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The truth about organisational restructuring

The start

The first time I experienced a restructure, was when I got a call to come into the CIO office. that was about six months after I joined the company as a team leader in IT. Not sure what the topic was, I got into his room and set down. The CIO wanted to hear my ideas about some other areas in IT. The conversation sounded valid, but I had this distinct feeling something was up. I got back to my desk to find everyone in IT were called to a meeting for an important announcement. In the meeting the CIO announced a new structure, many senior managers names had no box, and my name was there now responsible for these areas that I was asked about an hour ago

…it was my first job in a commercial business and I believed the CIO that it was about better service and clearer accountabilities for the new management team. In reality, it happened to be about cost-cutting and moving aside “opinionated” managers who disagreed with the CIO. Many months later we were still struggling to recover from the damage to trust that this restructure created.

The reality

Restructures as a way to deal with cost-cutting became particularly popular after the financial crisis of 2009.

Mckinsey, 2009 : “We suggest a better way: companies should start any cost-cutting initiative by thinking through whether they could restructure the business to take advantage of current and projected marketplace trends (for instance, by exiting relatively low-profit or low-growth businesses) or to mitigate threats, such as consolidating competitors” (https://www.mckinsey.com/business-functions/organization/our-insights/a-better-way-to-cut-costs) and the recipe was clear:

  • Combine incidentals to gain a visible effect on the bottom line
  • While reducing the number of roles take personnel actions that were avoided before
  • Cut on management

Since, I myself led many restructures, some to accommodate new technology and changes to processes and roles responsibilities and some responding to a CEO demand to cut 10%, 20%, or even 30% of operational costs. Because of my experience in that first restructure, I committed to doing it differently. I believed that transparency, inclusion and opportunities for feedback and training made a difference even if at the end of the day some people lost their role. However, we now overused restructures and squeezed the lemon as much as possible.

Organisational restructuring motivated by cost cutting (and nowadays most are), achieves less and less sustainable long term benefits. It means that in the process, we are breaking the fundamental trust we need for a productive relationship between people and organisations. We embedded a cynical view, even on the few times a restructure was really about a new business model, new ways of working or strategic alignment.

The alternative

When we move forward we have to get away from this overused, usually ineffective method or improving business results. The answer should be in creating agility within an organisation in a way that allows an on-going evolution to teams purpose, roles and responsibilities and even to the size of the organisation. This agility is what is required as a dynamic response to fast-changing conditions.

There are many aspects organisations need to create to achieve agility. However, here are my favourite three ingredients:

Teams

With technologies and competition accelerating, companies plan on shifting to a more flexible organizational model. A popular approach is adopting the concept of agile teams. The idea is that when a new challenge arises, companies using the agile teams approach allow for small teams to form, with the necessary range of skills, to seize the opportunity. Agile teams manage themselves and are fully accountable for what they do. In the not very distant future merging artificial intelligence with real intelligence will allow these smart, dedicated, in-place, and flexible teams of generalists, to direct much larger teams of remote workers and digital humans. This combination of in-person, remote, and digital workers will allow the teams to react quickly to new opportunities and quickly retreat from failures. It is clear why this concept is so attractive. These teams can be the biggest winners in the digital era.

Learning organisation

Learning organisations and the people in them learn constantly from everything they do. Continuous learning is systemically built into the organisation’s DNA and infrastructure. Everyone gets that continuous learning is expected and will be rewarded. To achieve that, communication is open and widespread, people at all levels are included in most communications and it’s assumed everyone “needs to know.” Further, senior leaders show they are learning constantly by communicating what they are learning as they learn; people are rewarded for learning with recognition, growth jobs, promotions and even financial compensation. (most recent example https://www.microsoft.com successfully making the massive shift in mindset from desktop to cloud)

Holacratic governance

Rooted in methods like Holacracy an holacratic governance is a process to support distributed decision making replacing the current way in which decisions making are vested in a management hierarchy.  The principle of holacratic governance are:

  • roles purpose and boundaries are clear and transparent to all
  • a role is fully accountable to deliver to its purpose
  • everyone in the organisation has an equal voice to suggest changes to purpose or boundaries
  • no one has the power to overrule a suggestion unless they can prove certain and real damage to the business.

The principles of holacratic governance are counterintuitive to current management thinking however are critical as part of achieving agility. (most famous example https://www.zappos.com/)

 

If you feel you are constantly being restructured, you are probably right. This method of cost-cutting is overused in most organisations. It is about time to embed true agility for long term sustainable change.

