The Secret of Adaptable Organizations Is Trust
In the last year, many companies have been pushed to the limits of their capabilities, and in many cases, to the edge of insolvency. With severe pressure on operations, supply chains, and demand, their processes have collapsed, and any idea of teamwork within their ranks has been thrown to the wind.
Or have they? My conversations with business leaders suggest that, in fact, the opposite is true. Contrary to all expectations, many CEOs say that their organizations actually appear to work best in crisis mode. With the company in a sink-or-swim situation, the employees pull together and develop the ability to surf.
Of course, working in crisis mode is neither sustainable nor desirable. Many business leaders are now asking themselves how they can keep up the momentum post-crisis and ensure that their organizations are adaptable in the future. How can they move from crisis mode toward forward thinking?
The key lies in achieving a permanent state of adaptability. Every business leader knows that their company needs to adapt in order to survive long term. However, the real issue is not successfully transforming your organization on a one-time basis — it’s writing the ability to adapt and transform into the company’s DNA. It’s developing a mechanism or reflex for dealing with whatever crisis comes along, be it financial, technological, environmental, or health related.
The pandemic has shone a sharp spotlight on the need for companies to be adaptable, but business leaders have long been aware of this necessity. Even before the mayhem of 2020, they had to deal with multiple crises. Indeed, most business leaders feel like they’ve been in a state of constant “transformation” for the past two decades, and many are heartily sick of the word.
The problem is, despite the energy that business leaders put into their work, most attempts to make companies adaptable come to nothing. This is borne out by my own experience working both in management and as a strategy consultant. Ask top managers what went wrong, and you’ll hear the same litany of complaints over and over again: Some individuals within the organization failed to take ownership of the change process. People started blaming each other. Things went wrong and nobody did anything about it. Gradually, the transformation lost momentum.
What was wrong with the old approach? Business leaders were trying to do too much. They were expending a lot of energy but channeling it in the wrong direction. Time and again, I’ve found working with organizations that complex problems do not require complex solutions. When it comes to being adaptable, the answers are actually surprisingly simple.
Less Is Actually More
Over the past few years, I’ve been encouraging business leaders to take a “less is more” approach. This technique differs radically from the old way of doing things. Traditional organizations were designed for stable market environments and often come with a heavy legacy of complex administrative processes. That makes them notoriously inflexible and difficult to transform. In such companies, when the going gets tough, the management gets tougher. The default approach is to impose more rules and tighter controls from above as a way of keeping disruption in check.
The problem is, tightening controls often stifles the organization. In fact, what management should do is loosen their hold and give the organization the freedom it needs to work effectively. The idea is that management should stick to defining what they want to achieve and let the organization focus on how to achieve it. This process of loosening your grip — while not letting the company descend into chaos — can be tricky. It needs to be based on a clear set of principles, backed up by science.
My approach is inspired by complexity theory, which builds on the work of U.S. theoretical physicist and Nobel laureate Philip Warren Anderson. One of the key concepts in complexity theory is “emergence”: The idea that complexity arises from simplicity and that small things form big things with properties different than the sum of their parts when interacting as part of a greater whole. Just a few simple principles allow you to build systems where macrointelligence and adaptability derive from local interactions and knowledge. In other words, the challenges may be great, but the solutions are often small.
Many examples of this occur in nature. For instance, ants build living bridges when searching for food, construct megacity-like colonies, and protect themselves against threats collectively. If the colony is flooded, for example, some of the ants use their heads to plug holes, while others absorb water with their bodies to drain the floodwater.
Adaptability Design Principles
I like to summarize this less is more approach in the following concise set of design principles, which effectively translate the concept of emergence into the language of business. Leaders can draw inspiration from these design principles to write the ability to adapt into their company’s DNA.
Following these principles can help business leaders build an organization that is able to learn from the bottom up, using local knowledge and expertise. Like a colony of ants, the organization derives its strength and adaptability from the power of emergence.
The Principles in Practice
How does this apply to organizational science? I recently worked side-by-side with a European airport that chose to take a less is more approach to transforming their organization. Here’s how they did it.
Specify the goal of the transformation.
The board defined their goal as improving the top and bottom lines. Then they broke that down into specific topics, such as increasing spend per passenger and decreasing administrative costs. No guessing was allowed about how this was to be achieved — that was left to the teams on the ground at a later stage. They also held meetings with representatives of each business unit and department to find out what success would look like from their perspective.
The advantage of this strategy was that the board didn’t start out with a mix of half-questions and half-baked solutions, as is often the case. All too frequently, the initial discussion shifts from asking questions to guessing the answers before the problem has been specified properly. As a result, the true nature of the problem only becomes apparent toward the end of the initiative. As Einstein famously put it: “If I had an hour to solve a problem, I’d spend 55 minutes thinking about the problem and five minutes thinking about solutions.”
Choose owners for the different topics.
The board set up “topic teams” led by pairs made up of a pilot, who was ultimately responsible for decisions, and a co-pilot, who assisted the pilot and acted as a sparring partner. Pilots and co-pilots were matched on the basis of having differing characters, approaches to problem-solving, and experience. Their task was to find the best possible solution to the challenge, considering end-to-end feasibility and impact, and then recruit a team of cross-functional experts from within the organization to help them in their work.
Test each solution.
Importantly, topic teams had to back up each solution they devised with a way of measuring whether or not it was successful. The airport could then test out each solution to see whether it actually worked, the idea being that you only do what you can measure. In organizations more familiar with experimentation, it’s possible to use key performance indicators (KPIs), such as a minimum and maximum number of tests and minimum and maximum failure rates.
Ensure exchange between the individuals involved.
This enables the process of emergence to take place. The board did this partly by having diverse teams (where lively interactions were both inevitable and encouraged) and partly by introducing regular “pit stops” every two weeks, during which the board and the various topic teams discussed status, ideas, best practices, and questions. They also designated a specific room at the airport that everyone involved in the program could access. The room had whiteboards for team progress updates, questions, and comments. It also served as the venue for the pit stops and as a place where members of the program could exchange ideas informally. During stay-at-home orders, this was replaced with a virtual room.
Make the process part of operational routine, not a special, one-time event.
Crucially, the initiative was later transferred to the line organization. The airport effectively established a new way of working, with transformation taking place on the job rather than in the boardroom. In terms of the overall goal of the project, the undertaking was wildly successful: The airport’s earnings increased by more than twice the original target. But, more importantly, the airport managed to embed a permanent state of adaptability within the organization.
The Role of Business Leaders in an Adaptable Organization
In traditional organizations, the person at the top focuses on making operational decisions, especially the big ones. In adaptable organizations, the leader focuses on facilitating the right environment. In the case of the airport, it was truly remarkable how the board was able to focus on finding the right pilots and co-pilots and resist the temptation to co-design solutions. They trusted their teams, gradually loosened their grip on the reins in a controlled fashion, and were rewarded with powerful, innovative solutions that emerged from the organization itself.
How can you know if you’re currently doing too much, getting overly involved in the nitty-gritty of operations? Here’s a quick exercise I often use with clients that will show you whether you’re holding the reins too tight and failing to allow emergence to work its magic. Count the number of decisions you make in the course of a day. If you’re constantly making decisions, chances are you’re not giving your company the freedom it needs to self-organize. If this is you, the single most effective task you can perform is to reduce the number of decisions you need to make every day.
The results of doing less, not more, might just take you by surprise.
This content was originally published here.