The Connected Company

Foreword

Long gone are the days of a predictable world in which you could take your time to make decisions, manage an organization from the top, or get away with mediocre products and services.

Pointing to today’s mind-boggling speed of commerce, exploding computing power, ever-sinking communication costs, and fierce global competition is stating the obvious. We all know that the competitive environment has changed forever.

Yet, surprisingly, while surpassing themselves at innovating with products and services, most companies are terribly slow at reinventing their management style, organizational structure, or institutional culture. They remain inapt to a fast-paced and connected world in which customers instantaneously and globally voice their dissatisfaction over anything less than outstanding products and services. These expired ways of organizing often result in unhappy clients, demotivated employees, and missed opportunities for new value creation.

In my work on business model innovation with large, global companies, I am constantly confronted with this. In the face of a changing competitive environment, companies are forced to take action. Smart and energetic executives generate amazingly innovative business models that have the potential to produce future growth, but then the organization is incapable of making things happen. More senior or more established executives get the company to fall back on their historic business model and old ways of working, which made them successful originally. In the short term, this might offer the comfort of a known model, less risk, and maybe even short-term gains. In the longer term, this often represents the roots of a decline into irrelevance or an increased risk of disruption by more nimble and often totally new competitors with innovative business models.

What I have come to realize is that without organizational and management innovation, business model innovation and adaptation to today’s fast-changing world rarely happens. To make it happen, we need to build new spaces for experimentation and learning. We need new organizational principles and platforms for autonomous teams to succeed. We need new incentive systems and institutional cultures to get employees motivated again. In short, companies need management innovation.

In his book, The Connected Company, Dave Gray offers answers for organizing in this new world. Refreshingly, Dave, who I’ve come to know as a deep thinker, practical “doer,” and good friend over the years, is not satisfied with quick fixes. In an approachable style, with explanatory visualizations and fascinating examples, he weaves together the core elements you need to take into account when designing the connected company: transparent interaction and communication platforms, organizational structures favoring autonomy and adaptation, a culture of experimentation and learning, and a new governance and reward system encouraging new behavior and holding it all together.

– Alexander Osterwalder

Echandens, Switzerland

June 2012