Rethinking organizations

Leave the old hierarchical organization behind! It’s time to create workplaces for the future – to enable innovation.

Just like business models, organizations need to disrupt themselves to be sustainable in a world of hypercompetition and constant change. Future proof organizations transform from hierarchical constructs into open, interconnected networks populated by a fluid workforce and values of transparency and immediacy, just like the world-wide web. This is how organizations will foster an innovative culture for the new generations.

Innovation is the fuel for renewal and the key to reinvent and sustain ourselves. To succeed in the future, organizations must regard change and innovation as their core activities. Those who will be most successful at that, will be the winners. Yet, cracking the innovation code is not easy. “Humans are creative. Organizations are (mostly) not,” says Gary Hamel, one of the world’s most influential and iconoclastic business thinkers. He refers to studies by McKinsey & Co where 94 percent of executives argue that although innovation is hugely important, their organizations are not good at it. Why?

Hamel and many other leading strategists, argue that we are stuck in old traditional thinking when it comes to the organization. The “organization” as a construct has been unchanged for nearly 200 years, since the industrial revolution and was crafted by people living in the mid 19th century.  It was designed for control purposes, to create efficiencies and effectiveness in a completely different competitive landscape when skill sets were totally different. Paradoxically, we can argue that organizations are failing to innovate because we are failing to innovate the innovative organization which is fit for the future. To understand what lies ahead – let’s take a look at some workforce trends facing us.

Millennials taking over

We know that millennials soon will represent 50 percent of the workforce and that the millennial generation differs from Baby boomers and Gen X in several ways that will alter how people work. We know that millennials want flexible, short-term project based, impactful work that promotes learning and variation. Millennials are purpose-driven, multi-tasking digital natives, but also self-centered, easily bored and disloyal employees.

Millennials want to work in self- organizing teams where they have a true impact on a cause that is meaningful to them. Their leaders need to be meaning-makers and give them autonomy. They want to learn continuously in the flow of life. They want constant feedback, reward for performance and to frequently change projects and roles.

In their urge to learn, an increasing number of workers are no longer climbing the corporate ladder but rather choosing to change employers or even careers every few years. In a world of shortage of talent, why hang around? A US-based study indicates that the millennial generation is likely to have twice the number of jobs throughout their careers compared to their previous generation. Those younger than 34 years of age, said job-hopping would actually help their careers.

Rethinking the management playbook

Traditional management principles aimed at maintaining control and create efficiencies typically were established with the perspective of the organization as a hierarchy, meaning a system in which members of an organization are ranked according to relative status or authority. In other words, a system to effectively organize a command-and-control regime. It typically involved management control practices like division of labor, talent specialization, standardization, formalization, role descriptions, annual appraisals and systems thinking in reward practices. And yes, although these practices do support the creation of efficiencies – they are readily blockages to agility and thus innovation.

Take the annual appraisal. Many a research have concluded that this exercise is out of date, as it has minimal or no impact on performance, engagement nor growth for the individual being appraised. In our era, employees need and want instant and continuous feedback. In future oriented organizations, leaders have regular check-ins with their employees where the focus is forward looking and focused on learning and development, not looking backward on past performance. In future oriented organizations, performance management is meant to foster positive emotions for the future: personal visions and dreams. Career planning in the future will be focused on learning and flexibility for the individual. Reward will move from systems and rule based thinking to a mechanism that reinforce learning and development. Reward will become growth oriented, individualized and transparent.

Leadership as a Service

Leaders need to be meaning makers in a world driven by purpose and meaning. “Servant leadership” may well be the new paradigm. The philosophy is based on sharing of power. The leader is there to serve the employees (rather than the opposite), to put the needs of the employees before anything else (even the customers) to help them grow, learn and perform at their best. The servant leader’s main focus is the growth of his or her people. Through growth of employees, the company also grows.  HCL Technologies, an Indian fast-growing tech company with 8 bn USD annual revenue and 137.000 employees across 44 countries, is practicing the philosophy. HCL is driven by Ideapreneurship. An ideapreneur has the licence to ideate and they describe their culture as a “grassroot movement that has rallied the whole organization” behind their innovation agenda.

Self organizing teams

Self-organizing teams are key to develop agile organizations. A self organizing team doesn’t have to wait for a manager: they assign their tasks and how to work to themselves. They take accountability for their work. For such teams to truly succeed, some principles must be in place like rules for teamwork, required skill set, competency development, commitment to deliver, trust and respect. Unfortunately, I have seen many enthusiastic self-organizing teams that have failed because leaders (including myself) have underestimated the necessity for good coaching and investment in training needed for the teams to succeed.

Diversity and Inclusion needed!

Diversity entails much more than the dimension of gender. There are diversities in terms of age, sexual orientation, education, ethnicity, religion, national origin and in terms of personalities, emotions, thought patterns, behaviors. As our world and our competitive landscape becomes more complex and diverse, so must we as organizations if we are to keep up with the world around us and be able to understand and deliver what it wants from us. Diversity in the workplace gives us the opportunity for new perspectives, increased creativity and more innovation.  In the future organization, diversity and inclusion are part of the DNA of sustainable companies.

The future of work is humanistic and purpose-driven

Hamel argues that it is time for us to create organizations that are fit for human beings of our time. In HR communities we talk about the emerging “social enterprise” which requires nothing short of full-scale reinvention. Future organizations must put humans at the center of their business strategies and bring meaning back to the workplace – that’s how the organization will thrive and sustain through innovation and growth.