Bryan Fenech – Founder and Director

Building the Organisation of Tomorrowwww.oot.org

Work in the organisation of tomorrow

• Bryan Fenech – Founder and Director

• Building the Organisation of Tomorrow• www.oot.org

Work in the organisation of tomorrow

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Contents

Introduction

Recap on Principles

Leadership, Management and Gender

Professional Services Disruption

Consultants and Lawyers

Project Managers and IT Professionals

Medical Practitioners

The New Guilds

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INTRODUCTION

Introduction

• This presentation looks at the application of the ideas covered in previous topics – the need for new organisational forms, what the organisation of tomorrow looks like, and enterprise logic – to individuals and their work

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Introduction

• The implications for leadership and management, gender diversity, and a range of professions (including consultants, lawyers, project managers, IT professionals, and medical practitioners) is explored

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Introduction

• This topic also looks at the rise of networks of support organisations, such as professional associations and workforce brokers, which some commentators have described as the “new guilds”

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RECAP ON PRINCIPLES

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Emergent enterprise logic of the knowledge era

• Networked, cellular

• Fluid federations

Structural Arrangements

• Distributed leadership

• Internal markets

Leadership and Governance • Dynamic

capabilities• Social capital• Value co-creation

Capabilities and Resources

• Differentiation and innovation

• Flexibility• Strategic alliances

Strategic Imperatives

Logic: The innovation mindset

OrganisationalAdaptation

Forces: Information Technology Revolution

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A transitional organisational model

CEOChief

Projects Officer

Chief Operations

Officer

Process-based organisation

Operations and execution

Lean six sigma

Project-based organisationChange and renewalProject portfolio management

New Ideas

New Capabilities, Products and

Services

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LEADERSHIP, MANAGEMENT AND GENDER

Conflicting leadership paradigms

• Tension between new and old paradigms– The criticality of knowledge-oriented

capabilities and resources emphasises the human and social dimensions of leadership

– However, events of the first decade of the 21st century has highlighted the prevalence of narcissistic CEOs and destructive leadership

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Leadership prerequisites for building social capital1

• Empowering rather than controlling employees, maintaining coherence by negotiating an inspiring vision rather than directing

• Maximising the value of employees rather than minimising their cost

• Encouraging trust, cooperation and teamwork

• Demonstrating integrity and ethics

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Leadership behaviour in the 21st century

• However, the first decade of the 21st century has seen an increase in CEO hubris, greed, short-termism, unethical and illegal behaviour2

– Excessive executive remuneration, predating stock options to increase executive compensation

– Increasingly short term focus – from annual to quarter – to maximise stock price

– Risky acquisitions– Fraud

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Personality attributes of CEOs

• Findings from research into CEO personality traits seeking to explain such behaviour runs counter to the leadership prerequisites for building social capital– Recent studies have correlated a high incidence of

narcissism in CEOs and confirmed the relationship between CEO narcissism and company fraud3

– A recent study concluded that the incidence of psychopathy in CEOs is 4 times that of the general population4

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Female representation in top management

• Despite significant investment in diversity programs female representation in top management remains stubbornly low over the last decade5

– ASX Top 200 Female CEOs 1.3 – 3.4% and Board Directors 8.1 – 12.3%

– ASX Top 500 Female CEOs 2.4% and Board Directors 9.2%

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Impact of female workplace participation6

• A positive association between firm performance and female participation below the CEO level, even when controlling for unobservable firm heterogeneity

• No positive effects from having a female CEO

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Impact of female workplace participation6

• Positive results for female participation entirely driven by firms pursuing an “innovation intensive” strategy, where creativity and collaboration important

• Evidence for a “female management style” that enhances firm performance by facilitating teamwork and innovation but which is rendered less effective by the “leadership attributes of the CEO position”

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PROFESSIONAL SERVICES DISRUPTION

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Disruption of professional services industry

• Professional services is starting to experience the same pattern of disruption previously experienced in manufacturing7, 8

– New competitors with new business models arrive

– Incumbents choose to ignore or to flee to higher-margin activities

– A disrupter whose product was once barely good enough achieves a level of quality acceptable to the broad middle of the market, undermining the position of long-term leaders

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Why now and not before?

