Are digital transformation and linear management thinking compatible?
In this article, we’ll examine:
- Linear thinking in business and management
- Whether linear management works in the digital age
- Modern “nonlinear” approaches to management, business, and product development
To start with, let’s explore linear thinking in management.
Digital Transformation and Linear Management Thinking
In business, linear management is often associated with linear thinking and “traditional” management models.
Waterfall product development can serve as one example of linear, traditional management:
- A product is developed in isolation from the customer base
- This results in a product that is feature-based, not one that is user-centered
- The complete product is released into the market, prior to receiving any customer feedback
Today, this model is rarely used in the software world.
For example, a waterfall product development style:
- Often results in features or products that don’t reflect user needs. In worst case scenarios, this can result in irrelevant products and launch failures.
- Takes a long time. In such a scenario, businesses will typically spend months, or longer, developing features derived from focus groups or user input. However, until real-world data is collected, there is no way to measure a product’s actual reception.
- Can be very wasteful. This type of lengthy development can take a very long time to generate returns. And when products or features are irrelevant, losses can mount even higher.
This type of approach is considered linear because it is sequential, inflexible, and the phases do not overlap.
However, in today’s digitally transforming environment, such models are not very effective.
For modern companies, nonlinear models have proven to be much more effective for digital transformation.
Non-Linear Approaches to Business and Management
Digital technology has disrupted the very way businesses operate.
Both on the micro and macro scales, businesses have had to evolve.
Today’s digital company must make changes to its:
- People – To keep up with today’s wave of technology, people must become more innovative and open to change.
- Technology – It should be obvious that success in the digital age requires up-to-date technology, from software to hardware.
- Strategy – Business strategies based on old paradigms will not survive in the digital ecosystem.
- Processes – Digital technology can increase efficiency, effectiveness, or even eliminate certain business processes.
Among other things.
In response to global digital disruption – and the inefficiencies of old business styles – businesses have latched on to newer business models.
Agile and lean are two examples of “nonlinear” business processes that have come to prominence.
Agile came from software development, and prioritizes collaboration, constant communication, and responsiveness.
Though it originated in software development, it has spread to many other business functions.
Today, we have a variety of agile approaches, such as:
- Agile change management
- Agile manufacturing
- Agile product development
- Agile human resources
To name a few.
Applying agile to a business model means reframing the business environment.
Agile recognizes that the marketplace is fast-paced, dynamic, and nonlinear … making it an ideal business model for today’s digitally maturing organization.
Lean is a business approach that aims at reducing waste through incremental product iterations, user-fed learning, and fast product releases.
There are three fundamental phases to lean:
- Build – First, a product is built and released, beginning with a minimally viable product.
- Measure – Data is collected and feedback is compiled.
- Learn – Business leaders and product developers analyze that information and make an informed decision about the next step forward.
This mode of operating shares many characteristics with agile.
It is aimed at continual, incremental improvements that are driven by users and external circumstances – not features and static plans.
Transform Business Models, Disrupt Markets
According to one analysis of 40 new business models, there are certain qualities that disruptive businesses share.
- Personalized products and services. Customized products are those that meet the end-user’s immediate needs and wants. These contrast with generalized, “blanket” products that are the same for everyone.
- Closed-loop processes. Linear consumption – where products are thrown away after use – are replaced with closed-loop recycling models.
- Asset sharing. Renting assets, such as apartments (Airbnb), cars (Uber), or anything (Rentything), benefits everyone involved.
- Usage-based pricing. Charging based on usage, as many cloud computing providers do, offers an alternative pricing model that benefits customers.
- More collaborative ecosystems. Digital technology can greatly enhance communication and collaboration, if applied properly.
- Agile or adaptive organizations. Agile processes, mentioned above, help businesses stay responsive to changing circumstances and context.
These nonlinear business approaches contradict linear, sequential business styles.
Adding these ingredients to a business model can help a company innovate, disrupt, and transform, regardless of its target market.
Different people have different definitions for “linear thinking” or “linear management.”
However, despite this imprecision, it can be useful for describe traditional business models that are based on inflexible, sequential phases.
And it should also be noted that linear processes are not “bad.”
After all, all natural processes, from business processes to natural phenomena, follow linear sequences.
In digital transformation, for instance, the diffusion of innovation follows a linear process.
It is important to avoid vilifying linear thinking altogether.
Instead, evaluate situations on a case-by-case basis and adopt a strategy that fits the circumstances.