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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

Organisational culture change is hard work

Background

There is a growing acknowledgement of the link between the type of culture that exists in an organisation, the level of personal engagement and the organisation’s overall success. However, only few organisations cracked the secret of how to move their culture and leverage it for strategic advantage.

In response to a previous post, I was asked a question about culture. While being a very popular topic on the leadership agenda I feel that clarity on what it is and what to do with it will be helpful. In this post, I bring together some of the simpler and, in my view, more comprehensive researches. I hope to turn the culture conversation from a “fluffy/ too hard/ nice to have…“, into a useful tool for both individuals and organisations growth.

Definition of culture

Culture is not posters on the walls, what the CEO declares as the new way, the managers’ personal style, or what is agreed in the strategic planHerb Kelleher (founder of southwest airlines) describe it as “…It’s not formulaic. The way I describe it is this huge mosaic that you’re always adding little pieces to make it work. And it’s not a job that you do for six months and then you just say, “Well, that’s behind us.” It’s something you do every day”

Culture is defined by the attitudes and behaviours of the majority of people in the organisation. this includes what is encouraged, discouraged, accepted, or rejected within the group. It is the day to day of the collective, and because of that, it is hard to change. Culture is the how in which strategy is executed. Culture can support and promote the organisation strategy or hinder it. When aligned with personal values, drives, and needs, culture can unleash significant amounts of energy toward a shared purpose and a thriving organisation.

 

Culture framework

 Culture stages

Framework principles

  1. Culture stage can be described by the words most people use in the organisation in relation to the way people interact with each other and the way in which they respond to change.
  2. Culture is an evolutionary process. As such, with intentional effort leadership can evolve an organisation’s culture. However like with any evolution, you can’t skip stages, you can’t stabilise the change until a tipping point is achieved, and you can’t time it.
  3. Since culture is a group phenomenon, most people in the organisation should be at the same stage to allow evolution. But, for exactly the same reason, unstable culture can disintegrate into lower stages.
  4. People “fit” into the different cultures is described in a similar way using personality traits. Note that for earlier stages of cultures, “fit” is achieved through fear vs. the individual’s preferences.
  5. Inherent in the framework are fundamental trade-offs. Although each cultural value can be beneficial on its own, natural constraints and competing demands force difficult choices about which values to emphasise and how people are expected to behave.

Why change?

The dominating culture across the western world is the culture of stage 3. The achievement worldview profoundly shapes today’s management practices. Most business leaders, MBA programs and management thinking are shaped by the hallmarks of this culture. Hence, when considering a shift from stage 3 to 4 it is particularly challenging because the current culture had served the organisations well for many years. Since the industry emphasises efficiency and results, this culture is perceived by most management as a strength.

However, this culture that created the prosperity of the modern world is also the one that is depleting the world’s natural resources and destroying the ecosystems upon which our survival depends. It is the culture of few winners and increasing inequality. It is a culture that is solely materialistic and that does not answer to humans longing for meaning and being part of something bigger.

People and organisations that have chosen to evolve to be part of a culture that operates at stage 4 and 5 report feeling more alive and having more fun, learning becomes effortless and stress goes down,  engagement is consistently high hence people seek employment in the company and stay, taking the company a long way toward having the talents to succeed.

Descriptions of each stage

Stage 1

Historically, organisations emerged when tribes organised to attack neighbouring tribes. Today this culture still exists in organisations like the Mafia or drug-dealing street gangs. Other examples are enterprises where founder-bosses do whatever it takes to succeed. They get involved in everything, regardless of structures or processes that would constrain their ability to “get things done”.

At this stage of cultural evolution, people are united by the fear and basic instincts of survival. When they are together, they form isolated gangs with absolute loyalty to the group. The theme of their words is that life has given them a bad deal, so it’s ok to do whatever it takes to survive.

Stage 2

Organisations at this stage have clear ranks up the hierarchical pyramid.  Many armies, religious institutions, government agencies, public school systems, and universities are still run today along the lines of this culture. They often operate on the hidden assumption that there is one right way of doing things, that the world should not change, and that lifelong employment should be the norm.

The focus of this culture is on predictability, risk consciousness and careful planning, respect, structure, and shared norms.

Under the protection of rules and traditions, people usually do the minimum to get by, showing almost no initiative or passion.  Passive-aggressive behaviour is the norm, i.e. people spend their time ignoring the organisation directives while telling people in charge that they are on board.

Stage three

At this cultural stage, the organisation metaphor is the organisation as a machine. The people in the organisation use the language of units and layers, inputs and outputs, efficiency and effectiveness, information flows and bottlenecks, Humans are resources, re-engineering and rightsizing.

In this culture, the values are authority and results. The culture is characterised by achievement and winning, strength, decisiveness, and boldness.

The work environments are competitive places where people strive to gain personal advantage and aspire to achieve top performance. People engage in anything that’s going on, with energy and commitment, but when you listen closely, they talk mostly about themselves and focus on appearing smarter and better than others. People operating in this stage usually complain that they don’t have enough time or support and that the people around them aren’t as good or as committed as they are. Winning is all that matters, and winning is personal.

Stage Four.

At stage four, the organisation language is about family or a community. Where everyone has a place, where colleagues look after one another, where the happiness of every member is important to the organisation’s overall success.  The leaders in this culture often strive to inspire employees to great things, leading them to outperform more traditional command-and-control organisations.

