10 October 2017
Dear reader,
In the Mannaz Multispeed Leadership Series, we will explore the new reality, what it means for businesses, and how we work with this together with our clients.
In our previous article, we sought to establish Multispeed Business as a term and with broad strokes paint what Multispeed Leadership consists of.
The purpose of this instalment is to provide a high-level view of what a multispeed context means for six distinct aspects of the organisation and how this affects each layer in a reality running in several speeds simultaneously. When reading this instalment, it is important to note that it is not to be viewed as a step-by-step guide. Rather, we have taken a helicopter perspective of all layers. They move at different speeds individually and intertwine with each other at different speeds. In classical management models our strategy sets up our innovation initiatives that again shape or affect our approach to organising, which governance models to deploy, how to go about leading our people etc. This still holds true for more exponential areas of our businesses but the different layers are much more intertwined and less linear. When reading, bear in mind that the several speeds can co-exist in an organisation and even within a layer.
Macro-environmental factors are affecting businesses in unprecedented ways. Acceleration is a popular and pervasive way to interpret our current economic and social climate. Other measures suggest a decline or a steady state. The rate of new consumer-product launches, for example, is slowly declining and inventories in the industrial sector have not seen massive changes yet.
So, are we decelerating, in a steady state or accelerating? This leaves us with a fragmented picture of current affairs. Alternatively, a multispeed picture. This notion of multispeed affects businesses and all levels of organisations. From strategy and innovation to governance, decision making and leadership through culture and mind-set.
As a CEO, you might find yourself having to lead both traditional production lines and functions, independent and agile project teams in your R&D, and networks or communities that you can engage in testing products or even reach out to for core development. From the enterprise level, the business function level, and to the individual level, the perception of speed is different.
Many organisations are conscious of the challenge that moving at different speeds simultaneously brings. They have however, not yet determined how to manage the complexity of this situation when it comes to e.g. strategy. If we look at strategy horizons, we might need to utilize different horizons for our various speeds. In the more traditional business or production lines, we might determine organisational strategies over a 3-5-year horizon, and make annual adjustments in response to external conditions. In the more agile departments, we might determine organisation strategies over a 1-2-year horizon, and adjust our approach as needed in respond to external conditions. Finally, in the exponential or hyper-agile parts of our organisations e.g. new ventures, corporate garages or similar, we must leverage our shared purpose as an organisation, and continually adjust our approach in response to external conditions.
At Mannaz, parallel to our work with helping our clients assess their Multispeed Business and strategy context we have introduced the concept of Multispeed Leadership. A new reality needs a new model that bridges the old and the new stable, the agile and the exponential.
The clear majority of organisations have previously practiced a one-size-fits-all approach to leadership. This approach is slowly being supplemented. The digital natives are harder to retain with a traditional mind-set and a one-size-fits-all leadership style. Leading in organisations that operate at different speeds, requires its own unique mix of organisational, governance, leadership and cultural capabilities to succeed.
What does a multispeed perspective mean for future leaders? It means leaders must apply different decision-making criteria and different fundamental understandings of leadership in the traditional part of the organisation compared to the exponential part of the organisation. The different leadership practices must therefore match their reality. Let us take leading and motivating as an example: In operationally excellent-orientated areas, our leaders might inspire followers by emphasising the satisfaction of achieving results. In these areas, we aim to motivate others through recognition and reward for their part in that achievement. In undertakings that are more agile our leaders inspire followers by emphasising our vision for the future and their active participation in its realisation. We aim to motivate others by enabling them see their part in this shared vision. For some of our more hyper-agile teams or projects it becomes more important for our leaders to inspire followers by emphasising our purpose as an organisation and its transformational benefits in wider society. There we aim to motivate others by giving their work meaning.
