Organizational speed & resilience in a bumpy world
Introduction
Early in my career, the company where I worked did an annual planning exercise with a 20-year time horizon as was the standard in my father’s career. However, this quickly became a 10-year strategic plan and then a 5-year plan. Even then the global economic environment disrupted the vision of stability. What was a 5-year plan was in reality a capital budget with three to five year projects and a monthly budget for the next year. Anything beyond the first year was immaterial other than the expected project economics, which were often driven by regulatory requirements or evolving technology that was becoming a basic requirement for staying in business. Increasingly, strategic management has shifted from forward planning to competency building to prepare for whatever the future will present which is likely a bumpy road. The only difference today is that the future is coming quicker than ever, driven by breakthrough technology, especially generative AI that is built on 20 years of advanced computing and telecommunication. This trend is confirmed in McKinsey’s “State of Organizations 2023” where the first trend mentioned is the need for increasing the organization’s ability to respond to environmental impacts thereby strengthening organization resilience.
Running as fast as we can yet still falling behind
The challenges organizations face are not new. What is new is recognition that these organization shocks are becoming more frequent, each with a need to respond quickly. Further, the time between disruptions is no longer a return to stability but sequential disruptions that sometimes even overlap. This has become the new norm that all organizations face — reacting to competitors and changing expectations of customers & employees. The post-Covid “new normal” includes employee expectations of work from anywhere at any time whenever such options exist. Reactions to pandemic supply disruptions continue in how customers make supply decisions and just-in-time supply chains for low cost are met with increased risk evaluations. Technology has pushed our choice of one or two between quicker, better, or faster to all three now required. And lest we forget one, competition will quickly make our deficit known.
At the same time there is pressure for speed and the ability to respond to disruptions (resilience), many organizations are still rooted in Industrial Era management practices that were developed for a stable environment. As will be shown, there are several pioneering organizations inventing new structures and operating styles, but they are mostly start-ups driven by founders disillusioned with past management practices or visionary leaders tasked with turning around an organization facing an existential crisis. That leaves most mature organizations that struggle with bureaucratic dysfunctions just this side of facing a crisis. These organizations face the challenge of reinventing itself while still running the business. When examining this challenge, a core problem rests in the Industrial Era approach to control — controlling the people doing the work. This work paradigm was not a problem when there were few competent leaders overseeing the work of a minimally educated workforce. However, this is not the world today when most “manual” labor involves working with very sophisticated technology. Central to this control process is how decisions are made, a problem that includes power, authority, and privilege. Regardless of the legacy management practices, it is essential that organizations find a way to speed up decisions which will require how authority is delegated, a process that raises fear of anarchy and incompetency, depending on the point of view of who is involved. Nevertheless, it is essential that organizations learn how to better control of the decision-making that is slowing the organization’s response to emerging issues.
This ability to respond to challenges extends beyond wider development of cross-organization competencies for problem-solving, decision-making, and change. In a fast-paced business environment, limiting actions to responding to issues as they arise will put you a step behind the organizations that anticipate how and problems are likely to develop. Being proactive involves close connection to the evolving needs of customers while sensing shifts in attitudes and expectations of employees, suppliers, and competitors. In the past, this environmental sensing may have been part of the annual planning cycle that required a minimum effort to move beyond rubber stamping the prior plan for another year. It also requires going beyond scenario planning that is often limited to top leaders as an exercise in foresight and reflection. This area of focus also needs wide cross-organization involvement to gain the necessary foresight of the wide range of directions environmental impacts are likely to arise. Further, the ability to draw attention to an issue cannot be limited to a select few based on their position on the organization chart. Communicating up and gaining cross-organization consensus is not timely enough. At the same time, some mechanism is necessary for purpose alignment with a process for resource allocation of knowledge & expertise, people’s time, and expense & capital funds. Recognition must also be made that all possibilities cannot be anticipated while building competency for early identification and mobilization of response.
