The Insurrection: New Organizational Paradigms

An insurrection has begun! 

Traditional workplace structures are under attack.  Conventional hierarchies and command and control models are being ditched.  Progressive young companies are experimenting with fresh organizational paradigms designed to foster collaboration, agility and speed.  The next generation has arrived!!

So what is the genesis of this workplace transformation?  How will these new frameworks help high growth businesses sustain their pioneering cultures as they scale?

As start-ups reach their Transition Stage, rapid staff increases can spawn structure, processes and procedures.  Cross-departmental bottlenecks and approval chains generate organizational friction, which grinds innovation to a halt.

To stem the tide of bureaucracy, Founders and start-up leaders can look for its roots.

In his book Reinventing Organizations, Frederic Laloux reviews the history of organizations from the earliest tribal cultures to today’s robotic corporations. Hierarchies are designed for efficiency and optimization - systematized people machines built to deliver the highest return for investors.  With the past as a good proxy for the future, these classic structures rely on highly predictive planning and precise execution to achieve budget targets. 

In the bureaucratic model, the “thinkers” are separated from the “doers”.  The most intelligent sit at the top developing strategy, handing down assignments and commanding their team.  The sole responsibility of the “doers” is to implement these directives.  Thus authority is limited and information is tightly controlled.  Employees are considered untrustworthy and communicated with on a need-to-know basis.   Internal compliance protects the company from the staff’s “selfish” intentions.

We are all familiar with bureaucratic side effects; political maneuvering and power plays, silos, turf battles, lack of authenticity and finger-pointing.  Staff engagement is low and innovation stagnates.

These 20^th century designs falter in our current technology driven, networked economies where the future is impossible to predict.  With market uncertainty nullifying planning, these lumbering hierarchies are rendered clumsy and ineffective.  

Today’s young firms are creating flatter, more flexible workplaces.  Speed is king.  Innovation outweighs efficiency.  Progress trumps perfection.  Navigating uncharted waters necessitates a team of “thinkers”; aggressive risk-takers constantly experimenting, iterating and pressing forward.  

These organizations thrive in the early days.  However, when the Transition Stage dawns and the heat is turned up, they can lose their way.  Falling short of revenue targets or missing release dates raises urgency levels.  The burden to deliver more with less creates frustration and inner conflict.  If financing rounds are in play, the crucible gets even hotter.

I have witnessed winning start-ups implode, more from organizational meltdowns than competitive forces.  In stressful times, cultural norms take a back seat.  Feeling pressured, leaders become more directive.  Decision-making authority is consolidated.  Information is held close to the vest as the circle of trusted advisors gets smaller.

The staff senses the changes.  Limited transparency creates skepticism.  The loss of their autonomy is alienating to many. The best and the brightest didn’t sign up to be part of an organization shrouded in secrecy or telling them what to do.  Ping-Pong tables and office happy hours can’t mollify these concerns.  Soon, they leave

“Now What?!?”

Organizational Strength is essential for crossing this chasm. Firms that survive the Transition Stage learn to leverage the collective wisdom of the team rather than rely on the smarts of a few.  Their leaders trust their staff and give away authority. They look to inspire and enable rather than direct and control.

These thriving young businesses are testing revolutionary workplace designs to unlock the innovation of their teams and return to their high growth trajectory. 

Holocracy™ is one such groundbreaking model.  Zappos’ implementation of this manager-less structure is chronicled in the press for its successes and stumbles.   Holocracy™ requires full immersion, a complete commitment to strict governance, styles of interactions and “resolving tensions”.  

New terminology and rigid meeting protocol feels awkward and oppressive.  Months of facilitation are needed to adopt these sweeping changes.  During the introduction of Holocracy™ at Zappos, 15% of their staff quit.  15%!!

Having sat through their indoctrination training, I would equate Holocracy to organizational base-jumping – radical!! 

Not many companies can handle such extreme change.  I believe there are more natural transitions to promote teamwork, innovation and employee engagement as a business scales. 

A new organizational paradigm (I dubbed a Collaborarchy™) is founded on a set of five Cornerstones.   These concepts are not foreign.  In fact, some may already be implemented in your company.  Rather, it is the intentional integration of these ideals that transforms an organization and enables the business to scale effectively.

Autonomous, cross-functional teams tap the creativity and insights of the entire crew.  Assimilating teams that include those touching the customer daily with those designing and building products enables more rapid iteration and better learning.  Distributed authority places decisions in the hands of the people closest to the problems.  A culture of transparency elevates trust.  Compliance becomes unnecessary when information is distributed liberally.  And with everyone working as their authentic self, co-workers build faith in one another.  Peer accountability is the most reliable means to ensure promises to customers and teammates are kept.  And when Leaders act as Catalysts and Coaches rather than Commanders, their teams work with passion and purpose. 

