From Professor Ieva Jakobsone Bellomi, Adjunct Professor of Organizational Behaviour and International Management at John Cabot University.
The topics of change, risk management, innovation, and business functions in management literature have been traditionally seen as distinct issues. It reflects our thinking patterns. Historically, the Western school of Greek Roman philosophy has compartmentalized individual elements into particular categories. In management it has often been the cause of creating unit, departmental silos. But the speed, complexity and unpredictability of the current organizational environment requires almost yin and yang holistic approach to how we build and manage organizations. And how we think and share information.
Building back better would require organizations to develop a holistic, correlative and complementary, threefold management philosophy: first, to solidify resilient organizational capacities to manage external and internal environmental risks (resilience), secondly, to develop an agile, Kaizen philosophy driven mindset to stay competitive in complex and challenging markets (agility) and, thirdly, most importantly – to build a holistic leadership and organizational culture of complementarity and interconnectivity (culture) – of operations (doing business) and innovation (growing business). As a Sudanese proverb states, ‘We desire to bequeath two things to our children: the first one is roots, the other one is wings.’
Strengthening Organizational Resilience
To be ready and respond effectively and efficiently to the changing environmental factors organizations we need robust, well-thought-out systems and processes. These should equip companies with capabilities to absorb and adapt to changes, recover critical functionality fast, and thrive in the new environment. As the Chinese military strategist and philosopher Sun Tzu has acknowledged: “Every battle is won before it’s ever fought.” Thinking ahead, running scenarios and calculating probabilities, taking necessary preemptive measures, thus, cementing a strong resilience network across all the organization, is a first step to prosper in the future.
Unfortunately, management pundits still survive on proposing to review and adjust only operational side of the business model. The operational focus was quite vivid during the beginning of the Covid-19 pandemic when some leaders engaged in cost cutting and layoffs (sometimes under the pretense of being agile) as the solution for a long-term ‘survival’. But, as Boston Consulting Group advises – truly resilient company is also about clear vision and purpose, diversity of thought, and psychological safety – a space for trial-and-error. Being resilient requires nurturing flexible and adaptable collective mindset and creating an organizational culture which nourishes critical reasoning and sharing ideas, and, thus, leads to innovative solutions. In short, from organizational mindset perspective, being resilient requires a special way of thinking and decision-making combining robust and flexible.
Resilience researchers and practitioners have identified three broad decision-making approaches that can help organizations to cope and thrive in uncertain times:
- The underlying approach is organizational routines, processes, like SOPs, which are guiding decision-making when work is predictable and risks can be foreseen with quite high certainty.
- The second approach is rules of thumb when the situation requires to speed up decision making in less-predictable environment. For example, a rule of thumb is used for capital investment decisions (albeit usually for the projects with ROI over 8%)
- The third approach as suggested by researchers is improvisation – spontaneous, creative efforts to address an opportunity or solve a problem. To improvise organizations must ‘develop’ employees who are committed to the purpose and values of the organization. This creates trust between the organization and its employees and builds psychologically safe organizational culture to try, err, and win. Most importantly, the leadership team should be ready to be the role models of such a corporate culture.
Innovating for Future
To weather uncertain future and global competition the organization must be several steps ahead. How do we do it? Global management consulting company Bain & Company has analyzed successful companies across the decades and have identified a critical criterion underlying success, performance, and employees’ wellbeing across the board – agility.
For a long time, we have perceived agile as an IT perspective towards innovation – working in independent, self-managed, resourceful teams with the aim to develop a new IT product or service. Today, the agile approach has spread across the business functions – in marketing, R&D, leadership, management thinking, etc. Agile seems to be an alternative to ‘command-and-control’ management style which due to the speed and velocity of the change today might be too heavy and too rigid for the organization to survive and compete. Agile organization, in the words of Darrel K. Rigby, partner of Bain & Company and agility guru, is about balancing operational efficiency (running the business resilience part) and innovation (changing the business agility part). D.K.Rigby uses the Tao yin and yang base to visually describe the interconnectedness and fluidity of an agile organization. I have adapted the yin and yang framework here in a more holistic manner to combine resilience, agility, and culture as a sustainable management philosophy model.
In essence, the agile teams and agile organizations are embedded in four basic principles:
- First, agile teams and organizations do value individuals and their interactions over the formal, bureaucratic processes and tools; this creates openness, trust, and psychological safety across the organization.
- Secondly, agile teams break complex problems into manageable modules, thus, the value of working solutions is more important than capturing and following excessive documentation; running short experimental sprints allows agile teams to develop new products and services faster.
- Thirdly, the primary focus of agile teams and organizations is their customers, external or internal; collaboration with customers and adaptability to their values is a priority over rigid contracts.
- Finally, being agile requires responding to change now rather than following a set, rigid plan; thus, agile thinking in general is about being ready to adapt to change and to use it to the organization’s advantage.
Scaling agile methodology depends on the organization, industry and, of course, organizational culture. But as much as it might look like an uncontrolled, anarchical approach – in agile teams there are clear rules of the game, for example, on decision making, budget access, autonomy.
Role of Leadership and Culture
As per the empirical research of Bain & Company – leadership and culture are the leading challenges to adopting agile and scaling it. Among the top – general organizational resistance to change (48%), not enough leadership participation (46%), organizational culture at odds with agile values (44%), and inadequate management support and sponsorship (43%). I would see the same as obstacles against building strong resilience networks across the organizations
To build sustainable and prosperous organization for the future, leadership needs to have a holistic mindset, first, to build complementary and supporting framework of organizational purpose, values, and strategy (ideally with sound ESG policies and stakeholder focus as organizational culture elements) and second, to balance and harmonize resilience in operations with agility in innovation. This requires inclusive corporate culture for people, internal and external customers, of sound psychological safety, ‘trial-and-error’ environment and ‘no blame’ policies.
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