Why the old operating business models have to go in the new age

For the past 100 years, organizations have operated in a management centric model, where management has relied upon formal controls based on written structures, processes, and formalized governance.

The appropriateness of these old operating models is now questioned as disruption has emerged out of change brought on from globalization, new technology, the internet, and social media. Characterized by almost constant unpredictable, uncertain and risky change, disruption is changing that emerges suddenly and fast due to it’s increased interconnectivity. Trade wars, uprisings or political announcements are now commonly first announced over the internet or social media, where they often appear without any filtering, analysis or context. In this new age markets and business leaders are expected to understand and respond to new directions quickly, including where data and information are incomplete or even fake.

The tide of this new age is not limited to changes in politics and economics, as technology is advancing with new sophisticated artificial intelligence (AI) and logarithms. With 5G and even faster technology ahead it is likely that robots, drones and other new technology will emerge in workplaces and even in the home. Many organizations still rely on written instructions, structures and processes to guide and control their business, presumably as they have worked for so many over the past. In disruption, the old ways may have to be modified or removed as it may no longer be possible to regularly maintain all the tried and trusted old controls.

So what happens when change is constant

It will likely be quite a time consuming and costly to constantly change in this new age. If the old control structures and procedures are not up to date, staff and other stakeholders may each have to operate and make independent decisions, where confusion and errors may emerge. Further, and perhaps more troubling is the possibility that staff and stakeholders lose trust in their leadership with so much ongoing change. Reductions in trust may be associated if management is not perceived as being in control that could lead to organizational leadership as being incompetent to run the organization. If the old controls do not work or are not replaced in this new age, staff may feel so stressed and confused so potentially become negative, dysfunctional or even leave. Without some move away from the old control models, it is possible that organizations may not be able to attract or retain the best-skilled staff.

Survival in this new age of disruption will require a set of new-age management and leadership practices. Organizations that continue to operate with management making all the decisions, those that continue with the old fixed structures and written processes, may simply find that they are just too slow and too inflexible to survive in this new age.  Disruption effects from climate change, trade wars or new technology and others are unpredictable in nature so creating new risk factors for the organization, where too much risk could even freeze all decision making. To operate in this new age future management will need to be agile and able to make decisions with less information and less certainty. Managers of the future will need to have skills to maintain stakeholder support irrespective of how confusing new information and situations arise.

New business models for the future

New organizational models are required for this new age, where management is no longer central or expected to know all the answers. These new models should include closer partnering style relations with all stakeholders, as the closer relations will likely yield speedier responses. If closer, more flexible relations are achieved, it may be possible for staff and stakeholders to be almost constantly engaged, where stakeholder input, suggestions and alternatives may emerge before decisions are made. When formal controls are no longer appropriate, it may be that management needs to train and foster increased ethics throughout the organization, where basing decisions on society values may be faster and easier than guessing what the out of date written rules might imply.

The thought of new operating models may be confronting for some managers, especially once they appreciate that control may need to be replaced with openness, shared values, stakeholder partnering, and inclusion. Organizations will need to invest in training and sharing the concepts of new-age models with their teams if they are to utilize their knowledge, input, and flexibility. Admitting that management is no longer in control and that new operating models are required may be one of the first actions of an organization that is wanting to modernize and move away from the controls of the past.

Written by Dr. Mathew Donald’s (Dr Mat).
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