The Rise of Generation Y Organizations

GENERATION Y COMES ALONG WITH GENERATION Y ORGANIZATIONS

It is in our human nature that most of the time we think life would flow in one direction only, i.e. linear, as if everything would always move at the same pace... However, the exponential change happening at a dramatic speed today is creating major delusions and disruption in our lives. 

Those that make us feel this exponential change most explicitly are the youth of the third millennium, in other words “Generation Y”. This generation is indeed very different, independent, and technology has got so much under their skin that you might think it is in their genes. What differentiates them is their familiarity with digitized life, and this has a profound even regenerative impact on all organizations in the world.

Generation Y (Gen Y in short) organizations set up/populated by Generation Y achieve growth multipliers of ten in a short period of time by employing technology: THEY RISE FAST. They take away the business of other existing companies and lead to their rapid extinction. You can’t shake this off saying, “There’s nothing we can do about it; let Generation Y sort this out.”
It seems in the near future we will either become Gen Y organizations, or we will age rapidly and disappear!

WHY IS CHANGE ACCELERATING? “THE 6 SHADES OF TECHNOLOGY

Almost every day we read and hear about how the Internet of Things (IoT) is going to change our lives. Currently there are 8 billion IoT devices, one device connected to the Internet for every single person in the world. By 2030, that figure will have risen to 1 trillion IoT devices, that is 1000 devices per person! (This is not sci-fi, this is near history!)

Adding to that 3 billion new consumers that will join the global economy and 1 billion entrepreneurs that will rise to the new middle class in the next 5 years, it becomes inevitable that the acceleration of change will be exponential. A crazy innovation and entrepreneurship boom is drawing near. And don’t think I’m just talking about Internet companies here, all industries will receive their share, from mining to textiles... There’s no way around it!

It is quite hard to grasp this speed, but we see that technology-based change follows 6 steps:

1. First, your business/product is digitized (e.g. digital photography). What is digitized is no longer limited; it reaches a virtual “infinite abundance”. Business models based on limited resources become fragile at this stage.
2. Then, exponential growth starts in that industry, witnessing the loss of those who did not go digital.
3. This growth disrupts the business model that cannot be digitized. (Let’s call that “disruption” in short.)
4. Following disruption, that business strips off its physical properties and turns into an application in the virtual world (think of the video camera disappearing to be replaced by a smartphone app...).
5. And once it lands in the virtual world, it loses value! (Like Uber wiping out the value of taxi companies...)
6. The last step witnesses the democratization of technology when it reaches wide masses. (For instance, in order to reach 1 billion people 30 years ago, you would have to be a global giant of a brand, however today, an app that you develop at home can spread to the whole world immediately.)

This is where Gen Y organizations come into play. They grow extremely fast by leveraging technological change and digitalization. Their most important characteristics is that they use resources in the most economical and extensive way without owning it, and their most valuable asset is knowledge...

In a world where knowledge grows exponentially, linear organizational structures become extinct like dinosaurs, and Gen Y organizations achieve unprecedented growth rates in a short period of time.

THE DIFFERENCE OF GEN Y ORGANIZATIONS

Perhaps their most notable feature is their ambitious corporate mission... Sure, considering that the whole world is their playing field, they can easily gather people around ambitious missions that create new cultural movements by using the transformative power of technology as well (e.g. TED: "Ideas worth spreading")

This is what we see looking at more structural characteristics:

External characteristics of Gen Y organizations:

1. Staff on demand: In a world where competencies are approaching their expiry dates in an ever-accelerating way making sure staff other than the core team is flexible increases adaptation. Particularly, the easier it gets to do/follow up with business conducted through external staff, the more convenient it becomes to embrace this structure.
2. Leveraging crowd and community: Today, many organizations call out to crowds to find creative ideas, and to test and fund them (crowdfunding, crowdsourcing). They use different and continuous incentives to engage crowds and sustain the engagement. This way, they get much faster, original and economical feedback (e.g. Ideascape, Kickstarter, and Fonlabeni from Turkey)
3. Using algorithms to turn data into knowledge: They can collect unprecedented amounts of data, and can make them readily available by adding meaning to them using novel analytical methods. Then they make these data accessible to wider masses, and use their feedback to interpret the data (e.g. Google, the king of Internet algorithms, IBM, Facebook and Ford's start-ups).
4. Renting rather than owning assets: Renting instead of buying digitized and commoditized assets enables them to invest in areas where they can differentiate (e.g. Techshop).

