ANALYSIS

Knowledge Lab
before the pandemic:
Knowledge Lab is a small successful company that is in the forefront in executive
leadership and management education.

The company offers consulting and training services to help organizations around
the world achieve high-performance. The programs or labs, as they call them, are
built entirely around the customer and are fully customized to fulfil their needs
and requirements in areas ranging from change management to culture change.

They provide, to both organizations and individuals, comprehensive and proven

transformational programs that deliver results immediately.

Knowledge lab has a variety of out-of-the-box products, proven programs, tools and
techniques for different audiences.

The team and the

face- to- face dynamic
Over the years, Knowledge Lab has put together a team of senior consultants
specialized on creating the spark of the programs. The team, combined with a unique
delivery model, has allowed Knowledge Lab to offer courses that are heavily driven
by experimental learning with very interactive sessions and hands-on activities to
change mindsets and behaviors.

The sessions are delivered in a face-to-face format, where the participants would
be divided in groups and that compete against each other during the duration of the
lab dynamic.

The pandemic
of Covid-19
Covid-19, also known as coronavirus, is an infectious disease caused by severe
acute respiratory syndrome coronavirus 2 (SARS-CoV-2). The first known case was
first identified in Wuhan, China, in December 2019.

The disease spread quickly and worldwide.

On January 30th, 2020; the World Health Organization declared a Public Health
Emergency of International Concern regarding Covid-19, and, later on March 11th,
2020, they declared a pandemic.

Globally, July 7th 2021, there have been 184,324,026 confirmed cases of Covid-19,
including 3,992,680 deaths, reported to the World Health Organization.

The Covid-19 pandemic resulted in significant global social and economic

disruption, including the largest global recession since the Great Depression of
the 1930’s.

It led to widespread supply shortages exacerbated by panic buying, production

stoppage, supply chains disruption, agricultural disturbances, and food shortages.
Numerous educational institutions and public areas had to be partially or fully
close and many events were cancelled or postponed.

Covid-19
in Australia
The first confirmed case in Australia was identified on January 25th, 2020 in
Victoria, when a man who had returned from China tested positive for the virus.
Australian borders were closed to all non-residents on March 20th, 2020 and
returning residents were required to spend two weeks in supervised quarantine
hotels. Many individual states and territories also closed their borders to varying
degrees, with some remaining closed until late 2020, and continuing to periodically
close during localized outbreaks.

Social distancing rules were imposed on March 21st, 2020 and state governments
started to close "non-essential" services such as social gathering venues like pubs
and clubs but unlike many other countries, it did not include most business
operations such as construction, manufacturing and many retail categories.

Why do you think Knowledge Lab did not change towards digital ways of delivering
value before the pandemic?
The team was too busy with work, customers and coaches were convinced the model
could not be delivered in a different way (than the successful face to face), there
was also no sense of urgency.

Exploring Alternatives
facing resistance
ANALYSIS

Facing change
within an organization
The business environment usually is attained to change, as markets are constantly
moving and adapting to new customer trends, behaviors and needs. Organizations
usually have to adjust their strategies to small changes all the time, possibly
looking to improve productivity; however, there are also other pressures like
competition, technology, or customer demands that require larger responses.

Understanding change and knowing where it comes from is key in change management
and anticipation crucial to implement change effectively. Nevertheless, change
cannot always be predicted and anticipation, sometimes, is not possible.

Types of change:
Planned vs. Unplanned
A planned change occurs when managers or employees make a conscious effort to
change in response to a specific problem. An unplanned change occurs randomly and
spontaneously without any specific intention on the part of managers or employees
of addressing a problem.

When change is planned, like a new information management system or a different

accounts payable procedure, change management can also be planned to minimize
employee resistance and to drive the change in the time and schedule that best fits
the organization.

When an unplanned change occurs, like a sudden economic downturn or a shortage of

resources, managers are usually taken by surprise and adaptation may not be as
organized.

Evolutionary and
Revolutionary Change
An evolutionary change happens gradually and incremental.
The stages of this type of change are often so small that those affected do not
even recognize it, or they do and they are able to adjust their work and processes
a little at a time.

Evolutionary change can be planned or unplanned.

A planned evolutionary change, or convergent change, is the result of specific and

conscious action to make changes in an organization.

