Different by Design: The Fabric of the New Organization

We just finished our 9th annual research conference, IMPACT 2016, and I was once again inspired by the innovation, passion, and sharing among the 600 or so people who joined us. This year’s conference was entitled “Different by Design: The New Organization,” and we focused for three days on the many ways we are redesigning our companies in the digital world of work to be more agile, responsive, engaged, and performance-driven.

The metaphor I used to kick off the conference was a discussion about how companies are like a beautiful fabric: designed uniquely to fit together with colorful thread, enduring and flexible, strong yet soft, able to adapt to any external conditions.

The shift we clearly see is a move toward a new organizational model, one we call a “network of teams.” Your company might look like a hierarchy on the org chart, but in reality people operate in teams (sales teams, product teams, service teams, etc.), and the teams work with each other, often communicating transparently, sharing information, plans, and results.

The challenge we face is that most of our talent and business systems are designed around a hierarchy. Managers in charge, delegating work downward to their functional groups. In this new world of empowered teams, how do we “design” the organization to drive customer results, employee engagement, and a focus on quality and communication? How do we reward people, what roles do leaders play, and how do we move people from team to team as the business evolves?

The metaphor I’d like you to picture is that of a rich, beautiful, enduring fabric, one that is radiant and multicolored, stitched together to be flexible and comfortable, one that is strong, enduring and impossible to tear, and one that is adaptable and impermeable to many types of weather.

This beautiful fabric is like your organization: it is made up of many integrated but tightly woven strands, it is unique and beautiful in its own way, it performs and fits well, and it adapts to serve you for many years. Such a material is “different by design,” and this forms the metaphor for the five fundamental themes for redesigning your organization.

Theme 1: Rethink leadership
In the fabric of our organization, leadership is the backing, the structure, the underlying weave that holds the organization together. In the new organization, different by design, we also need a new breed of leaders. In our survey, 89 percent of companies tell us they have leadership gaps and 55 percent say its urgent—why? Because the type of leaders we need today is unlike ever before.

We don’t need as many middle managers now, so the concept of “leadership by job title” or “leadership by position” has to go away. One of the senior execs I talked with the other day told me “I don’t have time for mid-level managers any more. I can get the information I need to run my business through our digital information systems. If our leaders aren’t hands-on experts in their business areas, I don’t really need them.”

We need to move people into leadership much faster. I believe leadership today is a sport of “learning while doing”—you become a HIPO through your leadership experience, and we have to push people into leadership roles, give them coaches, and provide open and candid feedback at a faster rate than ever before. By the way, do you really need a HIPO Program or can you expand your thinking about everyone becoming a potential leader?

Finally, we have to measure leaders differently. The new Deloitte performance management process directly grades leaders through an eight-question survey that goes to their team every quarter. The results show that direct feedback on leaders is completely correlated to business results, so the days of leaders being “rated” or “ranked” by subjective measures is going away.

Theme 2: Refocus on culture and engagement
In our fabric of success, I see culture as the beautiful color palette of our fabric, the deep hues and blend of colors, and the enduring dyes and stains we find to make our organization unique in its look and designed feel. This is the role of culture—it brings disparate people and ideas together, it unifies the look and feel of your organization, and it makes your organization beautiful, unique, and branded in a way people will remember.

We have been doing research on this for several years, and it’s clear to me that today’s highest performing companies are “listening organizations.” They bring together a continual process for feedback and communication—with a keen focus on analytics—to understand how people feel, what issues people face, and what problems we have in all areas of the business.

Culture is central to success in this new organization. Without a clear, meaningful, and well-aligned culture, networks of teams cannot share information, communicate, collaborate, and avoid competition. We define culture as “the way we do things around here” and engagement as “how I feel about the way we do things around here.” We now have tools and IP to help you diagnose both.

Communication is one of the biggest challenges. It’s important to communicate between teams, facilitate talent mobility, and help people understand what others are doing. In the new organization, this takes place through shared values, shared information systems, and new “connector” roles.

Theme 3: Redesign learning and career
In the context of our organization as a beautiful fabric, learning is the process you use to continuously clean, brush, revitalize, and repair your organization over time.