 

@Hadas Wittenberg is a change maker and a Future of Work Enabler

Agile teams don’t scale! They spread (if conditions are right)

Background

Agile teams definition: “Small, smart, dedicated, in-place teams who have the necessary range of skills to seize a new opportunity as it arises. The agile teams manage themselves and are fully accountable for what they do”.

With technologies and competition accelerating, companies are hoping to shift into a more flexible organisational model. The buzzword for this is agile. Agile once considered a radical alternative to command-and-control-style management and is now “rolled out” across a broad range of industries. It is an exciting concept in businesses.  Having these teams mean that in the already happening future of merging artificial intelligence with real intelligence will allow these smart teams to direct much larger teams of remote workers and digital humans. This combination of in-person, remote, and digital workers will allow the teams to react quickly to new opportunities and quickly retreat from failures. It is clear why this concept is so attractive. These teams can be the biggest winners in the digital era.

However, while the concept is widely appreciated, we seem to get stuck on trying to scale, “roll out” or duplicate by using existing, none effective, change management practices. Agile teams are new and, in most cases, fundamentally different way of thinking and operating. It requires a deep change.

Deep change

Deep change happens when we fundamentally change the way we think. It allows something different to grow and spread across the organisation in a way that is sustainable and has long term benefits.

As leaders and change agents we usually focus on activating the self-energizing commitment and energy of people around changes that they deeply care about. However very little if any attention is given to the limiting conditions that exist in all organisations. These limiting conditions might stop the agile teams from forming, these might slow or stop them growing and deliver business results or these might hold them back from spreading. Only by addressing these limiting conditions organisations can really become agile.

The diagram below, inspired by the book Dance of change by Peter Senge describes the self-energizing process of deep change and the conditions that limit it.

deep change diagram 

Seed phase – limiting conditions

Seed the idea of agile teams – Create Small, smart, dedicated, in place teams.

Time flexibility and availability –most people at work are overloaded and under constant pressure to do more with less. However, like with any significant change people that are part of an agile team, should have enough time to learn, develop and embed a new way of thinking and working. To achieve that the teams should be able to control their own time allocation. The teams should also prioritise what to do or not and how much time is directed to learning, planning, reflecting and collaborating. With limited time as a constant reality, start small!

Psychological safety and trust – at the core of the agile team is the ability to experiment, fail fast, learn and continually improve. Teams should feel safe to share their learnings and trust that being open and honest is advancing both their own and their teamwork. It is important to allow the trust to develop through clarity and consistency of Organisational values, leadership that “walk the talk” and encouragement for exploring personal and organisational values alignment.

Help availability – agile is a new practice in most organisations.  It is a new way for individuals, teams and organisations to think and operate and it requires a significant amount of support and help. Help should come in the form of coaches who are able to guide and challenge the team for new learnings, sponsor availability to remove bottlenecks and protect the team initiation and other experts to complement capabilities gaps. Many organisations have not achieved the commitment level required to cause agile to be successful. If you are an executive sponsoring who this change but have no time to participate, if you are a manager but you sit on the fence to see if the experiment will be successful, or if you add this activity as just one more thing to do then don’t even start.

 

Grow phase –  limiting conditions

Grow the agile teams – allow them to manage themselves and be fully accountable for what they do

Measurements in use – Measurement is an important part of building credibility and feedback is key to agile learning. However, if the measurement is used as a lever to change behaviours you are undermining reflection and openness of the team to new learning. For example, if you created the expectation that agile is about short term ROI you will negatively impact the team ability to meet expectations and undermine the overall value that can be achieved from this change.  Instead, organisations who are committed to the success of agile, should consider balanced measures including performance, value creation and team health and use these as real-time, constant feedback to support learning and growth.

Local management of interdependencies – agile teams that are interacting with non-agile functions might feel misunderstood and unsupported. The organisation has to feel comfortable with allowing the teams to manage their interdependencies at a local level and the team must learn how to become aware of the system impacts of their own activities.  Two critical capabilities required for that: the ability to collaborate with others and system thinking.

Tolerance for self – directed teams -The agile teams require a successful arrangement of power moving away from direct and control to setting direction and adjusting in order to achieve their purpose. If the organisation’s tolerance for independence and self-governance does not increase, then this leads to a clash over autonomy between the local group and the larger system. The best way of increasing tolerance for self-directed teams is through setting a hierarchy of purpose where at every level there is an awareness of the purpose and direction of the organisation while considering the current reality and developing the capabilities for local management of interdependencies.

