When you are an established player in your industry and a new competitor emerges, the first natural reaction is to ignore them, but at the same time, keep a close watch from the corner of your eye to see what they’re up to. But what if that competitor accumulates 700,000 new customers within their first year just like hot enterprise collaboration start-up Slack did?
What if you’re the InterContinental Hotels Group, which, over the past 238 years acquired 4,600 hotels with 674,000 rooms to become the largest player in hospitality. You observe a start-up called AirBNB, which over the past 7 years accumulated over 1 million accommodation listings, but owns no real estate whatsoever?
Of course, it comes down to choice. You can do the usual: wait, deny (perhaps they’ll go away! — they hardly ever do!), or you do what most organizations are doing and try figure out how to change, and fast!
So you come up with a brilliant idea to one-up your new competition and chart out your plans. You give the project a slick-sounding code name like “Genesis”, and you assign one of your top leaders to oversee it. The project has been scoped, partners selected, KPIs have been aligned to measure your “success”. You pull in your smartest people from all areas of the business to work on this project.
Six months have passed since you’ve given the green light, but today, as you’re reviewing version #67 of an 80-slide PowerPoint deck. You quickly realize that most of the slides just detail the accountabilities and deliverables of each of the functions, but for the most part, not a single line of code has been written. Your grandiose plans are already four months behind and your new competitor has just raised another round of funding.
You wonder what’s going on with the project. Are people not collaborating? Six months back, you made it perfectly clear to the C-suite and the board that this is your TOP PRIORITY (yes, literally in all-caps) and that everyone must collaborate to execute. In reality, however, meshing the skills and resources of different departments, each focused on their own distinct targets; to achieve a larger organizational goal is much easier said than done. While people will offer pleasant, cooperative behavior, that is far from true collaboration where people have a shared goal and shared purpose. Even if you are successful at the end, as Austin Carr, details in his synopsis on what it took Disney to modernize it’s parks with magic bands, it is a messy, political roller-coaster ride (with no pun intended).
It’s not that achieving collaboration between groups is impossible, but the way we design organizations, by splitting them into divisions, we divide the business, and the labor to drive efficiency. However, with different objectives and leadership priorities, true collaboration becomes really difficult.
While there’s no doubt that efficiency matters, for companies like the InterContinental Hotels Group or Hilton Hotels, who have to battle AirBNB and dozens of other new competitors, a sole focus on efficiency doesn’t necessarily solve their woes. It only leads to commoditization. Value is increasingly driven by innovation; efficiency is no longer the overriding goal.
The bottom line here is pretty painful for many leaders to hear and many of them will say that it’s ludicrous, but the management model that predominates in most organizations has its roots in the 19th century. It was a model built to maximize efficiency by minimizing deviations from standard practices. For today’s organizations, it just no longer works, as they must be endlessly adaptive and relentlessly innovative just to survive.
Almost every leader has the same question in mind: “How do we change faster?” Nearly every modern business book brings out examples from a handful of companies who are very successful in today’s fast-changing era. Organizations like Google, Amazon, Facebook, Pixar and Starbucks have been studied in detail for years in the quest of distilling the secret sauce that has made them so successful. While core principles such as failing fast or empowering for creativity used by these companies are absolute essentials for innovation, we’ve yet to find a way to copy and paste all of these attributes into other organizations. For example, take a principle such as failing fast and drop it into a business unit whose job it is to deliver for customers and meet quarterly revenue targets. The only ones failing fast will be the people who dared to try something new.
In reality, some cultures will accept change faster then others and some of the things that we know would accelerate innovation and get more out of our talent are not going to work as fast as we wish they did. The key here is to find the right context and carefully shape the culture around new behaviors that leadership holds themselves accountable to perform and model for others.
As many senior leaders grew up in an era that values efficiency and operate in a command-and-control structure, this isn’t an easy transition, but to get out of this particular hamster wheel, we have no choice but to unlearn over a century of inherited instincts and explore new models of working in the future.
So how do successful companies make the transition to become more responsive? I’d like to offer just four (of many) topics that could potentially have a big impact. Having studied many companies, from large multi-nationals to start-ups, over the years, there are dozens of tactics that large and small companies can implement for increased agility.
I chose these four, however, because of their practicality and incremental nature. That doesn’t mean that they’re easy to implement, but they won’t take moving mountains either (at least for some). Of course, as you read these, respect your own context and culture. We have to start by making a dent, which leads to more dents to prove out that new leadership mindsets are needed to create a responsive and adaptive organization that’s built to thrive in the 21st century.
So here they are:
In most organizations, we commonly hide, conceal or spin information to our personal advantage. The old-school thinking is that the better things are hidden from others, the more secure we feel. In a responsive organization, the opposite is true. Information should flow freely and be transparent and readable by everyone. The more people see the data, the more ideas and action there are to fix the problem, by collaborating on it. For example, if the sales pipeline figures for next quarter are low, the entire company takes notice and works to fix it. It isn’t just the problem of marketing or sales, everyone from R&D to Customer Support can pitch in solutions and ideas and collaborate to solve the problem.
Social media start up, Buffer is an example of a company practicing radical transparency. At Buffer, they openly disclose all their employees’ salaries, including the CEO, COO, CTO and others, their equity structure and their full revenue metrics.
Coming from a command & control structure, leaders often do a double take when they hear this example, but in reality, Buffer is at the forefront of a movement that is actually tremendously benefiting their business. It is a core example of Simon Sinek’s “Start with Why” principle at work. Buffer’s transparency has not only enabled it to recruit more top talent, but attract more users, as multiple studies and surveys have clearly indicated, customers are becoming sensitized to advertising or the classic “corporate speak” that you might hear from a company.
