Openness Makes Space for Ongoing Change

Will GM’s self-driving-car aspiration create value for the firm? Will its investment in Lyft lead to automotive leadership in ten years? We couldn’t say. But so far its openness to adaptation and new ideas shows potential for future growth and transformation.

We’ve now reached the last of the principles to be considered for a network orchestrator business model, and it points us to the mental model. Whereas the first nine principles emphasize specific shifts that network orchestrators make in order to better enable their outward-looking, co-creative business models, the final principle is about your own openness to making these shifts and to taking in and adapting to new information in general—whether it’s from your customers, employee groups, or the market.

Further, not only do you, and your leadership team, need to be receptive to new ways of thinking, but also you must structure your organization and your life so that you actually receive new ways of thinking. Leaders usually have no shortage of people who are able and willing to agree with their ideas and reinforce their perceptions. It takes effort to find ways to bring new ideas to your awareness, and even more effort to make them a part of what you do.

We should be clear that not everything must change dramatically, and not all at once. When it comes to the principles of network orchestration, every firm will have, and should have, a unique profile—one that reflects the interaction between a new world and a new market, and the firm’s unique history, focus, organizational model, and competitive context. We don’t recommend that you abandon your current assets, leadership style, customer relationships, employees, and revenue models, and build a new organization based entirely on network principles. A slash-and-burn approach will only create chaos. What we recommend instead is conscious, incremental, deliberate, ongoing openness and adaptation.

Openness will allow you to develop a portfolio of useful practices that will make your organization more adaptable and valuable in the digital network age. Just as financial portfolios require diversification and balance, your organization should leverage a mix of new ideas and methods, including tangible and intangible assets, employees and freelancers, accounting and big data analytics, and so on. You can develop this degree of openness even within a single core business—by using different approaches to serving the same customer need.

Principle 10, Mindset: From Closed to Open

The tenth principle moves your organization, and the leadership team’s mental models, from closed to open. Closed organizations define themselves rigidly and have a preference for sticking to their knitting. These types of companies see their customers as product consumers and miss the potential for co-creation. Internally, they keep teams siloed, and they see their employees as worker bees, failing to leverage the innovative capabilities of their workforce. Leaders of closed organizations don’t see why digital technology is important when their core business is real estate, or boxes, or mortgages, or soda, and therefore they rarely break out of traditional industry boundaries.

Open organizations, sitting on the other side of the spectrum, think about roles, processes, products, and industries less rigidly. Openness brings a mental model and a culture of openness and inclusiveness. This perspective provides a lot of flexibility for the organization to adapt to individual needs and broad market changes. Customers who want to develop long-term, co-creative relationships have the option to do so. Leaders may sometimes command, but they also have the capability and the desire to co-create and to help their workforce interact and innovate. Accounting data and big data analytics are used together to drive insight and decision making. Open organizations may not create network capability in every dimension discussed in this book, but they select what is most meaningful within their organizations and with their networks, and they start there.

Being an open organization has become increasingly important as the pace of change has accelerated and business models have evolved. For several reasons, open organizations are more adaptable when technologies and markets begin to shift, and technologies and markets are shifting at a previously unimagined velocity. Here’s why open organizations do better.

THEIR INNOVATION PIPELINE IS BROADER. Because they enable communication across silos, open organizations receive new ideas from a much wider variety of sources than do closed organizations. Customers share insights and co-create, employees are empowered at all levels, and other networks, such as suppliers and distributors, are able to contribute as well. A diverse group of innovators is much more likely to bring a novel solution to a tricky problem than is a leadership team with decades of narrow, historical, industry-specific experience.

THEY BEGIN WITH A PORTFOLIO. Open organizations tend to develop a lot of seeds, and their seeds fall further from the core business than those of closed organizations. This portfolio of more diverse initiatives or business units gives open organizations an in-place platform for growth and adaptation when the market shifts. Rather than start from square one each time, open organizations often have something they have been nurturing, or at least pondering, that can help bridge the gap when disruption hits a key business. Open organizations have a portfolio mindset.

THEIR TALENT POOL IS BALANCED. Open organizations are aware that institutional memory and historicity have value, but they also know that members who come from outside with different experiences bring a vitality that makes a difference. These team members, not to be ageist, most often are younger, and they arrive with different mental models than the ones used by those with “experience.” Both are valued by the open organization.

