Strongly emergent change forces will refine the way companies are steered, orchestrated and led through their digital core.
Unavoidably outdated, agree many CEOs about the state of management. Supporting the need for a search of new management frontiers are technologies that globally are impacting management such as digitalization, Platform Economics, Blockchain or the rapidly developing algorithms handling ever increasing amounts of Big Data.
The management challenges are evident in the difference between operating a digitally built company like Amazon and a more traditional organization based on decades of formal management hierarchy, operational processes and everyday human interactions. Such traditional companies now face the challenge of “cultural transformation” yet even the success in such an accomplishment might not be enough. The post-industrial new organization is reformed around a digital core with its steering and control practices shaping fast. The clock cycle of a digital core company may be instant – computers calculate and thus execute fast – while a more traditional organization is still in the process of scheduling an executive team meeting to discuss the matter in question.
Also, companies in China are fast emerging in the management circuit with their approach to excellence. For example, Haier, the Chinese appliance maker, has recently moved to become a micro-entrepreneur company where everyone, inside and outside the company, is expected to act as an individual entrepreneur. The example suggests that resources are becoming ever more mutable and fluid in fast-forming teams across platforms of collaboration and exchange. Other resources such as infrastructure assets are increasingly rented or shared. Industrial organizations may operate digital knowledge not the underlying assets (such as virtual power plants).
Uncertainty is pervasive despite all the information
We recently completed a study with interviews of senior leaders including CEOs and chairmen of the board in leading Finnish global companies. The study focused on leadership in the changing business environment. Quantum Leadership is forward-looking. It represents leadership that is positioned in between measured knowledge – plenty of data and analytics being available – and deep uncertainty. In knightian terms (Knight, 1921) there are less and less risks that can be identified and probabilistically evaluated, and more and more events and turns that are surprising, serendipitous or much more disruptive in their impact than initially thought. Uncertainty is thus pervasive despite all the information being available. Quantum Leadership, inspired by quantum mechanics – a buzzling branch of physics now emerging in computing – shares the conceptual similarity that the environment is potentially infinitely complex and more open-ended than thought of in existing management practice (or Newtonian physics).
Concretely, Quantum Leadership is based on three pillars:
- Strategic Landscaping, or the discipline of mapping strategic events forward and following their unfolding and deviation; thinking about contingencies;
- Leadership as an Empirical Discipline, or the practice, already known in scientific management, of measuring and analyzing, and furthermore acting on the flow of events and opportunities, now with the help of Big Data and AI tools;
- Customer in the Core, or orchestrating the company’s resources and capabilities around specific customer opportunities and personalized service delivery fluidly and in real-time, rather than managing in terms of an organizational structure, process or functionality.
We are expanding the research to include global outlier companies. Please let us know if you know of a company that ought to be studied for its Quantum Leadership practices.
Aalto University & Hanken School of Economics
Dr. Olli-Pekka Lumijärvi
The longer version of this article was published in the Boardview-magazine 1/2018.