This culture value Learning and Enjoyment characterised by exploration, expansiveness, and creativity often expressed through fun and excitement. Work environments are inventive and open-minded places where people generate new ideas and explore alternatives and where people tend to do what makes them happy.

People form partnerships and operate as part of teams that are focused around shared values and has a common purpose. People build relationships based on shared values and the language is about what is the right thing to do, not what is good for me.

Stage Five.

There are very few organisations that operate consistently at stage 5. If you listen to the leaders of these organisations, they talk about their organisation as a living organism or a living system (as opposed to a machine or a family). In this culture, people collaborate and work toward a noble cause, propelled from their values.

In this culture, leadership has a different role. When Jos de Blok (Buurtzog) was asked how is he motivating the people that work for Buurtsog his answer was ” I am not. This is a sort of patronizing, I think. My most important assignment is to keep out all the problems so that people can do their work”.

The culture is of caring and purpose. Caring focuses on relationships and mutual trust. Work environments are warm, collaborative, and welcoming places where people help and support one another. Loyalty unites the employees; Purpose is exemplified by idealism and altruism. Work environments are tolerant, compassionate places where people try to do good for the long-term future of the world.

In this culture, the group is focused on creating a better world not about winning over the competition. People talk about limitless potential, caped only by the imagination and the group commitment. People in this culture can find a way to work with almost anyone, as long as their commitment to values is at the same intensity as their own. There is almost no fear, stress, or workplace conflict.

What’s next

Evolving organisation’s culture is not easy; however, it is one of the only few levers left with leaders who want to create a long-term sustainable and impactful organisation. Leadership has a critical role in enabling the desired culture. In order to shift a culture, you have to consider the following:

  1. Accurately assess your own and your organisation’s cultural stage. Understand what outcomes different cultures produce and how it does or doesn’t align with the current and anticipated market and business conditions. When designing a target culture, it has to be in context and relate to tangible problems
  2. Foster leadership that is more culturally advanced than the organisation current stage. The leaders must align with the values of the target culture and committed to personal growth.
  3. Be able to understand and talk all culture stages languages as you enable the evolution of the individuals which might be at different stages.
  4. Be ready to shift your concept of leadership. At stage 4 and 5 leaders have no directive power, their primary role is to “hold the space” for the culture to emerge and that no earlier stages practices creep back in.

@Hadas Wittenberg is a future of work enabler and founder of Adaptive-Futures

References:

Laloux, Frederic. Reinventing Organizations: An Illustrated Invitation to Join the Conversation on Next-Stage Organizations. Nelson Parker.

Logan, Dave. Tribal Leadership Revised Edition: Leveraging Natural Groups to Build a Thriving Organization. HarperBusiness

Boris Groysberg, J. L.-J. (January – February 2018). The Leader’s Guide to Corporate Culture. HBR.

 

 

In retrospect – 3 lessons learned on being an Entrepreneur

“Being an entrepreneur is living a meaningful and adventurous life; it requires courage, commitment, and curiosity to learn” Hadas

It has been six months since I created this definition for myself. Many things happened that mixed work and personal life, I had to develop new skills and face new and sometimes uncomfortable realities. In retrospect, it’s definitely shaping to be one of the most interesting adventures I have taken in my career. Here are my top 3 takeaways

Focus

Most of us live a very busy and demanding life: wake up, go to work, deal with the politics, get paid, manage our personal life, go to sleep, wake up and start again. How much of that is really to do with your passion, with your purpose?. I thought I was making the most out of it, and then I got out of the formal job world for a bit and I discovered the power of being single-minded. Focus on one thing.

I spend my days only on the things that matter to me with no purposeless meetings, no meaningless PowerPoints, only work that has value. Being focus enables everything you do to be part of your purpose. This is regardless of whether you are investing your energy with a family member, helping a colleague or developing a product.

I am realistic that my work context may change, but the experience made it very clear to me that focusing only on the things that matter has to be my way of working from now.

Learning and reflection time

I remember a conversation a few years ago with a frustrated executive. Employee engagement results came back and one of the top areas of concerns for the employees was learning and development. It made no sense. The organisation had a sizable training budget and fast-changing work requirements meant people had lots of opportunities to learn something new. True. What people didn’t have was the time for retrospects and no time to embed new knowledge into useful skills before rushed to the next thing. Hence, no real learning and development.

In the last six months, I really got it. There are many hours where I am busy doing something (usually new), researching a new topic or meeting someone. But it is the ability to have the time in between, doing something different that allows for new insights to surface and new learning to become useful.

Grit 

By (my) definition as an Entrepreneur, you innovate to disrupt.  This means that in many cases people might intellectually engage with the need for your product but not for them as they don’t really want to be changed. When you are on your own or part of a small team, this can be daunting.

Grit is one of the qualities we will need more and more in the future. I, for example, am taking one pill of grit a day.  It contains the following ingredients: a reminder of the purpose and why I do what I do, a conviction that this is really going to make a positive difference in the world and a sprinkle of fun. 🙂

“If you want to change the world, start with yourself.” Mahatma Gandhi

 

 

@Hadas Wittenberg is a future of work enabler and founder of Adaptive-Futures.