May 2, 2024

Accelerating Organizational Transformation and Making It Stick Part 2 (TPL Insights #220)

By Rob Andrews

By Rob Andrews with italicized content from John Kotter’s Harvard Business Review article summarizing his book Accelerate!

As I mentioned in last week’s post, John Kotter’s work around accelerating organizational transformation flanges up perfectly with General Stan McChrystal’s book Team of Teams: New Rules of Engagement for a Complex World, a compelling narrative that explores the challenges faced by organizations in today’s interconnected and rapidly changing world. Drawing from his experiences as the former commander of U.S. and international special forces in Afghanistan, McChrystal offers insights into how traditional hierarchical structures are often inadequate for addressing the complex challenges of modern warfare and business. I open week this week’s post with a reminder that McChrystal’s book is well worth the read. Now, we will continue with Kotter’s work:

Complementary Systems

Mounting complexity and rapid change create strategic challenges that even a souped-up hierarchy can’t handle. That’s why the dual operating system—a management-driven hierarchy working in concert with a strategy network—works so remarkably well.

At the heart of the dual operating system are five principles:

  1. Many Change agents, not just the usual few appointees. To move faster and further, you need to pull more people than ever before into the strategic change game, but in a way that is economically realistic. That means not large numbers of full-time or even part-time appointments but volunteers. And 10% of the managerial and employee population is both plenty and possible.
  2. A want-to and a get-to—not just a have-to—mindset. You cannot mobilize voluntary energy and brainpower unless people want to be change agents and feel they have permission to do so. The spirit of volunteerism—the desire to work with others for a shared purpose—energizes the network.
  3. Head and heart, not just head. People won’t want to do a day job in the hierarchy and a night job in the network—which is essentially how a dual operating system works—if you appeal only to logic, with numbers and business cases. You must appeal to their emotions, too. You must speak to their genuine desire to contribute to positive change and to take an enterprise in strategically smart ways into a better future, giving greater meaning and purpose to their work.
  4. Much more leadership, not just more management. At the core of a successful hierarchy is competent management. A strategy network, by contrast, needs lots of leadership, which means it operates with different processes and language and expectations. The game is all about vision, opportunity, agility, inspired action, and celebration—not project management, budget reviews, reporting relationships, compensation, and accountability to a plan.
  5. Two systems, one organization. The network and the hierarchy must be inseparable, with a constant flow of information and activity between them—an approach that works in part because the volunteers in the network all work within the hierarchy. (See the exhibit “Two Structures, One Organization.”) The dual operating system is not two super silos, like the old Xerox PARC (an amazing strategic innovation machine) and Xerox (which pretty much ignored PARC and the commercial opportunities it uncovered).

Two Structures, One Organization

Traditional hierarchies and processes, which together form an organization’s “operating system,” do a great job of handling the operational needs of most companies, but they are too rigid to adjust to the quick shifts in today’s marketplace. The most agile, innovative companies add a second operating system, built on a fluid, network like structure, to continually formulate and implement strategy. The second operating system runs on its own processes (see sidebar “The Eight Accelerators”) and is staffed by volunteers from throughout the company.

Governed by these principles, the strategy network can be incredibly flexible and adaptable; the accelerators can drive problem solving, collaboration, and creativity; and the people doing this work—the volunteer army—will be focused, committed, and passionate.

The network is like a solar system, with a guiding coalition as the sun, strategic initiatives as planets, and sub-initiatives as moons (or even satellites). This structure is dynamic: Initiatives and sub-initiatives coalesce and disband as needed. Although a typical hierarchy tends not to change from year to year, the network can morph with ease. In the absence of bureaucratic layers, command-and-control prohibitions, and Six Sigma processes, this type of network permits a level of individualism, creativity, and innovation that not even the least bureaucratic hierarchy can provide. Populated with employees from all across the organization and up and down its ranks, the network liberates information from silos and hierarchical layers and enables it to flow with far greater freedom and accelerated speed.

