Peter Cochrane: The digitalisation mystery

The plethora of digitalisation events shows managers haven't been paying attention, says Professor Peter Cochrane

I was just cold-called to see if I would be interested in a conference on business digitalisation. My immediate response caused surprise as I stated that if I was being invited as a speaker I would be happy to do so, but if they just wanted me to attend then I was not interested.

The caller asked why, and I had to admit to being puzzled as to why anyone would want to attend! For me, digitalisation started over 25 years ago and is an ongoing norm with a continuum of tech driven innovation.

In my view, sequential reorganisations are artefacts of a distant past, and constant change and adaptable (jelly-like) organisations have been with us for decades.

Looking at the tidal wave of ‘digitalisation' events over the last year, we might conclude that a lot of managers and boards have been asleep at the wheel. We might also suspect that this explains the UK's poor productivity performance compared to the EU and international competition. But there is a distinct possibility that a raft of old management minds and technophobes has retired to be replaced by a new generation able and to embrace the new era of continual change.

No doubt about it: lurching from one organisational reconfiguration to another without embracing the technology opportunities to hand is expensive and largely ineffective.

I watched in disbelief as organisations fork-lifted existing processes and paper straight out of filing cabinets and onto hard drives and screens

In the early days of digitalisation I recall struggling with people composing emails of ‘Dear Sir or Madam' formal letter kind that were also printed for the record! I also watched in disbelief as organisations fork-lifted existing management processes and paper straight out of filing cabinets and onto hard drives and screens. This never improved things and almost always made them worse. The new electronic environment demanded new ways and modes of working, but people could not adapt.

I also remember the consternation of old mindsets at the prospect of automation and robotics promoting unemployment, and their complete lack of appreciation of the improved productivity and product quality being reflected in a bigger bottom line and the creation of entirely new jobs.

A modern business driven by technological change needs to be managed more like an SAS unit

Today it seems people are reinventing and making even bigger mistakes! If you are managing a business where everything is known and invariant, then a management structure from a regiment of 18-Century redcoats will work.

However, a modern business driven by technological change needs to be managed more like an SAS unit where survival depends on real-time adaptability and initiative.

For sure, people need some order and structure for reporting, pay and rations, but beyond that organisations have to be amorphous. Teams metabolise as required on a project basis, pulling in the skills needed as required. Regular office structures and 9-to-5 cultures work against this, and shared spaces, rapid design and prototyping are required. This mode works well at the extreme of the tech industry. But the spectrum is actually bounded by ‘concrete production' and research labs. In between is a complex space requiring a mix of modes.

To be blunt, companies are good at these extremes and really poor at almost everything in between! How come? In general, management and boards are dominated by people from sales, marketing and finance. So, they tend to hold sway over the organisation and instinctively organise everything in their own image with little appreciation of what it takes to create new products.

Inevitability, this sees a creeping outsourcing of research, design, development, manufacturing, supply, customer support, and so on. And this works in the short term, but it ultimately kills companies in the long run as the management understand progressively less.

Divisionalisation by function and/or focus, with autonomous cultures, management, methodologies and virtualisation is the best cure we have in the bag today, but it appears managers need to attend many more digitalisation conferences before this becomes axiomatic.

Peter Cochrane OBE is professor of sentient systems at the University of Suffolk, UK