Mar 3, 2014

Is your organization ready for a paradigm shift?

In my previous post I touched on the origins of the first modern organization chart, and how today’s organizations can still learn from the principles behind a reorg that happened over 150 years ago. When we take a step back from the details and look at the story from a high level perspective, we see how a new technology, the telegraph in that case, introduced a paradigm shift in organizational design.
In order to effectively deal with what had been, essentially, the first appearance of big data (back in 1845!), the organization itself had to change the way it is organized and operates. Initially, forward thinking organizations like the New York and Erie Railroad seized this as an opportunity to grow and expand. Eventually, other companies would have to do a similar organizational changes in order to survive in the new information driven world.
In recent years we are witnessing significant changes in the way we work and communicate. There is a huge acceleration in technological innovation, which in turn leads to change in culture, work habits, legislation, as well as in individual and organizational behavior. Some of these changes represent revolutions that could, and possibly should, foundationally change the ways that organizations are structured and how information flows within them.
One challenge that managers and organizational development professionals face is recognizing which changes are passing fads, which are “more of the same”, and which changes actually warrant a paradigm shift in organizational design. A second challenge is timing - when should an organization make the change, since any significant change bears risks of its own.

I wanted to highlight several areas where technological advances and cultural change are already requiring organizations to adapt:
1) The sensitive aspects of Big Data
Big data is probably one of the most talked about trends in the business world, and so we will not dedicate too much time to it in the current discussion. Organizations are realizing the importance of collecting and mining the data that they have access to, and using it to make decisions across all levels of the organizations - from product decisions, to process optimizations and resource management, to HR and hiring practices, and more.
On the organizational level it has defined new roles such as the “Data Analyst” and an increasingly growing importance to the knowledge and information officers and the organizations they manage. While most of the big data trend has focused on extracting useful insights, there are several related aspects that are only now starting to come to the forefront. For example, there is a difference between data that is purely owned by the company, versus data that is owned by the company’s clients and partners.
In the past, the trend in big data was to save as much information as it possibly could, and then figure out what to do with it. But this can come at a great price. We have all read and seen the stories of companies and organizations being hacked and losing the data of millions of people (Yahoo, Target, and Kickstarter are just recent examples). Some of us were directly affected. Security and privacy leaks like this hurt the company both directly and indirectly, as well as hurt their customers and partners (banks now have to spend over $200M to reissue stolen credit cards due to that incident). The hack severely hurt Target’s customer trust and bottom line.
Legislators are also stepping in, to help protect individuals - like the state ofCalifornia’s mobile privacy legislation, the country ofBrazil, and theEuropean Union.
While many organizations already have security and privacy experts, not all of them have “baked” privacy, security, and legal considerations into their organizational fabric. As more organizations step into the world of big data, they also have the challenge of structuring themselves a way that these considerations are integrated into all phases of their product cycle and decision making. Part of the challenge is finding a way for these to be involved in a way that on one hand protects the organization, but on the other hand does not hinder innovation, or add excessive layers of bureaucracy, which in itself can hurt the organization’s culture. Getting it right might require new types of organizations and organizational flows that are different enough to warrant a paradigm shift.
2) Diffusion of organizational boundaries
Traditionally, organizational boundaries have been much clearer than they are today - you were either an employee and part of the organization, or you were not. There are two interesting trends that are contributing to the diffusion of the organizational boundaries: outsourcing and crowdsourcing.
