1. Infuse your company with an entrepreneurial spirit
Gary Hamel, Visiting Professor of Strategy and Entrepreneurship
“A long habit of not thinking a thing wrong gives it a superficial appearance about being right,” wrote activist Thomas Paine (1737–1809). Bureaucracy and the traditional way things are done sap human potential. In what sort of organisations do people give their best? Where are they likely to stretch themselves, take personal risks and go the extra mile? The answer is start-ups: we need to infuse companies with an entrepreneurial spirit.
The real battle lines are no longer between companies. The war is between value-creating start-ups and large-scale bureaucratic regimes. Too many companies live in fear of being ‘Uberised’. They worry that their tradition-bound organisations are too slow to out-manoeuvre start-ups. Their anxiety is justified as the newcomers are typically the first to embrace new technologies and wow their customers.
To foster a spirit of ingenuity, leaders must commit to moving from incremental to bold, from bloated to lean and from coercive to free. Entrepreneurship and scale are no more incompatible than quality and efficiency or science and art. We haven’t been ambitious enough in trying to overcome those old trade-offs. It will take a radical overhaul of “management as usual” to reach a world where everyone acts like the owner, leaders are chosen by the led and everyone reports directly to the customer. It will take indignation to get there. Let’s get angry about it.
2. Break free from the iron bars
Dan Cable, Professor of Organisational Behaviour
In 2010, the international airline KLM Royal Dutch Airlines surprised its customers with a new social media campaign. As passengers arrived at airports, flight attendants handed them a personalised gift – something they could enjoy or use on their trip. One passenger, travelling to Mexico to help build houses for the homeless, was given a thoughtful care package including bandages. Flight attendants browsed Twitter and Foursquare, looking for people who mentioned they were taking a KLM flight. The campaign, called Surprise, exceeded expectations by engaging with customers and bringing online conversations back into the real world. The experiment began with a simple question for KLM workers: “Are you into social media?” With a small team of volunteers and a budget of €10,000 (£8,532), the campaign was born.
The Surprise experiment is just one example of what happens when people are given the freedom to explore within the organisational frame. Many companies say they’re looking for agility, not top-down rule-following, but this requires thinking about people’s emotions differently. Fear, the traditional tool of management, won’t do the job.
How do you break the bars of what sociologist Max Weber coined the “Iron Cage” of bureaucracy? In KLM’s case, a team of volunteers self-selected into helping because they liked social media. Their ideas were valued, and they felt the work had purpose. To bend metal, leaders must find new ways for people to explore and learn. When individuals are offered opportunities to play with ideas and play to their strengths, their ‘seeking system’ is activated. This brain system urges them to explore their environment for information that will help them survive. Dopamine floods their systems and a sense of curiosity and interest take over. So try a different approach to change by asking, ‘Is anybody curious about this? Do you find this project exciting?’ And let people lead the charge.
3. Frame disruption as a threat and an opportunity
Costas Markides, Professor of Strategy and Entrepreneurship
Mobile technology has changed people’s habits and attitudes. Your customers and employees are less attentive, loyal and patient while more informed, demanding and connected. Companies, therefore, have transformed how they manage their employees, how they serve their customers and how they compete with each other. The average 18-year-old now expects to have 10–14 jobs by the age of 40. Think of the implications: the challenge is not how to attract the best talent anymore, it’s how to retain and energise people so they don't leave.
More radical disruptions are on the way – from artificial intelligence to virtual reality and machine learning. For organisations to deal with the next wave of disruption, people – from leaders to front-line workers – must stop thinking of disruption as a threat. You need to frame disruption as both a threat and an opportunity. You can prepare your organisation for continuous transformation in three ways:
- Institutionalise the attitudes and behaviours that will enhance your agility
- Develop the environment that will support and encourage these behaviours
- Make the need for changing these behaviours personal and emotional.
4. Execute your strategy with horizontal coordination
Dominic Houlder, Adjunct Professor of Strategy and Entrepreneurship
Executing strategy has many myths attached to it. “It’s all about the plan, it’s down to communication, operational excellence, a performance culture and it’s always driven from the top.” But in reality the opposite can be true: it’s about adapting the plan, building a shared context, dynamic resource allocation, creating an execution culture and it’s led by distributed leaders. Saying strategy execution is all about vertical alignment is one such myth. Actually, it can be more about horizontal coordination.
It would be foolish to say that vertical alignment doesn’t matter – of course it does – but the myth is saying that vertical alignment solves every problem. Strategy doesn’t live in neat boxes on an organisational chart. A firm is made up of performance commitments. We test this with participants on our Executing Strategy for Results programme by asking them: “Who can you rely on to do what they say they will?” LBS analysis (Sull and Homkes) of the results from more than 7,500 executives reveal that 85% can rely on their bosses to do what they say they will all or most of the time. For their direct reports the results are similar at 83%. But the results are less encouraging at a horizontal level, with colleagues in other units (62%) and people in partner organisations (60%). How do we address this collaboration challenge?
We need to develop the cooperative trust which makes the horizontal dimension possible. To do this, people jump straight to myth two: executing strategy is all about the plan. But in reality there’s never a seamless sequence of execution steps called “the plan”. In the same way that it’s wrong to think that only vertical alignment gets things done, we need to move from seeing strategy as a linear step process to more of a loop – coined “The Strategy Loop” by Donald N. Sull.
The strategy loop
- Make sense. Develop a shared understanding of an ambiguous situation
- Make choices. Choose what to do, what not to do and what to stop doing
- Make it happen. Ensure people deliver on their commitments
- Make revisions. Compare assumptions with experience, explore the gaps and change course if needed.
There will be people more suited to different steps of the loop. That’s natural. This process allows for more sideways action, everyone to play to their strengths and a truly agile execution team.