All organisations need to deal with digitalization. There is no other option. Even if digitization is essential, however, it is misleading to claim that all companies are, or should be, digital. The reality is that we often still need to be both analogue and digital – both modalities often need to sit side-by-side within our complex organisations. A business must be able to relate to multiple realities at the same time across the organisation. In addition, these realities are developing at different speeds. When it comes to structures and hierarchies, it plays out quite differently depending on the speed. Large degrees of organisations have embraced a hierarchical organisational design with multiple levels of manager and employee. This has proved to maximize the efficiencies and economies of scale that our customers and markets demand. The same logic will not be as effective when it comes to undertakings that are more agile and in the future, we will have to embrace various organisation designs in different business areas. In some areas, we should aim to drive flexibility where our customers / markets demand that, and economies of scale where this is core to our strategy to win. For some of our co-creation projects with multiple stakeholders or projects utilizing the newest technology we should embrace self-governing entities aligned to specific customers. Our greater purpose again becomes the most important driver the more agile we find our organisational reality.
As we are moving into a more confused reality, organisational innovation initiatives also must be developed in different ways and at different speeds depending on their business and operating models. Previously, organisations used very heavy and rigid governance structures with demanding Gate-Stage processes not only within research and innovation departments, but also for smaller grass root-type projects. Now we experience several of our clients experimenting with different governance models for different types of projects. One organisation, an industrial producer of building materials, have initiated flexible R&D budgets with 15% of the entire budget reserved for employee ‘moon-shot projects’ and where they have institutionalized that vetting processes of new prototypes are done locally in peer-to-peer communities before involving senior management. When we pursue an innovation agenda, we should continue to focusing on continual improvement in our core products, services and operations but we might also pursue entire new business models that will threaten our old realities. The innovation governance practices, scope, speed and the way we engage our organisation in idea generation and research will all be affected by this new multispeed reality. A large player in the financial sector have made an open platform where they offer prices and rewards to a global community of coders and software developers. The goal is to continually co-develop financial trading algorithms competing with the organisations own team of internal developers. The community actively participates in developing the offerings of the organisation and so far, the community have beaten the internal team consistently producing work faster, cheaper and of better quality.
As we have pointed out previously, ensuring a differentiated right fit between reality and e.g. governance and decision-making processes is crucial. Usually we read examples of how organisations have stifled or killed new agile initiatives trying to fit them in old operating governance models. However, managing the traditional reality using the logics, governance models, and leadership practices of the exponential business reality will also prove fatal. The key here is again to optimize our governance and leadership to match these different and co-existing realities. The traditional operational excellence-oriented areas of our organisations have been obsessed with ‘efficiency’ as the golden orb for winning customers. We do not advocate a total shift away from this focus toward hyper-agility and exponential realities. Parts of our organisations must remain focused on efficiency but a one-size-fits-all approach will no longer work. When it comes to decision-making in our core business, significant decision-making authority is still held at senior levels and governed by an explicit process of decision request and escalation. In contexts that are more agile significant decision-making authority needs to be held at lower levels of management or by specific self-managing groups within pre-determined limits. If our business reality is truly volatile and unpredictable significant decision authority needs to be held by employees and first line supervisors. They make the decisions responding to the context but may call on managers that are more senior for counsel and endorsement regarding topics that are more complex.
If we turn to the last challenges in our model, a multispeed reality also means that we cannot continue to hold to one standard operational mind-set. We will simply not be effective in adjusting and responding to changing customer needs, dealing with digitization and readjusting and developing our organisations to match these new scenarios.
So how should we organize our business to keep up with this rapid development? What made us successful yesterday will not be the only solution for meeting the challenges of tomorrow. There is minimal relevant experience to lean on and learning agility is even more crucial than before going forward. Therefore, in the future we should learn to lead by defining direction, aligning around common purposes and working actively to establish commitment in a continuous process. An important toolset in our leadership toolbox will still be KPIs and lean processes, but they will not ensure organisation-wide success or be the right answer across the board. Likewise, self-governing teams and agile project organisations will not be the only answers to a complex range of questions. It is a both-and approach rather than either-or. Top management teams wanting to shape their company culture towards this should start the mind-set change locally – start with themselves. To a large degree, we must give our employees the space to find their own way, facilitate, and enable their journey and explorations.
Mannaz has also embarked on this journey. We aim to facilitate and enable our clients to meet these challenges themselves in their own context. It is a journey of multispeed realities both for us and for our clients.
Read our other instalments in the Mannaz Multispeed Series:
