HBR on Softscaling

There is an exceptional article on the Center for Information Systems Research site at the MIT Sloan School called Softscaling: Combining Emotion, Optimization, and Data by Ritu Agarwal. The article focuses on research performed on companies in India and included more than 60 interviews with CxO level personnel with regard to their overarching approach to business. Across industries the top performers had a similar strategy termed “Softscaling” by the author. The idea that by blending capabilities along three areas (emotion, optimization, and empathetic use of data) that significant performance gains could be made. “Softscaling combines the best features of optimization (e.g., low cost and reliability via Six Sigma approaches, metrics, and rationality) and emotion (e.g., connection to the customer and firm with passion, commitment, and con- cern). The actions in optimization and emotion are linked together by an evidence-based empa- thy grounded in data analytics.” (need citation). This emotional focus is strikingly different from traditional western style corporate execution, but it has produced striking results even outside of India as evidenced by the turnaround of Jaguar by Tata Motors.

The focus on emotion in soft scaling is intended to cut across the corporate operating environment and include stakeholders across the value chain from vendors and workers through to the customers. I think the closest western management approach would be Management by Wandering but with a focus on employee engagement. The vendor engagement seems to be a bit similar to what companies like Walmart have done by pulling their vendors and partners in more closely and engaging them more directly in support of initiatives like their supply chain management, however again I think that the level of emotional engagement and the dynamic is much different than what is put forward under Softscaling. The Softscaling approach described in the article appears to be much more intimately tied to being together followed by winning together than is traditionally seen in western business culture.  

The optimization discussed under the Softscaling approach also appears to be just a slight variation on the optimization models that have become prevalent in western business including the use of tools like six sigma. The take away from the research in this case is the use of these tools to optimize business processes without underestimating the human factors that may come into play in business. The example given of empowering bank employees to forgive missed loan payments under the right circumstances works because the company has also committed itself to having personnel that that stay within communities are charged with knowing individual customers and provided with the flexibility to step in as appropriate.

Combining this optimization of business process, in combination with a focus on building an emotional connection across the stakeholders in the value chain can be even more efficient if these two things are linked to data in order to understand the effects of optimization and emotion on the business. This enables the companies to deeply understand their customers, vendors and workers unique connection to the companies products, the results of business experiments, and engage in decision making much more closely to the activities that are driving performance.

Thanks as always for reading my blog, I hope you will join the conversation by commenting on this post.

If you liked this post, please consider subscribing to this blog and following me on twitter @jmillsapps. I regularly give talks via webinar and speak at events and other engagements. If you are interested in finding out where to see me next please look at the my events page on this blog. If you would interested in having me speak at your event please contact me at events@joshmillsapps.com.

If you are interested in consulting services please go to MB&A Online to learn more.