increased productivity in an industrial economy. However, the business world today is based on innovation, knowledge, web-based interconnectivity, accelerating pace of change, increasing customer power and expectations of a Facebook generation - and it demands a revolution in management.

Use innovation to harness the creative energy of chaos

Traditionally managed organisations, based on a hierarchical control and silo mentality, have difficulties responding to any sudden changes in their environment. Modern organisations should be managed and led as living organisms, where self-organisation, collaboration and communication is enabled. This would lead to more innovation, adaptability and resilience - crucial for the success of modern businesses.

There is a dramatic need for a new mindset and leadership skills. Conventional leadership approaches have been based on the Newtonian machine model that focuses on hierarchical linearity, a culture based on rules, command and control, and formal relationships. While this approach might work well in predictable and stable environments, there is ample research evidence that, in dynamic and complex business environments, this traditional approach inhibits creativity and innovation and decreases motivation and productivity.

In traditionally managed organisations, structures distribute power and processes distribute tasks. Both are about creating stability, repeatability and predictability - but in an unstable, chaotic world, which demands innovation. So we ask people to innovate in a system designed to produce the reverse, and then complain when they don't deliver.

Decentralise control to harvest workers' productivity

Paradoxically, modern business environments, fuelled by interconnectivity and the technological revolution, are predominantly comprised of knowledge workers, whose creativity and innovation are the main driving force for creating value. These workers are highly mobile, intrinsically motivated and value expertise rather than hierarchy. Consequently, they are likely to ignore hierarchical instructions and leave if dissatisfied or do not feel sufficiently valued.

So how can these workers be led to unleash their creativity and potential for innovation - and how can an IT function be re-aligned to support these new approaches? They can only be led using emergent leadership approaches based on the main premise that leaders can gain more power, influence and profit by "letting go".

By eschewing formal power, relaxing control and allowing decisions to be made on the basis of knowledge, skills and experience - rather than on the formal position in an organisational hierarchy - leaders can enable a dramatic shift in performance. For example, the application of emergent leadership principles in a German IT consulting company has resulted in a 1,700% increase in profit and a 23% increase in the number of employees in the first year, and a further 240% increase in the profit and a 20% increase in the number of employees in the second year, despite an economy in a recession.

How IT adds value through communication, collaboration and adaptability

In the context of changing management and leadership approaches, the role of the IT is changing as well. Communication is now more peer-to-peer and bottom-up. Work is more collaborative in nature, and IT can add a real value to a business if it is not isolated and if it is weaved in all parts of an organisational system.

In the form of social media, IT can be used for collaborative decision-making when all good ideas can be shared and discussed, regardless from which hierarchical level they come. The social revolution on the internet is fundamentally changing how people work together. All good ideas should be taken into consideration without one manager stopping these ideas being heard or implemented. Social media can help natural leaders to emerge on the basis of merit and quality of ideas.

All these changes are part of longer term, widespread shifts that are getting stronger. For example, the change in demographics - with increasing number of employees from the Facebook generation - greater use of mobile computing and ubiquitous computing trends, pressures for increased transparency within the organisation and so on.

Use social media to create adaptable organisations

CIOs should focus on creating organisations that are adaptable to changes, and IT plays an important enabling role in this effort, as opposed to running the IT function as an isolated, centralised IT plant. Apart from the crucial standardised IT processes, the IT function has to enable experimenting with social tools on a wide scale in an organisation. That will lead to IT/web-enabled values such as collaboration, transparency, trust, openness, freedom, and meritocracy become part of the organisational culture's DNA.

In an endeavour to address the need for new ways to work and lead adaptable organisations, and to provide a holistic view of an organisation and financial and non-financial factors that drive sustainable performance, we have developed the "Six-Box Model" - an ecosystem for sustainable performance. The model (see Six-Box Model figure below) is based on years of research and has identified six major, interconnected drivers of performance and innovation in organisations: Culture, Relationships, Individuals, Strategy, Systems and Resources. The model has been used in a number of private and public sector organisations to identify their performance and innovation potential from a holistic, collaborative perspective, using an online questionnaire.

The Six-Box Model - an ecosystem for sustainable performance

Six box model

How social media support six key performance drivers

It is relevant to note that, in the context of this model, IT is uniquely positioned to support all six key drivers of performance:

  1. Culture
  2. Relationships
  3. Individuals
  4. Strategy
  5. Systems
  6. Resources

Culture

The use of social media tools can help achieve more transparency, trust, information sharing, increased participation, innovation, learning and collaborative culture. It can also help employees to understand and contribute to the vision, it can help formal leaders to "let go" and natural leaders to emerge on the basis of ideas and it can help employees to become more engaged and productive.

Relationships

The quality and quantity of relationships can improve through using social tools. Collaboration can increase while the time needed to get to know people is decreased. Communication is improved, access to leaders is facilitated and employees can have their voice heard at the top level.

Individuals

As various studies show that about 70% of employees are disengaged, empowering employees to take responsibility and decisions for which they are most competent can have far-reaching, positive consequences. This process can be facilitated by social tools, helping people to feel passion and responsibility for what they do and transform organisation and themselves. When a critical mass of employees changes mindset, this newly released energy spreads throughout organisation as a ripple effect.

Strategy

In most organisations, strategy development is far too much top-down. Using social media, many employees can contribute ideas for strategy and participate in its implementation. When more people are contributing to strategy development, revision and delivery, this can have wide implications for its implementation as well as engagement and productivity.

Systems

Using social tools in organisations leads to improved transparency of processes, better flow of information and learning, systems and processes are better understood and it enables improved performance on a wider scale.

Resources

Social media can make clear how resources are distributed, supporting problem-solving and decision-making. One of the key resources in any organisation is business information which needs to be aligned with strategy. Business information must be accurate, up to date, relevant and easily accessible.

Conclusion: Change your tools - and your mindset

In conclusion, to influence performance in an original and sustainable way, new tools and techniques are needed as well a change in the mindset. The melting pot of the Six-Box Model and social tools could help achieve this transformation with wide implications for individuals, organisations and society in general.

Vlatka Hlupic is professor of business and management at Westminster Business School, University of Westminster, London

This was last published in May 2011

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