Recently I have had interesting conversations with leaders about transformation in organizations with the increasing need to be nimble, flexible and innovative in order to thrive in today’s disruptive world. The questions revolve around inspiring people to take ownership and champion new initiatives vs. relying on systems and processes. They have inspired this article.
An organization steep in hierarchy, systems and processes tries to transform itself to be more agile and innovative. In the traditional landscape, the strategy is developed by the leaders and the rest of the organization implements. This approach works in growing markets with some level of predictability. The organization places bets in the winning strategy. The differentiator is efficiency in its implementation – how fast the organization can execute the strategy to reap benefits. I label this approach as the triangle organization. With a clear hierarchy of power, it relies on the top down direction and driven by mature systems and processes to motivate and reward expected performance.
This is similar to the way Singapore developed. The best brains in consultation with experts define the strategies – bring in multinational companies, upskill population, home ownership, open market, connector to the world and clean and business friendly government. The strategies are implemented efficiently and effectively. The hierarchy makes clear the roles and responsibilities of the different levels. We have defined systems and processes for everything. The culture created is also one that waits for direction or permission from the higher management.
However, in a complex, uncertain and fast changing environment, the winning strategy is no longer as clear and strategies need to adapt quickly to the marketplace as well. In this new landscape, the bet is placed in empowering people at all levels to define and implement strategies quickly. This requires them to be self-initiated, take ownership and be resourceful. Instead of an overriding strategy, the bet is placed on many experiments across the organization and nurturing the ones that show promise. I label this approach as circle organization. Different levels of power are distributed across the organization, it relies on collective sense of purpose and peer accountability to motivate and fulfil promises.
This way of organization is akin to a start-up structure with lots of experimentation and minimum systems and processes. Entrepreneurs come together with employees, often treated as partners, to brainstorm ideas and implement together. There is a big latitude for change and improvisation based on how the market reacts to their ideas. Within this, the path is created as they venture forth. Profits are shared more evenly, with early employees often having stock options. People work hard because they don’t want to let their peers down. The culture is one of spontaneity, hard work and making a difference, because ‘what I do matters’.
Of course, the circle and triangle approaches as described here are at two opposite ends. In reality, most organizations have a mix of both or parts of organization that are more circle or triangle.
There is a place for both approaches. However, it’s challenging to juxtapose both. A business leader laments, “All my life, I have been in structured organizations, but now I need to activate champions and be comfortable with chaos. It’s hard.” Another manager working in a triangle but shifting towards a circle organization complains, “What is the reward for people to go the extra mile, beyond the KPIs at the end of the annual strategic planning exercise?” He is looking for predictability when the outcome is not yet clear.
The question remains how to juxtapose both. Clearly, it depends on the organization and its operating environment. My conversations with various organizations suggest that the challenge faced by larger and more established organizations is how to be nimble, innovative and flexible – how can triangle organization behave in more circle ways.
Here is an example. DBS is one of Asia’s leading bank, touted as a 22,000 start-up by Piyush Gupta, DBS CEO, has won Best Digital Bank in Asia for its adoption of technology to serve customers better. Innovations include applying for loans online (without exhausting forms), secured emails via internet banking to waive credit card fees (instead of spending 10 mins on the phone) to mobile payments. The bank outlets have a cosy marketplace feel, than traditional counters behind glass panels.
DBS is one of the oldest bank in Singapore with a history of stability and predictability. As a bank, compliance remain critical. It also has a legacy of long tenured staff, some of whom asked, “What does ‘embrace digital’ mean?” However, it has managed to introduce these circle ways into a traditionally triangle organization. How?
Experimentation and fast failure are encouraged. Innovation and customer experience are owned by all employees, instead of 1 department. Employees are trained in agile methodology and engage in cross functional hackathons or sprints. Rather than mull over a few months deciding whether to do something, employees are encouraged to set up small pilots with control group. Learn from the experience and make it better the next time. Empowered to make decisions, e.g., fee waiver based on spend, customers receive answers much faster than the old days of checking with supervisors. Employees are also educated on emerging technologies such as “what is API?”, data analytics and artificial intelligence. The journey continues with a notable $20 million investment to transform its people into a “digital workforce” .
This flexibility demonstrated by DBS is akin to water, which takes the shape of its container and can flow or be still. It can be gentle like a stream or forceful like crashing waves. So like water, DBS has changed its ways of operating, but its purpose remains to make banking joyful. There will be tension, however, this is also creative tension that gives us space to develop into.