Nothing learned or just very hard?!

Un Espresso per favore! 

It is Friday and I am glad you take a sip of Ecosystem inspiration.

After seeing a post this morning and over a decade of transformation experience, this Espresso is all about the leaders and their contribution: Looking at #VWGroup an their #software unit #Cariad from the outside...and their latest attempt #NPO

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2| Déjà Vu in Transformation: Steer Clear of Transformation Pitfalls in Platform and Ecosystem Ventures!

It is not a matter of intellectual horsepower, it is more about going all the way and avoiding common transformation traps. While it is already hard within existing businesses (products in traditional pipeline business models), it is even harder in platform and ecosystem business models, which invert firms.

Déjà Vu in Transformation: Steer Clear of Transformation Pitfalls in Platform and Ecosystem Ventures

• Everybody wants to rip the benefits of networked business models, because they promise higher growth (Ix 200 vs e-Commerce 2022, source Mirakl).
• Everybody loves the idea of integration, data transparency and margin assertiveness moving a product-centric to also a service business model.
• "Everybody" thinks the hardest is selecting, buying and implementing software and tech, therefore a small project team with little senior leadership support will do. AND: nothing happens.

(Almost) Everybody seems to suffer from very similar mistakes:

• Resistance to change: Human nature tends to resist disruptions when they are not co-authoring the journey, and platform initiatives are no exception. It's vital to address fears, concerns, and the discomfort that change brings. In case of platforms also their complexity and principles which are hard to understand and embrace make it even more scary and high risk (with high complexity and paybacks).
• Lack of clear vision and strategy: Without a well-defined vision and strategy, transformations may lack direction and focus. Organizations must establish a clear roadmap and communicate it effectively to all stakeholders, especially what the platform is and what not, and why it will take a very different holistic approach. Not the company in the center of the ecosystem map, but us customers!
• Insufficient leadership support: *Successful transformations require strong leadership at all levels. When leaders fail to provide sufficient support, it can hinder progress and demotivate teams. Active involvement and commitment from leadership are paramount.
• Inadequate team engagement: Engaging employees throughout the transformation journey is critical. When employees feel disengaged or left out, it can hinder adoption, collaboration, and innovation.

*Still Challenges on all fronts: Leadership, Operating Model and Technology

Yes, it is not a fresh study, but looking daily practice in our work and failure rates, I would argue this has not changed an awful lot in the breadth of businesses. Of course the pandemic and consumer and customer shifts have done their bit.

ad. 3. Lack of Clear Leadership Support

Prof. Karolin Frankenberger was talking about a study, I do not have the source from some time ago which is telling (CEOs in DACH):

"60% of CEOs do not ask for help and feel ashamed to admit they do not understand"

In a different study on resiliency from 2021: "Only 13% of European Organisations have a flexible & dynamic leadership approach"

• 12% of command and control
• 21% on seniority & experience

This means, a third is still in a past and process-oriented more pipeline business model. Opening up to partners, growing the pie instead of taking share in the first place are soft-factor aspects. Speed and adaptability are characteristics of innovation. Slow presentations and approval heavy processes still are the rule and not the execption.

Learning Box 1: Get your leaders immersed and educated TOGETHER as peers and make it a priority!

Next to the challenges of running a business in poly-crises environments leaders should learn and guide these type of business models as well. We have a solution for this environment we call "Platform & Ecosystem Discovery Camps" for enlarged leadership teams to ensure a first holistic understanding. The reactions are positive as we create a psychologically safe environment offsite. Also leaders are human and need to be fine to be in learning and not knowing or operating in "pretending mode":

• Why everywhere there can be a platform, there will be one.
• Why and how platforms create value that wins over pipelines typically.
• What metrics it takes to be able to actively influence and steer journeys...
• Why does a flywheel exist and how does it really work?

The important thing is to make this an absolute personal, leadership and Board priority is obvious when we look at some of the characteristics below.

If your innovation is only an afterthought to your process-heavy running business, you already know the result now. You might not care as you can change companies or will retire. But that is too ego-centric for a true leader, sorry.

There are no shortcuts to knowledge, especially knowledge gained from personal experience. Following conventional wisdom and relying on shortcuts can be worse than knowing nothing at all (Source B. Horovits)

Digitizing Product is hard, Platform is harder

Transformation has at least three legs:

1. Business
2. Tech
3. People

People is the hardest as we are habit monsters and embedded into a way of doing things as individuals, teams, units, organisations, societies, nations etc.

