Leading Organizations by Scott Keller

Author:Scott Keller
Language: eng
Format: epub
Publisher: Bloomsbury Publishing
Published: 2017-07-15T00:00:00+00:00

Levers for redesigning an organization

What are the big ideas?

AGILITY REQUIRES STABILITY

AUSTRALIAN-BORN media mogul Rupert Murdoch is often credited with saying, “The world is changing very fast. Big will not beat small anymore. It will be the fast beating the slow.” This makes for a great sound bite (as you’d expect from a media man!), but fast doesn’t really help if you’re headed to the wrong destination. We’d argue that the real advantage lies in being agile, not just fast. What’s the difference? Agility involves not just speed, but balance, coordination, strength, stamina, and reflexes. You can get speed by doing the same thing, only faster. Agility is smarter and more graceful—and knows when being first isn’t about being fast (the adage “the second mouse gets the cheese” sums up the sentiment).

Columbia Business School professor Rita Gunther McGrath’s research sheds light on an agile organization’s look and feel. She found that large companies that disproportionately grow their income vs. others have two main characteristics: “On the one hand, [growth companies] are built for innovation, [they are] good at experimentation [and] can move on a dime. On the other hand, they’re extremely stable, [the] strategy and organization structure stay consistent [and the] culture is strong and unchanging.”23 Our research confirms this: companies that are both fast and stable are over three times more likely to be high-performing than those that are fast, but lack stable operating disciplines.

The power of this idea shouldn’t be underestimated. Most leaders see the speed and flexibility that drives innovation at the opposite end of the spectrum from standardization and centralization which drive efficiency and control risk. This is a false trade-off. Perhaps an apt analogy is that of society at large, where individual freedom is at one end of the spectrum and government control is at the other. Yet they need each other: without submission to and enforcement of the law, a free society would become anarchy.

In practical terms: to be agile, leaders should determine which parts of their organization design are stable and unchanging and, at the same time, create looser, more dynamic elements that can be adapted quickly to new challenges and opportunities. Using a smartphone analogy, you need to choose your hardware and operating system first (stability), and then let go of control so that useful apps can be developed and improved (agility). So, for example, you might choose a primary axis of organization (stability) while facilitating the formation of temporary performance cells around solving specific needs (speed). Or standardize work in a few signature processes (stability) and coordinate work through iterative cycles in other areas (speed). Or you could emphasize a set of shared cultural values (stability) while radically empowering the front line to make decisions in keeping with these values (speed).

Companies with an agile organization design have another relatively unique feature: They break the cycle of going through large-scale organization redesigns every couple of years. Why? They achieve a state of continuous reorganization around a stable core.

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