Tuesday, July 15, 2014

Organization Renewal – The Key To Being Healthy & Relevant

Renewal for Health & Relevance
As organizations mature they face the prospect of death through atrophy and disruption.  All companies start the same way: someone has a unique idea for a service or good for a specific customer; sales grow exponentially, then competitors enter the field.  Soon the organization enters the "desert of despair" where the market is saturated with look-a-likes that are "faster, better, cheaper." 

To maintain profitability, the next step for the company is to go to the premium end of customers and pricing.  Then they wake up to find that their mass market has disappeared and they have become a niche player in a disappearing market.  Death by a thousand cuts and irrelevance.  Blockbuster, Kodak, Blackberry, Nokia.

This doesn't have to be part of the natural business cycle; and some companies know this: Samsung, Pixar, Starbucks, P&G.  What do they know that others don't?  This question has fascinated me for my entire career.  What I have come to realize is that some companies understand that organizations aren’t build to change: we build them for efficiency, consistency, and low risk. 

Some leaders recognize that improving their organizations sets up a dilemma where constantly making the right decision is eventually the wrong decision.  They know, as Nokia learned, that excellence as the world's leading manufacturer of cell phone handsets comes at a cost of not developing smartphone technology - now Nokia is the handset manufacturer for Microsoft.  No amount of urgency or burning platforms could transform Nokia and prevent its demise through its success.

Some companies like the once dying Pixar, clue into the notion of what I call "organization renewal."  They know that protection against irrelevance comes from inside - death is not dictated by the market.  They avoid the need for "change management" and "organization transformation."  They know they must build a culture of renewal.  They know that everyone in the organization must be sensitized to the signals of decay, and they must have the knowledge of what to do and access to the organization to make changes.

This is not chaos or leadership through consensus on everything all the time.  It's about knowing what the organization is and protecting that core while testing, learning, and moving into unchartered territories.  Sometimes it's a simple operational improvement like putting healthy food choices at the grocery checkout; other times it's a simple work improvement like cutting most of the authorities needed for a regular purchase; and other times it moving into new domains like mobile apps for the growing Millennial market.  These changes cannot be controlled from the center - they are too unpredictable.  They must come from a culture of trust and openness where everyone knows how to influence the organization.

In my experience with marquee clients around the world - like Whirlpool, Microsoft Europe, Canadian Pacific, Toyota South Africa, and Korea Telecom – I stress the following essential principles:

1. Know who you are
What can you become - not what do you want to become?  Change
the right things.

2. Engage Employees through Trust, Openness, and Tolerance for failure
·   Know leadership behaviors that shut down the organization.  Learn to listen.  Be inclusive and even vulnerable.

3. Ideate based on Insight
·   Build a discipline and capability for Ideation.  Get ideas from everyone, everywhere.  Show people how to spot trends in their area of interest; understand customers and their unarticulated needs; challenge the organizational beliefs that once were required but now hold you back.

4. Identify & Test renewal opportunities
·    Show people how to convert an idea into a business opportunity.  Be sure employees really know: the customer, the product or service, and how it will make money - or at least a difference.  After defining the opportunity, identify its fatal assumptions then develop a hypothesis to test, learn, and commercialize at low risk.

Organization renewal is the ability to take what you have and keep it fresh so that your organization will always be healthy and relevant.  It's a mindset supported by disciplined tools that can be applied to specific problems. 

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