Transformation is a major buzzword these days. Everyone is talking transformation. We see many organisations bringing in new processes, activities and approaches but failing to obtain the results they seek. For all this effort they are transforming to be the same.
Why is this?
We believe organisations are shying away from two difficult but critical concepts: structure and leadership.
Human needs evolve over time. Our society changes, new technologies are discovered and we adapt our thinking and values based on what we see around us. This is been a key part of our journey and what has differentiated us as a species from other known life forms.
Take the pocket watch as an example. It was invented in 1400’s and was a radical breakthrough. It was originally thought of as something that would sit in ones waistcoat pocket, often on a chain. Nobody thought about wearing on the wrist. But our needs changed and it became the wrist watch. Then the transistor was invented and we had digital watches. Now it has radically changed to smart watches that can tell us exactly where in the world we are, what emails are waiting for us, what our current pulse is etc. Or consider the mainframe computer. Invented in 1944 it has evolved radically to meet our changing needs, to the point where we now all carry a ridiculously more powerful version in our pockets without thinking about it.
Both of these have evolved over time with us to meet our ever changing needs.
It is difficult to determine what era the organisational chart comes from because our organisational structures haven’t really changed for the last few thousand years, despite humanity evolving radically. The result is that people feel trapped. They may be empowered with new ways of working, however the age old organisational structure has confined their improvements. It doesn’t matter what you apply – Scrum. Lean, Kanban – you are still applying it in a structure that has not changed for thousands of years.
The reality is that the wiring of modern humans is at odds with our predominant structure. And then we wonder why employee satisfaction is at an all-time low!
So where on earth did our predominant structure come from?
An early example is Egyptian era (~2600 BC). The Pharaoh held the ultimate power and authority. If he (they were nearly all men) wanted to build a pyramid, he would tell his nobles. A noble would act as “sponsor” and gather a bunch of slave drives to round up the salves and get cracking. They noble would then govern the work, often quite mercilessly.
If you compare that to most organisations, little has changed. The executive typically hold the strategy, decision making and power. They communicate that to the next layer (typically a management team) who then assign some resources to projects to deliver. The management layer then govern delivery.
Modern workers resemble Egyptian slaves. Intelligence, authority and decision making sits at the top and execution is done by slaves.
But something has changed recently. There is a clear and strong message that people want change. If you look at the US presidential election, it wasn’t actually about Trump v Clinton – it was about change vs the status quo. The same can be said of the recent NZ general election. How come Jacinda Ardern could take over from Andrew Little and within 2 weeks go from polling 20% to over 40%? Because she represented change.
Looking deeper into this, technology has improved our quality of life to point where we can start thinking about a greater purpose, about freedom of expression, about autonomy and our desires to address some of the significant challenges humanity currently faces.
In the Egyptian model, there was only one customer. The Pharaoh was both the customer and the boss.
But nowadays we largely build products for customers who are external to the organisation, yet we are still structured as slaves. We focus inwards on ourselves, our processes and our operations and upwards for instruction. Seldom do we focus outwards to the customer. Why? Because we still have a slaves mindset.
What is even worse is that we assume the higher in the hierarchy someone is, the greater their intelligence and natural decision-making ability. If we follow this logic through to it’s conclusion, then we are saying the people who are at the coal face working with customers are the least intelligent, the least capable, and that they should make the least important decisions of everyone (or not make any decisions at all). Really?
A Radical Update
Our view of the world is different. We would like to introduce you to one alternative model we call “The Inside Out”. It is a radical different structure designed to significantly improve outcomes for both customers and staff and transition away from a salves mindset.
In this structure we face outwards towards the customer, not inwards and upwards. The structure reflects that intelligence exists at all levels in the organisation, not just at the top. It empowers front line decision makers with right blend of autonomy, decision-making and accountability to delight the customer. People are trusted to operate in the best interests of the company, as if it were their own.
We structure ourselves around customer value streams – streams of activity that directly relate to what a customer aims to achieve with our products and services. Leaders act as unblockers to staff and help ensure everyone has clear line of sight to our core purpose and vision, and then create and nurture an environment where people can flourish.
But structure alone is not enough to radically transform organisations. It is only one part of the equation. There is a critical part missing.
Imagine we are working in a liberated structure. The slaves have been freed and now have autonomy to delight the customer. Out of the two below, which kind of leader would best fit this situation?
