My company is obsessed with organization design — understanding how the world’s most responsive businesses do their work. But that’s only one piece of the puzzle. Even if our hypothesis about what makes organizations faster and more adaptive is correct, we still have to get from here to there.
The $1B Question: How should a large, successful, and generally slow business go about transforming itself without missing a beat (or quarterly earnings)?
Time to change
Let’s use a fictional example to explore this question. Imagine your job is to improve the overall performance of an amusement park called WonderWorld. As you might have guessed, this amusement park is struggling to stay relevant amidst the many new forms of entertainment and family fun available in the 21st century. Shareholders are calling for change.
The traditional re-engineering approach would be to break out the org charts, process documentation, and budgets for the various rides and shops, and start to look for inefficiencies — to begin a grand reorganization process. Are certain rides struggling on throughput? Are there dependencies between certain parts of the park? Does the park’s financial data tell us something about where to start?
While these approaches are likely to find fruit, they all too often become cost-cutting exercises. And that’s simply because cutting cost is easier to do in the short-term than realizing new value. If shareholders are calling for WonderWorld to change, they’ll likely want to see results in the next few quarters, and cost cutting is the surest way to show progress. But it’s not enough. It serves the short-term shareholder while exposing the culture to the threat of being more efficient but less effective.
Organizational transformation cannot (only) be about cutting costs.
If we’re honest with ourselves, a cheaper or leaner enterprise is not really the goal. Reduced cost is really just a byproduct of increasing your organization’s ability to process and act on information — to probe, make, ship, and scale—things that add up to increased throughput and leverage (measured in return on capital, users per head, growth per head, etc.).
Barriers to change
Regardless of whether our goal for transformation at WonderWorld is a leaner cost structure, increased innovation, or a better guest experience, we will likely fall victim to our own hubris as leaders and try to do too much too fast. Executives tend to believe that they can redesign the whole enterprise from a corner office with a handful of PowerPoint slides. As we explored in The Last Re-org You’ll Ever Do, there is far too much complexity in a system like WonderWorld. The only viable solution is to create an organization that can change itself continuously. And we can’t get there by issuing org charts from on high.
Lasting transformation can’t come from above. It has to come from within.
Things would be much easier if we could find a way to improve performance in a decentralized way — one that enlists the enthusiasm and participation of the people in the network itself (i.e. park staff and guests). That means we need to start small. We need to enlist people who are willing and interested in changing — who feel the day-to-day pressures and opportunities in the park directly.
And now we get to the real rub. The problem is that for almost every person in the organization (including the CEO) organizational transformation is a nice to have, not a need to have. Sure, they know that if the park doesn’t change, it will eventually kill the business. But that’s in the distant future… long after bonuses are paid out. Maybe even after we’ve all moved on. And so while we all believe in the case for change, we’re infinitely more worried about this year, this quarter, and this project.
By the time org change is a “need to have,” it is way too late.
And yet, this intense need to solve for the short-term and act in our own self-interest is precisely the Achilles heel we need to start a revolution of decentralized transformation. Let me explain.
Transformation is a three-legged race
In order to harness the inertia of the organization, we need to leverage short-term ambitions for long-term change. At The Ready, we like to think about it as a three-legged race — in which we tie a short-term project to a long-term change objective. The project, a mobile app for instance, is a need to have — it has to ship this year in order to keep WonderWorld competitive in the marketplace. This project is happening.
What if we asked the team responsible for it to work in a new way that aligns with our future? What if we empowered, incentivized, or even mandated that they… operate as a self-organizing team? Or use OKRs? Or use cloud-based collaboration tools? If we do this, we will have succeeded in tying a small piece of our long-term goal (responsive organization) to what the business needs now (mobile app).
In our experience, when teams start working in a new way, mindsets change and behavior spreads. It’s hard to watch a team down the hall sitting together, highly engaged, working in an agile process, shipping every week, and getting accolades, and not wonder why the whole company doesn’t work that way. When the time comes to roll change out further, there are plenty of handraisers.
Make no mistake, this is messy. It is challenging. For starters, many employees are going to argue that a critical project is no place for an experiment. “This is mission critical work, Bob. You should try this experiment someplace where the stakes aren’t as high.” That sounds logical, doesn’t it? And yet, we’ve seen time and time again that low-stakes projects fail to trigger lasting or heritable change. It’s precisely because the mobile project is important that the team will have to make it work — the project and the method. It’s your job, as general manager of WonderWorld, to make sure that they are held accountable for both. Winning is not winning unless both things happen.
When a new client calls us in to discuss organization design and transformation they’re often surprised that we don’t do re-orgs as grand gestures complete with a big reveal of the new (soon to be obsolete) structure. They’re surprised when we talk about product innovation, strategy, process, talent density, leadership development, mobile, or big data. But we have to talk about these things. We have to do them, and do them differently (better). And that’s because transformation isn’t a pole vault. It’s a three-legged race. Awkward. Lurching. Collaborative. Stressful. Fun. And we get to the finish line together.
Ready to change how you work? The Ready helps complex organizations move faster, make better decisions, and master the art of dynamic teaming. Contact us to find out more. While you’re at it, sign up to get our newsletter This Week @ The Ready delivered to your inbox every week.