Organizations of the future can be recognized by a number of unique elements:
They attract and retain talent with future-relevant competencies
They are able to innovate as quickly as the outside world changes
They have distributed power structures based on smart self-organizing units
They build their purpose on solving burning societal needs and thus ensuring long-term economic viability
They embrace stakeholders into their decision-making
They have flexible and adaptive structures and processes
In short: they look very different from the typical large-sized organization of today.
As Kathy Miller pointed out in her February blog, organizations need to “adapt or die” and understanding stakeholder pressure as an opportunity for purposeful growth is an important pathway towards adapting and long-term success. As Kathy has suggested, the average lifespan of corporations has decreased from 60+ years to less than 15 years in the past 100 years (source: Richard Foster, Creative Destruction, 2001). This compares to a human lifespan that has increased by 30 years in the past 100 years. What I am proposing here is a short discussion about how organizational structures need to adjust – a painful, difficult and necessary topic.
Innovation is a big word and many believe that we can innovate around just about anything, including new organizational forms. Gary Hamel has made this claim in his latest Harvard Business Review Article (March 22nd, 2016), suggesting that organizations should prototype new organizational structures into various sub-units rather than adopt carefully designed and complex organizational structures that exist “ready-made”, such as Holacracy. I find this a dangerous invitation for a number of reasons.
First of all, I would say that companies should only innovate in the areas of their specific expertise, which typically do not involve organizational design but rather some specific product or service.
Second, changing an organizational structure can result in significant inefficiencies, fear, resistance and unintended consequences. It makes sense to propose as few such deep changes as possible to avoid paralysis.
Third, organizational structures deal with deeply embedded power structures that trigger all kinds of conscious and unconscious reactions when disrupted – a delicate thing as we know from personal development. It is amplified when applied to an organizational setting. Therefore, I would suggest the very opposite to what Gary Hamel is saying, namely: do not prototype and innovate around your organizational structure. Instead, get professional advice and figure out carefully where your organization stands and where it wants to go and then evaluate what options there are to ensure that the organizational structure supports that future direction. And then choose the option that is most appropriate to your organizational culture.
In Reinventing Organizations, Frederic Laloux outlines different types of organizations using a developmental perspective. He introduces the idea of “teal” organizations which are the emerging newest form of organizations and are considered the most adaptive, flexible and future-ready. He then lists a number of examples of what these companies might look like and then investigates if there are any common themes in the way they are organized. He points out three things: a) such organizations use the wisdom of self-organization; b) they promote “wholeness”, meaning that employees don’t leave their values at the doorstep; and c) they have evolutionary purposes, meaning that the organization serves a larger purpose than the survival of its own unit. Now, clearly, not every company fits this profile or might even want to be operating in such a space. One can claim that such organizations are well positioned to do well in future, given that by their very nature they integrate the six critieria listed above.
At Business School Lausanne, where we aim at educating our business students for the future, we believe it is critical to not only introduce such new evolutionary models into our standard curriculum, but to actually walk the talk by testing such new forms of organization. As a result, we decided to embrace Holacracy as our new organizational operating system in the summer of 2015. Now, our organization is transparent and visible to anybody (see here real-time how we are organized and who does what) – and it has been interesting to see what has happened to us and our organization as a result. Those of us who feel like sharing contribute to our blog regularly, which has become our very own action research in organizational development.
Our experience at Business School Lausanne (BSL) is very different from what Gary Hamel has outlined in his article: the positive energy that is released and the resulting shared and collaborative innovation is so enriching and powerful. And this has been achieved in a relatively short period of time after the initial shock was felt and that goes with any important quantum leap change process. Holacracy does not seek to replace bureaucracy; it offers an alternative way of dealing with power in decision-making processes. In our own journey at Business School Lausanne, we briefly suffered from this misconception, with a number of employees treating Holacracy as a new ruler (top down) rather than as the enabling support structure that it can be (and is intended to be). And we are not yet through the process – but we are sticking with it for sure. This is both for our own personal and organizational learning and to fulfil our promise as a learning institution for our students. Holacracy has put all of us in a new, shared space, one where we had to learn a new language, individually and collectively and where each of us was challenged with our own shadows of how we had so far unconsciously dealt with power. Daring to face these shadows, and enabling one another to dare to take new decisions in the roles we have, has been such a rich experience and has brought such an acceleration of innovation that sometimes I wonder how it is possible to get so much done in one day. The last two weeks feel like six months of work (and done with a smile). There is so much energy locked in the system that can be unleashed if the process is accompanied well and coaching and facilitation is readily available if and when needed.
Now, this was our journey so far and yours will be different for sure, and so I am not recommending that you copy what we have done. Rather, I am curious about where your organization is on its journey towards its vision and whether or not your organization has the right structure in place to achieve your vision. If not, do let Kathy Miller and me know – we are glad to help you with a cultural and an organizational assessment and with recommendations on what options there are for your future journey.