Fit For Purpose — The Next Management Megaconcept
Holistic thinking is on the rise to overcome the limits of the fragmented management methods we often employ in our work. Holistic thinking aims to combine and manage distributed yet connected nodes or viewpoints in constantly evolving ecosystems. My take on holistic thinking incorporates systems thinking with design thinking but also brings into play more practitioner-oriented frameworks. Instead of just employing methods for success I believe we should be constantly developing our assumptions of our ecosystems, our goals and our methods. I propose a constant analysis of “fit for purpose” should arise as the next management megaconcept.
To elaborate on this I will look at some of the current management methodologies, their possibilities and limitations and build towards the “fit for purpose” management framework which should be adapted to each context, organization and situation.
The top management methods which define how we operate our businesses today include buzzwords such as digitalization, enterprise architecture, business process re-engineering, customer experience (service design/design thinking), business intelligence, agile, lean, six sigma — just to start with. You can throw in analytics and big data If you like for some flavor.
Application of these methods somehow magically helps your company succeed in attaining its goals and the profits that go with it. The process is like the following adaptation by Simon Wardley of a couple of Scott Adams’ Dilbert comic strips.
Continuing on the shoulders of the giant Simon Wardley, without a map of where were are going, it is impossible to anticipate next necessary move. Along comes design thinking and agile with fast pace customer insights, probes and prototypes into the unknown unknowns of emergent possibilities. However apart from startups we rarely are working in contexts where we can adopt a true greenfield approach to whatever we are doing. We have hierarchies, cultures, strategies, business goals, previous products or services and a whole lot of issues which we have to account for.
Wardley maps developed by Simon Wardley consist of two dimensions: value chain and evolution. The value chain is made up of all the nodes in your service network which create (and co-create) value with the customer.
Wardley divides the evolution dimension into four phases: genesis, custom built, product (+ rental) and commodity (+ utility) which elaborates on the phase in which each node of the value chain exists.
The combination of value chain and evolution looks something like the picture below.
The world is constantly changing and each product and node of the service network is affected by this evolution. Adapting to the evolution is in the area where strategy and operations meet. A Wardley map can be used to map and evaluate how changes in individual nodes affect the whole and provide insight into what actually should be done.
In Wardley’s view there is no management method to rule them all. He elaborates on certain methods such as agile, lean, and six sigma and their fit into the different phases of node evolution. Agile is good in probing into the unknown and poor at managing commodity whereas six sigma is good at managing the incrementalities needed in stabile utility environments and does a poor job in emerging environments where end results are unknown. Lean stands in between the two methods and focuses on the transition from custom built to product which explains its popularity in startup circles.
Wardley maps are great and even though they succeed very well in their context which is the evolution of value chains, they fall short in visualizing the complete business context. The view is slightly out-of-date since it is limited by ontological views based in goods-dominant logic.
Current perspectives in service-dominant logic point to the shift from goods-dominant logic in which supply/value chains have been supplanted by value-creation networks which operate in service ecosystems. Service ecosystems encompass all the globally available and constantly evolving nodes which resource integrators can employ in creating value for their customers. Understanding, visualizing and analyzing the value-creation networks in the context of evolving service ecosystems is where Wardley maps are at their strongest.
However service-dominant logic also implies that value is co-created with the customers. This means that value exchange is no longer limited to the point of purchase of a product but rather a relationship in which the customers use to the products or services to fulfill their needs or jobs-to-be-done.
Schumpeter calls innovation “the market introduction of a technical or organizational novelty, not just its invention.” The concept of innovation also falls short in value-creation because if customers are not willing or ready to adopt innovations, they do not have the value that is expected of them.
To overcome this limitation design thinking and service design methods can be employed. I will continue with the possibilities and limitations of service design/design thinking methodologies.