The corporate hierarchies of the 20th century were never destined to last forever, with wall-to-wall people crammed into rooms with pools of humans typing and entering data, switchboards, mailrooms, coffee runners, and perhaps two assistants for each executive. Many thought it would last forever. But technology continued to whittle away at these dinosaurs. There was pushback and plenty of articles in newspapers of the day about the mistakes being made. Today, it all sounds so familiar over perceptions of Artificial Intelligence; protectionism hasn't changed much. That was the 1940s to 1960s.
Those days are gone, but not the ceremonial attitudes of retaining fiefdoms. During the pandemic, there were plenty of articles that workers are anxious to return to the office. Obviously, that was incorrect. Others wrote that employers should be more direct and force them back. That was a mistake. Clearly, the real estate developers were desperate, not the business operators. Now, we are in a hybrid workplace, a far cry from seventy years ago with all the hierarchy levels. I would worry about commercial office real estate. The technology ahead of us won't need it.
Even in the eighties and nineties, terms like restructures and rightsizing were being used to justify the reasons for organizational change. These organizational redesigns continued even into the 2010s but with less fanfare and little if any, significant changes to how businesses operated. Even with e-commerce and adding web management teams, things stayed pretty stagnant. Functional disciplines ruled the organization, and IT was somewhere in the back of the office fixing things versus helping identify opportunities.
In 2016, as I tried to buy the assets of a bankrupt 80-store retail chain, we discovered that the intellectual property rights to the website were controlled by a third party, and they were getting in excess of 70% of all revenue. No surprise, the retailer went under. The growing move to e-commerce undermined many retailers, and their organizational structures were, in hindsight, the reason for their demise. They didn't see the value in changing the organization's structure other than just adding a few more teams to serve an omnichannel shift, and most were never good at it. What was missing? Data hardcore facts that could help make decisions and the ability to collect and determine its insights. Things were speeding up out there. By the time you had market research on the table, things changed again and often too late.
You can't challenge the 21st Century with 20th-century tools, thinking or leadership.
The analogue world has ended, but many workers still hang on to it. And I fear that they will face the same reality as those in typing and data entry pools of 60-80 years ago.
By many accounts, there were very impressive successes in retailing and other industries but far more failures with leaders who wanted to hang on longer to their legacies and legacy organizations, ultimately deterring progress. You still see it today at many levels and brands. Thirty years ago, a CEO could have been in an organization's corner office for ten years or more and never have to worry about any disruptive innovation to hamper their leadership and that of the brand. Those days are very much gone! Depending on the organization and its competitive landscape, executives at all levels may have surpassed their best-before date within 3 to 5 years. The situation today may be even more dramatic than that. There is a world of hypercompetitive capabilities at the front door of every organization today. Turnover will increase at executive levels until weaknesses are addressed.
The only place you see leadership longevity of twenty-plus years is in government bureaucracies, mainly because there is very little movement until one retires, and even then, the executive in waiting is only a continuation of the last one. They don't always have fresh ideas. They only wish to wear the crown, as one friend put it to me, and they will seldom shake up the apple cart to risk their futures. Unfortunately, that happens in the private sector in many cases that I have seen with retailers.
The private sector today is in a quandary, primarily because of technology, unless these executives leading them built out digital platforms that outperform their peers in financial results. And have invested heavily in capturing, developing and harvesting their data and collection capabilities to feed the next technology monster, which is Artificial Intelligence. The organization then is at risk.
Organizations need to be rethought and redesigned. Traditional hierarchal functions with tightly controlled fiefdoms with Silos and smaller silos inside of them still exist. These organizations are from an old era. They need to change, and unfortunately, so will leadership in many instances.
The evolution of the organization needs to be rethought, and it begins with this. "The industrialization of human and artificial intelligence working together to identify, design, develop and deliver the next-generation strategies and innovations. To compete faster and more effectively respond to changing market conditions and lead their brand in differentiation." This is the goal and objective behind building an AI-Factory Engine.
Why is all of this important? There are three fronts to address.
As AI becomes more pervasive in the hands of businesses and consumers, competition will be far more hyper in speed. And growth opportunities will be out of reach for those not at this level. The AI-Factory Engine needs to be at full speed.
Equities markets and investors themselves will be looking for those organizations that demonstrate consistent performance with next-generation strategies and innovations. In fact, data and AI capabilities are likely to become a commodity within an organization that is a multiplier to valuations.
Organizations must be inverted so that the Brand remains the pinnacle focus of all initiatives and AI is the leading driver behind the brand with all functions in support. How does this differ? Many organizations even today have an IT department and even data scientists who sit in the background waiting for requests from functions. This is counterintuitive for the future and will fail to deliver results.
In closing, as a former CEO and current board chair of a for-profit organization, I believe that resistance to change is a sign of protecting the past, its roles and silos. What I have learned leading people and brands is that a world of bureaucratic fiefdoms has no place today and even less tomorrow. Organizations must be leaner and smarter. The leaders who can make these changes happen must have a strong vision of how their organization will function and deliver performance. The only risk to a brand's future is complacency and misdirection of leadership.
George Minakakis is the CEO of Inception Retail Group Inc. Is a respected advisor, author and speaker who likes to tell like it is. He spent 28 years between Pepsico and Luxottica in senior roles from Country Manager to CEO, with experience in Canada, the US, China and assignments in Europe and Australia.
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