USING UPDATED INFORMATION FROM THE FRONTLINE

One of the foremost responsibilities of senior executives in established organizations, small and large, is to stay updated on current market developments and recognize when it is time to change course and adapt.[1] However, senior executives often hear what middle managers ’think they want to hear’, which often shields them from the shabby truth. Frontline employees capture what is going on from the many daily business activities where they interact intimately with important stakeholders, and this information can be collected as reliable early signals about things to come. Although they represent a prime source of updated information for executive decision-makers, their insights typically remain unused[2].

The competitive environment continues to change as firms in the industry introduce new ways of doing business. Things can evolve gradually and at times abruptly when competitors introduce innovative products and services, adopt new technologies, or change essential elements of a predominant business model in the industry. Such events are often reflected by the term ‘unknown unknowns’, popularized by Donald Rumsfeld when he was US Secretary of Defense[3]. That is, unexpected things can happen in ways that are hard to know in advance. Yet, we must be able to deal with events when they arise to take advantage of the opportunities the new circumstances may offer. This requires that executive decision-makers are up-to-date on current and forthcoming changes in the business environment. Firms with informed executives are able to adapt and prosper, whereas those without will fail to adjust and gradually become redundant.

Crowd-prediction techniques can be used to gather important information about ongoing developments that allow top management to take timely strategic initiatives[4]. It can help executives gain updated insights about new opportunities directly from the frontline, a prerequisite for future growth and value creation.

Executives in Denmark and Scandinavia are generally conscious about the role of engaged employees in getting things done properly. This can be an artefact of lower power distance between top managers and employees operating in the organization as well as common practices of informal communication. The employees constitute an important source of updated market information as they interact with customers and partners in the daily transactions carried out to execute the business.[5]As business activities evolve, engaged employees observe the many subtle changes before anyone else. However, our field studies suggest that these insights typically fail to reach the executive decision-makers despite many good intensions. The ability to capture this information can become a major advantage for those organizations that are able to exploit it in their ongoing decisions.

We know how humans, including executive decision-makers, learn from their experiences to form what some refer to as their ’dominant logic’.[6]Hence, we learn from our failures and successes and store the implied cause-effect relationships in memory to be retrieved when we are faced with new decision situations. It is a form of pattern recognition where the traits of new situations resemble prior events and where specific acts were successful. Such heuristics can be very powerful when events are reasonably repetitive, but they become problematic if the world is changing in unpredictable non-linear ways. This is exactly what we are facing today. Change is changing, and the way the world is changing is non-repetitive and irreversible with the business context constantly evolving, never returning to the old ways. Consequently, executive decision-makers must be able to update their ’dominant logic’ with new current insights from frontline employees, who are the first to capture impressions about the ongoing changes.

The project Crowd Predictions from the Frontline, being carried out by the Collective Intelligence Unit and funded by the Danish Industry Foundation, intends to do just that: Demonstrate how frontline information can be aggregated and presented to executive decision-makers. The ability to develop updated insight about current operations and market opportunities is key to identifying global market potential and taking timely initiatives to exploit it

The project “Crowd Predictions From The Frontline” is supported by

[1] See e.g. Hal Gregersen (2017). Bursting the CEO Bubble, Harvard Business Review, March-April.

[2] T. Andersen and C. Hallin, Global strategic responsiveness. Routledge, 2017.

[3] Rumsfeld, Donald. “NATO Speech: Press Conference US SoD – NATO HQ, Brussels – 6 June 2002.” NATO, www.nato.int/docu/speech/2002/s020606g.htm.

[4] C.A. Hallin, T.J. Andersen, S. Tvetterås (2017). Harnessing the frontline employee sensing of capabilities for decision support, Decision Support Systems, 97(5): 104-112.

[5] C.A. Hallin, T.J. Andersen, S. Tvetterås (2017). Harnessing the frontline employee sensing of capabilities for decision support, Decision Support Systems, 97(5): 104-112.

[6] E.g., Rich Bettis and C.K. Prahalad (1995). The dominant logic: Retrospective and extension, Strategic Management Journal, 16(1): 5-14.

Author:

Professor Torben Juul Andersen, Copenhagen Business School

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