The hierarchy differs from almost every other hierarchy today in one very important way: All the junk ordinarily pasted on it for tackling big strategic initiatives—work streams, tiger teams, strategy departments—has been shifted over to the network. That leaves the hierarchy less encumbered and able to perform better and faster what it is designed for: doing today’s job well, making incremental changes to further improve efficiency, and handling the small initiatives that help a company deal with predictable adjustments such as routine IT upgrades.

The strategy network meshes with the hierarchy as an equal. It is not a super task force that reports to some level in the hierarchy. It is seamlessly connected to and coordinated with the hierarchy in a number of ways, chiefly through the people who populate both systems. Still, the organization’s leaders play an important role in launching and maintaining the network: the C-suite or executive committee must create it (more on that later) and explicitly bless and support it. The network cannot be viewed as a rogue operation. It must be treated as a legitimate part of the organization, or the hierarchy will crush it.

The Eight Accelerators

These are the processes that enable the strategy network to function:

  1. Create a sense of urgency around a single big opportunity. This is absolutely critical to heightening the organization’s awareness that it needs continual strategic adjustments and that they should always be aligned with the biggest opportunity in sight. Urgency starts at the top of the hierarchy, and it is important that executives keep acknowledging and reinforcing it so that people will wake up every morning determined to find some action they can take in their day to move toward that opportunity. Sufficient urgency around a strategically rational and emotionally exciting opportunity is the bedrock upon which all else is built. In my original work 15 years ago, I found that ridding an organization of complacency was important. In my more recent work, I’ve seen ongoing urgency emerge as a strong competitive advantage. It can galvanize a volunteer army and keep the dual operating system in good working order. It moves managers to focus on opportunities and allow the network to grow for the benefit of the organization. Without an abiding sense of urgency, no chance of creating a grander business will survive. For clients, my team has begun by having the executive committee take a first pass at articulating the strategic opportunity. This makes sense because its members are in a position to see the big picture and because their role in nurturing the dual structure is vital—particularly in the early days, when it is most vulnerable to the forces of resistance. (For the story of how one sales executive at a technology firm created urgency, see the sidebar “The Dual Operating System in Practice.”)
  2. Build and maintain a guiding coalition. The core of a strategy network is the guiding coalition (GC), which is made up of volunteers from throughout the organization. In my work with clients, people fill out applications to be on the GC. With a sufficient sense of urgency, you may get 10 times as many applications as there are roles in the network’s core. The GC is selected to represent each of the hierarchy’s departments and levels, with a broad range of skills. It must be made up of people whom the leadership trusts, and must include at least a few outstanding leaders and managers. This ensures that the GC can gather and process information as no hierarchy ever could. All members of the GC are equal; no internal hierarchy slows down the transfer of information. The coalition can see inside and outside the enterprise, knows the details and the big picture, and uses all this information to make good enterprise-wide decisions about which strategic initiatives to launch and how best to do so. The social dynamics of the GC may be uncomfortable at first, but once a team learns how to operate well, most members seem to love being part of it.
  3. Formulate a strategic vision and develop change initiatives designed to capitalize on the big opportunity. The vision will serve as a strategic true north for the dual operating system. A well-formulated vision is focused on taking advantage of a big make-or-break opportunity. (If no such opportunity exists, because you operate in a rare pocket of competitive stability, you may not need this system quite yet. But keep your eyes open: That situation won’t last.) The right vision is feasible and easy to communicate. It is emotionally appealing as well as strategically smart. And it gives the GC a picture of success and enough information and direction to make consequential decisions on the fly, without having to seek permission at every turn. In creating one company’s vision statement, the guiding coalition sought input from top management, a consultant’s report, and colleagues throughout the organization. The vision statement described what the sales group, which was dealing with market losses, could look like in a year if it accelerated toward a big opportunity. It outlined pragmatic goals but framed them with emotional resonance, using words such as “proud,” “passionate,” and “admired.” As a result, the group vowed to work better with partners, double growth in emerging markets, innovate constantly, and halve the time it took to make decisions. Next the GC identified the five strategic initiatives that its members deemed critical to achieving the vision and that they wanted very much to work on, including “innovation in attacking growing markets.” Inspired by the vision and guided by the initiatives that flowed logically from it, everyone within the network became an author of strategic change. That’s very powerful. To keep the two parts of a dual operating system connected and aligned, we have found, the GC must show a draft of the vision and initiatives to the organization’s executive committee for comments. A well-functioning GC will treat the committee’s comments as highly valuable input but won’t automatically accept them as commands.