The analysis below revealed that the strategic decision fields are structured along two major dimensions-the digitization of products or services and the digitization of business models.

And looking at the chart it is the hardest thing that large corporations need to do both Digital Product and Business Model Innovation. On one hand scale is great because of resources, on the other hand size is also adding a lot of complexity.

E.g.: Some car makers had a lot of autonomy in the different brands and locations. Their production IT systems were not build to be interoperable. This is essential now. Without a flexible, composable architecture and cloud based approach opening up to the outside is more challenging on circularity business.

While Digitizing Product is easier, digitizing business models is even harder ...

1. Platforms are horizontal not in vertical functional silos.
2. Platforms have longer payback times - if only a few c-suite leaders form a coalition against "the waste of time, energy and money" (they are steered with quarterly goals and annual incentives themselves) there will not be impact.
3. Platforms require adjustments to an ecosystem mindset and role modelling of leaders and operating models that support inverting the firm.
4. New tech and data needs to be brought on board in the context of ever faster tech generation changes.

Most common mistakes:

• Neglecting culture and change management: Failing to address the cultural aspects and manage change effectively can sabotage transformation efforts. Culture influences behaviors, mindsets, and the willingness to embrace change. The focus is too one-sided on buying and implementing new technologies which are complex enough.
• Overlooking data and insights: A lack of data-driven decision-making can lead to misguided strategies and missed opportunities. Metrics on multiple levels have to be put in place on all levers (User, Finance, Partner, Community etc.). Simply working with top- and bottom line goals from one year to another, like running business will not get you there. A future backwards approach is required as speed is essential. If you just muddle through in small increments nothing will scale AND platforms have to scale otherwise they will not achieve the intended flywheels of growth.
• Underestimating communication and transparency: Transparent and consistent communication is key during transformation. Neglecting this can create confusion, rumors, and a lack of trust. Regularly update stakeholders on progress, challenges, and milestones. Real time dashboard, stand ups, reviews and using a hybrid expedition room can help bridge that gap. This room covers WHAT and HOW and helps all involved and most importantly silo leaders to practice a more agile and transparent learning approach.
• Overloading resources and timelines: Unrealistic expectations regarding timelines and resource allocation often hamper transformations. It's essential to strike a balance between speed and ensuring adequate resources are available for successful execution. So many teams we see are part timers, they simply run out of energy and senior leaders pull the plugs "as it did not work". Whenever a large organization attempts to do anything, it always comes down to a single person who can delay the entire project. The reason is not the business model it is probably more often the operating model.

Simple Recommendations:

• Foster a culture of experimentation: Encourage a mindset of continuous learning and experimentation within the product team. Embrace a fail-fast approach, allowing for rapid iteration and innovation.
• Leverage data-driven decision-making: Utilize data analytics and insights to drive informed product decisions. Leverage metrics, user behavior data, and market trends to guide platform enhancements and optimizations.
• Prioritize platform security and trust: Establish robust security measures and privacy safeguards to instill confidence in users and partners. Address concerns around data protection and compliance to build a trustworthy platform reputation.
• Embrace agile and iterative methodologies: Adopt agile practices and methodologies to enable faster delivery and adaptability. Emphasize cross-functional collaboration, iterative development, and continuous improvement.
• Continuously evolve and iterate the platform: Stay attuned to market dynamics, emerging technologies, and evolving customer needs. Regularly update and iterate the platform to ensure its relevance and competitiveness.

Source inspired by: "Effective Platform Product Management" by Tabassum Memon

The most important one: Work future backwards! It is the Autopilot for your transformations!

Building A Business When There Are No Easy Answers

Learning Box 2: "It will never as slow as today again". So, the longer you wate, the more "Mission Impossible" it becomes!

With the speed of change which we all experienced in the last 3 years we can only get a grasp of what this decade will or might look like.

#Everchange is the right mindset and the operating model needs to support it!

So many transformations are in the books. So, there is absolutely no excuse, why you should allow your team or yourself to go down the path of same mistakes.

Aligment > Execution + Connection to intended future

It is sine qua non to align before jumping into execution. Intention is the only driving force for change. We cannot assume, when somebody drops the catchword "platform", that all have the same thing in mind, assume the same paths and resources towards it. Remember: a single person in a large Cooperation can stop a project.

A broad alliance increases the odds, even more so, given tenures are so short in leadership, while platforms take longer to win. It might be perceived as career limiting, while more of the same helps to just the ladder quickly before "Sh...hits the fan".

