May 9, 2024

Accelerating Organizational Transformation and Making It Stick Part 3 (TPL Insights #221)

By Rob Andrews

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

Today’s blog is a continuation of last week’s post. 

The Volunteer Army 

The members of the volunteer army also help make the daily business of the organization hum; they’re not a separate group of consultants, new hires, or task force appointees. They have organizational knowledge, relationships, credibility, and influence. They understand the need for change—they are often the first to see threats or opportunities—and have the zeal to implement it. 

It is vital that this army be made up of individuals who bring energy, commitment, and genuine enthusiasm. They are not a bunch of grunts carrying out orders from the brass. Rather, they are change leaders. Whereas hierarchies require management to maintain an efficient status quo, networks demand leadership from every individual within them. 

People who have never seen this sort of dual operating system work often worry, quite logically, that a bunch of enthusiastic volunteers might create more problems than they solve—by, for example, running off and making not very thoughtful decisions and disrupting daily operations. Here is where the very specific details built into the network and the accelerators come into play. This second system not only creates the army but guides the volunteers with a structure and processes that create a powerful, smart, and increasingly needed strategic force. 

In organizations where the volunteer army has really taken hold, individuals have told me that the rewards are tremendous—though rarely monetary. They talk about the fulfillment they get from pursuing a mission they believe in. They appreciate the chance to collaborate with a broader array of people than they ever could have before. A number of them say that their strategy work led to increased visibility across the organization and to bigger jobs in the hierarchy. And their managers appreciate how the volunteers develop professionally. In June 2012 I got this e-mail message from a client in Europe: “I can’t believe how quickly this second operating system gives growth to real talents within the organization. Once people feel ‘Yes, I can do it!’ they also start faster growth in their regular jobs in the hierarchy, which helps make today’s operations more effective.” 

Building Momentum 

Over the past three years I’ve aided eight organizations, private and public, in building dual operating systems, and the challenges have been fairly predictable. One is how to ensure that the two parts work together and don’t drift apart. Here it is essential that the GC and the executive committee maintain close communication. Another is how to build momentum: Most important is to communicate wins from the very start. Probably the biggest challenge is how to make people who are accustomed to a control-oriented hierarchy believe that a dual system is even possible. Again, this is why a rational and compelling sense of urgency around a big strategic opportunity is so important. Once it has been sparked, mobilizing the GC and putting the remaining accelerators in motion happens almost organically. 

A dual operating system doesn’t start fully formed and doesn’t require a sweeping overhaul of the organization. It grows over time, accelerates action over time, and takes on a life of its own that seems to differ from company to company in the details. It can start with small steps. Version 1.0 of a strategy network may arise in only one part of an enterprise. After it becomes a powerful accelerating force there, it can expand throughout the organization. Version 1.0 may play little or no role in strategy formulation but be involved, rather, in implementation. It may feel at first more like a big employee-engagement exercise that does, indeed, produce a much bigger payoff for the same size payroll. But the network and the accelerators evolve, and momentum comes faster than you might expect. 

A Summary and a Prediction 

Because a dual operating system evolves, it doesn’t jolt the organization the way sudden dramatic change does. It doesn’t require the organization to build something gigantic and then flick a switch to get it going. Think of it as a vast, purposeful expansion in scale, scope, and power of the smaller, informal networks that accomplish tasks faster and cheaper than hierarchies can.  

The system offers a solution to problems we have known about for some time. People have been writing for at least 20 years about the increasing speed of business and the need for organizations to be quicker and much more agile. But who has been able to pull that off? The situation won’t be improved by tweaking the usual methodology or adding turbochargers to a single hierarchical system. That’s like trying to rebuild an elephant so that it can be both an elephant and a panther. It’s never going to happen. 

People have been writing for 50 years about unleashing human potential and directing the energy to big business challenges. But who, outside the world of start-ups, has succeeded? So few do because they’re working within a system that basically asks most people to shut up, take orders, and do their jobs in a repetitive way. 

People have been talking for a quarter of a century about the need for more leaders, because an organization’s top two or three executives can no longer do it all. But very few jobs in traditional hierarchical organizations provide the information and the experience needed to become a leader. And the solutions available—courses on leadership, for example—are wholly inadequate, because most development of complex perspectives and skills happens on the job, not in the classroom. 

People have been grumbling for years about the strategy consulting industry, whose reports fail to solve the problem of finding and implementing strategies to better fit a changing environment. A consultant’s report—all thought and little heart, forecasting where you can flourish in two or five or 10 years, produced by smart outsiders, and acted on in a linear way by a limited number of appointed people—has little or no chance of success in a faster-moving, more uncertain world. 

The inevitable failures of single operating systems hurt us now. They are going to kill us in the future. The 21st century will force us all to evolve toward a fundamentally new form of organization. I believe that I have basically described that form here. We still have much to learn. Nevertheless, the companies that get there first, because they act now, will see immediate and long-term success—for shareholders, customers, employees, and themselves. Those that lag will suffer greatly, if they survive at all. 

The Dual Operating System in Practice 

Paul Davidson, a sales executive for a B2B technology firm (I’ve disguised his name and some company details), had seen sales growth slip for a number of years. When his division started to lose market share, he commissioned an outside study, which recommended both a new strategy and an implementation process that Davidson judged to be too rigid and complex for the kind of rapid change needed. So he persuaded his division head and the CEO to support a more dynamic approach to change. 

