10 challenges for digital transformation in the management of your company

We are in the early stages of a digital revolution that is transforming our business practices and driving a radical transformation of our thinking about management. For the first time in history, social technologies make it possible to coordinate human efforts without sacrificing people’s initiative and creativity.

Many have been the reasons that have been given to explain the causes of the current economic crisis that have left profound consequences in our society. The most obvious have been the voracity of the financiers themselves, economic deregulation and the negligence of the central banks that tolerated madness. But the reality is that the reason for the collapse of Lehman Brothers in September 2008, a turning point in the current financial and credit crisis, was above all a spectacular failure of management.

And this “failure of management” of much of the global financial system, is much more than the story of “irresponsible” politicians and bankers who lost control of their organizations; it is the story of a deeply flawed management model that encouraged bankers and executives to pursue business opportunities, unethically and without regard for their long-term consequences, putting their own interests and personal ambition ahead of those of their companies, employees, and shareholders.

In the same vein, on a national scale, one of the lessons learned from this crisis and a clear message from citizens in the recent municipal elections is that widespread corruption in our political system is also largely a failure of management. The management models of our political parties, organizations and institutions are opaque, promote clientelism, add little value and are very inefficient in the management and allocation of public resources. So it should not surprise us that this crisis has taken away citizens’ trust in political parties and in the integrity of their managers.

Hence the need to urgently rescue management. A well-chosen management model can be a source of economic and social value creation; a bad management model can lead us to ruin. Reality shows us every day that current management models, inherited from the industrial era and based on extractive hierarchies, have a very high cost in terms of transparency, initiative, creativity and commitment of people. It is becoming more and more evident every day that managers and management practice are currently suffering a serious crisis of values, and we urgently need to rescue management from its current “premises” to make it more ethical, open, participatory and transparent.

These are times to question.

If we want to create organizations that are fit for the future, we have to reinvent management systems and the processes that develop and give them meaning from the root. We must question what we do every day as managers in our organizations: how we develop the strategy, design the structure, set the objectives, build the teams, assign the resources and tasks, manage the performance, make the decisions, motivate people, recognize the efforts, develop the talent, measure the performance, learn organizationally and a long etc.

And, above all, we must ask ourselves why most workers, in all types of companies, regardless of their sector or size, are disengaged from their companies and do not find the purpose or meaning of what they do every day in their work.

In today’s conversation we will see that it is not true that there are no real alternatives to the industrial management model. The problem is that there is no executive will to do what needs to be done, that it is not a few small “reforms” in organizations or minor changes in their governing bodies, but a real rescue of management based on new ethical and social values, which put people at the center of management and make it possible to recover lost credibility.

Building the new management maps

To move forward, and get business management out of the impasse it has gotten into, let’s start by analyzing the original meaning of the word “management”.

The term as it is used in the business world, generally comes from the Anglo-Saxon conception of management, and is far from being a uniform and monolithic concept, since different schools have different starting points. In simple terms from Wikipedia, “management” corresponds to the action of making people collaborate to achieve the goals they want. In companies and organizations, management is associated with the function that coordinates people’s efforts to achieve the goals and objectives of the organization using available resources efficiently and effectively : Management is then, etymologically, a social competence, with the main managerial tasks being planning, organizing, directing and controlling.

These practices are reflected in the management models of companies through different business processes: strategic planning, annual budgets, operational reviews, hiring and promotion, performance management, talent management, succession planning, etc. Processes that are executed through a specific organizational structure, usually hierarchical, which reflects the formal relationship between people and groups in terms of the assignment of tasks, responsibilities and authority within the organization.

Management, a mature technology

Gary Hamel in his book “The Future of Management”, one of the best-selling books on business management in the last decade, argues that, due to the changes we are experiencing, business management has become a mature technology and, therefore, incapable of solving the new challenges that organizations will have to face in the new millennium. Hamel reminds us that most of the tools and techniques of modern management come from the first half of the twentieth century, and that they were invented by pioneers of that discipline who, in reality, had been born in the previous century.

