Why Most Organizations are Still Feudal at their Core

Inertial. Incremental. Insipid.   This is how Professor Gary Hamel describes large organizations in his HBR post titled The Core Incompetencies of the Corporation.

Hamel lays out his rationale in a simple and concise manner:

First, organizations are fundamentally intertial.   They see change coming, but go through various stages of denial before they would actually admit they have a problem. Even once they do admit a problem, change is slow and belated as leaders and individuals take time to rally behind the change, internalize it and take actions.   Then you have your detractors, deniers and even saboteurs.

Second, organizations are incremental. Innovation is counter-intuitive to how most organizations have been designed and are run (for scale, efficiency and risk management). Most of the folks at the helm of organizations are MBAs or finance types that have been taught and came up the ranks managing predictable businesses based on metrics.   We analyze the data of the past over and over again, making minor tweaks that, at best, can only produce reliable incremental results, but rarely game-changing innovation (which explains why disruption is abound in almost every industry).

Third, and in my opinion, most importantly, organizations are emotionally insipid.   Most organizations are setup for command-and-control where strategy gets set at the top, executives are out of reach for employees and compliance is what is being rewarded with compensation and promotions. Initiative, imagination, and passion can’t be commanded.   They must be cultivated and inspired. In organizations full of rank-and-file individuals where bureaucracy and egos, prevail on a daily basis, the very core ingredients of creativity such empathy, listening and risk-taking are nowhere to be found. Very few people are rewarded to take risks, preventing a very essential “heads-up” mindset from prevailing.

Hamel wraps up his article by calling out quick fixes, such as wikis, online collaboration, design thinking and other tools that have been recently creating much buzz in corporate circles with a strong call-to-action for leaders to start building the organizations of the future.

In Hamel’s own words “Until we challenge our foundational beliefs, we won’t be able to build organizations that are substantially more capable than the ones we have today. We will fail to build organizations that are as nimble as change itself. We will fail to make innovation an instinctual and intrinsic capability. We will fail to inspire extraordinary contributions from our colleagues and employees.”

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