In the past, organizations were self contained in the sense that the work was usually done in-house by the company’s employees, usually at the same physical environment. Today, many companies use outsourcing parts of their business and delegate work to other places where labor is cheaper or more experienced. Some tech startups entire engineering force is outsourced, while other companies outsource other services.
Crowdsourcing is an even more intriguing trend where internal tasks are given to the general public through match-making or competitive platforms. For example, Kaggle turns data analysis problems into competitions for data scientists. Topcoder similarly conducts competitions on more general programming problems, and Innocentive generalizes this approach to additional research and development areas like life sciences, chemistry, and more. Other companies rely on the general public as their PR/Marketing outreach with viral marketing campaigns, and so on.
Finally, another type of crowdsourcing is the open source movement. Increasingly, organizations put out open source projects that contribute to an external community of developers, but also return the company different benefits, like crowd-sourced bug detection and fixes. This also helps with training potential future employees in the tools and technologies that the company utilizes.
The contracting organization needs to define legal and contractual boundaries, with non disclosure clauses and the likes. However, there are additional considerations. In a way, the organization’s boundary is now much more fuzzy, or fluid. In some senses the organization is making the external companies or individuals part of their processes and flows. In other ways, it has very little influence or even visibility into what is happening outside its boundaries. How much does the organization know about the culture of an outsourcing firm, their internal values and processes? Is there anything they can do about the employee churn rate of contractor employees, or knowledge transfer for long term projects?
A way that organizations today resolve these challenges is to eventually attempt to hire successful contractors and contributors, and make them part of the traditional organization. However, a more exciting challenge might be to rethink the definition of the organization under the reality of diffused boundaries. How to manage long term relationships of this type, how to integrate them with the organizational processes and culture in ways that make sense. How to leverage the benefits of outsourcing and crowdsourcing, while also benefiting from the advantages of an explicit organization.
3) The way we communicate
Communication technologies are changing the way we interact at work, and also the ‘where’, ‘when’, and ‘how’ of the way we work.
Today we use social communication tools much more than in the past. Many companies provide their employees with internal social tools that in a way, flattens the organizational hierarchies. Every employee is “approachable” via that medium - via email directories, organizational groups and knowledge wikis, shared calendar systems, and more. Employees can easily contact the executives and vice versa without the need to schedule a formal meeting in a tight schedule, and without the need to “run into someone” at the hallway, which was the traditional way to interact with someone informally.
This direct accessibility is coupled with the fact that everyone can be reached at all times (24/7) due to the always-connected laptops, tablets and mobile phones, coupled with a an increasing acceptance of people being available during evenings, weekends, and even vacations (which has many drawbacks but is not part of our current topic).
Adding to that is the “flattening of the world” which allows companies to spread their offices across the globe in a very efficient way. For example, these allow a company to provide cost-effective 24/7 customer support by transitioning to different call centers around the world, each of them operating in the regular work hours of its time-zone. It also allows very small companies and startups to be distributed across locations and countries, something that only large corporations were able to do in the past.
These are just few examples of how today’s communication tools and norms are changing the flows of information within organizations. However, most organizations have not changed their organizational designs to match. How does the concept of a manager adapt to a reality where all employees are connected? What do team boundaries mean? How should processes be established in an organization that is constantly operating across many time-zones, how does one define a shift, or an end-of-day review? If we re-designed organizations from the ground up under today’s conditions - would they still look and operate as they do today, or will they be better served by different constructs?

