I really enjoyed WOBI (World of Business Ideas) last week, and it's definitely had me thinking. I don't think I've changed my mind on anything, but I've connected a few things together a bit differently.
So what were my main insights? Firstly, that there wasn't a lot of focus around the conference's non-social media tagline, Exponential. I might go for something like Inspirational. I'm not saying it was, though I wouldn't say it wasn't, but I'm not one of those who look for inspiration from speakers, I look for insight. But there was a lot of focus on running business in a way that will inspire employees (Hamel, David, Sinek and SMR Covey) customers (Lindstrom) and society (Porter).
So how do you create an inspirational business and / or organisation? Well, I think in a number of ways Hamel got very close. I do think becoming more human is the key. I just don't agree that eliminating bureaucracy, especially managers and management layers, is the main way to achieve this. Managers do add costs and layers do make businesses inefficient, but they're not the biggest thing to point at. Using Porter's ideas they're part of operational effectiveness or execution, they don't impact strategy. Using my terminology, they're value for money, not adding or creating value.
Layers are becoming more important with an increasing focus on being more human, and on employee experience, etc. And I accept that if you were to design an organisation just to develop a compelling experience, you probably wouldn't invent hierarchy to do it. But hierarchy doesn't really get in the way of experience that much. I don't agree with Hamel that being 8 layers down in an organisation feels like being buried under the other 7. I accept that organisational life is often awful and we do need to be more ambitious the way we sort that. But do we really need to start with layers to do that. In my view, not so much. For one thing, hierarchy provides some really useful benefits that it's still difficult to provide as easily through other means. Eg I thought Porter made a very good case for a hierarchical aspect to strategy in our interview.
I'm absolutely not saying that we don't need to redesign our organisations. As Hamel says, our business models have changed but our organisation models haven't done so to anything like the same extent. They now need to do so. That's why I think the opportunity of applying Porter's thinking about business strategy to our organisations is so important.
I loved the way he described this in our interview: "Competition
is about what you actually do in the marketplace to achieve value for
the customer. Then you back up and that’s where the resources are. There is a cause and effect. We can keep on going further and further
back up, keep going upstream to look at cause and causes. Supporting every piece of
the value chain there’s another value chain like activity which are the
steps you take to get there. And as get more about insight about
management we have more insight into what some of those things are. What’s
helpful is that we’re getting up the causal chain. Business strategy is about
what you do in the marketplace but how you get to doing that is a
fascinating question. That’s why I’m interested in the dynamic view of
strategy."
We need to start thinking about creating unique and differentiated organisational strategies by developing best fit activities in the
organisation value chain. These activities then need to provide the right outcomes which will add and create value for the business. Porter seemed to agree with this perspective too, saying: "if
they’re good resources they can be an advantage, part of doing it
better."
But as well as what our organisation needs to provide, we also need to think about how it is going to do this. So Hamel is absolutely right in suggesting that we need to set clear organisation principles. These provide an additional driver for our organisation design.
And because employees are now more important we need to include their expectations as the third main driver, so that we don't just end up trying to make horrible organisations less awful for people through things like journey mapping (putting experience lipstick on a nasty pig). Or, and this may be the one change I have come away with, we introduce more of a shared value perspective by focusing on societal expectations here.
If these three objectives indicate that we need to reduce hierarchy then so be it, but in my experience that's not the main result most of the time. What I think is a more common result is that we align our organisational groups with the business that needs to get done, including through the use of horizontal teams, networks and, as Hamel mentioned, communities. Doing this ensures that people can get their work done easily and provides a much better basis for their engagement than worrying about bureaucracy.
I think the above steps need to take place before we do anything else, but they're not the most important thing. Hierarchical thinking is a bigger problem than hierarchical structure. And sorting this is about developing David's emotional agility, Sinek's infinite game or Covey's trust and inspiration. Which could of course be principles for the organisation design. Or simply deeply embedded leadership behaviours getting people to act differently and to provide time and attention for themselves and each other. My worry is that this is difficult to achieve unless you've got the right organisation in place first, so again, I think redesigning the organisation is the most urgent thing. But then you can move on to the most important (I admit I was inspired by SMR Covey's father) and ensure people are acting in a human way in the newly human organisation. (In The Social Organization I call this these the organisational society and architecture).
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