The following is a transcription from my recent presentation at 15th International Conference on Technology, Policy and Innovation.
The programme was titled: New forms of adaptive organisational workforces: Faster adaptability is the new core competency in the new economy
Above you will find the corresponding slides. Below I’ve also posted the audio.
If you are interested in having me speak at your conference take a quick look at my topics and let’s talk.
My background is in improving organizations, designing organizations. But my background fundamentally is in engineering, tech, IT and he school of Lean as well. So I have a deep-rooted history working within lean.
I’m running my own business called Lloyd Parry which consults businesses on how to make them much more adaptable to the environment that they’re working in. And we do that by investing in the people, but also advising HR on the best reward and recognition systems, the best way to manage processes and even who should be designing the organization.
The work that we’re doing is saying it certainly should not be managers that do the designing of the organization.
But what problem are we trying to solve? I get lots of calls from companies these days about the amount of discontinuous change with technologies, the skills people have, and the way organizations have to connect to other organizations, even for temporary purposes. The whole notion of a nice solid value stream is long gone.
What are the implications of this for management, staff, and the work design? They’re massive. And I’m getting calls from companies unable to keep up with the pace of change.
Around 2002 I was working with a high-tech outsourcing company, and getting some breakthrough with some of the Lean things that I was doing. My work came to the attention of a man doing some work for the London School of Economics.
He went on to do research in work psychology at Aston Business School in Birmingham. He’s currently at Warrick University these days. What he found when he was doing this work for the London School of Economics was that by taking some of the philosophies and approach to people embedded and implicit in Lean and Agile these days, you do get better performance. But unfortunately Lean isn’t known as much for creating an adaptive organization as much as creating better processes: Leaner processes and a huge fixation on waste.
Lean is really about fixation on the customer and value and empowering staff to continuously focus on that. It’s an on-demand, continuous system but very often businesses settle for far less by just improving a few processes. That’s great, but there’s so much more potential.
I wanted to know why I was getting more out of my staff than other people who had gone Lean. And these guys gave me the clue. What it did was identify the specific work I was doing that was making a difference and the work that wasn’t making any impact at all.
An organizational transformation in Lean typically took about four years with benefits during that entire time. But now my organization transformation process is down to eighteen months because we use now a diagnostic based on behavior. And that’s what I want to talk about today because it has implications for how we design, build and operate organizations going forward. This isn’t just for IT organizations: we’ve done this for police forces and notably, local government.
What is this behaviour-focused diagnostic looking at? Well, we start with something that we call the work climate. Social scientists have been looking at work climates for many years and have demonstrated the effects of attitudes on certain work outcomes. So it was a revelation to me that we could actually look at the impact of the operating strategy, the structures, the managing practices, how we make decisions. The perceptions and feelings of people feed through all of this so it’s a good place for us to get some information and then try and decipher the specific attitudes, how they were brought about and how we can change them.
So what is a climate? If you have an organization where there’s high levels of trust between staff, between departments, you get collaboration. Collaboration only comes from a mutual respect and the trust. Everybody thinks you can put people into a room, get them solving a problem together and that’s collaboration. It’s not. It’s all about reciprocity. Do you trust me and I trust you? If so, we’ll get along and get good collaboration.
A climate can be made up of these things. Is there good leadership? Is it a challenging environment? Is there enough freedom and decision making? Do we share intelligence within our team, within our function? When do we see our senior management? All of this gives rise to the work climate. And we can check that.
The good thing about the survey is that we can check it at more than just the work group level. There’s the weather on the ground but there’s weather at different levels. So we can stratify the readings to find out what the weather is like at the top of the organization. Sometimes the leaders are in the bright sunshine and everything’s great, but when you go down to the staff, there’s lots of rain and lots of stuff is coming down. So we can find out where the disconnect is in the hierarchy as well.
This gave us a very great insight. The thing is, I’m talking about a work climate and this is entirely different than a culture. A culture is difficult, takes a long time to establish, but once ingrained, proves very difficult to shift. The twist is that all cultures start off as a work climate that has sustained for a period of time.
Work climates can change very rapidly. There could be a good climate in an organization but when a new manager enters the mix with a strict focus on the numbers there’s no freedom: everythings locked up. The climate has changed but has the culture of the organization changed? Probably not.
But if that manager keeps going like that for a sufficient length of time, it becomes ‘the way we work around here’. So the toughest challenge for Lean and Agile transformations is changing the climate long enough so it becomes the culture.
It could be a hot climate or a really nice climate. The biggest thing at the epicenter of this is trustworthiness. Building trust between managers and staff fundamentally help Lean and Agile organizations, but it is absolutely a priority for adaptive organizations as we will see. If there’s no trust, you will not get adaptive organizations or certainly not ones with any longevity.
So, in our ten years of work, we had all of these dimensions and our problem was that, yes: we could see the links, but how do we present this to a manager or a CEO or a CIO in a way that they can easily comprehend? We found we had 160 dimensions that we had to break down into four that most managers could wrap their heads around.
We have to examine how we engage with our customers and the outside world. How do we gather that knowledge, institutionalize it, then bring it into the organization? How do we learn from it and share it right across the end-to-end business and not just keep it in one little function? How do we share this information we’ve got from the outside with our senior management? What mechanisms do we have for that? These are the things that we are looking for.