  4. Communicate the vision and the strategy to create buy-in and attract a growing volunteer army. A vividly formulated, high-stakes vision and strategy, promulgated by a GC in ways that are both memorable and authentic, will prompt people to discuss them without the cynicism that often greets messages cascading down the hierarchy. Done right, with creativity, such communications can go viral, attracting employees who buy in to the ambition of the message and begin to share a commitment to it. Sufficient urgency around a strategically rational and emotionally exciting opportunity is the bedrock upon which all else is built. This point tends to prompt skepticism from people who have seen attempts to motivate a workforce fail. But if the right messages are sent from a passionate GC to colleagues who feel a sense of urgency, the volunteer army will start to gather. I’ve seen it happen. Motivation is an issue when people are forced to work in boxes within a hierarchy where workers become bored, new ideas aren’t welcome, and managers aren’t effective. And it does not take many volunteers to get a network launched: Again, 10% of the total employee population will do. That’s 500 people in an organization of 5,000.
  5. Accelerate movement toward the vision and the opportunity by ensuring that the network removes barriers. Perhaps a sales rep has gotten customer complaints about bureaucratic hang-ups. He doesn’t know how to fix the problem and doesn’t have time to think about it. Someone in the network gets wind of this and says, “I’ve seen that. I volunteer. I’ll put together a group and attack it.” That person writes up a description and sends it out to the volunteer army, and five people immediately step forward. They set up a call to begin learning why this is happening, figuring out how to remove the barrier, and designing a solution—a better CRM system, perhaps. The team probably includes someone from IT who has technical expertise and can help identify where the money for the new system might come from. The team works with additional volunteers who have relevant information—from whatever quarter may be germane—to act quickly and efficiently. The time between the first call and this point might be two weeks—a model of accelerated action. The network team settles on a practical solution that properly supports the sales team. Then its members take their thinking to the CIO, who gives feedback and may offer the budget and the resources. The volunteer army is not a bunch of grunts carrying out orders from the brass. Its members are change leaders who bring energy, commitment, and enthusiasm. Design and implementation occur in the network and are instituted within the hierarchy. And if the network is truly operating hand-in-glove with the hierarchy, the people in the hierarchy are champing at the bit to get the new CRM system.
  6. Celebrate visible, significant short-term wins. A strategy network’s credibility won’t last long without confirmation that its decisions and actions are actually benefiting the organization. Skeptics will erect obstacles unless they see proof that the dual operating system is creating real results. And people have only so much patience, so proof must come quickly. To ensure success, the best short-term wins should be obvious, unambiguous, and clearly related to the vision. Celebrating those wins will buoy the volunteer army and prompt more employees to buy in. Success breeds success. If wins are not forthcoming, that in itself is useful feedback: Something is wrong. A committed GC, with many eyes and ears to take in the reality of the situation and with no status or territory to protect, can quickly tweak either the decisions it has made, or the methods used for implementing those decisions.
  7. Never let up. Keep learning from experience. Don’t declare victory too soon. Organizations must continue to carry through on strategic initiatives and create new ones, to adapt to shifting business environments, and thus to enhance their competitive positions. When an organization takes its foot off the gas, cultural and political resistance arise. Here, again, is why urgency is so central to the strategy part of the dual operating system. It keeps people going. If it is weak to begin with, or neglected, the volunteer army’s determination will flag, and the temptation to slow down or stop will become irresistible. The volunteers will start focusing on their work in the hierarchy, and the hierarchy will dominate once more.
  8. Institutionalize strategic changes in the culture. No strategic initiative, big or small, is complete until it has been incorporated into day-to-day activities. A new direction or method must sink into the very culture of the enterprise—and it will do so if the initiative produces visible results and sends your organization into a strategically better future.

Stay tuned for Part 3 next week!

Warmest Regards,

Rob