Spread phase – limiting conditions

Ready and able to seize a new opportunity as it arises

Organisational learning – the overall ability of the organisation to accept, learn and adopt new thinking is critical for spreading the agile teams. If you have invested all your focus on the growth of the initial teams and have not worked on developing learning capabilities across the wider community, spreading will be impossible. To overcome this limiting condition, organisations have to break the “silos”, distribute experts’ knowledge and allow participation and sharing of knowledge across all stakeholders.

Culture flexibility – Fear and anxiety are the most prevailing limiting conditions for any change to be successful and sustainable. This fear is rooted in the most common culture in organisations, the culture of winners and losers. It means that for new ways to spread other ways and the leaders that currently practice these must loose. It raises questions like: “am I safe?”, “am I good enough?”, “can I trust others to say I don’t know?”. On top of psychological safety, organisations must accept, demonstrate and embed diversity. Diversity will allow for a smoother inclusion of new thoughts and practices.

Evolving purpose – As agile teams grow in capabilities, deliver business results and gain credibility, they demand more self-governance, the ability to define their own boundaries and purpose and to set new targets.  As teams are learning to be aware of their context and collaborate with others, boundaries should be allowed to evolve.

 

Summary

The concept of agile teams as the winners in the future of work is taking hold with many organisation. To enable the agile teams to spread organisations must alter the limiting conditions that cause these ideas a premature death.

 

@Hadas Wittenberg is a Future of Work enabler and the founder of Adaptive Futures.

Stop the waste of the latest management fad

When I came out of university in the 90s, it was TQM. Then we moved into BPM and Process Re engineering, followed by six sigma and lean and lately, graduated into scaled Agile. During these many years I learned how to work in and with top down and matrix management, management by objectives and by consensus.  I Experienced the cubical office, the open space hot desking and the mandatory bean bags. I refer to all of these as management fads.

What is a management fad?

I characterize a management fad by the following:

  • Easy to understand by using principles and visual concepts that come with a clear process for management on what to do and how to use
  • Is tailored to answer the current/ latest business world problem: diversification, globalisation, digitalisation, automation, etc.
  • Claims to be universal regardless the industry, culture, size etc. hence “easy” to copy from another company as “best practice”, so you can be as successful as they are.
  • And finally, it is promoted by well recognised management experts that make a lot of money out of it.

It is true, I have been part of that system. Every few years a new promise takes over as the favorite among management consultants and executives. These management fads are usually not “new” rather they wrap century old values of money and control into a “new” something. These fads also come with new jobs.  Like the ISO auditors, Process engineers, Six sigma black belt ninjas, Agile coaches and many others.  All, there to help management ensure the “cut and paste” is done correctly. Fads are not fundamentally wrong, some have profoundly changed companies, for better or for worse. Some even introduced useful ideas that stayed longer than the fad itself. However, fads over promise and under deliver, hence doomed to be replaced by the next ones.

Why do we have these fads?

When I reflect on how come we fall for these repeatedly, I think the answer is management laziness. I can explain. We all know that the world (and business) problems are becoming significantly faster and more complex.  We also know that in most cases it requires us to:

  • Enable multidisciplinary collaboration of passionate and capable people, wanting to achieve something bigger then themselves
  • Learning, course correcting and becoming better at, and staying with it, until the problem is solved
  • Focus on creating value and reducing waste with in context and adaptive approaches

But changing values and behavior, navigating the complexity and needing effort and courage to progress is hard so we go for the fad. Think about it, loosing weight is simple: eat less, exercise more – right? So, how come we have a massive industry, billions of dollars, millions of experts and similar number of books and we are still on a promising trend for obesity? Same with management, we know the principles, but we hope that by buying into the latest we can get a quick fix.

I say to senior management, stop it. There is no one size fit all, there is no method that is better than the other, there is no consultant that knows better than you what your vision is and how to motivate and keep you and your team on track to create,  there is no end date or a magic transformation, and there is no pink pill. There is only a purpose, a desire to learn, and care for the people around you. All with limited resources and hard work.

But…!

If you need external push or specific advice, absolutely, get help. Get a (real) expert, get a good coach, get a useful tool, get a process that works. But own it, cause the change. It is your job and your problem to solve.

 

Hadas is the founder of Adaptive Futures and a future of work enabler.

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