It is important to recognize the size of the changes going on in the world. In my previous post, I discussed how we are no longer in the industrial age; that fundamental structural changes are underway in all facets of society. We must embrace disruption in order to make it work for all of us.
Think for a moment about the structure of the current operating model for most organizations. Departments are formed around functions, just as if they were cells on an extended assembly line. These departments market, sell, distribute, and support the product. They manage the processes that are inputs to manufacturing, such as materials supply chain partnerships, as well as processes of the business itself such as legal, human resources, operations, and facilities.
If leaders truly want to build 21st century organizations, they must define the behavior they wish to see, teach and practice that behavior, and then reinforce it.
The organizational structure based on the assembly line is so 20th century. It’s not inline with the economic world of the 21st century. It needs to change. It will change.
But first, we must define the behavior that is required to succeed in the Digital Age. At every level of the organization, people need to look at themselves and ask, “How do I disrupt myself in order to deal with the new reality?”
As luck would have it, human beings are learning machines. Humans evolved to be continuously learning. From taking her first steps, to learning to walk, or ride a bike, children naturally “try, try again.” When faced with uncertainty in business, people must go back to their natural learning mode. If they don’t know the answer to something, they must go figure it out. They should embrace an entrepreneur’s spirit.
“A growing startup is consistently balancing execution work with exploring new ways to grow.”
Entrepreneurs naturally work differently in the face of uncertainty because they don’t have a plan to execute on. Most of what they do is within the realm of the “unknown.” What they’re trying to do is develop that plan. They’re trying to develop the blueprint of known things that if executed correctly, the business grows. A growing startup is consistently balancing execution work with exploring new ways to grow.
“Uncertainty is a continuum.”
Large businesses need to find their own balance. It’s not that they become a startup again, but that teams find the balance between execution and exploration behavior across the entire organization based on the uncertainty they face. In reality, now more than ever, uncertainty exists all across a company. It’s a continuum; not this binary known versus unknown. It’s not that a company can divide itself into the cliched dual operating model of execution in the core business and exploration in the innovation silo.
Employees need the time, space, and safety to learn. Learning mode includes common practices, such as developing empathy for customers, running rapid experiments, and using evidence to help make decisions on what to try next. Numerous resources exist to explore working this way, including those that teach agile, design thinking, and lean innovation practices.
For this to happen, leaders need new skills to manage teams operating in uncertainty. They must walk the talk. They require self awareness to know when they don’t have an answer. They require vulnerability to admit out loud when they don’t know and where they were wrong. They should seek to develop empathy for workers, colleagues, and their own bosses. They should create an environment where it’s ok to explore the unknown.
Additionally, they need to learn how to balance execution vs exploration work. The hook is the uncertainty part. People have to admit to uncertainty, and then work differently where it lives. Leaders can use agile practices to balance the work. They can use learning impact metrics to measure progress for the exploration work.
“You need the failure to see the success.”
All workers should be members of agile teams. Teams are given a mission, composed of the challenge they are given to conquer, the metrics used to measure their progress, and guardrails around behavior allowed to achieve the desired outcome. Team missions are rolled up to division or departmental missions. Division and group missions are rolled up to the company’s mission and strategic priorities. On a regular basis, performance is measured by progress toward desired outcome. Ultimately, performance is measured by impact to the product, division, or company.
Between leaders and team members sits middle management. Middle management must find a new role, too. No longer dictating how work will be done, and passing down edicts from above, they become coordinators of information flow. Old school information was a one way flow top to bottom, where each layer lower did what they were told. Good middle managers learned how to manage up, meaning they massaged the outcome of lower levels in ways to placate higher-up. They often compete with colleagues to better position their fiefdom, since their performance was measured only on output.
“Agile teams close to the source of problems are better able to solve them.”
In the new structure, their role is more strategic. They are empowered to allocate resources across teams in a way that best serves their group or division missions. They align teams missions and metrics to group priorities. They ensure team output is consolidated such that it’s cohesive with other components. They own the larger picture.
They also must ensure that information is shared up to leadership as well as across horizontally to other parts of the organization. Agile teams close to the source of problems are better able to solve them. However, middle management must coordinate the new flow of knowledge to and from those teams.
“Organizing in the new way to reduce uncertainty through learning increases efficiency.”
Up and down the hierarchy, the biggest obstacle to change is the fear of losing the ability to execute and hit targets. Organizing in the new way to reduce uncertainty through learning increases efficiency.
The devastating COVID-19 pandemic is part of a larger disruption — moving from the Industrial Age to the Digital Age. The increased complexity of this age, as well as the continuous disruption leads to massive amounts of uncertainty.
People must behave differently to deal with uncertainty. You can’t simply execute through the unknown. They can do this by thinking like entrepreneurs, in other words, learning before executing. To behave in this way, however, requires new leadership skills and benefits from alternative organizational structure. Disruption is happening, we can’t stop it. We can, however, learn and adapt in order to survive and thrive.
Brant’s new book, Disruption Proof, is coming September 14, 2021. Learn more at brantcooper.com