• Professional services, particularly consulting and law, has remained immune from disruption previously due to 2 factors9

– Opacity– Agility

• Technological change is rapidly eroding both factors

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Patterns of professional services disruption

• Development of inhouse capabilities• Increasingly granular information about

providers – rankings, financials, clients• Democratization of knowledge leading

to increasing client sophistication – alumni diaspora, internet

• New business models providing alternatives for sophisticated clients

• Disaggregation and modularisation

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CONSULTANTS AND LAWYERS

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The traditional consulting business model

• The product is expertise – therefore, asymmetrical knowledge between client and provider

• Clients rely on brand, reputation, and "social proof“ (the professionals' educational pedigree, eloquence and demeanour)10

• Price is a proxy for quality

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The traditional legal services business model11

• Attraction and training of top legal talent to do the bulk of the work serving clients

• Creation of a tournament to motivate the lawyers to strive to become equity partners while maintaining tight restriction on the number of equity owners

• Charging high hourly rates

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Alternative business models and disruptors12,

13

• Firms who assemble freelance consultants – e.g., Eden McCullum and Business Talent Group (BTG), Axiom (www.axiomlaw.com), Lawyers on Demand (www.lod.co.uk)

• Facilitated networks that link users with industry experts – e.g., Gerson Lehrman Group (www.glgresearch.com) and Expert360 (www.expert360.com)

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Alternative business models and disruptors12,

13

• Data- and analytics-enabled consulting –packaging ideas, processes, frameworks, analytics, and other intellectual property through software or other technology – e.g., McKinsey Solutions

• Big data analytics enabled consulting – e.g., Narrative sense

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PROJECT MANAGERS AND INFORMATION TECHNOLOGY PROFESSIONALS

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At the forefront of change

• Information technology and project management are not just contemporaries – they are intimately linked catalysts to the discontinuity that unleashed the socio-economic forces of the knowledge era

• As organizations found it necessary to change more frequently, they turned to project management

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Tool of choice for managing change

• Disciplines and mechanisms for organising and coordinating business change– Project management techniques have been

adopted to cope with “uncertainty, multiple goals and speed of change”14

– Project management provides the necessary flexibility and responsiveness to survive in an extremely turbulent context where the ability to change and be innovative is imperative15

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Increasing projectisation of the workplace

• Projectisation is set to continue and intensify– Project management (and the associated

discipline of portfolio management) provides the deployment and coordination mechanisms needed to facilitate “dynamic capabilities”

– Organisations need to become increasingly project-oriented if they are to increase their “absorptive capacity”

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Expanded application of project management

• Project management is now being adopted to manage professional services contracts in fields where it has not previously had application – e.g., legal services

• Portfolio management techniques are being adopted to manage marketing campaigns and sales functions

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Where to from here – key IT trends, new disruptors

• IT continues to drive change– Analytics driving business insights and

competitive advantage– Social platforms as a source of business

intelligence– Cloud computing enabling integration between

organisations decoupled from infrastructure– User experience, deeply engaging the user by

integrating processes and devices– Necessity for more sophisticated security and

privacy

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Challenging project management paradigms

• The traditional project management paradigm as a “core rigidity”– Innovation requires risks exploratory activity to

generate new solutions, whereas project management is primarily concerned with time, cost and requirements

– The classical project paradigm organizes the mobilization of professionals to answer explicit demands but innovations are not designed as an answer to an explicit question or existing customers

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Challenging IT paradigms

• The IT service paradigm as a category error– Is IT a cost center or a source of competitive

advantage?– Peers and colleagues versus customers?– How relevant is ITIL in a project-based world?– How does the shared services model support

agility?

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Challenging IT paradigms

• The CIO role paradigm obsolete?– At a time when industry analysts such as

Gartner, and publications such as CIO Magazine are directing CIOs to be more strategic, forty-two percent of CIOs still characterize themselves as “IT service providers” and “cost centers” to the business leaders in their organizations, rather than “IT partners,” “business peers”16

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MEDICAL PRACTITIONERS

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Sophisticated patients with sophisticated tools

• A range of consumer oriented mobile applications – e.g., SleepCycle, Lumosity, Better Health, iTriage, HealthTap, Fitness Buddy, Health Mate

• Providing advice, body telemetry, diagnosis, improved body and brain function programs, connection to health service provider