In today’s rapidly changing network of teams, we have to rethink learning, careers, and job roles in general. In a dynamic, team-based company, you will be creating new teams, disbanding teams, and merging teams together whenever a new business opportunity occurs. Whenever this happens, team leaders and team members will search for the “best person” or “most experienced expert” to join their team and help get the work done. This means we have to provide a wide array of learning offerings to help people continuously improve.

Today, learning is driven by the employee, not just the organization. Your learning experience is now part of your employment brand, so if people don’t feel your company is a place to learn, they’ll find another company that is.

This has spawned a new revolution in video-based learning, micro-learning, spaced learning, and prescriptive learning tools that bring content to employees just when they need it. One of our clients implemented a new learning platform to enables employees to rate, comment on, and recommend content to each other.

Finally, we have to reengineer the way we think about careers. The traditional concepts of a job description, a structured career ladder, and a set of stage gates you go through during your career are rapidly becoming obsolete. In the new organization, there are no simply “managerial” or “professional” career tracks—employees jump around from role to role, job to job, regularly throughout their professional lives.

New disciplines here include the creation of a “career manager” or “career coach” separate from the line manager, the need to reward leaders for internal hiring and job rotation, and the adoption of well-designed onboarding and professional development programs that take people up the learning curve of a new job in a highly designed and integrated way.

Theme 4: Reengineer performance and goals
The fourth design element of the new organization is the reengineering of performance management, goal setting, and feedback.

First, we have to move away from the “annual review” to a continuous, open, multidirectional process for feedback and communication about performance. If teams talk regularly about goals, progress towards goals, and what is holding the team back, performance management will happen by itself. And if we do away with the “manager as king” model of leadership, and think about leaders as “sponsors,” people will give each other coaching and developmental support on a regular basis.

Second, we have to redesign goals and move away from a once a year, top-down process (something that comes from the industrial organizations of the 1960s) to an agile, bottoms-up process where goals are set by the team. We need tools that make goals transparent, easy to update, and simple—so we can use goals to “manage work,” not just throw them in a drawer to look at once a year.

The third part of this new world is the explosive growth and growing importance of People Analytics that helps us understand engagement, alignment, performance, and growth. This year, our research showed that the adoption of predictive analytics in HR almost doubled, and companies are now building analytics teams that can harness people-related data and make sense of it.

Theme 5: Reimagine HR
The fifth, and most important, part of the new organization is the changed role of HR. In the new organization, people are empowered, and they operate on behalf of customers. Our job is to make their work easier, more meaningful, and more productive. To do this we have to get out of the mindset of HR as a compliance- or process-design function, and rethink our role as the “employee experience department.” We, like the rest of business, have to “think digital” and start using the tools around us to make the work life better.

This new role means three big things:

First we must become fluent with digital technology, analytics, and mobile apps so we can build solutions and programs that fit into the flow of work.  We call this the birth of “Digital HR.“

Second, we must abandon traditional HR process thinking and adopt design thinking wherever we can. People are already overwhelmed with work. In order to facilitate employee productivity and help us build the teams we need, we must study the personas of our employees, look at what we can do to make work easier, and build tools and solutions that come to market fast, iterate, and are designed with the end user in mind.

Third, we in HR should incorporate concepts from behavioral economics—or the power of the nudge. In today’s digital world of work, people don’t just “comply” with the programs we built—we have to “nudge them” with better choice architectures, fewer options, data driven recommendations, and suggestions that help them make work easier. These approaches let us continue to deliver great training, onboarding, alignment, and performance solutions—but in a way that feels natural and valuable to everyone, not just another “HR thing to do.”

Bringing it all together

HR as a profession has come a long way in the last year. Companies all over the world are advancing their skills in people analytics, adopting new cloud technologies, and upgrading the skills of their business partners.

The new organization is clearly here, and the more I talk with people about this topic the more important I see the need for organization design, design thinking, and a fresh approach to building the tools we need in business. Given all these changes and the tremendous business disruptions we face, I believe we have no choice.

Embrace the new organization and look forward with your solutions. We are here to help you throughout your journey.