Per Sinek, “Customer’s don’t buy what you do, they buy WHY you do it” and with transparency, customers now engage with ‘humanized’ companies that communicate openly and provide access and insight into their cultures and what they stand for. They want to be part of the brand and want to understand the higher purpose for the organization (besides making money or peddling products and services, of course).
While you don’t need to go as far as Buffer did, by making information open and available, you can remove the distractions, fears, and negativity that hinder concentration. Insights from neuroscience underscore that our brains work best when we no longer feel the need to hide, cover up our mistakes, or dwell on errors. Simply put, sharing data and insight fuels shared purpose and accountability and gets everyone on board with solutions.
Setting Simple Principles
How many pages are in your employee handbook? At Nordstrom’s, the employee handbook contains one core principle: “Use your best judgment in all situations. There will be no other rules.” Nordstrom’s culture demands that the employee put the customer before company or profit in all decisions and every principle they have in place follows the culture. For example, salespeople are not bound to a single department like they do in other department stores. If a customer needs help with an entire wardrobe, the sales person can walk with her throughout the store and recommend products. Nordstrom’s salespeople are fully empowered to help customers and are consider themselves as entrepreneurs working within the business.
At Zappos, values are not just written in an employee handbook, they are at the very core of what the company practices and stands for. The company, which differentiates itself with level of service that is the envy of the industry, calls out delivering WOW through service as one of it’s values. WOW is such a short, simple word, but it really encompasses a lot of things and sets the bar at Zappos. To deliver WOW, Zappos employees work to differentiate themselves, which means doing something a little unconventional and innovative, above and beyond what’s expected. The shared purpose is also clear: It must have an emotional impact on the receiver.
You can write manuals and manifestos, but the best principles are simple enough so that anyone can use them to guide their decisions and behaviors.
A Nordstrom’s sales person, they can ask themselves if they’re using the best judgment for the customer. For a Zappos Customer Loyalty Team member, they can use the principle to easily distinguish if they really delivered a WOW experience as soon as they wrap up a customer call.
As we all know, having stated principles is not enough. Having leaders who exhibit these principles through their actions is the only way to gain trust and get buy-in.
Impact of Small Teams
While most people believe that “the more brainpower in the room, the better”, there is much scientific proof emerging that the exact opposite is true. In fact, throwing more people at a problem is one of the most common productivity traps that we fall into. Amazon founder and CEO Jeff Bezos coined a “two pizza rule”. If a team couldn’t be fed with two pizzas, it was too big. People in smaller teams are far more productive. As group size rises, all sorts of issues spring up and individual performance levels diminish. The larger the team, the more links between people get accumulated and the costs of coordination sky-rocket. This formula shows how the links grow at an accelerating rate:
- A small startup of of 7 people has 21 connection points to maintain
- A group of 12 has 66 connection points to maintain
- A group of 60 has 1770 connection points to maintain.
- A large enterprise of 6000 has 107,997,000 connection points to maintain.
Imagine the complexity of managing even 20 connections. With every person joining the team, the potential for mismanagement, misinterpretation, and miscommunication increases. Delays emerge from the snowballing time and effort required to keep everyone informed, coordinated, and integrated.
The solution is to create small and lean teams that have the authority and resources they need to accomplish their goals without help or oversight. These teams tend to be comprised of 5–8 multi-disciplinary people that are tasked to see their work through from start to finish. Teams need to be built with more than just skills in mind. Both skills and personalities need to complement each other and even occasionally cause some positive friction in order to avoid group think. When you have a good mix of skills, traits and personalities, these small teams can make a huge impact and move faster than ever before.
Many companies have embraced the notion of these small teams and have even created innovation incubators around them. At Tyco, a 55-year-old pioneer of the world’s leading security and fire-prevention systems, nearly 200 employees work in 20 internal startups whose mission is to develop new products and accelerate innovation. One of these teams was able to develop and launch a remote fire-alarm-testing product in under a year, resulting in doubling the revenue from flame-and-gas detection products.
Other industry giants like Coca-Cola, Nordstrom’s, Mondelez and GE have used the small team approach to successfully drive results and engage some of their best and brightest in re-imagining the future and to solve some of their biggest business challenges.
Show any child a sample corporate memo and they’ll likely look at you as if you came from another planet.
Today’s corporate communications, whether it’s a team meeting or some of the emails we receive contain language that was not meant for human consumption. They are riddled with buzzwords and lengthy meaningless statements. As Guardian writer Steven Poole observes, buzzwords help deflect blame, mask mistakes, complicate simple ideas, obscure problems, and perpetuate power relations. Unlike what you were taught in school, business communications is not about lecturing. It is about inspiring action. It is about getting buy-in through influence. It is about showing the authentic side of leaders.
Simplifying communications and underscoring a tone of authentic breaks away from the mundane and not only gets your message noticed, but also inspires action.
The nonprofit Teach For America has been named one of Fortune’s 100 Best Companies to Work For in each of the last two years. As it grew rapidly, so has the distance between staff and senior leaders. This made it harder to nurture a culture of trust and breaking down the barriers between leadership and staff amidst this scale-up has become more difficult. Teach for America undertook an initiative to humanize and simplify the way their leaders communicate, sharing the following practices:
- Go live: When there’s only one take, spontaneity and personality is what you get
- Go with video! In-person is always best, but when that can’t happen, video brings people to life
- Go online: A microblogging community fosters lively casual conversations among staff and executives
- Throw out the script: Loosen the reins on talking points and allow your leaders to speak from the heart
- Coach the voice: Help your executives find their authentic voices and they’ll deliver messages with passion