Adaptability Blockers: Or…welcome to your Frankenstein organization

What gets in the way of this ideal state? After a business believes it has hit product/market fit, it tends to shift into execution mode by focusing its resources into optimizing the delivery of its product to customers. The structured experimentation found in Agile or Lean Start-Up Methods that produced the insights and progress lessen as resources are directed to integrating customer requests, iterating, scaling, or globalizing the product/service. Specialized functions that come with size add complexity, limitations, conflict, and often stoke competition between functions and regions that then further consume the senior executives’ attention. The founding team struggles how to best contribute in a larger and more complex world, and you attract candidates who value the complexity and safety of a larger company where they can operate within their silo without truly understanding the impact of their actions on customer experience, revenue, and profit. Executives may notice something amiss with culture and engagement but by this point changing it requires dedicated attention that competes with the need to execute on plans so only superficial work is undertaken. Many executives have never identified their personal values and desired impact in the world, or consciously made choices resonant with those values, so the idea of growing your company in an integrated way with organizational values or company brand is never considered. In short, executing your “thing” consumes so much of your collective resources that you lose the discipline to not only keep experimenting with both incremental and significant product/service enhancements but more broadly with all aspects of your business and organization.

Design Goals: Quadrant Four

It helps first to define what a responsive, adaptable organization might be in today’s world. I’ve enjoyed reading and found their definition interesting: “Responsive Organizations are built to learn and respond rapidly through the open flow of information; encouraging experimentation and learning on rapid cycles; and organizing as a network of employees, customers, and partners motivated by shared purpose. Responsive Organizations are designed to thrive in less predictable environments by balancing the following tensions:

More Predictable <-> Less Predictable

Profit <-> Purpose

Hierarchies <-> Networks

Controlling <-> Empowering

Planning <-> Experimentation

Privacy  <-> Transparency

That led me to Exponential Organizations, a book about capabilities required to thrive in an information-everywhere world. Its premise is that advancements in technology will bring about such dramatic changes in markets that one must design the very nature of work for this environment. It defines an exponential organization (ExO) as one whose impact (or output) is disproportionally large—at least 10x larger—compared to its peers because of the use of new organizational techniques that leverage accelerating technologies. Here are the core aspects of such an organization:

Massive Transformative Purpose (MTP) – The higher aspirational purpose of the organization, capturing the hearts and minds of those both inside and especially outside of the organization. As I mentioned earlier, people are self-selecting into organizations that align with their purpose and values, and I personally have felt way more motivated and creative when I know my contributions matter to someone or something I care about. Importantly, when you’re operating in a VUCA world people are always at risk of burnout. With a compelling MTP people are at cause for something bigger than them and that’s very energizing, even with VUCA; it’s not a nice to have but essential for creativity and progress.

They divide their suggested capabilities into two aspects, one focused on internal organizational aspects (represented by the acronym IDEAS) and the other focused on externalities (represented by the acronym SCALE). I didn’t find this split very clear, but most of these I think would fit in Wilber’s Quadrant four. By the way, organizational leaders can take an online survey created by the authors to assess your progress towards being an ExO.

Interfaces – When implementing the externalities (SCALE), ExOs use customized filtering and matching processes – which they call interfaces – to process the output of external attributes into the internal organization, using algorithms and workflow software. Example: Uber uses interfaces to allow users to find and get matched with the best drivers. Because of this it costs Uber essentially zero to add an additional driver.