Once we’ve shared that information we need to make some decisions about it. Who is making the leadership decisions? In Lean and Adaptive organizations such decision making is way, way down in the organization. Gone are the days where you have to move decisions up to the top. We all know that. Yet we continue making organizations where decisions flow down from the top. But Lean fundamentally changes who makes those decisions. There are new controls that come in place and they’re mostly social controls as we will see.
Then we move from having made the right decisions to questions about ‘how are we going to improve’ and ‘what are going to improve’? And that is the life cycle of an adaptive organization. So when we run the survey, we are looking for how those four dimensions are carried out in an organization.
What we anticipated in our early survey was that there was going to be a mass production model and a Lean adaptive model. We were wrong. There were two very stable ones in between as I’ll explain.
All companies are adaptive to a certain extent. They have to be. But today you have to have new forms of adaptability where we’re not talking about continuous improvement any longer. We have to have continuous change. Why? Because as soon as I’ve installed something it’s not about optimizing it, because I’ve got to change it again. So it’s install, get it stable, then it’s destruct and then reconstruct something else.
So how do we get continuous change?
Let me lead you into this very gently. I just picked out a couple of things to illustrate the different ways different organizations approach these aspects. Engaging. Does the job design allow staff to engage with customers or not? Is everything locked up, and you have to ask permission? The levels of trust and control can vary quite a bit.
If that is engaging, what do we mean by learning? Basically, you know, front line staff share information about what’s going on in the real world with senior managers. Just think about that. In small organizations they do that. Small software development companies, they do that. But once you’re over a certain size, the top guys stare from the top. They’re not connected to the operation and they’re not connected to the information that’s coming in about their customers. Do they routinely collaborate and problem solve with senior and mid managers? Very rarely.
Is the management focus to simply get the biggest bang for the buck, or is it on problem solving, creativity, facilitate and collaboration? Those are two different perspectives and your reward and recognition systems will also support that. A promotion is given if staff do one more than the other. If you reach your targets in employee utilization, cost reduction and work intensification, you get promoted. Such a culture is sustained through the measurement system.
Do we look at end-to-end effectiveness or just functional efficiency? Do they even know where the rest of the business goes? Adaptive organizations need people to be able to look at everything.
I’ve detailed four organizational archetypes. There is the mass production organization, which I’ve characterized as a bus in that its all batch and queue. Then you have a more modern form of that which is mass customization much like the previous model but with some options.
Then I move up into mass specializations, networks of teams, high specialists that we’re integrating and it’s a bit like a very good department store. You have to go around the different departments. Those people know everything, but you have to do the integration right up the mass adaptation which I couldn’t find a name for. So I called it customer value enterprise.
This is what we found out from the research. There are different characteristics for all of these. The offerings these companies offer are very different. I’ll just illustrate from the bottom to the top. Low variety in manufacturing. Generally some options, compared to individualized, bespoke, unique, flexible offerings. What’s the customer experience like? Well, we’ve got high co-creation of the solution design. Here, it’s transactional and processed.
Who improves things? Here, it is the people who are doing the work, that are doing improvement. There’s no separation. And you can see the management focus. But, the thing that drives this is the question of ‘on what basis do I want to compete’? Economies of scale, low margins? A trusted advisor, an expert, going for integrations? For knowledge work, and if you’re in software development, you need to be up there. If the world is changing rapidly, then you need to be up there. If it’s not, and it’s going to be stable, even in an unstable world that your business is quite stable, then this is fine.
So you have a choice going forward about which operating model you need to take. Here is the result of a large, global IT organization of about 2,000 people. We took engaging, learning, leading and improving. And from the survey we found out it was a predominantly mass production model.
So what we found from this organization a major well-known software company, is that that was how they designed the work and that was the perception of their people. Yet they have good engagement stuff with their customers but they were only in a reactive mode.
Eighteen months later we had a complete shift from all 2,000 people and their perception of what it’s like to work there. Being able to surface problems without fear and further, actively seeking problems. And when the reports were green for a long enough time, we turned them all red to raise the standard. That was normal.
When the outside environment changed and their customer needs were changed, the staff would change the staff measurement system. They would tell the HR Department , “That’s what you should be measuring us on now. That’s what you should be rewarding us for.” Very different. So it was the customer with the staff that was driving the change in the organization.
I’m working with a number of large organizations. This company, Amadeus, provides lots of software applications and platforms for most of the European and Middle East airlines. They’re having to change their ways from the technical silos to everything working end-to-end. To that end, they’ve actually changed their whole operating model to do that. So they have end-to-end business, they measure end-to-end. The rewards are on collaboration. The senior managers do not make the day-to-day operating decisions anymore.
It is not even the middle managers leading. It is the first line management. Middle management are talking about making sure that they’re not overburdened, but the basic improvement and the change is day-to-day built in at the front line level.
Moderator: Any questions?
Female: You showed us the software company that you worked with before and after. But also in your speech you spoke about how moving from work environment to culture takes time. Have you actually measured how long it took?
Stephen: That’s a thousand dollar question. Culture takes time. I probably need to go back in five years, but what we’ve done is fundamentally change the reward and recognition system. We’ve found those are the things that sustain whatever models are in place. What staff value here has changed. So the trick is, is to make sure that the governance structures that reinforce that old work view are dismantled as quickly as possible and get something else in.
But only time will tell. If a new manager, a command and control manager comes in there and says, “All of this is out,” well, he’s got a big job to undo it. But it’s still possible. But I don’t think the staff would let them go back.