For example: An organization decided that their customer service department could
operate more efficiently with 10 percent less staff.

Convergent change happens all the time within organizations, as managers constantly
adjust processes to make their departments and the organization more profitable.
Often during convergent change, managers look to ensure employees continue to
follow the existing mission and core values of the organization.

This type of change can, unfortunately, lead to complacency.

On the other hand, a revolutionary change, also known as frame-breaking change,

happens rapidly and dramatically.

Revolutionary change can also be planned or unplanned. Both types of changes can
lead to partial or total modifications in four elements within the organization:

Technology and innovation: Changes related to the way inputs are transformed into
outputs, such as machinery, work processes, delivery of goods and services to
clients, new applications of technology, etc. Also, changes in how engagement with
customers is done.
Product or service: Changes related to the delivery of products and/or services to
customers, new products and/or services, improved products and/or services,
customized products. Also, to the way these products or services are offered to the
customers, such as new channels.
Administration and management: Changes related to the core of the organization. How
companies are organized and managed, including changes in mission, vision,
objectives, organizational structure, policies, among others.
People or human resources: Changes related to employee behaviors, skills, and
attitudes, organizational culture as well as personnel changes.
Note: Change in one of these elements might be significant, but that change in one
area will often affect other elements.

Resistance
to change
No matter how organizations define change, the main problem faced is usually that
no one feels comfortable with it. It is part of the human nature to want things to
remain the same, keep the status quo as change often translates into the stress and
anxiety, unexplored territories and less organizational confidence.

Within an organization, you can find different types of resistance to change.

Navigating change is a constant organizational issue, whether it is on a small or

large level.

When managers can anticipate change and are able to plan a strategy to adapt, they
can stay ahead of change resistance and create a calculated roadmap to implement
it, but if is unplanned, things can get difficult and sometimes drastic decisions
and measures have to be taken.

The importance of aligning the need

for change with organizational change
When organizations are forced to change their business strategies, it is common for
people to resist the change, therefore, sustainably drive organizational alignment
and mobilize the entire organization around the mission and objectives of the
company is extremely important to achieve success.

Achieving true alignment, where strategy, goals and meaningful purpose reinforce
each other offers great advantages. The result will be an organization that focuses
less on deciding what to do and more on simply doing with a clearer sense of what
to do at any given time and relying on people to move towards the right direction.

When aligning the need to change with organizational change, it is important to put
special emphasis on building a culture that makes the organization proud.

In addition, it is of great importance that all members of the organization

understand the need for this transformation. This is what will enable success and
prepare the business for future growth.

Now, when implementing a transformation, the need for change has to be clearly
defined. For this, you might have heard of Simon Sinek’s Golden Circle model, an
easy and straightforward change management tool.

Before we start with Sinek’s model, let’s review the academic research and work
that set the foundation of modern change management.

The Formula
for change
The formula for change is a model created in the early 1960’s by David Gleicher and
Richard Beckhard, and then it was redefined in the 1980’s by Kathie Dannemiller.

This tool is a powerful model that help organizations weigh and evaluate their
strengths and weaknesses in order to assess the exact situation they are currently
in to make the right decisions towards the implementation of change.

The original 1960’s formula, as created is: C = A × B × D > X where:

C = is change;
A= is the status quo dissatisfaction;
B= is a desired clear state;
D= is the practical steps to the desired state;
The updated 1980’s version refined by Kathie Dannemiller now states:

C = D × V × F > R

These elements must be present for meaningful organizational change to take place:

C = Change;
D = Dissatisfaction with how things are now;
V = Vision of what is possible;
F = First concrete steps that can be taken towards the vision.
If the product of these three factors is greater than R= Resistance, then change is
going to be possible.

To ensure that change will be successful, it is important to use influence and

strategic thinking to create vision and recognize those pivotal, early strides
towards it.

Also, the organization has to acknowledge and accept the dissatisfaction that
exists by listening closely to the employee voice while sharing industry trends,
leadership ideas, best practices and competitor analysis to identify the need for
change.

Simon Sinek’s
Golden Circle
According to this model, every organization on the planet function on these three
levels:
1. WHAT we do (the result),
2. HOW we do it (the process) and
3. WHY we do it (the purpose).
When these three elements are aligned, it provides a foundation for innovation and
trust.