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Sophisticated patients with sophisticated tools

• Technology enabled networks linking patients, medical experts and institutions: patient portals – e.g., Patients Know Best– Enter symptoms by smartphone, tablet or PC– Diary for appointments– Discussion with a clinical team– Obtain treatment plans

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Key disruption – the patient owns their data

• With disruptive technologies like Patients Know Best17 the patient owns their medical records – c.f., the institutional control model that exemplifies patient/clinician relationships today

• The patient can revoke access to a record by an institution that created it without losing the right to give access to it to other institutions

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Integrated care requires patient control

• Disrupting the current medical industry using new applications– Invite local GPs– Share data with any other hospital– Connect and work with innovative providers– Connect and work with charitable trusts– Patient advocacy

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THE “NEW GUILDS”

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Lost conditions and infrastructure

• Traditional employment contracts offered many advantages– Greater job, and therefore, economic security– Training and education– Health insurance and other benefits– Social interaction– Sense of identity

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New opportunities for a new kind of service

• With the firm taking less responsibility for meeting these needs, independent organisations are stepping in and providing support to employees

• Some authors have termed these support organisations “the new guilds”18

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Which organisations are taking on this role?

• Three types of organisation are taking on this role19 – – Occupation-based worker associations – e.g.,

professional associations and unions– Workforce brokers that match employers and

workers– Regionally-based organisations – e.g., joint

ventures between local business, government and educational organisations

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The future of the new guilds

• Providing a portfolio of services that replicate that of traditional Human Resources Departments

• Sourcing best deals on health insurance (mobile insurance policies), investment advice, career counselling and planning, job search

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Visit www.oot.org

Bryan FenechFounder and Director About www.oot.org

• www.oot.org is the website of Building the Organisation of Tomorrow, a networked community and set of resources to assist leaders to meet the imperative for organisational renewal

• All institutions are under increasing pressure to adapt to 21st century technological and socio-economic forces. Successful leaders need appropriate frames of reference to manage these processes of transformation; however, such frames of reference are rare

• Find articles, presentations, book reviews, and other resources

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References

1. Hitt, M. A. , Haynes, K. T. & Serpa, R. (2010) Strategic leadership for the 21st century, Business Horizons, 53(5), pp 437-444

2. Hitt et al (2010) op cit3. Rijsenbilt, A. Rijsenbilt & Commandeur, H. (2013) Narcissus

Enters the Courtroom: CEO Narcissism and Fraud, Journal of Business Ethics, 117, pp 413–429

4. Bercovici, J. (2011) Why (Some) Psychopaths Make Great CEOs, Forbes [http://www.forbes.com/sites/jeffbercovici/2011/06/14/why-some-psychopaths-make-great-ceos/]

5. Australian Bureau of Statistics 4125.0 - Gender Indicators, Australia, Feb 2014

6. Dezső, C. E. and Ross, D. G. (2008) ‘Girl Power: Female Participation in Top Management and Firm Performance’, University of Maryland Robert H Smith School of Business, Working Paper No. RHS-06-104.

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References

7. Christensen, C. M., Wang, D. & van Bever, D. (2013) Consulting on the Cusp of Disruption, Harvard Business Review, October

8. Schumpeter, J. (2013) The Future of the Firm, The Economist, September

9. Christensen et al (2013) op cit.10. Christensen et al (2013) op cit.11. Beaton, G. (2013) The Rise and Rise of the NewLaw Business

Model [www.beatoncapital.com]12. Christensen et al (2013) op cit.13. Beaton, G. (2013) op cit.14. Pellegrinelli, S. (1997) Programme management: organising

project-based change, International Journal of Project Management, 15(3)

15. Eskerod, E. (1996) Meaning and action in a multi-project environment, International Journal of Project Management, 14(2)

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References

16. The CIO of the Future Research Report [http://emersonnetworkpower.com/en-us/Solutions/CIO-Topics/Documents/CIO-of-the-Future-Research-Report.pdf]

17. www.patientsknowbest.com 18. Malone, T. W., Laubacher, R. and Morton, M. S. S. (2003)

Inventing the Organisations of the 21st Century, Cambridge MA: The MIT Press

19. Malone et al (2003) op cit.