How did we get into this parlous situation, and what can we do to recover from it?
Many companies have fallen into the trap of over-engineering their internal activities with over-complicated structures and bureaucratic reporting systems, leading to disempowered people chasing the wrong targets.
In many large companies, employees find themselves operating as “prisoners” of a traditional way of working that has been inherited from the industrial era. The original concept of bureaucracy, for example, was developed in the early twentieth century as a way of streamlining and de-personalising the activities of large operations. Bureaucracy achieved coordination through standardised rules and procedures, and it sought to place people in roles where they could apply their deep functional expertise. This worked very well as a way of mass producing products at scale. But increasingly companies also need to be creative, innovative and flexible to cope with the new challenges they face.
The world has moved on, but the principles of management have remained stuck in the industrial era. We need to ask ourselves whether we can find better ways of working for the future to overcome this gap.
This problem also manifests itself at the level of the individual, with workers increasingly feeling detached from the fruits of their labours. Staff satisfaction surveys show large chunks of people who are not engaged, and it’s not just a necessary by-product of being part of a big organisation. Some of the top reasons for low staff satisfaction include distracted leaders, a varied approach to performance management, a company’s lack of trust in its managers, or a lack of basic tools for reaching the end goal.
So, what’s the answer?
There are lots of specific things that managers at all levels can work on, but the focus here is on the broader issue of corporate purpose . A clear and meaningful purpose provides a different way of defining objectives and it helps to cut through the clutter of legacy structures and processes.
How to arrive at a meaningful corporate purpose
Traditionally objectives have been arrived at by working backwards from a company’s financial goal in a linear way. The alternative approach involves setting a high level purpose – one that is articulated in terms of meaningful value to stakeholders other than just making money – and then using this as an “oblique” target that people can rally around. By delivering on that higher-level purpose, it is often the case that the company in question achieves strong financial results almost as a by-product. I have seen many companies –Tata, HCL Technologies, Handelsbanken, Whole Foods Market, Lego, John Lewis – put this oblique principle in practice with great effectiveness.
In essence, organisations that don’t involve their people in figuring out how best to achieve the company’s purpose will struggle to get their employees to bring their minds to work and go beyond the minimum. In turn, bringing people together will make an organisations’ workforce more innovative.
We have to take risks, and in the words of Mark Twain: ‘sail away from the harbour’.
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Julian Birkinshaw is a Professor of Strategy and Entrepreneurship at London Business School.
Julian will be part of the international faculty on the upcoming Senior Executive Programme, IMI’s flagship development programme for senior business leaders which begins on May 25th 2016.
