5 organisational design aspects to thrive in the 2020s

06 June 2019 Consultancy.uk

With rapidly changing markets meaning many firms face an uncertain future, it is easy for companies to panic and double down on old ideas that have served them well thus far. Illustrating why this would do more harm than good, however, a new study has explored how innovating purpose, ecosystems, adaptability, real empowerment and leadership (PEARL) can help businesses deliver sustainable growth after 2020.

As companies look to get the most from their operations in a rapidly changing business environment, Q5 Partners, a consultancy which prides itself on specialising in organisational design, has published a new report outlining five key design aspects clients should focus on to thrive in the coming decade. Based on a survey of more than 400 professionals in North America, Europe and Oceania, the researchers have concluded that purpose, ecosystems, adaptability, real empowerment and leadership (or PEARL for short) are key for businesses going forward.

Purpose

Business cannot afford to ignore purpose-led consumption anymore. A recent study found that the majority of consumers now expect companies to take a stand on current and broadly relevant issues such as sustainability, transparency and fair employment practices – if they are to retain their customers.

According to Q5’s own research, a purpose that goes beyond financial performance is key to creating a workable advantage for any organisation. The good news is that the majority of respondents to the firm’s survey said they were committed to their organisation’s purpose. The problem is that many firms do not seem to send clear messages about that purpose, while the onus seems very much on the individual worker to relate to it, meaning many feel under pressure to hit associated targets.

What respondents cite as the Good and Bad of purpose

The authors suggest a number of tips to improve on this front. They believe firms should use the idea of purpose creatively to create connection to what they do – showing the link to projects, goals and ideas in a real and meaningful way. Meanwhile, firms should test the alignment of that message with their broader company, making sure its implications mean the same thing to everyone, and do not place certain team members under stress – further monitoring this with performance metrics.

Ecosystems

Many global businesses are failing to realise the growth they anticipated before 2020, with trillions still at stake in the next two years. While more than one in six businesses in the UK alone are concerned that growth strategies are susceptible to disruption, honing new ecosystems which include long-time rivals could be the key to delivering exceptional growth. A report in 2018 found that UK companies building more innovative ecosystems could tap into £75 trillion of value.

“The organisation has open ecosystems,” the authors stated. “It is a seamless network of highly autonomous, interdependent units that increasingly includes customers, suppliers, communities and a flexible workforce. It challenges traditional notions of hierarchy and the idea that the organisation is a self-contained entity. We also observed in some sectors that organisations are coming together in new ways, creating powerful and successful alliances and partnerships that require a real shift in mind-set about organisational boundaries.”

In order to achieve this ideal scenario, however, the report found that trust and collaboration are key. Companies must allow different parts of their organisation to come up with solutions, do things differently and at different speeds. At the same time, this calls for heightened transparency to create an environment in which people understand what is going on across the organisation and can see the bigger picture, driving enhanced decision-making.

In order to deliver this, Q5 suggested that firms should flatten hierarchies wherever possible, in order to more easily err on the side of transparency. At the same time, removing performance measures will ensure that employees are not incentivised to adopt unethical behaviour, while boosting trust. The paper also found that firms should resist as many standardised processes and internal rules as possible, meaning staff can be unshackled from office bureaucracy to exert freedom on their approach, finding ways to improve their performance in the process.

Adaptability

Amid a fast-changing technological environment, where markets must quickly shift footing to make the most of new opportunities, agile has arguably become the worst kept secret in modern business. This is because the more adaptable a company is, the more chance it has of improving its product development environment and achieving breakthrough innovation performances.

According to the Q5 researchers, “We found many organisations are starting to explore new practices, new ways of organising and new ways of working. But our data showed adaptability performs poorly in mindset, clipping the wings of those who might want to drive change. Working in new ways with greater levels of ambiguity causes discomfort for many. We believe that culture, and specifically one in which people are quick to place blame, is a significant barrier to enabling change in many organisations. It’s also worth recognising that it is easier to change working practices than it is to change the way people think.”

WHAT RESPONDENTS CITE AS THE 'GOOD' AND 'BAD' OF ADAPTABILITY

Many respondents agreed that they were encouraged to learn from failure already. However, the majority disagreed that their company was open to doing things in different ways, while most neither agreed or disagreed that their people were comfortable with unfamiliar tasks. This shows that while some positive changes are occurring in offices across the board, there is still an overriding hostility to new ideas ingrained in many.

In order to navigate such cultural clashes, the analysts suggested that firms should strive to achieve the optimal balance of strategic planning with a willingness to adjust to reinvent the organisation. If a company can build change resilience at every level, encouraging staff to experiment and expect mistakes – as an R&D department would – then the culture of an entire organisation will become better at adapting to new ways of working.

Real empowerment

According to the researchers, the empowerment in question must be “real” for a reason far more important than helping them to spell the acronym PEARL. According to the paper, the “real” here is important because empowerment is no longer just about trusting people to work remotely or holding a less draconian expenses policy. Now, it must include giving employees a meaningful role to make autonomous decisions.

Failing to do so can flout major potential for innovation and productivity boosts. This is illustrated by the fact that while a culture of equality can drive innovation at work, only a third of UK employees feel empowered to innovate at present. This demonstrates a significant disconnect between workers and their bosses in the UK, with 76% of business leaders also claiming they empower employees to be innovative.

Q5’s researchers found that the ideal organisation carefully manages authority, decision-making and autonomy to bring the best out of each member, fostering a spirit of entrepreneurship. This enables people to work to their full potential, while avoiding a sluggish, micro-managed corporate set-up that is unable to adequately respond to new challenges quickly.

In order to deliver real empowerment, the study again suggested a number of measures. Introducing working practices that maximise flexibility – such as remote working, flexible scheduling and use of a contingent workforce will help with real empowerment, but as mentioned, it should not end here. Firms must also discourage a culture of blame that doesn’t support ‘speaking up’, while being clear about where accountability lies for all tasks. This can free people up to operate effectively while driving creativity.

Leadership

Amid all the importance of autonomous and agile working, it is easy to overlook the role without which this will not hold together: the manager. According to Q5, the ideal leader in any office is a ‘connective leader’, who can act as a catalyst or conductor, helping to facilitate rather than police their team’s ambitions and ideas.

The authors explained, “Our research highlighted a real shift in the role and required capabilities of a leader – it points to an emerging framework for ‘Connective Leadership’ where leaders need to be purpose-led, catalysts of change and conductors of their people and organisations… Leaders need to channel their organisation’s purpose and translate it into practices and meaning for people at different levels of the organisation – this is still a big gap for many.”

In order to eliminate such a gap, it is important for firms to cease the promotion of functional experts to leadership roles without sufficient investment in the development of ‘people skills’ and more connective leadership capabilities. Fast-tracking someone smart into management without making sure they can properly facilitate the development of others is a fast-track to frustration for the company, the individual manager, and their team. At the same time, firms should create a space where people feel safe enough to take risks, and an office where ultimately managers can delegate decisions which do not really require management input to their team.


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