Of course, the industrial management model was spectacularly successful, and became one of the main drivers of economic progress in the last hundred years. But it has had, over time, a negative effect on the very concept of management, since it is today, exclusively with the hierarchical structure, and the bureaucratic form of work that has been imposed on large industrial companies. And what is worse, in the face of a reality as complex as the current one, our organizations are paralyzed by hierarchy, the organizational chart and the division between functions.

The need to rescue management

Management is one of humanity’s most important inventions, and it is the key “technology” to create value through people. Therefore, our ability to address the enormous challenges of a hyperconnected society is ultimately dependent on our ability to rescue management from that archaic version, as a set of bureaucratic practices that encourage clientelism, discourage transparency, frustrate experimentation, discourage creative thinking and overvalue previous experience over creativity and experimentation.

The challenge of management in the new context is threefold: on the one hand, to learn to interact with the new reality, to develop a new perspective that allows us to build the new maps to move in a digital world; on the other, to acquire the new 2.0 capabilities necessary in the new collaboration economy, and finally to design new identities that have value and add value to new digital customers and make them a reality in increasingly open, virtual and global collaboration networks.

The path has already been traced. It is becoming increasingly clear that, at least for the next few decades, the media will be the driving force behind the great transformations that are already taking place in our traditional management models. Our organizations have already embarked on a journey of no return, of which we know their starting point – hierarchical, essentially opaque and power-oriented organizations – but of which we do not know the point of arrival in detail, as it is yet to be defined.

The fact that it is yet to be defined does not mean that we do not know anything about this new destiny, about this uncertain future that awaits us. We can say, without fear of being wrong, that it will be populated by more transparent, people-oriented organizations: by organizations with a new social dimension. It is not a question of questioning efficiency and planning, but of recognizing that the business challenges we face – in a complex and uncertain global context, let us not forget – require less planning and control, and much more capacity for dialogue and interaction with the new social realities. In short, it is a matter of seeking a new point of balance, which allows us to coordinate individual efforts and produce results without having to sacrifice people’s creativity, motivation and passion.

Management 2.0: management as a social competence

We need to reinvent a whole new model of management. The argument is very simple: to compete in global markets, today’s organizations need to attract and involve the best professionals, innovate continuously, respond nimbly to changes, meet the needs of new customers and act ethically. These new management imperatives cannot be addressed from a hierarchical industrial management model, based on opacity, command and control. We are facing unprecedented challenges that are beyond the scope of management practices that we have inherited from an industrial era and that are more than a hundred years old.

Management essentially consists of getting people to collaborate with each other to achieve the desired objectives. That is why we say that management 2.0 is a social discipline, it is not a matter of technologies, but of ethics, values, culture and leadership. The essential thing is to understand that management 1.0 inherited from the industrial era is based on management as power and hierarchy as an imposed order, and that in the era of collaboration, management 2.0 is based on management as influence and on redarchy as a new emerging new order.

When referring to a discipline and 2.0 is attached, it is about alluding to its compatibility with the values and new ways of doing things that characterize the social web: new ways of communicating, collaborating, bonding, and learning; new work environments that promote interaction, collaboration, and the construction of communities that transcend the borders and management models of traditional companies.

As a driver of the necessary changes in our organizations, management 2.0 allows us not only to address the new reality from the perspective that another management model is possible, but also to create new contribution frameworks not necessarily linked to a position in the organizational chart, but to communities of passion, which make it possible to reduce the fear of change and increase the trust, collaboration and collective innovation necessary to face the new challenges of a digital economy.

The search for a new balance.

The
Redarchy Manifesto
is a list of ten critical challenges that our organizations face in the search for this new 2.0 management model. Each point of the manifesto highlights the need for a new balance between the 1.0 management model inherited from the industrial era and the new values of management 2.0, based on the new ways of doing things that prevail in the social web.

