4. What is the role of leadership when implementing change?
When we look at hierarchical companies, the pyramid structure in place emphasizes that there will be leaders on the top and people responding to them. This kind of leadership structure usually employs a top-down decision making set-up, where leaders on the top of the pyramid hold most of the responsibility. According to Boynton (2013) this model is not really effective “Their [leaders] brains aren’t big enough to come up with all the ideas that need to be in play. Nobody’s brain is big enough. That’s why an organisation needs all hands (and minds) on deck”.
The Deloitte (2016) report shows that leadership is the second biggest trend for global human capital trends. According to them, “the traditional pyramid shaped leadership development model is simply not producing leaders fast enough to keep up with the demands of business and the pace of change” (Deloitte, 2016). Additionally Nayar (2016) states that considering today’s fast-paced marketplace, teams that need to rely on and wait for a leader to weigh in have lost the game before they start.
Robertson (2015) also argues that traditional companies, with a leader on the top can make companies more bureaucratic which negatively impacts the company’s growth. “Research shows that every time the size of a city doubles, innovation or productivity per resident increases by 15%. But when companies get bigger, innovation or productivity per employee generally goes down […] In an urban environment, people share space and resources locally, understanding territorial boundaries and responsibilities. Of course, there are laws and governing bodies to define and enforce those laws, but people don’t have bosses ordering them around all time. If the residents of our cities had to wait for authorization from the boss for every decision they made, the city would quickly grind to a halt. Yet in our companies [with the Holacracy model] we see a very different organizing principle at play”. (Robertson, 2015)
As Laloux (2014) suggests, leaders also have an important role in determining a company’s evolutionary stage and consequently its structure. Based on this statement, for companies to evolve to next stage that society is demanding, new ways of leadership are vital for organisational evolution. Leaders are also the main asset when switching from a hierarchical structure to a network structure model (Forbes.com, 2012).
According to Forbes.com (2012), the change needs to be started by leaders, otherwise the process can be seen as an obligation by everyone else. “Step one is to make sure this body of people at the top [leaders] is aligned and very urgently wants to accelerate and sustain strategy and change. If that is in place, and that model is in place, we can begin to cascade it down through the rest of the organisation in such a way that this population will want to move over and help create this new model, and want to accelerate and make change happen for it. That’s our experience. If not, what we end up with is trying to run change through a “have-to” environment or culture, and we begin to see it stop and slow down”. (Forbes.com, 2012)
Adopting a Teal organisational structure, in theory, can solve most part of the problems cited above which are faced by people that work in hierarchical companies. “This is the first breakthrough of teal organisations: transcending the age-old problem of power inequality through structures and practices where no one holds power over anyone else, and yet, paradoxically, the organisation as a whole ends up being considerably more powerful.” (Laloux, 2014).
Teal is the last evolutionary stage according to Laloux (2014) and what differentiates it from the other stages is self-managed teams. The authority is distributed among the groups, with no one holding power over anyone.
“As we know from Adam Smith, companies exist because, to a large extent, working together is more productive than working as individuals. The philosophy of self-managed teams consists in acknowledging and implementing this fundamental premise of economic science”. (Zárraga & Bonache, 2005).