Customizing this framework to your culture and adopting these Cornerstones at your own pace provides the best chance for success.  Staff members welcome the opportunity to participate in the process.  With an extensive feedback loop and continuous communication, your firm can internalize the changes and adjust along the way.  Iteration on an organizational model works as well as iteration on software design to determine the best workplace framework for you. 

Over the coming weeks, we will dig deeper into each of these five Cornerstones.

Scaling High Growth Businesses

The odds are low.

The chances of turning one’s idea into a thriving business are miniscule. Entrepreneurs face countless hurdles from funding to tech design to market fit to timing.  With the cash burn clock ticking, founders must cobble together a strong team, create a valuable product and generate sufficient noise to be heard above the din.

The start-up community attracts the best and the brightest.  Early stage capital flows to the sharpest innovations.  So when the formidable odds stack up against them, entrepreneurs rely heavily on ingenuity and intellectual horsepower trying to think their way out.

For a time, cleverness can be a winning strategy.  Unfortunately, outwitting the marketplace in the long run is implausible.  Consumer change is too quick, competition too vast and business too complex to stay ahead on smarts alone.  As a result, the cunning that got many start-ups through the early rounds may not carry them to profitability.

“Now What?!?”

On the climb to a viable entity, companies mature through multiple stages. 

Much has been written about the earliest phases of their life cycle. The hyper-growth years are exhilarating ride.  Customer adoption and funding from prominent investors provide a stamp of approval.  For many start-up founders, getting this far is the realization of their dreams.

Now comes the hard part.  Later funding rounds bring higher expectations.  Product proof and brand awareness generate stout competition.  Maintaining high growth rates on a larger base is daunting.  Genius from the top or individual heroics can’t always pull a rabbit from the hat.   

The Transition Stage can be the most challenging of all, particularly for founding leaders.  I have witnessed successful start-ups stumble as staff grows from 25 to 50 to 100 plus.

Scaling a business requires a vastly different skill set than building one.  Beyond vision, technical innovation and product design, companies at this stage require strong cultures and authentic relationships to connect with staff.  Success will be driven as much by Organizational Strength as intellectual prowess.

Make no mistake; prosperous businesses require brilliance, imagination and inventiveness.  However, future prosperity is predicated on harnessing the collective wisdom of the whole rather than the exploits of a few.   Organizational Strength is founded on the principle that nobody is smarter than everybody. Collaboration, authenticity and employee engagement are the fulcrums to reach the next level.

Navigating this evolution is tricky.

In the Family Stage, employees are deeply connected. They share a common purpose as well as a desk or office.  Organizations are flat, enabling a highly collaborative workplace.  

Spread thin across multiple functions, the staff is given plenty of autonomy and decision-making authority. Feeling truly valued, teams are highly engaged and thriving. 

Success means growth.  Growth brings more people with diverse personalities often spread across multiple locations.  New customers types demand attention and resources from legacy clients.  Communication and teamwork is not so simple anymore. Conflicts arise.  While everyone is trying to do the right thing, it can feel like chaos is taking hold.

To maintain order, basic structures are established.  Titles are handed out, some for external purposes, others to keep key people on board.  Hierarchy follows.  Larger work groups form naturally along functional lines.  Team leads are anointed. Strapped for time, Engineering, Marketing, Product and Operations groups become more insular.  Silos are born.  Prioritization and decision-making becomes cumbersome without clear procedures.  More structure and processes sprout.  Rules are written and approvals required.  Compliance ensues.

Nobody invites the evils of bureaucracy.  The underpinnings start innocently.  Soon the tide of hierarchy and systemization wreaks havoc on company culture and alienates the team. This organizational friction stymies innovation.  Growth falters. 

“Now What?!?”

In the coming weeks, we will examine advanced strategies to tackle the confounding Transition Stage.  We will explore the nature of Organizational Strength, a means to best leverage the entire team rather than rely on a few individuals at the top.  Progressive companies are tapping this power with the next generation of organizational structures and tactics. 

A Collaborarchy™(as I like to call it) is the assimilation of concepts to boost collaboration, connectedness and employee engagement at any stage of a company’s lifecycle.  In this approach, young firms can stay true to their core values and culture while migrating to more organic processes for distributing authority and aligning teams.  Founders become Catalysts and Coaches rather than commanders.  The proper balance of autonomy and accountability can be created to attract and retain the best talent while enabling the organization to flourish.

The outcome is lightning quick businesses, flexible enough to anticipate customer needs while fostering rapid innovation. Companies with Organizational Strength can weather the storms of the marketplace and scale effectively to accelerate growth and profitability.