How the transition to an agile organization can succeed
The pattern of conventional forms of organization: "In stability we trust!" In times of rapid, disruptive and unpredictable environmental change, traditional organizations are proving to be insufficiently flexible or adaptable – and you can't blame them for that. The conventional hierarchy was conceptualized not for adaptability, but for its opposite: to produce reliability and stability while becoming increasingly efficient. This approach has proven itself over decades. But these times have faded, as more and more organizations in more and more industries are currently experiencing
In the past, researchers such as March and Weick have pointed out that other forms of organization will be needed: Organizations fundamentally geared to adaptability and agility. Solely the strain of recent years has established the necessary grounds, and thereby conditions, for various useful concepts of agile cooperation, decision-making and control to develop.
New forms of organization: Trust in the rules of self-organization
The intention of these new concepts is not to loosen the rules of a conventional organizational structure a little in order to create more freedom and flexibility. On the contrary, radically new organizational principles are emerging. Leadership, coordination and control are fundamentally re-understood, linked and distributed. Self-organization means that employees, teams and units decide for themselves, within a binding and clearly communicated framework, what they can do and how best to do it. For this to succeed, a clear set of rules is needed, that equally apply at all levels and to all participants and on which everyone can rely on. And as soon as said rules are no longer helpful for the purpose of the organization, there needs to be a framework to collectively enhance and adapt them.
Self-organization: If you do it, then do it right!
Self-organization succeeds if clear and consistent framework conditions are created on three levels: on the level of architecture (design of spaces), on the level of structural and procedural organization (design of structure) and on the level of cooperation (design of communication). Developments at these levels must go hand in hand and support each other. Nothing is gained if, for example, new cooperation spaces are created at the architectural level in which people can meet and exchange ideas - but they have no freedom at the structural level, no liberty to initiate innovative ideas and solutions together, or to make decisions and implement them. The process of transferring decision-making and competences to teams is also doomed, if the payout of individual bonuses is inconsequentially proceeded, without calibration or alignment with potential goals.
In the practice of decentralized organizations, four principles can be found that are applicable across all levels. They underlie each of the new forms of organization: distributed authority, transparency, evolutionary learning, and orientation to the purpose of the organization.
PRINCIPLE 1: DISTRIBUTED AUTHORITY
Decision-making competence must go where things happen! The sense of a common goal should always be kept firmly implied within a procedural mindset - whether the work is conducted individually or within teams, directly with the client, at the machine, concerning facility management or in research and development. This means no longer waiting for superiors and instructions but drawing on one's own experience and expertise and assuming responsibility for one's own actions. No laissez-faire principle can be derived from this. It requires disciplined work with high expectations of self-management and conflict management. In small organizational structures and projects this is not only proven, but already standard: In software development and increasingly also in other industries, agile approaches like Scrum have already replaced the classical project management methods. Currently, models such as Holacracy or scaled agility are used to transfer these approaches to entire organizations.
Delegating responsibility is not enough! If authority is distributed, this must be done consistently. Self-organization requires that superordinate bodies limit themselves in their power - and that this limitation is binding. In agile methods, for example, the final responsibility for prioritizing the work steps of a (e.g. one-week) planning period (a so-called sprint) lies with the team. The superior cannot define the plan target for the planning period, nor can he or she determine that the planning is to be changed because the priorities have changed from his or her point of view. For decisions with a greater scope, processes must be agreed which are binding for all and can only be changed again together. And this principle is also consistently continued at the structural level: In established organizations with distributed authority, the higher level has no technical possibility to decide on the organizational structure of the sub-areas: How an area positions itself lies entirely within its own responsibility.