Organizations and people naturally communicate from the outside-in, starting with
what is easiest to understand (WHAT and HOW) to what is hardest to understand and
explain.

But the WHAT and HOW do not inspire action. They are like facts and figures that
make rational sense, but people do not make decisions purely based on them.

This is why this model starts with the premise that very human action and behavior
is driven by a “WHY” or by an emotion.

When people and organizations act and communicate from the inside out, they adopt
the capacity to inspire. When they communicate their purpose or cause first (the
WHY), they communicate in a way that drives decision-making and behavior.

For The Golden Circle to work properly, organizations and people must have:

1. Clarity of WHY.
2. Discipline of HOW.
3. Consistency of WHAT.
All of the sections are equally relevant but the most important thing is achieving
balance across all three.

WHY:
If you do not know WHY you do WHAT you do, how can you expect anyone else to know?
Find that clarity first for others to know your WHY (your purpose).

HOW:
In order to bring your WHY to life, you must be disciplined in living your HOWs.
You must behave in ways that are aligned with your values, guiding principles,
strengths and beliefs.

WHAT:
Everything you say and do must be consistent with what you believe. The only way
other people (customers) will know what you believe is if you say and do the things
you actually believe.

Now, going back to change, when wanting or being forced to change, the first
question every organization needs to ask itself is “WHY”. Why it needs to change.

Loyalty to the cause will only happen when the purpose of the action is clearly
defined and understood by everyone, both employees and customers. This will enable
full alignment in the strategy and help to manage effectively the resistance to
change.

ANALYSIS

Today's
customer
Today’s customers increasingly expect companies to deliver a seamless experience
with both human physical and digital touchpoints. While human physical interactions
largely drive current touchpoints, future touchpoints will increasingly skew toward
digital and provide a real-time customer experience that is contextualized,
personalized, and data and usage-driven. Meanwhile, human interactions will likely
focus on orchestrating the ecosystem and co-creating value with the customer.

A key point for companies in the development of successful strategies is listening

to what customers want and need, and in order to do so, they must experiment and
then seek for feedback to improve.

The importance of
customer centricity
Regardless of the industry, change is a constant force and when companies fail to
adapt them usually pay a very high price.

The ability to rapidly adapt and interpret change to turn opportunities into action
is vital for true business agility and becoming a flexible organization requires
identifying opportunities, keeping the pace with changing customer demands and
harnessing new technologies.

When an organization is going through change, it is easy to jump right into a

solution, whether it is social media, chatbots, or becoming an e-commerce.

The key to a successful transformation into a digital format is customer

centricity, where customer problems and needs are defined before building a
solution with them. This calls for listening to customers, responding to them and
ensuring their positive customer experience and engagement.

Companies that have higher understanding of customer needs and problems hold the
competitive advantage. Use of models such as Value Proposition Canvas, or processes
such as Design Thinking are extremely helpful to reach this end.

These changes in customer expectations are constant. These are more complex and
diverse than ever and being able to stay ahead of the competition requires
knowledge and insight.

Digital transformation
and customer centricity
To succeed in the era of customer empowerment, companies must undergo a continual
digital transformation to create digital solutions for their customers, tear down
internal silos and use technology to solve everyday problems. When done well,
digital transformation creates an agile and technology-driven company that can best
meet customers’ needs.

Companies should not undergo digital transformation simply to say they have done it
or to adopt the flashiest technology; real digital transformation is rooted in
solving customer problems and delivering a consistently high-quality experience.

In other words, digital transformation, at its very core, is about customer needs
and creating successful customer outcomes, if tackled properly, the result will be
a successful customer experience.

Digital business transformation is disrupting businesses in every industry by

breaking down barriers between people, businesses and things. By breaking these
barriers, they are able to create new products, services and find more efficient
ways of doing business.

These type of innovations are happening across organizations of all types and in
every industry. Unfortunately, there are many cases in which innovating and
transforming into the digital age is often reduced to the implementation of new
technologies. There is more to it that sometimes it is not taken into account, and
it paves the road for failure.
There is no digital transformation without an appropriate business transformation.

