In this TED Talk, transformation expert Martin Danoesastro shares lessons learned from companies on both sides of the innovation wave on how to structure your organization so that people at all levels are empowered to make decisions fast and respond to change.
Martin Danoesastro – TED Talk TRANSCRIPT
Have you ever watched a flock of birds work together? Thousands of animals, flying in perfect synchrony: Isn’t it fascinating?
What I find remarkable is that these birds would not be able to do that if they all would have to follow one leader. Their reaction speed would simply be too low.
Instead, scientists believe that these birds are relying on a few simple rules, allowing every single bird to make autonomous decisions while still flying in perfect synchrony. Their alignment enables their autonomy, and their autonomy makes them fast and flexible.
Now, what does this have to do with any one of us?
Well, it’s one way of illustrating what I believe to be the most important change that is needed in ways of working today.
The world is getting faster and more complex, so we need a new way of working, a way that creates alignment around purpose, that takes out bureaucracy and that truly empowers people to make decisions faster.
But the question is: In order to get there, what are we willing to give up?
A few years ago, I was working with a bank that wanted to embark on a digital transformation. They wanted their offering to be simpler, more intuitive, more relevant.
Now, I’m not sure how many of you have seen a bank from the inside, so let me try to illustrate what many traditional banks look like.
You see lots of people in suits taking elevators to go to their department, marketers sitting with marketers, engineers with engineers, etc. You see meetings with 20 people where nothing gets decided. Great ideas? They end up in PowerPoint parking lots.
And there are endless handovers between departments. Getting anything done can take forever.
So this bank knew that in order to transform, they would have to improve their time to market by drastically changing their ways of working as well.
To get some inspiration, we decided to go and have a look at companies that seem to be more innovative, like Google, Netflix, Spotify, Zappos. And I remember how we were walking the halls at one of these companies in December 2014, a management consultant and a team of bankers.
We felt like strangers in a strange land, surrounded by beanbags and hoodies and lots of smart, creative employees.
So then we asked, “How is your company organized?” And we expected to get an org chart. But instead, they used strange drawings with funny names like “squads” and “chapters” and “tribes” to explain how they were organized.
So then we tried to translate that to our own world.
We asked, “How many people are working for you?”
“Who do you report to?”
“Who decides on your priorities?”
You can imagine our surprise. We were asking for what we thought were some of the basic principles of organizations, and their answer was, “It depends.”
Now, over the course of that day, we gained a better understanding of their model. They believed in the power of small, autonomous teams. Their teams were like mini-start-ups. They had product people and IT engineers in the same team so they could design, build and test ideas with customers independently of others in the company. They did not need handovers between departments. They had all the skills needed right there in the team.
Now, at the end of that day, we had a session to reflect on what we had learned. And we had started to like their model, so we were already thinking of how to apply some of these ideas to a bank.
But then, one of the hosts, a guy who had not said a word all day, he suddenly said, “So I see you like our model.
But I have one question for you: What are you willing to give up?”
What were we willing to give up? We did not have an answer immediately, but we knew he was right. Change is not only about embracing the new; it’s about giving up on some of the old as well.
Now, over the past five years, I have worked with companies all over the world to change their ways of working. And clearly, every company has their own skeptics about why this is not going to work for them: “Our product is more complex,” or “They don’t have the legacy IT like we do,” or “Regulators just won’t allow this in our industry.”
But for this bank and also for the other companies that I have worked with afterwards, change was possible. Within a year, we completely blew up the old silos between marketing, product, channels and IT. Three thousand employees were reorganized into 350 multidisciplinary teams.
So instead of product people sitting just with product people and engineers with engineers, a product person and an engineer were now members of the same team. You could be a member of a team responsible for account opening or for the mobile banking app, etc.
At the go-live date of that new organization, some people were shaking hands for the very first time, only to find out that they had been sitting two minutes away from each other but they were sending each other emails and status reports for the last 10 years.
You would hear someone saying, “Ah, so you’re the guy that I was always chasing for answers.” But now, they’re having coffee together every day.
If the product guy has an idea, he can just raise it to get input from the engineer who is sitting right next to him. They can decide to test with customers immediately — no handovers, no PowerPoints, no red tape, just getting stuff done.
Now, getting there is not easy. And as it turns out, “What are you willing to give up?” is exactly the right question to ask.
Autonomous decision-making requires multidisciplinary teams. Instead of decisions going up and down the organization, we want the team to decide. But to do so, we need all the skills and expertise for that decision in the team. And this brings difficult trade-offs.
Can we physically co-locate our people who are working in different buildings, different cities or even different countries today? Or should we invest in better videoconferencing? And how do we ensure consistency in the way we do things across these teams? We still need some kind of management matrix.