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Predicting the Future of Work

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A confluence of forces, some old, some new, is pushing companies to change how they work. Globalization, powered by new communications tools, has broadened their reach. Technologies such as cloud computing are allowing organizations to restructure operations.

At the same time, a new generation of technically savvy workers is working its way up the ranks, further exposing companies to transformative technologies like social media. For some firms, particularly those that operate in many locations, new ways of organizing work that take advantage of knowledge sharing can be an effective response to these business shifts.

CIOs who combine technological expertise with a broad, strategic view of the business have an opportunity to lead their organizations’ adoption of new work approaches. They bring technological clout to what is fundamentally a cultural transformation of the company. They can do so because they are intimately involved in corporate strategy, which gives them a rare top-to-bottom perspective.

The power of virtual teams

Collaborative and virtual teams — more complex, dynamic and autonomous than traditional corporate team structures — can make it possible for companies to take advantage of human, physical and technological resources regardless of where they are located.

A global survey of 402 executives in Europe and North America, conducted by the Economist Intelligence Unit in May 2010 in cooperation with Cognizant Business Consulting, suggests that companies that are at the forefront of the transition stand out from their peers in many respects. Companies that are already seeing the benefits of this transformation, defined as “leaders” in this report, say:

  • They outperform other organizations in innovation, recruitment and retention of talent and productivity.
  • They tend to be less hierarchical.
  • They provide more flexible work arrangements.
  • They have established policies and practices that support the formation of more virtual and collaborative teams.

Throughout the report these leaders are compared with companies that expect to garner benefits from new work structures either within a year or more, or not at all. Those firms are classified as “all others” in the charts throughout the report.

The research also shows, however, that there is no single model for such teams nor a single best path to implement them. How they are deployed reflects a company’s tolerance for decentralization, shared decision-making, collaborative innovation, and change itself. Some firms create teams at strategic points, straddling marketing and production or research and development and legal, for example. Others integrate them deeply into the organization’s fabric.

While one might think that the digital generation – the Millennials – would be the main driver for this sort of change in companies, the research shows that they are not playing that role. This may reflect the current economic environment, in which labor is abundant.

What matters more than age is mindset: Companies are adopting a variety of tools and collaborative methods because they increase competitiveness, not necessarily to attract or retain a specific employee demographic. Nevertheless, organizations that are at the forefront of this transition may be better positioned to attract new workers when economic growth tightens labor markets.

To implement collaborative virtual teams, organizations must overcome several hurdles, including:

  • Resistance to change and the risks born of greater openness
  • Teams must be are well coordinated and work at cross purposes

Although companies that have embraced these teams say they are integral to their organizations’ operations, they do not have quantifiable measures of their impact. Developing a set of metrics to prove the value of collaborative virtual teams is among the main challenges to their widespread adoption. Executives who are able to quantify results will gain credibility to lead their companies’ transformation.

Reorganizing work: a new hierarchy

Survey results show that new ways of organizing work are gaining traction. About one in six respondents says their organization already has seen positive results from more virtual and collaborative teams, and another one-fifth expects to garner benefits within a year. Executives interviewed for this report are strong advocates of these work structures. Leslie Jones, CIO of communications giant Motorola, for example, says collaborative virtual teams are part of the company’s DNA.

The practices are particularly appropriate for knowledge-based work. Some companies have implemented them enterprise-wide, sometimes as a result of a major strategic decision. In many cases, however, they are applied in an opportunistic way, and gain ground gradually within companies. Other organizations are not adopting these work structures.

Those already benefiting from such practices — our “leaders” group in the survey — have some attributes in common not shared by the remaining respondents, including:

  • They are more likely to see innovation and collaboration as important competencies for their organization.
  • Their company is at the forefront in testing new collaboration and remote-work technologies.

And they report that the benefits of greater collaboration — including increased innovation, improved productivity and greater competitiveness — outweigh the risks, such as reduced governance and potential security lapses.

Companies in which top executives demonstrate strong support for the transition to a new work structure are more likely to outperform their peers in such areas as innovation and productivity, the survey shows. The CIO in particular is seen as a potentially galvanizing force: the research suggests that collaborative virtual teams are more likely to take hold where the CIO is engaged in the process and involved in broader strategic concerns.

Perhaps because they have been deeply engaged in the transformation of their organizations, interviewees report positive results after adopting the new structure. Indeed, for U.S.-based consumer products giant Procter & Gamble (P&G), which considers virtual teams a strategic strength, the structure minimizes delays between discovery, decision and action. CIO and president of global business services Filippo Passerini says building such teams is more than a way to delegate tasks: It pushes decision making authority from middle managers toward groups of project or topic experts working together, eliminating bureaucratic delays.

