Thursday, 24th June 2021
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To realise transformation requires a cultural change

For many people, Jimi Hendrix is considered the best guitarist in the world. His ambidexterity undoubtedly played a big role in his success. By Carsten Rust, Senior Director Digital Transformation EMEA, Pegasystems.

Much to the regret of his admirers, he never actually played live using his right hand, only his left – or at least if he did, there is no recording of it. But it doesn't matter if you believe psychologist Stephen Christman, who argued that Hendrix was “mixed-right-handed”, because the two-handedness of Jimi Hendrix led to a "highly developed creative predisposition". This meant that he was not only able to coordinate the motor skills of his hands perfectly during guitar playing, but also to perfectly coordinate lyrics and melodies.

The increased interaction of both halves of the brain, which is manifested in ambidextrous individuals, could also be of great use to executives in the challenges of digital change.

Executives face a mountain of challenges: markets are becoming increasingly digital in every way, customer demands are rising as well as globalization. Additionally, ever-increasing competition demands new products, rapid innovation and superior business models which all bring their own obstacles. An all-round reassessment, if not a complete overhaul of a company is necessary for real change. Such an act of power can hardly be achieved with digital transformation alone, after all, numerous challenges further increase the complexity of the tasks. For example, data protection, cybercrime, reduced personnel and budget resources, climate change, market discourse, and of course, preserving the motivation and inspiration of employee through rapid phases of change. And that was even before the limitations of Coronavirus had to be considered. The exchange of technologies and the more efficient the formation of business processes are only the beginning.

However, an incremental approach will not work. Executives need to be able to see the whole picture as if they were zooming out of a map to break away from the city view and see the entire continent. Only by being able to visualize the big picture will they be able to determine the course for the future. Increased interaction of both brain hemispheres is crucial.

A fundamental part of digital transformation is to optimize existing business models, including the elimination of inefficiencies, the reduction of variance, and the improvement of reliability. Many leaders have focused on this, and they still do, in the belief that the past is a good template for the future. In view of the digital change, this is simply not the case. The future looks fundamentally different and leads to unknown territory. Therefore, it is important to explore and develop new business models at the same time, focusing on innovating, in terms of both technology and in adapting to trends in the market. During any business transformation, it is essential to be willing to experiment and take risks and thus also to be open to mistakes. Those who are not prepared to go down this path will restrict the opportunities available to them.

Ambidexterity fits perfectly with the dual approach of utilization and exploration. Leaders are particularly successful when they can play their guitar both right and left, that is to say, it is important to keep both disciplines in balance and to carefully coordinate them. If the tip of the scales is too far away from innovation, it is then slowed down, and the potential of future

market opportunity is neglected. If it is overly focused on exploration, the business may be at risk, because it will be overwhelmed by new business models.

A good example is the automotive industry, which is currently looking for the right balance between utilization and exploration. On the one hand, it is constantly optimizing the design of its internal combustion engines, which account for a large part of its revenues, and on the other hand, it is now investing billions in the development of electric cars and other alternatives after a hesitant start that could have been a disaster for some manufacturers. In a fast-changing society, it is not just a matter of responding quickly to market changes, adapting to new market trends, or even legislation or environmental protection, but also proactively and boldly pushing new business models. To be courageous is to be convinced of an idea and be willing to invest relevant budgets into it, and perhaps also daring to radically replace the existing business model.

A wonderful example of this is the approach taken by filmmakers during the collapse of analogue photography. Despite numerous restructurings, Kodak failed to jump on the new digital train and ended up having to file for bankruptcy. Fuji took the bold and radical path: The manufacturer used his know-how with collagens, i.e. substances that make analogue films last longer, to launch a new cosmetics brand, which he was able to successfully establish in Asia.

The balancing act between utilization and exploration succeeds if the following principles are followed:

1. Create a common vision and identity for the company

2. Integrate innovation projects into the corporate strategy

3. Define innovation metrics to measure project progress

4. Implement incremental budgeting based on innovation metrics even without detailed business plans

5. Foster collaboration of cross-departmental teams and allow all employees access to company resources, regardless of their role

6. Promote experimental work and the use of new methods, as well as the learnings from mistakes

7. Establish incentive models that promote innovative thinking, especially outside the innovation team

8. Accelerate and decentralize decision-making processes through increased transparency and innovation metrics

For many companies, such an approach represents a radical culture change, and executives must be prepared to give up their inherent resistance. It may not always be easy, but perhaps the increased interaction of both brain hemispheres will help here too.

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