At the end of the day, the more assets and staff you own, the harder it becomes to change your strategy. Therefore, Gen Y organizations stay flexible in that sense, and thereby can change and adapt rapidly in a world where technology changes rapidly. The “must-have” critical competency here is to be able to continuously engage and motivate crowds outside of the organization.
Internal dynamics of Gen Y organizations:

1. Dynamic and proprietary interface: They continuously filter and prioritize external data using company-specific/proprietary interfaces (such as Apple's App Store, or Uber's interface for vehicle choice).
2. Real-time dashboards equipped with new value metrics: Large amounts of data bring along the need in the organization to measure and manage with new metrics (lean start-up experiments, etc.). Gen Y organizations use real-time, customized targets and data that are accessible to all, and are revised frequently enough to accommodate fast growth (especially true for fast-growing Internet companies).
3. Experimentation: The new language of entrepreneurship, “Lean Start-up”, is one of the fundamental values of Gen Y organizations... Learning by frequent experimentation and abundant idea testing is now the new rule of thumb in competition. It has even been observed that well-filtered and frequent experimentation bears better results compared to top-down strategies (Toyota's famous “Lean” methodology is implemented in this digital world as lean start-up).
4. Autonomous teams with a wide range of competencies: Flexible and authorized teams equipped with social technologies ensure the speed of adaptation and success of rapidly changing industries in particular. The valuable trait of this new corporate culture is transparency (the most famous example being Zappos).

WHAT ABOUT US?

What are or should we (at least most of us) be doing in response as those that are watching the rise of the Gen Y corporate culture?

The classic reaction, particularly in industries where change is relatively slow, is “waiting” (e.g. B2B). But what are we waiting for? For change to draw closer to our business… I think, in this day and age this is comparable to waiting until you can spot the drone approaching to shoot you!

Another similar behavior is laced with fear, and involves targeting speed by reducing the number of tiers in the organization. However, as the total headcount and resistance to change remain unchanged in these organizations most of the time, the results stay the same.

Does this come to mean that the destiny of existing companies is to become extinct like dinosaurs? If they keep relying on their closed innovation systems, and continue developing their existing technologies only, yes, extinction is inevitable. However, as some striking examples demonstrate, there is still a way out.
And that is at least to act like a Gen Y organizations...

What to do “to act like Gen Y”?

1. All the top management back to school!: First of all, the leadership team and the Board have to become familiar with and understand digital and social technologies. Don’t even make an attempt if you fail at this point. Then you need to go and meet Gen Y organizations to become their mentees. If you say this would embarrass you, you should at least give your generation Y employees the homework to explain to you these digital and social technologies. Finally, it is imperative that you understand and embrace questions such as “What is big data?”, “How does it become knowledge?”, and “Why us and now?”.
2. Cooperate with Gen Y organizations!: In order to embrace this way of doing business in a permanent way, you want to go beyond mentoring, and create opportunities to cooperate with young organizations in your own line of business or in adjacent segments. Don’t forget that they will outlive you unless you take a step.
3. Set up your Gen Y organization that will eliminate you!: I can almost hear you say, "You must be kidding!”, but believe me, this is how companies who take this seriously go about it… Best proof for this is probably that last year, when we visited General Electric (GE) Ventures in the Silicon Valley, we were told that most of their job was to invest in Gen Y organizations that would eliminate GE’s core business.

FORK IN THE ROAD

Yes, there is an obvious fork in the road awaiting large corporations. Engaging “crowds”, creating value from big data through new algorithms, and experimentation are the must-have characteristics of Gen Y organizations in order to adapt… What’s more, those that want to start a major change should even consider rewriting their corporate mission!

At this fork, the single advantage of large corporations is the intellectual wealth they have accumulated in years… Their challenge is their willingness to create the vision to adapt to this new world, and implement it. However, the disruptive change the digital world has triggered makes it urgent to take action. It is extremely urgent because while you make experience-based decisions when recruiting people, the priority of Gen Y organizations is imagination.

Well, are you ready to change to such an extent that imagination will be decisive when you recruit?

Source: Exponential Organizations, Salim Ismail