These are just three areas that could lead to organizational restructure and change. They represent technological advances and behavior changes that are happening around us every day. Many times these changes creep slowly, first as some disruptive technology or behavior, and then one day you realize that everyone is doing it. It is sometime a good exercise to think whether our current organizational structures and practices still serve us well, or should we take a step back and update them. Innovative organizations will seize the opportunity to adapt and grow, and later set the pace for the rest of their industry.
What do you think? Could these areas lead to paradigm shift in organizational design? Are there other areas that would change the way organizations work in the future? What organizations and companies are forward thinkers in terms of their organizational change? What changes are they already implementing?

Feb 18, 2014

Aesthetics and insights in an organization chart from the past

Mckinsey Quarterly published an article by history professor Caitlin Rosenthal about the first modern organization chart, and included visuals of the authentic drawings made by Daniel C. McCallum in 1845. McCallum was in charge of the operations in the New York and Erie Railroad, one of the world’s longest rail systems.
While increasing use of the telegraph gave the organization enormous amounts of data, it also added complexity and information overload to the railroad’s operation. There was a need to improve the processes for organizing the newly available operational information, and for acting on it in a timely manner. McCallum crafted a new design for the organization’s structure that reflected his approach to how operations should function. This is considered one of the first data driven organizations, and the beautiful graphics that documents his organizational plan is considered one of the first modern organization charts.
A few things that caught my eye in the article and McCallum’s work(I do recommend reading the full article):
The drawing was inspired by nature, and shaped in the form of a tree: The roots represented the board of directors and the trunk represented McCallum and his chief officers. The five railroad tracks and the personnel operating them were the tree’s branches and leaves. As the author points out, this illustration is very different than today’s static hierarchical pyramids that we are all familiar with. The tree metaphor might lend the chart an artistic and archaic look, however the actual principals it depicts are actually pretty familiar in modern, data driven organizations.
McCallum’s depiction of the organizational pyramid is inverted from what we see in most organization charts: Rather than being a top-down illustration, it is a bottom-up depiction. This is not just for aesthetics - it also means something about the responsibility given to the branches and their personnel. Authority was given to the people who worked at the lines themselves - they possessed the knowledge which was critical to the operations and could use information in real time. Decisions didn’t have to go all the way up to top-leadership (or down, to the trunk and roots, if we go with McCallum’s take). Loops could be closed fast, giving the right people down the line “ownership” of their domain - which is a also modern management approach. The article refers to McCallums approach as a reversal of hierarchy, an interesting concept to consider in modern organizations as well.
In the tree-like organization chart the trunk and roots of the chief officers and the board still matter greatly, as they do in a real tree. They give a foundation and stability with their experience, strategy, and direction - but they do not need to approve the time-critical operational decisions. Together with the decentralization of decision making, McCallum insisted that targeted metrics will be reported to the board of directors. This allowed the board, with its finite capacity, to receive relevant and actionable data. This was supported graphically as information flew through the branches to the bark and reached the roots.
In the case of the New York and Erie Railroad, the novel information technology (the telegraph) allowed for new capabilities and opportunities of increasing the scale of the organization in ways which were not possible before. However, in order to effectively seize this opportunity, the organization itself had to change. And not just that organization, all organizations would have to eventually change in order to effectively deal with the paradigm shift that information technology brought forth.
Nowadays there seem to be numerous changes in the way we work and communicate. There is a great boom of technological innovation, which in turn leads to change in culture, work habits, legislation, as well as in individual and organizational behavior. Like the introduction of the telegraph, some of these changes represent revolutions that could, and possibly should, foundationally change the ways that organizations are structured and how information flows within them. Examining some of these and the reasons why they might lead to paradigm shifts in organizations will be the topic of my next post.

Feb 4, 2014

Watching out for toxic leadership in your organization

“A toxic leader is a person who has responsibility over a group of people or an organization, and who abuses the leader–follower relationship by leaving the group or organization in a worse-off condition than when s/he first found them.“ (Source: Wikipedia)
A recent NPR segment focused on the topic of toxic leadership in the US army. The story described research done by David Matsuda, an anthropology professor who tried to understand the high rate of suicide among US soldiers while he was researching local cultures. There were several interesting aspects to this story:

  1. The military is an organization where an extreme hierarchical structure and the uncompromising result-oriented goals (to be achieved at any price) may result in life & death consequences. We can think of it as an extreme indicator of behaviors in other organizations that are not as strict, in which toxic leadership might be harder to spot.
  2. The complete effect of toxic leaders on their subordinates and teams is not always fully recognized. It is not always as high profile as suicide, but a continuous degradation in individual and team performance. As mentioned in the story by a lieutenant general at the joint forces - wherever there were toxic leaders, no one would take prudent risk, be innovative, or act creatively.
  3. The fact that it took an outsider (an anthropology professor, not a soldier) to ask the right questions that would get to the root-cause and reveal a large scale phenomena, one in which toxic commanders abused soldiers who ended up committing suicide

As suggested in the piece, toxic leadership exists in other organizations as well: “The problem of toxic leadership is not confined to the military. It will be a cancer in any social organization that lacks the mechanisms for controlling it.“

In most cases of toxic leadership found in civilian and corporate organizations, it “only” causes people to be miserable, abused, or to simply leave their job and find a new company to work for. Toxic leadership may be challenging to trace or distinguish from other issues, but has a tremendous effect on how teams and whole companies operate, as well as how challenges are faced and goals achieved. It can lead to undesired attrition of good people while the bad apples remain in place and continue spoiling the bunch.

Why is it so tricky to identify toxic leaders?
Today’s fast paced challenges call for super-performance. As a result, people tend to focus on the results and deliverables, and not pay enough attention to the method or the way things get done. Additionally, in the corporate world, the effects of a toxic leader are harder to detect, and symptoms might be attributed to other issues or go unnoticed. Companies should invest in establishing processes that first identify, and then keep toxic leaders at bay.

