The Five Laws of Organizational Transformation


The Five Laws of Organizational Transformation

The Five Laws of Organizational Transformation

Every organization I visit struggles with organizational change. Every. Single. One. No matter where I go, people ask me the same questions everywhere:
– “How do we scale agility to large organizations?”
– “How do we stay agile when we’re growing very fast?”
– “Could we optimize success and innovate at the same time?”
I believe organizational transformation can be successful when smart managers embrace these five laws in their daily work.

1. Become a Shape-shifter

Form follows function, as every product designer knows. And an organization’s structure should follow top management’s intended strategy, as every organization designer knows. The chosen structure has significant consequences for the products and services that the organization can produce.

However, in the 21st century, organizational strategies need to change faster and faster. That means that “restructuring programs” are a thing of the past because companies must restructure continuously. They need to become shape-shifters, able to change their form in record time, acting on the requirements of the moment. Smart managers, instead of implementing teams, will focus on implementing mechanisms that allow teams to form themselves. To accelerate organizational transformation, digital learning provides personalized and agile training solutions.

2. Speed Up Experimentation

The age of planned change programs is behind us. The “lean startup” movement is just one example of a focus on small-scale, safe-to-fail tests to learn things that no planning method ever can. Jeff Bezos, the CEO of Amazon, famously said that his goal is to run as many experiments as possible, in the shortest possible time.

That’s why all managers should stop trying to change people. Nobody likes being manipulated by others. But humans are a curious species, and most people are happy to try something new, as long as they feel that the experiment is not going to hurt them. Therefore, instead of managers rolling out change programs, they should roll out experimentation platforms.

3. Balance the Scale

Sometimes, a process benefits from centralization; other times, things works better when they are decentralized. For some teams, what you’re looking for is efficiency; for other teams, what you’re aiming for is effectiveness.

Sometimes, your business needs exploitation of a successful strategy; other times, the business needs exploration to generate new, innovative ideas.

The favorite question of whether to work in a hierarchy or a network is often misguided because this is a trade-off decision that should be made repeatedly for many different topics. It depends on the context, and this context changes frequently.

Smart managers don’t discuss hierarchies vs. networks. They empower people to decide among each other which tasks and processes are best delegated upward or sideways, and what other work is best done by themselves.

4. Embrace More Gamification

Why do managers so often claim that “people resist change“? The world saw little resistance to change when it came to the adoption of the internet, smartphones, Facebook, and hipster coffee bars. And there is barely any resistance to change when it comes to playing games, whether solitarily on a tablet computer or collaboratively in virtual game worlds.

The problem is, most organizational change is not fun. Change managers make no deep connections between the work  to do and people’s intrinsic motivators, such as curiosity, honor, mastery, relatedness, order, and status.

The best managers borrow heavily from gamification insights, with themselves in the role of game designers of an engaging work environment.

5. Rely on Habitualization

Some behaviors are good; others are bad. Most managers rightfully feel a responsibility to grow and guard an organizational culture that fuels productivity and innovation.

However, most of them rely on rules, rewards, processes, and punishments in their attempts to achieve an amazing work culture.

But rules, procedures, and punishments have a terrible track record when it comes to influencing behaviors. People don’t change after the introduction of rules. They change when the environment and communications are engineered to create sustainable habits. Rewards can play a role when they are part of a habit-forming process.

Smart managers see habitualization in the company as a key to dealing with the complexity of the world.

Organizational Transformation in the 21st Century

Managers should stop planning one organizational change program after the other. Instead, they should turn their company into a shape-shifter by introducing a platform for safe experimentation, where empowered people choose between hierarchical vs. networked processes, in an environment that managers design with insights from gamification and habitualization. Skills development is a need to succeed in organizational transformation in the 21st Century.

With five laws of organizational transformation, you can scale agility to larger organizations, balance optimization with innovation, and let your company survive the 21st century.

This article by Jurgen Appelo is part of a publication with thought leadership pieces by 11 other authors from the CrossKnowledge Faculty.

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