From Julian Birkinshaw & Jonas Riderstralle

Dear CEO


We realize you have a lot of things on your plate, so the last thing you need is another new strategic initiative to work on.   But please bear with us: the proposal outlined below is actually going to make your life a whole lot easier.  Of course the multitude of issues that your company has to address is going to remain as complex and multi-faceted as ever, but if you take our advice you will be able to spread the load a bit more, and get focused more quickly on the important stuff.


You have heard the expression “teaching an elephant to dance.”   In fact, you have probably used a version of it at some point. Like most of your peers, you wish your company was more nimble and responsive, more like some of those Silicon Valley start ups that get featured in business magazines all the time.


In fact, we would suggest that increasing your “strategic agility,” your capacity to adapt quickly to changes in your business environment, could be the most important and difficult challenge you face right now.  We were talking just last week to managers in one of the largest consumer products companies in the world, and they said their biggest barrier to change is their over-engineered formal processes – things like the budgeting process, the performance evaluation system, the stage/gate methodology for reviewing new products.  These were high calibre, highly motivated people, all trying their best to make the company a success. And yet the “system” was holding them back.


Why does everything take such a long time in big companies?  We see two linked problems.  One is the invisible stranglehold of bureaucracy – everything gets done according to rules and procedures. Of course, the rules aren’t always wrong. These management processes were designed by thoughtful, well intentioned people.  But over time they take on a life of their own. They metastasise to address all eventualities, and their linkage to the company’s overall goals becomes ever more tenuous.


Many company executives have said they want to move away from bureaucracy towards a “meritocracy” which puts people and ideas first.  This isn’t a bad idea. We can all agree that  knowledge, or human capital as it sometimes called, is central to success in today’s Information Age. But it turns out that a meritocracy can be just as slow, and internally-focused as a bureaucracy.  We work in the oldest form of meritocracy – the university- and while we hate rules, we love to argue and discuss every issue, and we believe strongly in consensus.  Many professional service firms, and indeed quite a lot of traditional business organizations too, have moved in this direction, thanks to this belief that knowledge and learning are the only sustainable sources of competitive advantage.  Yet, the sad result is often a form of analysis paralysis where people are highly knowledgeable and can “talk the talk” but nothing actually gets done.


So what you actually need is not a focus on rules and procedures, nor is it a focus on knowledge and insight  – you need a focus on action.  We call it this model the adhocracy, as distinct from bureaucracy or meritocracy.  In practice, it means simplifying your formal processes, reducing the number and size of your cross-functional committees, and eliminating some of the centres-of-excellence sitting in headquarters, and putting in their place a light-touch, fleet-footed model where small teams are empowered to take action quickly and in direct response to the needs of their users. If you like analogies, think in terms of the special forces units used by the military when operating in enemy territory. It is said that no plan survives contact with the enemy, so adaptability and thinking on your feet is at a premium.  In a business context, this means breaking work up into small projects, doing experiments and market tests, and adapting quickly to feedback.


We know this change in emphasis will be difficult for many of your managers.  When faced with uncertainty, most people default back to what they are comfortable with – typically either a standard operating procedure (bureaucracy) or a review committee (meritocracy).  You need to have the courage to push against these instincts. And there are some handy examples you can draw inspiration from in the business world today.  For example, the agile movement in software development, and in particular the scrum methodology, is entirely consistent with our notion of adhocracy.  Other examples are the beyond budgeting movement and the Holacracy organizing model.


This more action-focused approach to organising, by the way, requires some pretty big shifts in management style for you and your team. You have to give up some of your traditional sources of power, and you need to start promoting people who challenge the status quo.  Ultimately, the adhocracy isn’t really an organising model, it’s a state of mind. And if you want to make your company agile and competitive in today’s business environment, it should be at the centre of your change agenda.


Julian Birkinshaw & Jonas Riderstralle


About Julian Birkinshaw & Jonas Riderstralle

Julian Birkinshaw is a Professor of Strategy and Entrepreneurship at London Business School and has written twelve books, including Becoming a Better BossReinventing Managementand Giant Steps in Management. He is a Thinkers50 ranked thinker.


Jonas Riderstralle is co-author of the international bestsellers Funky Business and Karaoke Capitalism.  He has been included in the Thinkers50 on six occasions.

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