While project kick-offs happen more often in cross-functional teams with senior participation, teams and leaders alike assume: "this is what we agreed to". Far from.

Methods towards kick-offs applied are normally more project management-oriented and do not touch heart and hands, beyond head. They are efficiency driven: "We only have 2 hours, be happy to get them!"

This is pretty sick as downstream delays and restarts are the result "but we were really quick to agree, we have an agreed plan"...

The other equally dramatic mistake is, that leaders move on to the next chapter, task, project or fire fighting challenge. They assume, things are going well and progress.

But just like leaders get distracted and lose focus due to daily business, also project teams do.

It is essential to visualise the alignment, the picture of the future and committed key levers and keep them always present to reflect together in a hybrid space, not on a XLS traffic light report how things go and whether you are still on path to deliver, what barriers you need to remove and so on.

CEO - please tell it like it is (Source: B. Horowitz):

• Trust. Without trust, communication breaks. The required amount of communication is inversely proportional to the level of trust. As a company grows, communication becomes its biggest challenge. Execution demands good communication.
• The more brains working on the hard problems, the better.
• A good culture is like the old RIP routing protocol: Bad news travels fast; good news travels slow.

It’s a good idea to ask, “What am I not doing?”

Lust but not least, spring time is cleaning time! Why assume platform business models can happen on top and part time, or with 1-2 Business development people. You are spending €€€ Millions on equipment, company cars, advertising and new sites, but not starting the right way, reducing the work load, number of reports, meeting hours and so on AND getting people with time, focus and ability to learn from outside the company. How should they learn, when all the see is process centered running business?!

#Cariad Part II or #NPO - my reference:

Today in a LinkedIn post by #VWGroup Hauke Stars we see a great picture on Alignment > Execution: cross-functional team is standing "united" in front the business and IT-teams result of the effort. They went through some fire and a lot of politics. A reset seemed to be needed to rebuild trust.

Frank Goeller posts: "This is a very important movement within our digital transformation, which has to penetrate all business areas and domains." See above the transversal nature of Software platforms for mobility.

In the "stato nascendi" there is excitement, anticipation and energy. All is good. Now all participants most likely will go back into their day to day. Without an agile structure with dedicated time budgets, the energy will fade, scepticism will rise again. I am not suggesting that the VW process does not take care of it. I am using it as a very visible, well communicated and transparent source of inspiration and learning.

I took the liberty to zoom into the public domain available outputs. And It ticks many boxes.

Simple Goals - Simple Principles: "#NPO wall of commitment": signed

• Satisfy: Customer satisfaction...
• Accelerate: Reduce time to market by giving power to teams
• Transform: Launch 3 wave 1 ART and scale 7 ARTs by 2023
• Enable: Drive 100% SAFe qualification quota of NPO members

Rules of Collaboration:

• We as business & IT implement the NPO together
• Leadership lives the lean agile values
• ...

What is great: Simple language - few goals and principles - easy to remember and communicate.

What I do not "see" literally is the customer ? The future state... visualised. You can achieve this in a full day! and be even more memorable, it is too generic , at least from the outside.

What creates challenges - it is only the beginning

What too many transformations forget is to really operationalise the journey, e.g.:

A - Goals - brand-led and time boxed

B - Processes (keeping the intended future front and center with top leaders and team, situational feedback, how to resolve conflicting interests, budget process adaptation…including sanctions, the group decides who does not play team)

C - Incentives

D - Talent

E - Tech and data 

How to Minimize Politics in Your Company

• Politics is when people try to advance their careers or agendas by means other than merit and contribution.
• One way to invite politics is to give people raises when they ask for them, rather than soley based on performance. 
• Minimize politics by hiring people with the right kind of ambition—ambition for the company’s success with the executive’s own success only coming as a by-product of the company’s victory.
• Build strict processes for potentially political issues and do not deviate. These scenarios come up most often with performance evaluations and compensation, organizational design and territory, and promotions.
• Source: Tyler DeVries

"Large scale change requires to keep the view of the system whole"

While the NPO effort is great - it is so hard when you need to do it middle up or bottom up. The secret sauce of Elon Musk's companies is a single strategic destination, all principles serve the higher purpose (why we get up in the morning) and ambition (how we determine we really have impact on our purpose and we can measure it?)

In summary:

Platform is a must.

Platform is hard.

Platform requires leaders to learn and do.

Platform requires the operating model to enable.

Platform is a joint and also human effort.

Platform is future backwards on all fronts! (PS: with your partners)

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Ciao and Happy (long) Weekend!

Alex