Future-ready organizations structure themselves in ways that make them fitter, flatter, faster, and far better at unlocking value.
Visit a future-ready organization and you’ll observe that speed is both a preoccupation and a cultural bias. You’ll even hear it in the company lexicon, in expressions such as “increasing the clock speed,” “metabolic rate,” or “a bias for action.” While the COVID-19 crisis has made speed a priority for many organizations, it has also reinforced how difficult speed is to harness.
Once organizations galvanize identity, they need to optimize for speed. Operating models need to be fast, nimble, and frictionless to create ways of working that foster agility and simplicity. They need to enable a network of empowered, dynamic teams to find pockets of value, including at the company’s “edges” where employees are closest to customers.
Imperative 4: radically flatten structure.
As the business environment has become more complex and interconnected in recent years, many companies have mirrored these changes in their organizational structures, creating an ever-more convoluted matrix. Unwittingly, they are betting on organizational complexity to solve market complexity.
This is a losing bet. Future-ready organizations, by contrast, structure themselves in ways that make them fitter, flatter, faster, and far better at unlocking considerable value. Their goal isn’t to eradicate hierarchy so much as make it less important as an organizing mechanism. They flatten the organization and adopt the simplest P&L structure possible, reinforcing business objectives with clear, strong performance management and other mechanisms.
Consider Haier, the China-based multinational maker of appliances and consumer electronics that shifted away from traditional hierarchical structure and toward emergent, agile teams. Employing one of the more intriguing approaches we’ve come across, Haier is an organization with no layers, no traditional bosses, and no middle management; yet the company is anything but a free-for-all.
Imperative 5: speed up decision making
A recent McKinsey survey found that organizations that make decisions quickly are twice as likely as slow decision makers to make high-quality decisions. Organizations that consistently decide fast and well are, in turn, more likely to outperform their peers. However, only one in three survey respondents said their organisations consistently make fast, high-quality decisions.Achieving quality and speed in tandem takes work. It requires a system that properly allocates decisions to the right executives, teams, individuals, or even algorithms.
The top team needs to focus its time and energy on the core business decisions that only it can make, such as those initiatives central to the value agenda
Other leaders, meanwhile, should spend more time deciding on resource and talent allocation for those initiatives. Top of mind for everyone should be who is working on what.
Through managing the backlog of resources from the top of the house, organizations will speed up and increase the quality of decisions.
To prepare for the future, many companies will need to reset their default mode by developing a bias for action and the ability to differentiate between crosscutting and delegable decisions. The great majority of decisions should be delegated to the lowest levels possible, giving employees at the company’s edges agency and accountability for decisions they are equipped, and best placed, to make.
Leading organizations also rightsize the number of decision makers and critical voices involved in a decision. Each participant should be purposefully included, with a clear eye to removing decision “spectators” or others without a critical role in the process. Who has a vote? Who has a voice? Notably, clarity on this does not necessarily mean limiting the number of people involved or removing diverse perspectives. It just means ensuring that there is a strong reason for each participant to be present.
Imperative 6: treat talent as scarcer than capital
Top companies will anchor the effort to a bedrock principle: our talent is our scarcest resource. Then they’ll zero in on three core questions: What talent do we need? How can we attract it? And how can we manage talent most effectively to deliver on our value agenda?
Identifying what talent they need is very hard for companies that haven't yet taken time to create a value agenda. Research form Mc Kinsey & Co finds that a substantial amount of value in organisations is linked to as few as 25 to 50 roles, many af with aren't at senior level. Leaders must know what those roles are. If they don’t, they may be wasting top talent on roles that can’t deliver outsize value
Creating an attractive destination for top talent means fostering an inclusive employee experience. This influences whether employees stay and thrive, which in turn affects the company’s bottom line.
When it comes to performance management, senior executives can learn from companies such as Netflix, which says it prioritizes having “stars” in every position and at every level. While this statement might sound like an empty motto at another company, for Netflix it serves a valuable need: the company’s highly autonomous culture would suffer with the wrong people in place. To decrease the odds of this happening, Netflix actively counsels out “adequate” performers.
Finally, future-ready companies see that talent ecosystems often allow for the best management and allocation of top talent. In some cases, companies rely on tech-enabled marketplaces to better match skills to projects. Such talent ecosystems can even reach beyond traditional corporate boundaries.