Rouse on Transformation

I have worked with well over 100 enterprises and several thousand executives and senior managers, often focused on initiatives that have the potential to fundamentally change their enterprises.  Somewhat simplistically, these initiatives depended on three ingredients – technology, people, and organizations.  Frequently these executives and managers commented that technology was the easy part.  People and organizations were much more difficult to change, support, motivate, and design.

Let’s consider three examples.  First, many see health IT (information technology) as the means of transforming healthcare.  However, this can only happen if people embrace this technology and organizations are designed to leverage these investments.  Further, the individual and business incentives have to be aligned with achieving these ends.

How about energy and the Smart Grid?  Wind turbines, solar panels, smart sensors and intelligent controls are seen as the means for greatly enhancing energy efficiency.  However, consumers have to be willing to play a central role in managing their energy consumption.  Energy providers have to see benefits from decreasing peak-level consumption, as well as organize around the services associated with motivating and enabling consumers.

Consider education.   Laptops and e-books, for example, are seen as greatly facilitating the delivery of education.  However, students have to be ready, willing and able to gain knowledge and skills in this manner.  Schools have to organize themselves around this means of delivery and assessment.  Teachers need to morph from being “sages on the stage” to “guides on the side.”  This will be particularly difficult for university-level instructors, in part due to misalignment of incentives.

Technological inventions succeed in becoming market innovations when all three elements of success are aligned.  The vast majority of inventions languish on the shelf, or in the literature, because no one has worked out the people and organization issues that must be resolved for success.  These issues should be addressed across all the stakeholders in the success of the innovation.  This includes users, payers, distributors, maintainers, investors, inventors, and so on.

Addressing and resolving people and organization issues often involves subtleties and complexities that cannot be addressed with a checklist.  One needs to understand the concerns, values, and perceptions of each class of stakeholder, as well as their abilities, limitations, and inclinations in playing their roles.  Then one must creatively find the “sweet spot” among all these needs, desires, and constraints that, hopefully, delights the primary stakeholders and gains the support of secondary stakeholders.

One should not view people and organizations as complications that thwart innovation.  Without creatively working the people and organization issues there is no innovation; there is just invention.  Innovation involves creating change in the marketplace.  People and organizations define markets.  Innovation and value are created by inventions that enable and motivate people and organizations to do things better, or perhaps do things they could not do before.  If people and organizations do feel enabled and motivated, no change happens and no value is created.