Organisational adaptability as a strategy
Aimée Skevik
Organisational adaptability as a strategy
Aimée Skevik
VANTAGE | STRATEGIC LEADERSHIP
Vantage /‘va:n.tɪdʒ/
noun
Vantage refers to a position or standpoint that provides a good view or perspective, often implying a superior viewpoint that allows for better understanding or insight into something.
Vantage refers to a position or standpoint that provides a good view or perspective, often implying a superior viewpoint that allows for better understanding or insight into something.
We live in a world characterised by rapid and unpredictable change. New technologies, regulatory changes, the unstable political landscape, changing consumer behaviours and global economic uncertainty are impacting most organisations in one way or another.
The probability that your organisation will need to work on new things in new ways over the course of the coming decade is high. Hence, organisational adaptability should have a place on your company’s strategic roadmap.
Organisational adaptability refers to an organisation’s ability to respond to changes to its operating environment. Adaptability will be an important factor for most organisations to maintain their competitiveness and respond quickly to new opportunities and threats.
How do you make an organisation adaptable? Here are some key points.
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1. Create a trust-based culture
To make an organisation adaptable, one key element must define its culture: trust. Slow and complex decision-making processes are ineffective if you need to make changes quickly. Employees who are empowered to make their own decisions are more effective. This not only motivates employees but also helps you fully leverage their expertise and potential.
The Nordic region is known for its culture of trust and is sometimes called ‘Nordic gold,’ as highlighted in a report by the Nordic Council of Ministers. Most managers in the Nordic region claim to trust their employees. In practice, however, managers’ communication, actions, reporting requirements, and bonus schemes often fail to show employees that they are trusted. Individual performance-based bonuses don’t convey trust that all employees will contribute to company goals. To build a culture of trust and collaboration, collective incentives tied to overall company performance are more effective.
In a trust-based culture, it is not just about management trusting employees. Employees' trust in management at all levels is equally crucial. Management must earn this trust by showing respect, trust, and fairness in their actions. In addition, trust among employees is needed. Strong collaboration among employees enables quick change. Trust and autonomy are essential for building adaptability.
2. Practice clear leadership
An adaptable organisation built on trust and autonomy needs clear leadership. To prevent trust and autonomy from leading to confusion and anarchy, everyone must understand their role, the organisation’s goals, and how each individual contributes to them. This ensures that everyone can make effective decisions that drive the organisation toward shared goals. Management must define a clear direction and regularly communicate it across the organisation. Several established frameworks can support this process. OKRs (objectives and key results) is one example, helping to clarify an organisation’s ambitions and desired outcomes.
Trust and autonomy foster responsibility. Establish effective ways to hold individuals, teams, and managers accountable at all levels. Trust-based leadership doesn’t mean less leadership — it requires more.
3. Introduce agile principles to your organisation
Begin with agile principles that are easy to understand and adopt as part of your organisation’s culture. The Heart of Agile, defined by Alistair Cockburn — one of the authors of the Agile Manifesto — can be a good starting point. In 2015, he distilled the core of the agile approach into four principles:
Collaborate – Collaborate across disciplines and functions to achieve shared goals. An interdisciplinary approach is crucial for adaptability.
Deliver frequently – Deliver quickly and gather feedback from future users, whether from internal stakeholders or external customers. Avoid waiting until a deliverable is fully completed. Create a culture where early feedback is valued and embedded in the organisation’s workflows.
Reflect – Reflect regularly on processes and results to identify successes and areas for improvement.
Improve – Continuously improve based on learning and reflection.
4. Develop a flexible organisational model
Traditional hierarchical models offer control but often lack speed and adaptability. In recent years, some organisations have adopted more flexible models, often inspired by the Spotify model. The Spotify model organises companies into interdisciplinary teams focused on tasks rather than functions.
The key principle of the Spotify model is aligned autonomy. Alignment refers to shared objectives and tasks, while autonomy allows teams and individuals to decide how they will contribute. Organisations may be tempted to start with structural changes to become more agile and adaptable. However, it's better to address the first three principles before restructuring. This helps prevent traditional ways of working from persisting in a new structure.
Begin by changing areas where the current structure hinders speed and adaptability. You can experiment within parts of the organisation to learn what works before fully implementing a new model. Create task-focused teams that include all necessary members to deliver results.
5. Enable technological adaptability
Many organisations' tech structures hinder flexibility and adaptability. This can stem from governance models or a preference for a single software provider to simplify management and maintain control. Others rely on standard solutions adapted over time or monolithic systems built up over years. Changing such systems can be both complex and costly.
Develop a strategy and principles for tech development and procurement that support flexibility where future changes are likely. A best-of-breed approach means selecting the best solutions for each function or process, regardless of supplier. This strategy integrates specialised systems to maximise functionality and flexibility in the organisation's technical infrastructure. For organisations with extensive standard solutions and technical debt, this approach can be complex and require significant investment.
Start by identifying where modularity and flexibility would provide the most benefit. Adopt clear principles to define when technology should be standardised across the company and when teams can make independent tech choices within certain guidelines. While cross- company standardisation has benefits, it can also limit flexibility and speed.
6. Implement financial flexibility
“Beyond Budgeting” is a management approach that challenges traditional budgeting by promoting flexibility and decentralised financial management. The concept of Beyond Budgeting emerged around the same time as the Agile Manifesto. Although developed independently, both share similar mindsets. Like the Agile Manifesto, Beyond Budgeting follows a principle-driven approach.
At its core, Beyond Budgeting emphasises trust-based leadership, delegating responsibility to those closest to the work and best positioned to make decisions. It is best known for promoting rolling forecasts over traditional budgets. In essence, Beyond Budgeting helps organisations move beyond traditional budgeting to become more adaptable.
Creating an adaptable organisation requires cultural change. This change can involve small adjustments or a major transformation, depending on your existing culture and ways of working. It demands courage and clarity from management, as well as flexibility, accountability, and a readiness to embrace change from everyone.
Most importantly, take an agile approach to organisational development. Implement small changes, gather feedback, reflect, learn, and continuously improve.