  • Assessments: One of the solutions to identify toxic leaders in the army was to add subordinate evaluations when deciding whether to promote a commander or not. Toxic leaders can behave in a certain way to their commanders and in a different way to their subordinates. In order to assess behavior in a complete manner, the organization should consider all aspects of the work the person is doing as well the feedback of the people who manage, report to, and interact with the individual. This is already a part of many if not most companies’ assessment processes (usually called 360-degree assessments). If your organization is still not not doing this, here’s another reason to start.
  • Another issue that could lead to toxic leaders going undetected arises when top-leadership that is disconnected from the day-to-day operations. Wise senior leaders understand the importance of staying connected to the people who work at their organizations, and not just to their direct reports. They make an effort to “show their face” around the company, and create opportunities for any employee to interact with them. Employees would hopefully get the message that they can access top leaders whenever is needed.
  • Finally, not all organization pay attention to creating and promoting a culture with open communication channels all around. Companies need to nurture a culture where any member is able, even expected, to express their opinions and raise concerns across multiple forums and channels. These can include traditional approaches like town-halls, surveys, or discussion forums.

It is important to keep the concept of toxic leadership in mind as we set out to observe and analyze an organization and the social dynamics within it. Thankfully, many of the activities that are important for recognizing the presence of toxic leaders are also good practices in the organization for other reasons as well.

Jan 22, 2014

Managing organizational change: keeping the right people in the loop

When organizations make a decision to reorganize or restructure the way they work, it usually starts with strategic organizational goals: Improving flow of information, adapting to a changing marketplace, change in organizational priorities, and so on. Most of the thinking tends to be around organizational units of like teams or departments, and how they connect and relate to one another.

When it comes to the individuals - Organizations tend to put a lot of attention on the top leadership and management level. However, a lot of the energy related to most other employees is directed toward more bureaucratic and mundane tasks like headcount calculations, or who would report to whom in which team. In many cases, companies neglect to invest enough energy (if at all) in the thing that makes everything tick - THE PEOPLE.

M. C. Escher,  Sky & Water I, woodcut,  1938

Ideally, the organization should make the effort to engage every single one of its members, and involve them before, during, and after the process. At the minimum - get their thoughts and feedback at the end of the process so you know where they stand. However, there are not always sufficient resources or time for this. In this these cases, it is important to prioritize who to talk to, and when. Even when you do have resources to involve everyone, the order of engaging the organization's members might matter. Specifically, there are two tiers that leadership and change-drivers should consider and address:

1) The future leaders 
Leadership has usually already identified those individuals who would assume key roles in the future, at both team and organizational levels. Companies usually spend significant resources to find and nurture its future leaders for the near term as well as for medium and longer terms. Organizations make efforts to ensure sure these people are happy and will remain in the company. In times of organizational changes, the importance of communicating the process and status to the future leaders might sometime be overlooked due to the chaos of change.

Such periods of organizational change could be confusing times for everyone, and key people might not feel secure enough. They might start looking for alternative roles that seem more stable. It is critical to keep lines of communication open and give sufficient attention to those individuals. Especially in times of organizational challenge and instability, companies need to address the tier of future leadership. Make sure they understand what is going on, and why. What the goals of the specific change are. The drivers of change and organizational leaders would be wise to reassure the future leaders. It is good to listen to their thoughts and goals. It is especially important listen and respond to their concerns, before they turn into fears. 

2) The social hubs

Every network of people is characterized by a few central people, not necessarily in terms of their role but in the sense of the way that they are perceived by others. These are the people who are well connected with others within the organization. They are the ones that everyone goes to for advice, or to chat with when there's gossip, because they always know first when things are happening. Office admins could be an example for people who are well networked across the organization, and know what's happening above as well as underneath the surface.

These central people are crucial in situations of change, as they basically control the tone of information that flows informally within the organization. It could be wise to identify those social hubs, and popular/vocal members of the organization, and bring those central people on board. It could even be as simple as communicating the current process and the rationale behind it to them. Making them involved partners could help spread the right message across the organization. Even when the plan is to talk with every employee in person, this process takes time. Starting with those central employees could help spread the positive change throughout the organization until the individual conversations are complete. 

Planning the communication messaging as well as the order in which to communicate organizational changes is an important component of the change management strategy. This grows in importance for larger organizations or more radical changes. It is especially important for change processes that cannot be accomplished swiftly but stretch over a period of time - like the merging of business units or acquisition related integrations. 

Formal channels and hierarchies of communications are not enough - we also have to consider the informal and interpersonal channels of communication that might affect the organization just as much as the formal channels, if not more. Successful implementation of the internal communication strategy can help mitigate risks, reduce fears and resistance, and increase confidence in the organization and its leaders.