Organize for growth and innovation
Updated: May 20, 2021
The ability to make the same things faster or cheaper isn't as important as it once was. Today what's far more important is what an organization and its people can do with the resources they have.
There are major changes in our organizations today, but in many cases we still live in outdated ways of governing and organizing. Without an understanding of the difference between the “traditional” organization and the organization of the future and the realization of what changes we need to make, it is easy to get lost along the way and focus more on trends than on what is really crucial to creating a long-term sustainable and value-creating organization.
But is there such a big difference? And what is the difference?
Back in the days, we had strategies that can be illustrated by a stopwatch; focusing on efficient and optimized processes, doing the same thing repetitively, at a scale with maximum efficacy, working with the margins, communicating with the workers on strictly to know basis, with hierarchies and principles of command and control. In this environment the traditional way to educate, pushing out formal content (by different methods) to the workforce was the easiest way to go. And this strategy worked really well when information was scarce, when the world was predictable and stable enough. But it is no longer sufficient when the environment is evolving around you rapidly, not once a decade, once a year but every week or day. Suddenly a team, or a company, find it very efficient doing the wrong thing. And an organization can find itself with a very disengaged work force and that becomes a real problem, it becomes a survival problem.
In the traditional organization, the focus is on processes and efficiency. It is assumed that "everything" is predictable and conforms to predetermined ways of functioning. There are clear hierarchies, and the organization is governed by management systems and control functions. Title and rank are more important than ability and performance. There is more focus on the individual than there is on the collective team. Employees are motivated by salary and bonus, and the control methods in the traditional organization are a constraining factor. There is no room for employees and the organization to develop and grow outside the given framework, which also limits the organization's innovative power.
In the future organization, traditional principles of how an organization is governed have been turned upside down. Here one does not think it is possible to predict everything and "openness" is the key. Motivation is created by building commitment and meaningfulness in employees with a clear purpose; ie what value the organization contributes to its customers, and to the outside world in general. Transparency, empathy, collaboration, adaptability and mobility are key principles. Ability and performance are more important than title and rank, and the leader's role is not to control but to empower employees to grow and succeed. Decision-making is pushed out to the edges. Seeing opportunities and challenging oneself and the team to try new ways of working, seeing and testing the unseen create the foundation of the future organization.
The future organization is organized for growth and innovation enabling employees and teams to flourish, grow and make breakthrough innovations.
A prerequisite for successful digital transformation
I believe that a change in the traditional company is a prerequisite for success with digital transformation (and probably all types of transformations today). No kind of transformation ("digital" or otherwise) never involves technologies alone. They involve the people that use the technologies and the values that infuse how they use them. In fact, the ability to stake out and maintain a robust strategic advantage now depends on much more than technological superiority. An organization's culture - the principles that inform what we do and why we do it, along with the way of working that stems from this - is the key source of competitive advantage, and it is becoming more important every day.
Organizations are making technology investments and getting no results because they aren't prepared to change their organizational structures, behavior or ways of working. Outdated methods are used to structure, operate and lead the organization.
More than 70% of digital transformation fail. - Forbes
Organizations hoping to manage disruption will need to make sure they are building new cultural capabilities in addition to technical ones. And the way to change culture is not to first change how people think, but instead start by changing how people behave; i.e. what they do.
Design your organization for breakthrough growth in a fast-changing world
A question that is often asked is "how should our organization be able to function with the principles of modern society?" What I often see is that companies implement an agile way of working on the top on traditional structures. This creates, in the worst case, an even more slow and uncommitted organization.
Many organizations focus on agile transformation. But if you do not simultaneously create trust and transparency and reduce hierarchies, the agile investment will probably only be like a new refueling, it may last for a while but then you have only created the organization to require even more fuel. Many investments that are made are also quite complex, which in turn only seems to strengthen existing working methods, structures and hierarchies.
In the successful organization, bureaucracy and innovation are partners. They create a system where both elements continually improve and where people in each part of the organization collaborate to generate superior results.
Bureaucracy works when organizational tasks - what to deliver and how to deliver it - are clear, stable, and predictable (innovation, by definition, meets none of these criteria). Every company has to run its business with efficiently, getting standardized products out the door and delivering predictable services to customers.
The challenge, in a nutshell, is not to replace bureaucracy with agile but to find the right balance between the two. Every organization must of course run its business; i.e. it must be good at operations. But every company must also change the business, continually introducing not just new products and services but also new operating methods and procedures; i.e. must be good at innovating.
Although these tasks require different skills, they are not enemies. They are complementary, interdependent, mutually beneficial capabilities that need each other to survive. Insufficient focus on innovation leads to a static enterprise that will fail to adapt to changing conditions. On the other hand, insufficient emphasis on operations creates chaos - poor quality, high costs, and dangerous risks to customers and to the business.
The key is balance. Every organization must optimize and tightly control some of its operations, but at the same time, every organization must innovate. Agile, done well, frees and facilitates vigorous innovation without sacrificing the efficiency and reliability that are essential to traditional operations.
You have to find the golden mean between bureaucracy and agile for your organization.
How can you combine these models into a golden mean for your organization?
How to generate continual organic growth
It may be difficult to break existing structures in an organization. And even if the will and awareness are there, leaders in many cases do not have the knowledge of where to start and how to proceed.
We need ot find ways to harmonize existing structures with agile way of working
Spry Growth Loop offers you tools for harmonizing agile working methods with your existing structures. The framework with the nine focus areas helps you to balance structure and agile working methods based on your organization's current state. You get a common language within the organization and a deep understanding of how your organization's needs and can develop. You also get help to find your hidden driving forces in order to focus on changing behaviors and ways of working, which in turn improves the culture of your organization.
In the long run, you will develop the driving forces needed to create organic breakthrough growth and a great power of innovation.