A autocratic dictator like Cersei is going to be a complete disaster. A leader who can align a diverse range of tribes behind her is a much better fit. The right kind of leadership in a liberated structure is critical. Without a matching leadership style, a decentralized or liberated structure can be disastrous.
There are three distinct leadership traits that we believe are vital for a radically transformed organisation:
- A people first approach
- A culture of Candor
- Value the whole person
A people first approach
Richard Branson puts it elegantly:
Think about how most think. It is largely the complete opposite to this, especially listed companies. Shareholder returns comes first. Customer needs come second. And finally, the employees needs come third (if they are lucky).
But if we want great shareholder returns, we need happy customers. And what is the best way to have utterly delighted customers? Happy staff. So….. shouldn’t we focus on delighting our staff first?
Steve Denning argues maximizing shareholder value is the dumbest idea in the world. We strongly agree. It is obvious to want shareholder value, but that is a by-product of an organisation that put’s it’s people first, not an objective in itself.
Candor is vitally important in a decentralised structure. In a rigid, slave-based type structure, there is simplicity and clarity provided by rules and order. You do your job without straying out of bounds and so does everyone else. The leadership skill required is low as it is just about holding people to account on their duties.
However as we move into dynamic structures with multi-skilled, cross functional teams, a completely different type of leadership is required. Staff often require timely and accurate feedback on how they performed in new, unpredictable situations, to enable them to adapt and grow. Without this, and without a rigid structure, they have no idea how they are doing and whether they are delivering value. In many ways this is the worst possible situation.
An extremely effective tool in our toolkit is Radical Candor. It helps us focus our approach on how we work with people. For example, imagine we need to give feedback to a staff. If you don’t genuinely care about the person, and you aren’t prepared to be direct with them then it is likely your approach will be insincere and feel manipulative. We’ve all been through this, where we feel like the person giving us feedback is just trying to push us into a certain position or achieve a certain (often political) outcome.
If you don’t care about the person and you are happy to directly confront them, then the feedback is likely to reflect this as obnoxious aggression.
Assuming we do care, then that leaves two options. If you are not prepared to be direct with them then you are likely to try and sugar coat the feedback. The end result is likely to be ineffective, passive aggressive and can be completely disastrous. The final option is Radical Candor – where we are prepared to challenge the person directly because we care about them. The feedback is thought of as a genuine gift for them that they can use to grow.
In my experience New Zealanders don’t like challenging directly which means we tend to go for either quadrant on the left – Manipulative Insincerity or Ruinous Empathy. Think about last time you were at a restaurant and weren’t happy with your meal. The standard NZ approach is to complain to your friends but when the waiter asks how you meal is the typical response is “it’s fine, thanks.” Or even worse is Ruinous Empathy: “the potatoes are a little cold but don’t worry, it’s fine, I can have them like this, it isn’t a problem” yet when the waiter leaves you say “I will never come here again”.
Looking at this model, how do you approach feedback?
Value the Whole Person
Most organisations play a strange game where you are supposed to be a different person at work than you are outside of work. They focus on the work version of you and the things you want to achieve at work. But this isn’t how humans operate. I don’t have a work version of Edwin and a home version – it’s just Edwin.
Valuing the Whole Person is about understanding the persons beliefs, values, dreams, fears and aspirations. It is about understanding who they really are, what they find important and who they want to be. It is about helping them achieve these ambitions as part of their work. IF we can find a way to help them grow as people as part of their work then imagine their emotional response to work.
This leadership trait is vitally important. If you want to lead people effectively you need to care and ideally care about the whole person. If you don’t, then you should question why you are in a leadership role.
Bringing it all together
So how do Structure and Leadership interact? Ancient Egypt relied on slaves working in a centralised model with an autocratic leader. I dont know anybody that enjoys that model. A good leader in a centralised structure often result in the good leader quickly becoming frustrated and leaving. A poor leader in a decentralised structure often results in the best staff leaving as in the absence of strict rules and position descriptions the leaders inability becomes painfully evident. In both situations the organisation is living on Borrowed Time.
Radical Transformation is all about how your organisation progressed from these three sub-optimal quadrants into becoming a healthy, thriving modern organisation.
In summary, structure alone is not enough. It provides some benefits but without the right type of leadership, most transformation efforts fail. Leadership is the multiplier of structure and the two go hand in hand.
What are your experiences with Structure and Leadership?