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Organizational Agility, Part 2: Cracking the Code on the “Flipped Pyramid”

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Published on: September 2017

Written by: Megan Lambert

By Megan Lambert, Senior Consultant at BTS

In our previous blog post, we talked about how a “flipped pyramid” creates more agile organizations through the redistribution of power. Distributing power and decision-making to the front-line people of a company – those who often know the customers best – gives the organization the ability to adapt quickly to the changing environment and better meet the needs of the customer.

You may be thinking, “This is great in theory, but how would it work in practice?” Many skeptics adhere to the myth that if power is more evenly distributed, the organization will dissolve into chaos. They ask, “How will we make decisions? How will we get things done?”

 

cracking the code on the flipped pyramid

 

These apprehensive questioners think of power distribution and imagine an ineffective and inefficient workplace – filled with committees, cross-functional initiatives, and consensus-driven decisions, all painful exercises in persuasion, corporate politics, and ego.

There is no doubt that sharing power has its challenges; however, with the right structure and culture to support it (and if the leader has the courage to try it), power sharing can unlock tremendous potential and creative energy in an organization. There seems to be three basic requirements to succeeding with a “flipped pyramid” approach:

  1. Stable purpose and culture
  2. Distributed decision-making structures
  3. Self-aware leaders who model new behaviors
1. Stable purpose and culture

Organizational agility in big companies requires as much stability as it does responsiveness. The stability comes from a central set of shared values, principles, culture, and purpose. These provide the guiding light when people are weighing trade-offs and making decisions for the company.

For example, one of my clients has an explicit policy that prioritizes employees first, followed by customers, and then shareholders. The CEO states, “Employees are like air (you can live only a few minutes without them), customers are like water (a few days without), shareholders are like food (almost a month).” This metaphor for the organization’s hierarchy of needs provides clear prioritization and guidance for decision-making on choices that could compromise one stakeholder for another. Likewise, leaders can support organizational agility by creating clarity around the organization’s purpose and culture; then, by giving employees space to own their work and guide the company’s direction, they can create a more agile, powerful work force.

Another example is Southwest Airlines. Their purpose is to: “Connect people to what’s important in their lives through friendly, reliable, and low-cost air travel.” Employees can use this statement to check their decisions– e.g. “will this new pricing structure help us connect people to what’s important in their lives?” or “Does this new ad demonstrate that we are friendly, reliable, and low-cost?” A purpose statement can become the guiding light for making difficult decisions.

2. Distributed decision-making structures

Decision-making structure adds guardrails to the potential chaos of distributed power. There are very sophisticated processes of self-management laid out in systems such as Agile, a working methodology pioneered for software development, and Holacracy, which describes itself as “a self-management practice for purpose-driven companies.” I’ll highlight just one example of a self-managing process even more traditional companies can employ. It’s called the Advice Process, which means that any person at any level of the company can make a decision, provided that they solicit input from every person who will be affected by that decision.

For example, I notice that our expense reimbursement system is slow, painful, and time-consuming – I can decide to prototype a mobile app for reimbursements, provided I get input first from Mark in finance, Ross in IT, etc. The decision still resides with me – it is still not consensus driven – but I carefully listen to and consider insights from others in order to make the best possible decision for my organization overall.

The Advice Process makes everyone equally responsible for the success of the organization by giving them the power to make impactful business decisions. The challenge is that it requires executives to relinquish control over decisions they would typically make, and allow people “more junior” to them to own critical business decisions.

3. Self-aware leadership who model new behaviors

Allowing people across the organization to make key decisions requires an enormous amount of trust and the relinquishment of control on the part of executives. Embracing uncertainty and sharing power can be remarkably uncomfortable for an executive that has made his career on knowing the answers and having the solutions. Brian Robert, partner at HolacracyOne comments in the book Re-inventing Organizations, “When I first became a CEO, I realized how addictive that role was. You get to be a hero every day. There is nothing that feels quite so good as to come in and save the day and have that ‘everything rests on you and your shoulders’ feeling. One of the challenges and opportunities of Holacracy is: now I get to be a hero just like I did before, but now everybody else gets to be a hero too.”

The way executives are used to getting the feeling of being a hero – by making the calls and holding the power over the company’s direction – must shift in order to create space for more distributed decision-making. This requires an enormous amount of self-awareness from the leader and a whole new set of behaviors based more on mentoring and coaching than being directive and decisive. It also means leaders need to embrace failure and welcome decisions that are different than ones they themselves might make. Ultimately, it is a process of letting go of control at the top and embracing uncertainty in order to create more momentum and agility across the whole organization.

Summary

Changing deep-rooted internal structures and culture is difficult – it takes time and immense willingness on the part of your people. However, with the growing complexity of the world, the pace of change, and the rate of disruption, large companies may have no choice but to distribute power and decision-making across the organization or they may risk becoming obsolete. Power distribution is essential to organizational agility, and organization agility is key to success in the market. Trust your people: provide them with the right purpose, culture, decision-making structures, and leadership to achieve organizational agility. If you do that, they will meet the customer’s needs quickly, effectively, and with excellence.

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