Davidson knew much of what he wanted: a less costly sales operation, a broader range of distributors, the ability to move into the marketplace faster, and more focus on high-growth Asian markets. To get started on making those changes, he convened the sales division’s executive committee for a daylong meeting and charged it with creating a statement of opportunity. I can’t share the statement (my team worked with Davidson), but here are its main points: 

  • We have an opportunity to increase our sales growth by 50% or more in two years, and to become the number one sales organization in the industry. 
  • This is possible because (1) customer needs are changing, requiring competitors to change (but it is not guaranteed that they will change fast enough), (2) markets in developing countries are starting to explode, and (3) we are not operating at peak efficiency within the company. 
  • We have not changed fast enough to keep up with external demands, even though we have great people. We are capable of changing faster—we’ve done it in the past. 
  • We can create a very successful field organization that we’re deeply proud of. 

Davidson put the eight accelerators to work for his company. First he pulled together an “urgency team” made up of 20 volunteers from across the field organization who had credibility and who had embraced the opportunity statement—intellectually and emotionally—as soon as they heard it. This group agreed to an ambitious goal: getting buy-in from at least 50% of the 1,500-member sales division. The urgency team spent three months devising dozens of ideas for forging a broad understanding of, passion for, and commitment to the opportunity. It organized meetings, created support materials, and built an intranet portal filled with information, videos, blogs, and stories about the ways in which individuals on the sales team were already changing. 

Next the urgency team, working with the executive committee, invited employees to apply for a role in the guiding coalition. The application form asked why they wanted to be on the GC, how they planned to manage the additional workload, and more. About 210 people applied, and 36 were selected, mostly—but not entirely—from middle management and below. They functioned without a formal leader, though a facilitator organized meetings and phone calls. Despite initial awkwardness about the range of formal status across the GC, a new organizational logic arose: For any given activity, the people with the relevant information, connections, motivation, and skills took the lead. 

With input from top management, the outside study, and colleagues throughout the organization, the GC developed a vision and a strategy. The vision statement is confidential, but it said roughly this: “Within 12 months we will be using intermediaries successfully more than we ever have; our growth rate in emerging markets will be at least twice what it is today; we will have developed a discipline around innovation; and decision-making time will be cut in half, from a month to two weeks. We will be a proud, passionate group, still gaining momentum to make us the most admired sales organization and the best place to work in the industry.” The statement was perfectly rational, but there was also a lot of heart in it. 

The guiding coalition then took a first pass at identifying specific initiatives. Its members agreed on five, including attracting and hiring outstanding people with Asian experience, and making the product-introduction process faster and more efficient. The vision and list of initiatives went first to the executive committee, which was generally enthusiastic but worried that the GC might be taking on too much too fast. The GC extended the timetable on one of its initiatives and went to work. 

The original urgency team’s methods helped the GC take the vision and the strategy to the entire field organization, using training, communications tools, the portal, and face-to-face conversations, which proved to be particularly powerful. The more team members talked to colleagues, the more excited people became. I was at one lunch where a GC member spoke, and as the group broke up, the man next to me said, “For the first time ever, I understand where we need to go, and how. And it really makes sense!” 

Six months in, the GC had five major initiatives in place, each of which had from one to six sub-initiatives. The initiative to hire excellent people in Asia, for example, sprouted a sub-initiative to bring new people up to speed more quickly. The focus was on eliminating barriers to accelerated movement in the right direction. 

The people involved talked, e-mailed, and met as needed to get the work done. In the main GC meetings, members reported progress, shared information, solicited ideas, and asked for help (“Who has experience with the Japanese market?”). Senior managers helped to ensure that lower-level employees got the information they needed to make smart decisions. Lower-level people added frontline information that ordinarily wouldn’t have made it up the hierarchy to the executive committee. 

The guiding coalition came up with a big, visible win six months into the process: It built a new, simplified IT tool at a remarkably low cost in a short period of time. (IT had been a time-consuming trouble spot.) First an initiative team interviewed users to understand why the existing system was failing; then it reached out to the volunteer army for expertise. One e-mail request for help, sent to 100 people, elicited 35 responses within four days. Salespeople and their managers loved the end product. Success with this single effort, observed in the field organization and broadcast on the portal, accelerated progress by removing a big barrier and boosted the dual operating system’s credibility. 

The company never let up. I have lost count of how many initiatives it has completed over the past three years and how many barriers have been removed. Many mistakes occurred along the way, but the system continues to improve, and version 2.0, now at the division level, is without a doubt more sophisticated than version 1.0. 

The biggest accomplishments so far have been institutionalized in the hierarchical organization and integrated in daily operations. In cases where strategic changes don’t fit some aspect of the company culture, the relevant team looks for ways to change the culture. To a large extent this happens naturally if the new approach produces better results; but sometimes changes are so big that nurturing is needed. 

Three years after Davidson began to create a dual operating system, his field organization, and increasingly the entire division, are handling important issues in a new way. No one on the executive committee is overwhelmed by being appointed to help guide two or three strategic initiatives at once. Despite all the change, complaints about change fatigue in the core business are few. 

The results are dramatic. The system has accelerated the creation of new partnerships, new ways of dealing with direct customers, a faster product-introduction process, shorter response times on complaints, superior data for the product development group on shifting customer needs, and faster growth in Asia—it was up by more than 60% in 2011, compared with 25% three years ago. The division has started to win back market share, which the financial community has rewarded with a 55% increase in the company’s market cap. 

These are still early days. If the dual operating system is to achieve its true potential, it must spread to the entire enterprise. I think it will. That’s when the company will become a model of both strategic agility and short-term efficiency: Today’s results will grow stronger and stronger while the whole organization works together to sense threats and respond to them before it’s too late—and, more important, to seize and exploit opportunities at a pace that will ensure that it flourishes for years to come. 

I hope you enjoyed this piece on organizational transformation. The purpose of these blogs is to share what we’re learning about building cultures of peak performance. Please give us a call if you’d like to talk about how we can help your organization. 

Warmest Regards, 

Rob