This week General Electric turns 125, and Vice Chairman Beth Comstock celebrated with the tweet:
You don’t get to be 125 years old without learning about #change! Happy birthday @generalelectric.
At a time when the average lifespan of a listed company is 18 years, GE’s #125yearsyoung is a testament to its focus on sustaining innovation and its culture of embracing change. I first committed my career to the process of making change stick when I ran Forrester Research’s Leadership Board business — a service delivering peer insights and executive learning to 1,500 business and IT executives. Depending upon their role, each of these executives had a unique list of functional priorities. But across the board, all expressed a need to improve their team’s agility and nurture a culture of innovation. As the need became more pronounced, I moved over to run the research business for Post*Shift — an insights and consulting company in which all of our work is anchored by a single, fundamental question:
We believe that adaptability is the fundamental goal of the 21st Century organisation, particularly when volatile market conditions and new digital entrants can shred competitive advantage so quickly.
But while executives cite enterprise agility as a priority, the barriers to realising an adaptive, digital operating model remain high. In October 2016, we introduced a diagnostic to benchmark the agility of organisations. Respondents score their companies on 20 attributes of adaptability across four categories: org structure, practice, culture, and leadership.
Their answers provide key insights on progress made and challenges holding them back. I am particularly fascinated by the four biggest barriers that executives have identified – not only what they are, but also how they interrelate:
- Structure: Inflexible org structures that do not adjust quickly to new opportunities and threats.
- Practice: Lack of routine practices for gathering relevant data and making it available for employees’ decisions.
- Culture: Employees who do not share work in the open, due to worry about internal politics or deference to superiors.
- Leadership: Leaders who do not devote time to removing barriers and blockages on their teams.
Structure: Practical alternatives to hierarchy remain a challenge
Of the four categories, respondents struggle the most with structural adaptability – that is, enabling an organisational system that is more connected, resilient, and flexible. Hierarchies minimise transaction costs in stable, predictable market conditions, but the nature of the firm must now evolve to cope with new opportunities and threats as they emerge. Large firms respond by trying to create the 33,000 person start-up – a fine aspiration that is so much easier said than done.
Achieving adaptive & emergent structures requires both a willingness to experiment with new team-based approaches and to invest in digital workplace tools. Indeed, we are not surprised to see that amongst respondents who regularly use these tools, there is more flexibility in the organisational structure.
Practice: Data-driven ways of working elude many
Companies struggle to make data and insights available to frontline employees, and this is one of the places where we see the most significant interrelationships between the challenges. It is no wonder that companies who are not data-driven are also struggling to distribute decision authority across the entire organisation.
If we do not give people the raw materials to make an informed decision, then how can we expect more adaptive structures and open cultures? Closing the gap here requires not only an investment in technical projects like master data management, but also a focus on building people’s skills and confidence interpreting data.
Open cultures exist more in principle than practice
Our data shows that despite all the talk about transparency, companies are not making progress towards open cultures as quickly as they would like. We suspect that much of this is due to the confusion between employee engagement and culture — which translates into well-meaning, but ultimately ineffective improvement programs. Organisational culture is the behaviour the organisation displays as a collective. Pioneers like Red Hat do not leave openness to the good will of individuals; rather, they rely upon systems like the “Open Decision Framework” to encourage employee collaboration across the entire firm.
Servant leadership: Still not universal
Academic research shows the benefits of servant leadership over more directive forms, but our data suggests that its application is far from universal. While the model has been around since the 70s, it takes on new dimensions in a digital world. It’s the servant leaders who create and protect the space in which new ways of working and digital innovations can emerge. Cultivating new forms of digital leadership, including a serving mindset, require a sweeping change of the content, format, and access to corporate leadership development.
The value of a diagnostic approach
If you are an executive accountable for your firm’s transformation, you face the difficult and exciting task of moving an entire organisation towards an adaptive, digital operating model. But you face layers of complexity – no two regions, lines of business, or teams have the same level of digital fluency and employees’ comfort with change is similarly uneven.
How do you prioritise the right actions so that you are making a true impact, and – just as importantly – ensuring that teams are accountable for their own transformation while keeping everyone aligned?
A diagnostic approach provides the benchmark data that helps you:
- Identify the different digital maturity levels across business units, brands, and regions
- Create transparency for board-level management and reporting
- Focus the central transformation team to close the biggest gaps or to double down on your strengths
- Ensure strategic alignment so people work smarter, not harder to achieve digital priorities
How adaptive is your organisation? Take our free Quantified Org Diagnostic Test to find out and receive personalised recommendations for how you can improve.