Every organization aims for more a profitable business with digitally enabled and
outcome-based business models. Nevertheless, developing a new business model
requires exploring alternatives to current ways of doing business as well as
understanding how companies can meet customers’ needs differently.

The main challenge of the digitization of companies is not technology per se, but
human factors, cultural traditions, resistance to change, lack of knowledge and
good practices, lack of resources, lack of motivation and risk taking. As of today,
many analysis show around 70% failure rate of digital transformations in companies.
(BCG, McKinsey and Forbes)

To face these challenges, organizational agility, strategic alignment and choosing

the right technologies for your business is imperative to a path of customer-
centricity and digital transformation. The ability to anticipate and make quick
informed decisions will often determine the success and future of a business.

Fit
for Purpose
There is no one-size-fits-all approach to creating customer value, especially in a
digital world. Driving product or service innovation and continuous improvement
requires different approaches at different moments of product maturity.

Simon Wardley and Hendrik Esser wrote about the different approaches that could be
suitable in different product/service contexts. These contexts are related to the
evolution of the offer that could go from novelty, to custom built, to product
/rental towards becoming a commodity.

These contexts also set alternative ways of working, leading and approaching
outcomes.

While all of these models share themes of customer-centricity, constant validation,

outcome-driven and waste reduction or efficiency, the following diagram shows when
it is best to apply each methodology based on the maturity of the product or
service you are offering.

When developing new products and services or even modifying them, business agility
is extremely important. Business agility means the ability to quickly adapt and
respond to changes in the business context. This requires the flexibility of an
organization to shift between the above-sketched approaches fast, and a good
understanding of both internal and external context.

This term does not imply that company that displays high levels of business agility
use only agile practices. It means that they are able to dynamically and
simultaneously use the different approaches that are fit-for-purpose in the current
situation and context of the organization.

ANALYSIS

Turning challenges
into opportunities
The constant shifts in the consumer landscape (expectations and demands) are
creating critical challenges, but also opportunities, for all types of
organizations.

This is where innovation plays its leading role.

Maintaining a customer-centric focus while gaining true business agility will
require the implementation of a total customer-centric strategy into every level
and department of a business.

Customer R&D focuses on developing better ways of communicating value propositions

and delivering complete, satisfying experiences to real customers. Also, it allows
for the team to be continuously focused and minimize the waste of work.

Customer-Centric
Innovation (CCI)
Innovation is not something temporary, it is not a one time requirement. It is a
persistent need in all industries and organizations that allows them to explore all
the opportunities presented by consumer trends. And, successful companies are those
that approach innovation as a continuous journey, similar to the needed
transformation to make it real in the company.
Maintaining a customer-centric innovation focus while gaining true business agility
requires the implementation of a total customer-centric strategy into every level
and department of a business.

To implement a customer-centric innovation strategy approach in an organization,

the key is to set common goals in the company, so that different departments all
aim towards the same goal of providing value to the customer.

Moving
to digital
It is a clear indication that digital transformation is spreading across even the
most traditional industries and creating an increasing amount of business
opportunities.

Every organization aims for more profitable business, and digitally enabled and
outcome-based business models seems like a correct approach to this, nevertheless,
it is not as simple as just adopting new technologies. Developing a new business
model requires exploring alternatives to current ways of doing business as well as
understanding how companies can meet customers’ needs differently.

Generally, the main reason why more than 70% of digital transformations fail is
because lack of internal organizational and strategic alignment and resistance to
change, but with a disruptive event such as the Covid-19 pandemic, skepticism and
resistance has turned into unity and urgency as companies are forced to leverage
digital technologies to ensure business continuity.

Most companies know how to pilot new digital initiatives in “normal” times, but
very few do so at the scale and speed suddenly required by a disruptive event such
as the Covid-19 crisis. Digital transformation takes time, planning, preparation
and building the proper infrastructure to support the new business model and
avoiding irrevocable mistakes is critical to ensure a long-term oriented
digitalization.

As a business leader once said,

“The trick is not to squeeze a 3 year digital program into a 3 month program. The
trick is to make sure that what you do today is still valuable in a few years from
now.”
Four steps to turn digital transformation into long term success:

As today's world grows increasingly connected, globalized and digitized,

organizations, in order to survive and ensure long- term success, need to adopt an
innovation mindset.
Innovation
through first principles
Clayton Christensen popularized the idea of disruptive innovation in the book The
Innovator’s Solution, which was a follow up to his The Innovators Dilemma published
in 1997.

