In the past, organizations were built to grow physical and financial assets. Leadership focused on systems to exert control and avoid risk. Today, innovation is fueled more by how people work and lead rather than by what they make. Successful digital-era organizations are masters at investing in the production and flow of intellectual assets, including the knowledge possessed by employees, customers and stakeholders. Their leaders constantly push for growth and game-changing behaviors by changing the way their companies operate, pushing into new markets, and expanding how they create value. They are not spending their energy protecting and defending business as usual.
Most organizations believe they’ve changed their business models to adapt to the “new normal,” but too many haven’t changed how they lead, how they get work done, or how they measure success. Leaders simply push employees to work harder, to do what they have always done, to approach their work the way they always have, and to meet their numbers. Yet most understand that this is not sustainable.
As the demands of the economy continue to shift, how does an organization overcome the resistance to break this cycle? How does an organization manage complexity and change in ways that fuel innovation and growth?
When studying organizations that are maintaining the strength of their existing culture while adapting to changes in the business environment, Gallup finds similar processes among each.
The leadership of these organizations focuses primarily on mobilizing people to act for collective goals of both leaders and followers, rather than strictly focusing on getting followers to do what the leader wants done. Vision is interactive: Top leaders seek broad and diverse perspectives that emerge bottom-up and outside-in rather than top-down. These perspectives inform leadership’s decisions about the organization’s future and come from all constituents, instead of from the minds of a select few.
The organization’s focus is on stimulation rather than control. Managers focus learning efforts and create conditions that prepare employees to achieve goals that have been set, as well as goals that no one imagined to be possible.
Responses are integrated rather than compartmentalized. Social networks span the entire enterprise and everyone is offered opportunities to offer expertise and solutions rather than having responses come from a single group controlling the opportunity.
Changes occur in unexpected places, so leaders set the stage for people and ideas to bump into each other in unpredictable and organic ways, rather than through formal and linear processes.
Too often, existing leadership frameworks create a dichotomy whereby the formal, hierarchical leadership within the organization is constantly pressing for better financial results and the informal, adaptive leadership is constantly pressing for innovation. As these two forces compete, when one wins, the other becomes marginalized.
Organizations need new leadership frameworks that break this cycle by:
• Letting the formal, hierarchical leadership do what it is intended to do (i.e., making decisions about systems, structures and resources in ways that create pressure for financial and operational results)—not demanding it be the catalyst for innovation and change.
• Legitimizing the informal, adaptive leadership function to do what it is best at (i.e., being a champion for creative ideas, shared leadership, and better ways of working)—not demanding it make hierarchical decisions about structures and resources.
• Creating a formal, interactive leadership function that generates ideas and solutions among people, rather than by individuals alone; this will allow for collaboration between the hierarchical and adaptive areas of leadership so they can coexist and thrive.
By using a new framework for leadership, organizations can transform their traditional hierarchies into structured networks where human resources, intellectual capital, and financial resources flow across boundaries. The resulting culture optimizes both efficiency and inspiration by removing obstacles, reducing wasted efforts, eliminating confusion and positioning people to do what they do best.
Breaking the mold of traditional leadership is a foundational requirement for organizations seeking to turn information into innovation. Change is everywhere and organizations must be ready to break through the natural resistance to these uncertainties. It is the only way businesses will continue to grow, compete and innovate in the rapidly changing economy.