Compliance was a necessity during the Industrial Revolution, but ever since the digital economy has taken over it is blocking productivity. It turns out to be a classic case for change.
The way we run our companies and projects today was inspired by the logic of a 120 years old Scientific Management.
Command-and-control was the slogan that would create economic growth. And it did. Without any doubt, our economy, our society and our well-being would not have progressed to the current levels of prosperity without compliance and obedience.
What Got us Here Won’t Get Us Any Further
In fact, the compliance to strict rules and procedures was the shortest path to productivity. Without any doubt, carrot-and-stick leadership is the best way to get things done in a predictable economy based on scarcity and competition.
Creative concepts such as empowerment and co-creation may be fun, but they don’t bring home the bacon. This trade-off of the traditional economy is demonstrated below:
But the good old economy isn’t what it used to be. The traditional economy is sputtering and it seems to be more than just an innocent cough.
The digital economy has taken over and its dynamics are radically different:
- The means of production are available to anyone in the digital economy;
- Transaction costs and shelf-space costs are close to 0 in this digital economy;
- “Wisdom of crowds“: your brand is no longer a logo or a slogan: it is the story your customers tell about your product.
Does this mean that productivity is no longer the straightest path to success? No. Instead, this means that compliance is no longer the best way to be productive. Productivity is still the bottom-line, but we need to redefine what it means.
Why We Need Co-creation
In a world where information is no longer scarce, productivity is about connecting customers and employees in a different way. Customers own your brand by advocating or disliking it.
Like it or not, the internet has shifted the ownership of your brand to your customers. The real value of your marketing efforts is in the message received by your customers, and no longer in the initial message as it was intended by your company.
Here is the twist: when consumers own your brand, productivity depends on your ability to include customers into the story of your product. The same goes for projects: ownership demands for inclusion into the creative process.
As a consequence, compliance is no longer the shortest path to productivity. Have a look at how the power-laws have shifted since the internet has liberated information out of scarcity.
Without any doubt compliance is still the shortest path towards a stable objective. It calls for well-defined function descriptions and performance reviews. And did you notice that it also makes sheep out of your workforce?
Get Dumber, Not S.M.A.R.T.er!
In an earlier article, I have underscored why SMART top-down controlled organizations with diligent employees are in trouble. They functioned well in an environment where the amount of information was fixed. The manager receives the information, interprets and processes it and then hands out the instructions. In fact, this has been the secret of growth in our economy over the past decades. And it has a huge downside: learned helplessness.
But now a shift is happening: the amount of information is overwhelming and most people, teams and companies are paralyzed by the flood of information. The result for SMART corporate decision-making is painstaking: as a central commander you need to process even more information faster. No matter how hard you try, you will always be too late in this new information-driven economy.
The advice for leaders is clear:
- Get dumber by distributing the intelligence in the community of your brand (big deal: giving up control), and
- Redefine intelligence: it’s not in the manual but in the interaction.
The Good News
The good news is that the same dynamics that have made information abundant have also made it easier to connect with customers. Social media platforms such as Facebook, Twitter, LinkedIn, blogs, wiki’s, etc. have taught us a new form of interacting.
Without being aware of it, customers have picked up a new form of literacy and interaction; that of the digital economy.
This even goes for internal projects serving the ‘internal customer’, because just like your customers, your employees know how to navigate these platforms. Being an employee does not undo the social and navigational skills we picked up on social networks. That is why blogs work really well inside companies too.
The Bad News
If you came across the previous paragraph without uttering “yes but”, chances are that you have never seen a company from the inside.
So let’s be honest: having clarity on the need for co-creation will not make it happen. There is a price to pay, and it is the same price as in any transformational change endeavor:
- Sponsorship: Leaders who lead by example;
- A Clear Vision: Pulling a straight line from the customer to the CEO;
- Ownership: Hosting the community of your brand;
By the way: the good news for organizational change practitioners is that this is what we are good at; the only difference is that the territory of this kind of change initiatives is uncharted territory.