A recurring theme above is how to involve everyone across the organization, which goes beyond simple delegation that has an implicit threat of withdrawal. It also requires a wider understanding of empowerment that is often equated with delegation. In this narrow view of empowerment, employees have limited guidance of the boundaries of authority and decision rights. Under routine conditions, such delegation is sufficient when dealing with recurring issues that fit within the delegated boundary. However, employees will have to extrapolate those boundaries when faced with different situations which raises the issue of how mistakes have traditionally been accepted. With high risk associated with a mistake, employees are motivated to work within narrow boundaries and bump the issue back up the organization hierarchy as the safe career move. A better approach is to provide guidelines for risk acceptance and work within constraints driven by the organization’s purpose. This shift in attitude is reflected in the “better to ask for forgiveness than permission” approach for self-empowerment. Of course, such action must be seen by others as being purpose aligned without personal benefits being promoted. This shifts empowerment from a narrow view of what is explicitly delegated to active testing of boundaries either through clarification (“I intend to . . . “) or acting in consultation and involvement of others (another way to reduce or offload risks to others).
Assessing your organization’s speed and resilience
Before moving on to discussing actions organizations can take to increase resilience and response time, let’s take a few minutes for reflection on how your organization rates on speed and resilience.
Decision-making process
· The reason for the decision is not clear
· Purpose is not understood or has conflicts
· Unclear who has decision rights
· Too much focus on consensus
· Bottleneck in the decision-making process
· Only loudest voices get heard
· Fear of making a wrong decision
· No culture of testing ideas
· Lack clear decision-making process
· Limited options (resource restriction)
· Short-term prioritized over long-term
Meetings
· Meetings to prepare for meetings
· Meetings as theater or politics
· Too many meetings, often without a clear agenda
· Failure to reach a conclusion
· Avoid tough conversations
Time management
· Everything is a crisis (no priorities)
· No time for actual work
· Addicted to analysis & planning
· Taking excessive time trying to predict the future
Transparency
· Information not shared, used as power
· Everyone wants to be involved in everything
· Cannot say “no”
· Lack of accountability and ownership
Interpersonal relationships
· Lack of honesty and candor
· Politics – conflict between silos
· Ideas get lost in the bureaucracy
· Individuals valued over teams
· Learned helplessness
· Passive-aggressive behaviors
· People do not feel valued for their contributions
· Protecting and stroking egos
Which of the above issues are limiting your organization’s speed and resilience?
Requirements for the New Era Organization
Based on the assessment of your organization, you may want to create a specific list of how your organizations needs to change to increase both speed and resilience. In general though, there are several requirements that are observed in how most bureaucratic organizations need to change to move into a post-Industrial Era world.
· How employees are involved needs to evolve in both preparation and practice.
· Distributed authority to respond to emerging issues.
· Control need to shift from controlling the people doing the work to enabling the production of work using soft forms of control (self-organization & operating boundaries using principles in tension).
· Positional power needs to shift to group powers (convening & collaboration).
· The mindset and approach for decision-making and change needs to shift from episodic disruption of a stable operation to routine adaptation in a dynamic environment.
· Greater awareness of organizations as a network of networks where the organization chart only documents positional power, authority, and privileges.
What are the requirements for your organization to be successful in the future? How will you get there?
Next steps forward — racing ahead
The question is not whether organizations need to respond quicker with more resilience but how they will gain this required competency. Some possibilities include –
1. Identify bottlenecks and address them.
2. Find the hidden gems in your organization that are beating the odds and learn from them.
3. Review traditional management & leadership “best practices” and determine which are suitable for maintaining stability (ignore these) and which support change.
4. Study how pioneering organizations organize for work and creatively swipe their ideas (all ideas will require some modification for your situation and cannot be blindly used).
5. Or, take the longer route that will require wider, cross-organization involvement to make sense of the challenges faced and how people see things changing (or what is limiting the change they desire).
Decision time — what is your next step?
Continue the discussion at https://www.futocracy.network/spaces/11637556/feed
Reference
McKinsey (2023). The state of organizations 2023. https://www.mckinsey.com/capabilities/people-and-organizational-performance/our-insights/the-state-of-organizations-2023
