With the business landscape shifting on its axes, companies are recognising the need to make fundamental changes to the way they operate; the way they exist. Today, success cannot be defined per the old standards. The organisations that are making waves are those that are breaking free from old parameters. Think: Uber, Airbnb and Netflix.
Therefore, many businesses are finding that they need to review their organisational design and mindset. Otherwise, they risk being left behind. They need to consider how they approach what they do and whether this fits with what's expected today.
So how can organisations make the changes required in a disrupted environment?
The current business landscape
We can roughly divide organisations into four categories, dependent on where they sit on the axes of mindset (ways of being and leadership style) and organisational design (structures and processes).
NB: This four-box model is adopted from a seminar by Carl Erik Herlitz, Tuff Leadership Training.
1. Traditional organisations
Businesses that fall into this category have conventional, hierarchical structures and a leadership style to match.
2. Startups and small organisations
These businesses tend to have progressive structures, but less progressive ways of being. While they are disposed to shy away from the traditional, they're not sure how to define themselves and often fall into default ways of working that jar with their flat structures.
3. Empowering organisations
These businesses usually have traditional structures, but are experimenting with different styles of leadership, which seek to empower employees.
4. Next stage organisations
Businesses that fall into this category are very progressive organisations, both in terms of their structure and ways of being.
So, what is a next stage organisation doing that is different from a traditional one? And how can those businesses that fall somewhere in the middle of the spectrum learn from their example?
What comes first: mindset or structure?
Lisa Gill, the founder of Reimaginaire, says: "If you start with mindset, then you have a really good foundation to co-create the structures you need. But if you start with structures, you move into a tricky space, because it's difficult to solve problems with the same thinking that got you there in the first place.
"Even the best structures in the world will be meaningless if you don't have the right culture or the right skills or mindset to make them work."
Many organisations are experimenting with new ways of being. There is a focus on decentralising knowledge and power, increasing transparency, and firmly establishing adult-to-adult communication in the workplace.
One system that is gaining traction is Sociocracy. This term essentially describes a system of governance, whereby the interests of all members of society are given equal credence – but it can equally apply to organisations of any type.
Dutch entrepreneur Gerard Endenburg developed the modern take on Sociocracy in the workplace. In the publication, "Sociocracy: The Creative Forces of Self-Organisations", co-authored by Endenburg and John A. Buck, four ground rules are outlined:
- Consent – big decisions can only be made if no one in the organisation has an informed and firm objection.
- Election of persons – this takes place in the context of ground rule one.
- Circle – organisations are formed of semi-autonomous circles, which have their own aims.
- Double-linking – each circle is connected to the one above it by the operations leader and an additional representative from that circle.
As can be seen, this is a holistic approach that places the emphasis on inclusion across the organisation.
Another tactic that can dramatically change the way in which an organisation exists is to replace leadership with stewardship. This approach focuses on partnership and service, rather than control and domination; it aims to empower employees through giving them the power of choice.
Stewardship is not a new idea, but it is becoming an increasingly relevant one in today's disruptive business environment. In his 1993 book, Stewardship, Peter Block writes: "Stewardship is the umbrella idea which promises the means of achieving fundamental change in the way we govern our institutions. Stewardship is to hold something in trust for another.
"[…] Stewardship is defined in this book as the choice to preside over the orderly distribution of power. This means giving people at the bottom and the boundaries of the organisation choice over how to serve a customer, a citizen, a community. It is the willingness to be accountable for the well-being of the larger organisation by operating in service, rather than I control, of those around us. Stated simply, it is accountability without control or compliance."
While these words were written almost a quarter of a century ago, they still seem radical when we think about how many organisations still operate in a stringent, top-down manner, with power concentrated in the upper echelons.
Both Sociocracy and stewardship are about leaving power and ego at the door and embracing open communication, to achieve better results for the whole organisation.
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Once an organisation has overhauled its mindset, on both an individual and group basis, it is far easier to implement new structures. There is a trend towards becoming more agile and responsive, to deal with the inevitable changes that are affecting industries across the board.
Lisa says: "The alternative to traditional structures is not chaos or consensus but, rather, cooperation. You have an ultimate goal that you are all working towards. You might have individual outcomes, but you all cooperate. This might mean that sometimes you have to do things that you don't fully agree with - but that you can live with."
Holacracy is one way of putting this into practice. Holacracy is "a complete, packaged system for self-management in organisations. [It] replaces the traditional management hierarchy with a new peer-to-peer 'operating system' that increases transparency, accountability, and organisational agility.
"Through a transparent rule set and a tested meeting process, Holacracy allows businesses to distribute authority, empowering all employees to take a leadership role and make meaningful decisions."
For instance, while a traditional organisation might be characterised by office politics, which benefit the select few, and inflexible job descriptions, with Holacracy there are transparent rules, and employees hold several, fluid roles.
Technology is playing a key role in enabling organisations to create new structures. Cloud-based tools are allowing employees to work more flexibly and remotely – for instance, Loomio, which enables collaborative decision-making.
Today, organisations must embrace new structures and new ways of being. This is not an easy bidding. In fact, as Lisa highlights: "There's a paradox that when you implement new structures, rather than needing fewer processes or less leadership, you actually need, in many ways, more processes and more leadership. That's one of the challenges."
Businesses that are on the path to becoming more agile and responsive will likely find many obstacles along the way, but we are all continuously learning what constitutes success today - and in the future.