Markets are disappearing and are becoming networks of information. The customer is at the heart. If you understand networks, you will understand the future.
This summary describes what it means to become a network organization and how to influence consumers. It will teach you about new patterns, new cultures and new behaviours, which will help you reinvent your company.
The Age of Uncertainty
The future is characterized by something author Peter Hinssen calls VUCA: Volatility, Uncertainty, Complexity and Ambiguity. Things are changing faster and faster, and we don’t know where things are heading. The world is complex and everything can be interpreted in more than one way.
Therefore, there isn’t one model that holds the perfect strategy for the future. You need to learn to adapt and think fast. You can’t predict everything. Instead, you must prepare as much as you can and keep as many options open as possible.
Business strategies need to be fluid. Companies need to update their strategies frequently if they want to survive.
To stay relevant, Peter Hinssen has developed a VACINE, an acronym of principles that companies must have to survive the rapidly changing future.
V is for velocity. Companies of the future have to move quickly.
A is for agility. Companies need to be fast, swift, and flexible.
C is for creativity. Companies must stay creative to stay relevant.
I is for innovation. Companies must have ongoing efforts to develop new ways to solve current and future problems.
N is for network. Markets are turning into networks, and companies need to be able to influence the networks to survive.
E is for experimentation. Companies need to continuously try and learn from new ideas and tactics.
This VACINE will guide you through the Age of Uncertainty.
Today, products, markets and behaviours are changing faster than ever before. Figure out how long it takes your company to evolve an idea from a brainstorm into a marketable service or product. Make sure that your company is moving faster than your market.
Designing organizations for tomorrow is difficult. To do so, we must understand the era of networks. And that begins with thinking about business, companies and markets as complex, internetworked, adaptive systems.
Humans like simple. Unfortunately, in today’s world, simple isn’t enough. Complex, dynamic systems are the norm. Feedback is a fundamental characteristic of dynamic systems. To understand these complex systems, we need to observe them as a whole. We can identify patterns, but we can’t predict or plan them.
Entropy is a measure of the disorder in a system containing energy or information. The less ordered a system is, the greater its entropy. Entropy increases over time and you can’t reverse it without outside intervention. That means all complex natural processes are irreversible.
We are entering a society that is entirely based on the concept of networks. But we still treat out environment, our economies, our markets and our organizations as simple linear systems.
To understand the world of complex systems, you must first understand a few things:
- Complex systems emerge without a master plan.
- Complex systems are connected both within a system and between a system and its environment.
- Complex systems coevolve between the system and its environment.
- Complex systems are not perfect. They are not designed for optimal efficiency, but instead to be “perfect enough.”
- Complex systems favour variety and diversity.
- Complex systems are self-organizing. There is no hierarchy.
Today, information flows freely and rapidly. We are sharing, replaying, and forwarding information faster than ever before. Companies must realize that in order to take advantage of this opportunity, they must develop techniques to gather insights, find patterns and deduce meaning from this information.
We need to look at the connections for our new network society. For example, Facebook is built on the idea that relationships are valuable and connections can be captured. Other companies are realizing that networks are the dominant structure in business.
Another example is Zappos, who transformed its company to a holacracy, a structure more like a city and less like a bureaucratic organization.
Technology Takes Over
Not all connections are created equal though. Some tend to be more densely connected than others, and therefore distribute more power.
To thrive in the age of networks, you must understand how your customers behave in their networks and how to access the powerful connections. Markets are now networks of intelligence, and it is changing the rules for how customers can be reached and influenced.
Technology revolutionized the way we live our lives. Marketing was created to gain insight about what consumers want so companies could produce exactly that thing. In the beginning, it was about relaying a message from producer to consumer. It was a one-way conversation: the company told the market what they were offering and that was it.
Over time, consumers began to get involved. Now, consumers are informed network thinkers who are influenced by what they hear, see and read on the network that surrounds them. They can interact directly with brands.
Websites like Amazon and Netflix have algorithms set up to give their customers recommendations based on their prior behaviour. The Internet provides insight into our habits and can be used to market disturbingly well.
The future of marketing is network neuroeconomics. Companies must understand how to influence individual consumers to create trusted, organic brand ambassadors. Marketers must realize they can no longer control a target demographic. Instead, they need to focus on influencing dynamic behaviour in order to influence tribes.
Our minds are designed to find patterns, and marketers must use that knowledge to influence people. Get rid of the idea that there is one average consumer and look for patterns and insights. Build trust because consumers have become part of the ecosystem of information. The consumer now has full control.
To Survive and Thrive
To survive in this new network-based society, companies must become more fluid. If you want to advance in the network, you have to feed the network. You have to share information and help spread that information within the network.
Companies need to be networks too. We need to get rid of the org chart and the labels that lock people into specific positions. You should adopt an autocratic, holocratic or a non-hierarchical system to bring people together and inspire collaboration and communication within your company.
The tomato processing company Morning Star is a good example of unique systems. They have no managers at all. Employees organize themselves and initiate coordination with those they need it from. Each person is responsible for knowing what they need to do.
We need to reinvent organizations as antihierachy using the network as the foundation. The opposite of hierarchy isn’t chaos. Organizations will have to act as both structures and networks simultaneously.
Sometimes, the organization will have to function as a structure in order to focus on execution and efficiency. Other times, it must act as a network, being fluid and creative.
Conway’s law states that the fabric of an organization (how teams work together) helps determine the fabric of the products it is working on (how products work together). If markets become networks, companies will have to become networks too.
Innovation requires ongoing destruction. Companies must learn from the mistakes and innovate to make it better. There will never be a truly indestructible company. Instead of trying to discover qualities that guarantee success, we should look at why companies failed and what we can learn from them.
Joseph Schumpeter, an Austrian professor, has an idea about creative destruction. He says, in the world of capitalism, start-ups and entrepreneurs should attack established companies so the economy will regenerate and grow. This is built on the idea that from the ashes of failed attempts, new things can flourish.
For example, Netscape failed as a business, but it created an entire industry of Internet companies along the way. We can thank Netscape for Google, Twitter and Facebook because the collapse of Netscape created opportunities for its 2,500 employees to follow their own entrepreneurial dreams.
We shouldn’t try to make companies that are built to last. We should understand that growing, evolving and collapsing could create something much better than we could ever imagine in the first place.
Strategy for the Age of Networks
To thrive in the new age of networks, companies will have to get in touch with their inner innovation networks, understand how to make them fluid, and avoid becoming rigid corporate structures.
To survive in a VUCA world, an organization must be fast and nimble. To survive, an organization must rediscover the inner network – the core innovation network inside – and nurture it.
Fluidity is important too. Fluid organizations can easily adapt to market trends and changing customer behaviour. In many Silicon Valley start-ups, organizations can shift overnight to change direction toward the trends of reality. For example, Twitter started as a podcast delivery service. Intel initially sold computer memory, not microchips.
Organizations have three parts:
The core innovation network, which is the essential network of people that make innovation happen at your organization;
The social network, which is a group of people who work together, relate to one another, and spend a lot of time with one another; and
The structured network, or hierarchy, which is the chart that determines who does what and who reports to whom
Companies must sync all three parts. They also need to learn how to connect to consumers, influence networks of information, and understand the dynamics of network behaviour. As the outside world starts to behave more like a network, the inside of your company must do the same. There is more to running a company than a top-down bureaucracy. Change your company’s dynamics, and match the speed of flow. If you can do this, you will always win.