• More purpose, less rhetoric. In most organizations, the reality of their values does not live up to their rhetoric. Most managers claim that people are their most important asset, but the truth is that their fundamental concern is to maximize shareholder wealth, something unacceptable if what we want is to mobilize human energy. Today’s young people want their work to be life, to have meaning. The problem is not in what we say as managers, but in what we do.
• More collaboration, less competition. Collaboration has become the key to taking another step forward in the level of productivity of our organizations. It is through collaboration that we can implement new ways of working, breaking down vertical silos and new ways of relating to customers. Open innovation can only thrive in redarchic organizations based on trust and with a high level of transparency among all the agents involved.
• More emergency, less planning. In a disruptive environment such as the current one, experimentation is the new planning. The real strategy in organizations is not something that is planned, but emerges as a result of experimentation and the search for alternatives in a future that is already here. The emerging strategy is aimed at responding to changes, experimenting and achieving the best results with the means available. The emerging strategy is not the strategy by prediction, it is the strategy by discovery.
• More trust, less control. Management by control models reinforce power struggles and a general culture of paranoia, and although they are designed to ensure a high level of compliance, their cost is very high in terms of the autonomy, creativity and commitment of the people who make up the organization. Collaboration can only thrive in an environment of trust and transparency, these values are essential to connect people emotionally with the organization. Lack of trust demoralizes and fear paralyzes.
• More innovation, less fear. In this new context, we can no longer base our strategies on mere continuous innovation of our products and services to ensure their competitiveness in the market. It is no longer just a matter of defending our position in the market; today it is equally important to explore new opportunities, experiment and expand into new markets. The innovation process always involves a dose of improvisation, so it is important that the organization tolerates it. It is also important to have creative but persistent people who fight to make things happen despite internal resistance.
• More influence, less authority. The need to prepare for a digitalized world has highlighted the need for managers capable of finding the necessary balance between the productivity needs of organizations and the purpose needs of people. This new type of influence-based management requires authenticity, and a great capacity for personal credibility to connect with the collective intelligence of the organization, mobilize and coordinate human efforts.
• More community, fewer borders. The Social Web allows us to participate, create, and learn collaboratively in open, trust-based structures. The boundaries of our organizations are becoming liquid. Decision-making processes must be free of bias, and they must leverage the collective knowledge of the entire organization. Functional “silos” do not bring value to organizations. New business models are increasingly based on informal networking, mass collaboration, and production ecosystems that cross organizational boundaries.
• More transparency, less opacity. The Age of Collaboration is shredding at accelerated speed, and forever, the curtain that has always hidden the reality of organizations from public view. However, there are still few companies willing to accept and handle this new scrutiny. Transparency is a new force that is triggering, right now, profound changes in all areas; changes that will definitively affect the future viability of all organizations.
• More dialogue, less imposition. “The market is conversations.” This phrase, repeated ad nauseam by hundreds of converts, and which is the basis for understanding how customers are changing, still sounds new in many organizations. Customers want to talk to real people, with faces and eyes that truly represent organizations, and not to be shouted in their ears as traditional advertising does. On the social web we can all actively participate in conversations with our colleagues, with our customers, and with our suppliers. It is these conversations that allow us to cultivate collective intelligence and create economic and social value.
• More Redarquia, less hierarchy. The social web does not show every day how social media make it possible to coordinate human effort without sacrificing people’s creativity and passion. And at the same time, they make possible new open organizations where ideas can compete on equal terms, people can contribute in the areas that interest them most, authority is in line with the value that is brought to the organization, and Leadership and innovation is everyone’s job.

By way of summary

New social technologies are transforming business practices and driving the reinvention of the management discipline that we have inherited from the industrial age. In today’s conversation we have seen the need to rescue management from the premises of the industrial age, and we have introduced the Management 2.0 as a social discipline, that is, not as a matter of technologies, but as a new way of coordinating human effort, more ethical, people-centred and compatible with the values of the social web; collaboration, transparency and community In a subsequent conversation we will talk about the four key disciplines to make the new management model a reality in our organisations.

Rescuing business management is a complicated task. It is difficult to imagine that something that has not changed in recent decades can now do so in a short period of time. Changes are particularly difficult to anticipate if you have already reached your “comfort zone”, and you are convinced that management is a tool for managing the status quo. But in a digital and hyperconnected world, such as ours, there are not many options, as you may have read me on more than one occasion, and they can be summarized in two: transformation or irrelevance. And, possibly the least risky option for you, is to become a management rebel in your company, accelerating changes in your organization’s management model and connecting with a future that is already here.