There are currently heated discussions in the IT community about the need for bimodal organizations, one mode focused on predictability, performance, and efficiency (Mode 1); and one focused on agility, flexibility, and ability to operate in areas of great uncertainty (Mode 2). Gartner, the IT industry analysts, is clear on this issue (source: http://www.gartner.com/smarterwithgartner/why-digital-business-needs-bimodal-it/): “You need to become bimodal because one mode can’t answer the complex needs of the organization. It’s not nice to have. Gartner believes you must have both modes.” The topic for today is whether this imperative also applies to sales organizations, end whether there is more to Mode 2 in a sales context than old-fashioned business development.
I have tried to track down the origin of the concept of bimodality, and it appears to have its roots in the sociology of science, and specifically the study of knowledge production. It seems specifically to have originated in a 1994 book by Michael Gibbons, Camille Limoges, Helga Nowotny, Simon Schwartzman, Peter Scott and Martin Trow: “The new production of knowledge: the dynamics of science and research in contemporary societies.” The authors’ thesis was that there is an alternative way of producing knowledge, based on “multidisciplinary teams [that] are brought together for short periods of time to work on specific problems in the real world for knowledge production” (source: en.wikipedia.org/wiki/Mode_2). I am a layman in this field, and would appreciate if a reader with more scholarly background could shed light on the issue of origin.
Before we proceed, I must admit that I last year wrote a review of J. P. Kotter: “Accelerate”, a book about the need for dual operating systems in business organizations. See http://www.amazon.com/review/R33QINHKET5EIZ/ref=cm_cr_dp_title?ie=UTF8&ASIN=1625271743&nodeID=283155&store=books. My review was for a long period voted the most useful critical review of this book on amazon.com. However, the book was an easy target for a number of reasons, including that it was a rehash of Kotter’s earlier thinking and that Kotter seemed less willing to refer to previous thinking in related areas. It is now increasingly clear to me that I was wrong in debunking Kotter’s concept of dual operating systems in business organization.
Here is my adjusted thesis: i) Bimodal capabilities are needed in sales organizations; ii) there is a need for a balance between Mode 1 and Mode 2 capabilities; iii) the concept of dual operating systems in organizations (in Kotter’s sense) is related to the concept of bimodality; and iv) Mode 2 in a sales context has limited to do with old-fashioned business development.
Regarding (i), here is why: I guess we have all observed them in real life, highly successful people who bring in large and strategically interesting deals through sheer agility, flexibility, and personal connectedness. My favourite example is Mr. Zaoui, former head of European investment banking at Goldman Sachs, who is believed to have worked on deals worth around USD 300b during his stint at the bank (source: www.efinancialnews.com/story/2012-04-10/goldman-rainmaker-zaoui-to-retire).
On the other hand and with reference to (ii), too much Mode 2 may not be effective. Indeed, I have for many years worked with various early-phase technology companies and in some of them there were clearly too much Mode 2 (typically in the form of smart and charismatic, but also big ego and somewhat erratic founders), too little Mode 1. In such organizations, everything revolved around agility, flexibility, and uncertainty, when it could be argued that what these businesses needed, were high-performing and predictable sales machines (which is how highly successful organizations like Aker Solutions, IBM, Oracle, Microsoft, and Accenture organize their sales activities).
A related side issue is whether there is an optimum mix of Mode 1 and Mode 2 for any organization. My take on this issue is that no, there are a range of feasible mixes, and different companies in apparently same industry tend to select different mixes depending on for example previous organizational choices, available resources and current capabilities, seemingly without discernible relationships between exact mix and financial performance.
Some readers may argue that the need for bimodality in sales organization depends on the maturity of the business or the industry. Yes, I agree, in many mature industries the focus should be on building market share and generating margin from current customers, which is the stuff that Mode 1 is made of. On the other hand, Eastman Kodak was fairly Mode 1 (as I understand it), and it is well known how that story ended.
So let us get specific about Mode 2 in the context of a sales organization: It is by definition about agility, flexibility, and ability to operate in areas of great uncertainty. Where in the organization does one build these capabilities, and does share share, co-locate or split Mode 1 and Mode 2 resources in the organization? McKinsey’s 7S framework (structure, strategy, systems, skills, style, staff and shared values) may be used as a guiding framework for such endeavour, but really it is about making hard and explicit mode-specific design choices in areas like reporting lines, sales reporting, incentive systems, and recruitment. At a more fundamental level, it is (with reference to shared values in the 7S model) about instilling an acute awareness of strengths, weaknesses, opportunities, and threats at all levels in the Mode 2 part of the sales organization, and a corresponding eagerness to exploit strengths and opportunities / deal with weaknesses and threats.
If you believe that the bimodality imperative applies to your organization, here are four issues that you may want to consider:
- Do you have the required Mode 2 capabilities? What is the strategic rationale for building Mode 2 capabilities and how to calculate the NPV of agility, flexibility, and ability to operate in areas of great uncertainty?
- Do you have the right balance between Mode 1 and Mode 2 capabilities? Do you know your revenue split between Mode 1 and Mode 2?
- Where are you going to build Mode 2 capabilities in your sales organization? Born or bred? Who is your Mode 2 champion, the CEO, the VP Business Development, the business development manager, the product managers, or someone else?
- Do you believe Mode 1 and Mode 2 should be based on shared, co-located, or split resources?
But conclusion is clear, your sales organization need to become bimodal, and Mode 2 goes significantly beyond old-fashioned business development.
Have an excellent Easter!