The theory of disruptive innovation explains the process of how innovation and
technology can change markets by presenting affordable, simple, and accessible
solutions and after doing so, disrupts the market from which its predecessors were
born.
There are many ways to face innovation, nevertheless many of the most successful
companies do so by reasoning through first principles. This concept is an ancient
Aristotelian term that refers to a way of solving problems by reducing them to
their basic elements and building from the ground up.

In business processes, this type of reasoning can be used to analyze existing

processes, create more effective business models and better products and services.

The application of reasoning from first principles has no limitations.

When there are problems to be solved, organizations should analyze the situation by
first breaking down what is already known into fundamental truths and only by
understanding what is unconditionally true can they discover practical and
innovative solutions.

“First principles is kind of a physics way of looking at the world, and what that
really means is, you boil things down to the most fundamental truths and say,
“okay, what are we sure is true?” and then reason up from there.” -Elon Musk

ANALYSIS

The Red Queen Effect

and Innovation
One element of innovation that seems to be undeniable is that it must happen faster
than it has in the past, unfortunately, most organizations react to this challenge
with a demeanor of "work twice as fast and more thoroughly”.

This organizational attitude or behavior is known as the Red Queen effect

This effect can be seen as a contest, in which each organization’s performance

depends on the organization’s matching or exceeding the actions of its rivals.

You move forward but your competitor moves forward at the same time.
If you do not move, you fall behind.
This approach may yield short-term benefits and avoid a bit of risk but ultimately
cannot compete in a globalized economy.

Innovation often supposes a competitive advantage, an opportunity to grow and a

challenge for the competitors. In a Red Queen effect, is clearly a survival
strategy that requires existing organizations and especially new ones, to supersede
the existing innovations as quick as possible, all in hope to reach the next
predominant position in the market.

Maybe at a given time, companies need to innovate in order to survive, but a short
mind approach to it will only ensure short-term results. For innovation to enable
long-term organizational results, it must be transactional in the organization's
business model in combination with an organizational culture of sustainable
innovation.
From digital transformation
towards digital sustainability
As the world grows increasingly connected, globalized and digitized, organizations
need to adopt a sustainable innovation mindset keeping in mind a long-term strategy
with a short-term execution of change.

Digital environments are in constant change. New digital technologies appear every
day and enable new ways of delivering value to customers. For organizations, this
requires a constant, quick adaptation and learning, not only on a practical level
but also on a mental and emotional level.
Those who have a growth mindset will adapt more easily and quickly to these
changes, and responding quickly to change is something that can be trained,
developed and learned.

With a growth mindset of constant learning and a proper alignment between the
company’s strategy and with technology will eventually enable digital
sustainability.

Digital transformation’s main goal is to force organizations to optimize their

operations, their business models and finally offer a unique customer experience
through digital services and products.

The digital transformation should be built around the three key bridges or
elements, and need to be revised constantly in order to adapt to customer needs:

WHY do you need to transform? (what are you trying to achieve).

HOW can you actually transform?
WHAT parts or functions of your business do you need to transform?
Most of these changes, and as a result the digital strategy, must be driven by
customers and not by technology itself and today’s customers expect constant
innovation.

We are living in an era where a company’s ability to provide innovative hybrid

experiences is as important as the quality of its products and services.

About
the future
“In the midst of every crisis, lies great opportunity.”
Albert Einstein
What is to come is questionable and associations need to continually adjust and
update their activities to better adapt. There is no mysterious formula or code to
be ready in a V.U.C.A world and while no association has yet deciphered the code,
the experimentation in progress demonstrates that future-ready organizations cannot
be defined as such, but as companies that are better prepared.

For most organizations, the Covid-19 pandemic and its aftermath have upended life
as we knew it. As organizations move from a mindset of coping to one of competing,
the best companies will seize the unique unfreezing opportunity before them to
imagine and create new systems and modes of organization that are more flexible,
integrated, resilient, and ultimately, more human.

These organizations will view themselves as interconnected systems that seek to

constantly experiment, fail, learn, grow and start the process anew when the world
invariably changes again.