PRINCIPLE 2: TRANSPARENCY INSTEAD OF CONTROL
Who controls autonomy in collaboration? Of course, the transfer of decision-making power raises the question of control. When several roles work together in their own decision-making authority, transparency is the only solution. According to the Protestant principle, which the Indian author Vineet Nayar reminds us of: "If you want to keep your house in order, install large windows". Without transparency, distributed authority leads to incompatible realities within the organization. Coordination and compliance become impossible. Mature organizations in self-organization therefore make their key figures accessible to all employees. Even salaries are made increasingly transparent; internally, or in some cases - as with the social media company Buffer - also publicly. Openness becomes the central design principle at all levels. Communication barriers are deliberately torn down, taboo zones radically decimated. Those who have to make decisions that have an impact on the entire company reveal what alternatives they are considering, what questions they are asking, and invite others to feed their opinions into the decision-making process. Participation processes of this kind have meanwhile become tried and tested practice in various established companies such as Deutsche Bahn - to increase the quality of decisions on complex problems.
PRINCIPLE 3: EVOLUTIONARY LEARNING
Say farewell to the illusion of predictability! Self-organized structures have abandoned the illusion that in a complex world, networked influencing factors can be calculated and customer needs can be predicted. Instead of following the motto "predict and control", they follow the guiding principle "sense and respond". Processes and products are also not thought of as permanent, but merely as a starting point for the next iteration. In agile organizational approaches, the aim is to receive relevant feedback by as many sensors as possible and to react to this with adjustments in short cycles. This is the only way to increase the speed and radicality of innovation in an environment of constant disruption.
The danger is to sink into collected information and large amounts of options. A clear procedure must therefore be developed to select those with potential from many new business or product ideas. Some companies such as WATTx have developed "do-or-die-sessions" for this purpose: Regularly convened expert meetings question ideas from different perspectives. If development teams do not provide satisfactory answers, the project is consistently stopped, and resources are invested in other prototypes. Holacracy takes up the iterative adaptation principle for the further development of entire organizations. What would be hopelessly overwhelming for a central control system is permanently happening here in so-called governance meetings. The rules and processes of the respective corporate divisions are continuously developed by the roles involved according to clear rules. There are binding communication principles on how different superordinate and subordinate levels are represented and heard.
PRINCIPLE 4: PURPOSE-ORIENTATION
All rules serve one goal: To fulfill the purpose of an organization! Where do organizations find orientation when there is no stable framework in a volatile, uncertain and complex environment? They find these not only outside, not only in market analysis or stock market values, but also inside, in the actual sense and purpose of the company. The purpose of an organization is its answer to the question of why it exists and what its contribution is in society. In self-organized organizations, this purpose of being becomes a guiding star to which all can orient their navigation instruments and decisions. Areas and roles also define their respective purpose. Employees in Holacratic organizations can decide whether to accept a project or not by comparing it with the purpose of their area or role. The prerequisite is that the purpose is based on a joint decision-making of the team. This ensures that action is coordinated across the board.
People who organize themselves and their work together with others need specific competencies. This creates new opportunities and challenges not only for managers but also for employees. Whoever wants to be effective here, must express him- or herself, address conflicts and be able to get involved. If assertiveness was able to compensate for a lack of social competence in hierarchies, it is no longer possible in self-organized organizations. The aim here is to support managers and employees in acquiring the skills that enable them to have a say. Group and organizational dynamic settings prove to be particularly suitable for practicing self-control, feedback, negotiation processes with colleagues and dealing with conflicts.
Self-organization, decentralized control and distributed authority are realizable in all contexts. The number of success stories is currently rising rapidly. How organizations develop the principles of self-organization is individually different. There won't be a one-size-fits-all model! It is crucial that the path to this goal already abides to the basic principles of self-organization, at all levels in a consistent and credible manner. A marketing statement as a purpose is smiled at by employees and otherwise ignored. Without distributed authority, there is no evolutionary learning that allows conclusions to be drawn from experience. It is absurd to prescribe self-organization from above. In short: Trust is what arises when collective organization is inspired by a skillful manner of self-organization.
Babette Brinkmann is Professor of Organizational and Group Psychology at the Technical University of Cologne.
Matthias Lang is co-founder of dwarfs and Giants, a consulting firm specializing in new organizational models.