Albu On Strategy

How Can Organizational Structure Unlock Strategy?

Even though 2012 elections are now decided, they will not reduce the “dizzying velocity of change in our economy,” as stated by Robert Safian author of Secrets of a Generation Flux Leader (Fast Company – November 2012). We are witnessing the boom of companies such as Apple, Facebook and Amazon; and the bust of companies like Research in Motion, Blockbuster, and Myspace, all at an accelerating pace. Business leaders are realizing that their business models that leveraged the advantages of established brands, of scale, and of efficiency are vulnerable to new agile business models.

To help define the qualities of business leaders and organizations that will thrive in this ongoing chaotic business environment, Safian has identified “Generation Flux” based on his research of business leaders and companies such as Nike, Intuit and FX Networks. Generation Flux is characterized by members who embrace adaptability and flexibility. Safian adds, for organizations to be successful, leaders will need to change traditional organizational structures in order to become more agile.

Traditional organizational structures rely on hierarchy and rules to insure organizational effectiveness, but hierarchy can impede an organization’s ability to adapt and be flexible. Safian believes “hierarchy is an effective tool for streamlining decision-making, disseminating information, and making sure stuff gets done.” Yet, hierarchy falls short on creating the organizational climate to generate creative ideas required to stay agile in today’s economic environment. The challenge is: “to encourage creativity and agility, while retaining the advantages of hierarchy” notes Safian.

Safian writes Generation Flux leaders are realizing a “new kind of openness to ideas is required.” He cites several examples of Generation Flux leaders who successfully embraced the need for more creativity and agility:

The first, example is Retired General Stanley McChrystal, commander of all U.S. and international forces in Afghanistan.

In the fight against Al Queda McChrystal states “we had to change our structure, to become more of a network. …we found the wisest decisions were usually made by those closest to the problem.” To create a climate where the best ideas win, McChrystal introduced what he called a “shared consciousness.” By holding frequent task force meetings, decentralizing decision making, and changing the role of his command team to guiding on values, strategy, and priorities. He ensured his field officers made tactical and operational decisions in line with the task force’s strategic principles.

Next is John Landgraf, President and GM of FX Networks, where creativity is central to the success of his business strategy.

Landgraf notes, “Basic and premium cable will produce 150 scripted original series a year…so you have to pick really distinctive ideas.” So he is promoting greater intellectual diversity at FX Networks so people are not siloed in their areas of specialty. Landgraf explains, “You have to value all styles, because you will never know which type will solve a problem.” To break down silos Landgraf brings his leadership team together every two weeks to discuss strategic issues facing FX. At the meetings everything is confidential ensuring an open discussion and everyone is not confined to their area of responsibility. Landgraf comments “it’s easier to keep information at the top and delegate, but when things move really quickly and problems are more subtle, we need everyone contributing.”

Safian shares other secrets of Generation Flux in his article, but we chose to focus on the area of openness of ideas, as we have seen many of our clients wrestle with the challenge of encouraging creativity and agility within their current organizational structures. We hope these ideas will help address challenges you may be facing with the chaotic business environment. We would be interested in hearing about your experience in making your organization more creative and agile.

Posted in Leadership, Newsletter.