Dashboards – Real time, adaptable dashboards with essential company and employee metrics and short feedback loops are implemented and accessible to everyone in the organization. People pay attention to innovation metrics like lean value, growth metrics, learning metrics, and use accountability tools like Outcomes and Key Results (OKRs) to identify what will get done, by whom, when, how, and for how much. “The Doblin Model notes nine different types of innovation to track in a balanced way across an organization:

  • Profit Model: How you make money
    • Network: how you connect with others to create value
    • Structure: How you organize and align your talent and assets
    • Process: How you use signature or superior methods to do your work
    • Product Performance: How you develop distinguishing features and functionality
    • Product System: How you create complementary products and services
    • Service: How you support and amplify the value of your offerings
    • Channel: How you deliver your offerings to customers and users
    • Brand: How you represent your offerings and business
    • Customer Engagement: How you foster compelling interactions

Experimentation – ExOs use the Lean Startup methodology and other techniques inside different organizational departments to constantly experiment with new ideas and processes, culturally enabling risk-taking and failure as essential to learning and progress. Processes are constantly being tweaked with fast-feedback loops. Consider tracking both the number of experiments run as well as its success rate (or learning metrics if results differ from expectations).

Autonomy – ExOs have a flat organization, allowing self-organizing, multi-disciplinary teams and/or individual employees to operate with decentralized authority. A good example of this is the Holacracy model. No one is advocating for pure autonomy; autonomy without accountability is asking for anarchy at worst, wasted effort and opportunity at best. You absolutely need to design your ways of working to enable autonomy if you want fast response time, adaptability, and happy people.

Social – ExOs leverage collaborative tools such as file sharing, activity streams, wikis, telepresence, virtual reality and emotional sensing to manage real time, zero latency conversations. When implemented it creates transparency and connectedness and lowers an organization’s information latency and increases stakeholder engagement and the ability to leverage diversity of backgrounds, knowledge, and perspective to make progress on adaptive challenges. This is both internal and external with your Community & Crowd initiatives. Start with key influencers and support them enrolling others; they should feel ownership of the tools in service of the MTP.

Staff on Demand – The authors feel this is a necessary characteristic for speed, functionality, and flexibility in a fast-changing world. Rather than ‘owning’ employees, ExOs leverage external people for simple to complex work. The nature of the work limits how on demand staff could be utilized, but I’ll bet LinkedIn or other platforms will soon offer curated profiling and matching services for organizations to help make this an easier process. Right now I see most HR leaders struggle just to fill regular open headcount let alone develop and maintain a depth of connections with people interested in on demand work.

Community & Crowd – Most ExOs are attracting and leveraging their community or the general public to scale their impact by harnessing creativity, innovation, validation, and even funding. Key to this is an organization’s ability to continuously be in relationship authentically with its supporters and beyond. This will help the organization withstand the inevitable bad news story or all-too-common inaccurate internet rumour.

Algorithms – As the world turns into data and information, ExOs are leveraging algorithms including machine learning and deep learning to get new insights about their customers and products. Algorithms are a tool and a capability that links well to our broader goal of the organization being able to sense, learn, and create faster than the competition across both execution and exploration activities. I’m almost certain we’ll see Chief Data Officers become standard executive roles, and Data Scientists collaborating with every function.

Leveraged Assets – Rather than trying to own assets, ExOs access, rent, or share assets to stay nimble – outsourcing even mission critical assets. Leveraged assets are comprised of cloud computing, hackerspaces and assets from customers as inputs for business.

Engagement – comprised of digital reputation systems, gamification and incentive prizes, which create network effects and positive feedback loops. Humans are social creatures who love to contribute and to hold status. These tools allow people to both contribute AND be recognized which causes them to want to contribute further, but in my mind that’s insufficient. Participation will drop if people are not also learning and being able to apply wisdom or other benefits as a result of this engagement.

I wonder how many HR people if surveyed would be actively working to develop these capabilities within their organizations? My guess is most are focused on HR functional areas or key talent strategies but adopting this as your focus would be super “out there” for most HR people.

Interestingly, leadership is not directly addressed and I believe it’s probably the most important transition that needs to take place. In order for an organization to be designed for adaptability requires a fundamentally different view on leadership. We need to move from hierarchical, imbalanced power relationships between executives and employees to one where everyone is viewed as a leader responsible for her/his world and able and empowered to take that responsibility.

Next post: The Inner Game and Org Design