The more the business environment changes, the faster the value of what you know at any point in time diminishes. In this world, success hinges on the ability to participate in a growing array of knowledge flows in order to rapidly refresh your knowledge stocks. John Hagel, John Seely Brown, Lane Davison
While new knowledge flows are important, they are not enough! A major challenge that confronts business leaders is seeing how change and innovation, external to their own organization, can lead to new possibilities to create and deliver value to customers. This requires business leaders to enhance their adaptive potential and their ability to make mindshifts.
The illustration below is a New System of Engagement. It outlines how social software can help executives engage the rapidly changing business environment and to see and seize the potential brought on by change and innovation.
Seeing new possibilities requires a mindshift–a new way of envisioning what is relevant and meaningful to customers. Here, context is all-important. Context is the interrelated conditions or situation in which something exists; the circumstance that defines meaning and value. Clearly, the context of customers is impacted by change and innovation. So are their issues and challenges. New possibilities must not only leverage the potential of innovation, they must be meaningful to customers in their current and emerging context.
Netflix, Zappos and Groupon are three great examples of companies who exploited the potential of technology and leveraged the growing number of customers online. Netflix and Zappos provide greater convenience but much more—an enhanced and enticing selection process. In both cases, when viewed from the traditional retail experience perspective there were many reasons to believe these companies would not be successful. In fact, most established traditional competitors responded by refining the retail experience and reducing prices. Their mindset or frame-of-reference failed to grasp the powerful shift that captivated customers. Blockbusters the industry giant in DVD rentals before Netflix, is now in bankruptcy. Retail shoe stores aggressively compete with each other for much lower margins while Zappos thrives.
The mindshift that underlies companies like Netflix, Zappos and Groupon are far from second nature for most executives. In fact, by focusing on what external innovation enables and shifts in context, they buck the very thought process and focus that made many of today’s executives successful—a focus and honed expertise on internal operational efficiency. Now the question is, how do executives develop and enhance the new way of thinking? How do they lead in the face of rapidly shifting business conditions?
With the pace of change and innovation, especially disruptive innovation, executives with high adaptive potential are critical to their company’s future. Today, the ability to make sense out of change and innovation has become a critical executive and organizational capability. This is not something done once or once in a while, but something that is ongoing, deliberate and systematic. Those with low adaptive potential, no matter how successful they were in the past, risk becoming a liability.
The concept of a New System of Engagement is to put into play methods and tools to increase knowledge flows and create a mechanism to facilitate purposeful mindshifts. The purpose is to turn the challenges of changing business conditions into new possibilities to create and deliver value to customers. It has four key elements.
Turn information overload into insights: The system starts with curation tools that scan relevant information sources and assemble so an executive gains both a sense of the changing milieu and insights. The more diverse the perspectives the better. The idea is to gather insights that will see beyond traditions and lead to new ways to create value.
Manage Ideas: Unlike the mythical story of Archimedes shouting “Eureka” when he suddenly discovered the principle of buoyancy while in the bathtub, new possibilities usually require a gestation period during which unrelated ideas and dynamics must be kept alive and organized in ways that are readily accessible.
Facilitate Sense Making: Innovative ideas take shape when an individual mentally pushes disparate elements together into a unique union that makes sense. This takes mental effort and effective unconscious cognitive operators that guide the mental effort. To add to the challenge, the innovative fusion must over-ride the intrusion of over learned cognitive structures that represent the conventional view. Now, the mental process can be augmented using social computing tools.
Harness Collective Wisdom: It is a simple fact that the rate and diversity of change is too great for anyone to go-it-alone. The object of this aspect of the system of engagement is to leverage collaboration principles and a rich networked brain trust to augment an individual executive’s mindshift process.
It takes effort to put a system of engagement in place and use it–but consider the alternative. The actionable insights gained are critical to business leaders. This is not something you can buy from a consultant and expect to provide the leadership to seize the implementation. To gain the ability to fully exploit the innovation, to be able to elaborate, apply and implement, an executive must go through the mindshift. This not only true for the executives who envision the new possibilities, it is equally critical to those charged with innovating and aligning the business practices that deliver the innovation to customers.
Now for some good news–the efficacy of the mental processes that guide the use of mental effort in seeing new possibilities gets better with use. Similarly, a well-designed system of engagement gets richer and more efficient with use. So we are at a critical divide—those who choose to enhance their adaptive potential will become increasingly valuable to their organizations. Those who don’t make this choice risk the peril of seeing the world from a context that has diminishing value.
For more on MindShifts check out our video (4:18 minutes): Mindshift Innovation in a Nutshell.