THE CULTURE SUPPORTS CHANGE. Because open organizations have a culture that is broad rather than narrow, and open rather than protective, new ideas are more likely to take root and find support to grow.

Where does your company fall on the spectrum from closed to open? Consider the following questions:

• Is our mission statement narrow and focused on a specific industry or product? Or is it broad and focused on serving a large need?
• What percentage of our business comes from our core, and how narrowly is that defined?
• What percentage of our business comes from outside our core, and how far does it depart from the core?
• Is our leadership team excited by and receptive to new ideas, even those outside their areas of expertise?
• How do new ideas reach the leadership team? How easy is it for employees and customers to have their ideas heard?
• Do we understand the digital alternatives to our current business model?

Moving your mindset from closed (1) to open (10), you truly take on the mental model of a network orchestrator. Open organizations create the space needed to encourage network participation and the flexibility to adapt and experiment until they hit a business model that creates mutual value.

Open Can Be Big

Some of the best examples of open organizations are also some of the biggest and most well-known companies in the world. An open perspective is perfect for growth—because everyone is a potential customer or contributor, and every market provides a new opportunity. Open organizations often focus on platforms and customers, rather than industries and products. Open organizations don’t need to own everything and keep it within their walls; they can access assets that exist outside the organization.

We have talked about Facebook, but Google is another classic open organization. From its policy of encouraging employees to work 20 percent of their time on their own projects—whatever they think will benefit the company—to its mission to “organize the world’s information and make it universally accessible and useful,” to its eagerness to take on projects (such as self-driving cars and glucose-checking contact lenses) far outside its core competencies, it could be said that Google has openness in its DNA.

In fact, Google has become so open that founders Larry Page and Sergey Brin have had to create a newer, bigger company—Alphabet—as a part of continuous business model innovation. As Page said in the Alphabet announcement, “We’ve long believed that over time companies tend to get comfortable doing the same thing, just making incremental changes. But in the technology industry, where revolutionary ideas drive the next big growth areas, you need to be a bit uncomfortable to stay relevant.”³

We take the point that the technology industry has enveloped other industries at such a rapid rate that it’s less like an industry and more like an underlying capability that every business needs. Even so, Page’s advice about being a bit uncomfortable to stay relevant applies to open organizations, and especially to open leaders. Closed investors and leaders have seen the risks of complacency and stagnation in the disruptive environment that has become the norm for business.

Amazon.com is another big, open organization. With its mission—“to be earth’s most customer-centric company; to build a place where people can come to find and discover anything they might want to buy online”—Amazon has set its sights on nearly every industry one can imagine. Although it started with a simple physical product—books—you can now buy anything you might need from Amazon.com, from web hosting services to streaming videos, to cutting-edge tablets, and a lot more. Amazon also partners with sellers all over the world and allows its customers to sell on the website, too.

Now you may raise the point that some of Amazon’s other practices don’t seem very open. In The Everything Store: Jeff Bezos and the Age of Amazon, CEO Bezos is described as “a micromanager with rigorous standards who is often uninterested in other people’s opinions.”⁴ To this, we reemphasize that each of the principles must be applied carefully, with consideration for your firm and the networks you are serving. You don’t need to shift to the far right edge of the business model spectrum on every principle discussed in this book, but you should consider each one deliberately and conscientiously to determine which will produce the greatest difference, and thereby the most value, for your organization.

We understand that not many companies are like Google and Amazon. But consider that they themselves weren’t anything like their current forms ten years ago. Google started as a search engine, and Amazon.com started as an online book retailer. The power of openness is what made them international powerhouses.

Fight Against a Closed Mindset

Although we all like to think of ourselves as open-minded, flexible, adaptable people, we’d be smarter to admit to ourselves that this profile is rare. Human beings are excellent pattern recognizers, and leaders and successful businesspeople often achieve their roles by recognizing what has worked in the past, focusing on it, and excluding distractions.

The problem is that the world is changing rapidly, and so is what is working in and for organizations. An open mindset that leads to innovation and business model transformation is a wonderful adaptation in a fast-changing environment.