Early adopters of these work structures tend to have flatter organizations and less “siloed” communication channels than more traditional companies, the survey shows. They typically offer a wider range of collaboration and remote-access tools, including telepresence, instant messaging, site templates, external or custom social networking environments, and cloud computing. (See chart below.)

These characteristics support virtual teams, says Chris Satchell, chief technology officer (CTO) at U.S.-based International Game Technology (IGT), a global developer of electronic gambling systems. (In an unusual setup, the CIO of IGT reports to Mr. Satchell, who thus combines responsibility for technology innovation and IT.)

Because communications generally are not filtered or relayed through managers, information can spread more easily. Ideas can be added to, dismissed or simply absorbed by the group for future use. There are few data-hoarders, and isolated “gurus” are integrated in teams where they share their specialized knowledge.

Such a team might comprise a factory manager, data engineer, marketer, project manager and company attorney, all of whom have expertise in the project at hand. Most or all of them can be in separate locations. Working together, they address practical issues, eliminate redundancies and catch mistakes more efficiently than within conventional structures. When they span the globe, these teams can effectively work on a project around the clock.

In some cases, the benefits might not be initially obvious. Collaboration is intrinsic to the hospitality industry, for example, but it tends to be site-specific. Jeremy Ward, CIO of global luxury hotelier Kempinski AG, says that the company instituted a culture of geographically diverse virtual teams two years ago. “We changed the way we work,” he says.

The Munich-based company, which develops and manages hotels, often in exotic corners of the globe, learned that employees benefit from a robust, shared cache of experiences and greater autonomy. Operating a hotel in Mongolia is different from running one in Namibia, but there are similarities in providing luxury in remote locations, including sourcing materials or training staff in a developing economy. Once the advantages of knowledge sharing were identified, and the case for a new corporate culture made, the company implemented tools needed to make it possible. Kempinski’s global virtual teams now use wikis to collect, share and elicit knowledge about tasks, practices and projects. Virtual shared workspaces enable real-time, globally dispersed collaboration. And process-automation tools streamline corporate tasks including training and personnel matters like vacation requests.

Interviews with other executives reveal that Kempinski’s culture-before-technology approach is a common best practice among companies that have adopted collaborative virtual teams. Making the transition to this work structure poses challenges for traditionally organized companies, however. The CIO can provide the support needed to implement the necessary changes.

Implications for the software industry

For most companies, dealing with uncertainty and change is a part of doing business. Nowhere is this more true than in the software industry. Software and technology vendors will be enabling this future workplace by changing how we share knowledge, how we build relationships, and how we engage with customers. Vendors focused on collaboration tools and social media are changing the fabric of social interactions.

Cloud computing technologies and mobile applications are rewiring the inter-connected workforce. And analytics and business intelligence are changing how we process and share information.

Today, however, the challenge posed by rapid technological change is even more daunting. Globalization has moved the technology industry beyond the search for resources and markets to include globally dispersed research and development.

Technology vendors need to secure and optimize technical talent and skill sets wherever they are found. Software vendors that are able to knit their operations into flexible and semiautonomous teams will outperform competitors in technology innovation and responsiveness to market changes. This will require changes to knowledge-based business processes within their own organizations.

Companies that have not implemented such changes can learn from the experience of those identified as leaders in this report. While the use of collaborative virtual teams is still evolving, some best practices have emerged:

  • The change toward virtual collaborative teams should not be viewed simply as a technology effort but as a strategic business initiative. Many of the companies identified as leaders in this research have relied upon partnerships with business heads to champion this approach. For others, the transformation can start within IT, where CIOs can hone a strategy customized for the overall organization. But this should be a launch pad that will enable the CIO to identify the best techniques and tools for the enterprise.
  • To be effective change agents, CIOs must be not only leaders, but also enablers and partners. Success is far more likely if CIOs and IT professionals are seen as integral team players whose efforts add real value to the deployment of collaborative team structures within the organization. CIOs can provide the visible corporate leadership and support that is required as traditional hierarchies are challenged and dismantled. They should promote training and robust communication policies that keep enterprise-wide goals and security in sight, yet do not stifle collaboration and creativity.
  • CIOs should spearhead the development of metrics that prove the tangible value of collaborative virtual teams. While survey respondents report improvements, especially with regard to innovation and productivity, proving value is key to securing enterprise-wide support for a shift to this new approach. Metrics strengthen the CIO’s position as an agent of change.

To gain more insight from the Future of Work study, including more about deploying virtual teams, understanding the new leadership role of CIOs, how cultural changes can ensure security and the importance of tracking ROI, click here to download the full report, “Next-Generation CIOs: Change-Agents for the Global Virtual Workplace.”

Mark Livingston is Senior Vice President at Cognizant Business Consulting.

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