In our last blog post, we argued that a “digital transformation” being experienced across nearly every sector is thrusting us into a new era of complexity. Large companies are failing to adapt. They are dying earlier and faster than ever before. And their failure to adapt could come at a profound detriment to society.
The answer is … intrapreneurship.
To see that, let us take you to Afghanistan and Iraq in 2003, when General Stanley A. McChrystal took command of the Joint Special Operations Command. McChrystal’s primary enemy, Al-Qaeda in Iraq, was unlike anything traditional military principles had prepared him for. Composed of decentralized units, they would appear to attack and then melt into the population. Without a formal reporting hierarchy, they offered no clear power center to target.
As McChrystal said in his book Team of Teams: New Rules of Engagement for a Complex World, “We had more in common with the plight of a Fortune 500 company trying to fight off a swarm of start-ups than we did with battling Nazi Germany in World War II.”
McChrystal eventually realized that if US and allied forces were to succeed against their enemy, they would need to dramatically adapt their approaches. They eventually “abandoned many of the precepts that had helped establish our efficacy in the twentieth century, because the twenty-first century is a different game with different rules.”
We highly recommend you read McChrystal’s account in Team of Teams to gleam insights into how large organizations can adapt to thrive in the emerging complex competitive environment. But here is our highly synthesized summary.
The first distinction that led McChrystal to his new approach was what he calls “reductionist process.” Introduced by a mechanical engineer named Frederick Taylor in the early 1900s, the philosophy essentially proposed that corporations should apply scientific rigor to their operations. Processes should be optimized and then repeated. On a manufacturing floor, for example, you don’t need four different ways to install a car door. You should find the best way and then train line workers to repeat it.
A reductionist approach leads to employees playing one specialized role, requiring little communication with colleagues, without a need to understand the big picture, nor a reason to question the boss.
Taylor’s approach proved enormously influential and was adopted by businesses as well as the military. The US military and those of its allies had become efficient, machine-like operations composed of specialized teams performing tightly defined roles. But this approach proved ineffective again a fluid, decentralized enemy.
McChrystal analyzed the situation and had two more critical insights. First, he considered the difference between efficiency and effectiveness. The effort to optimize a process to maximize its efficiency becomes detrimental when the process needs to change. The auto assembly-line worker may be unmatched at installing his doors, but when a new kind of door needs to be mounted, his process might not work. Al-Qaeda in Iraq was changing its tactics so often, the US and its allies could not adapt quickly enough. They were finding a complex (unpredictable) enemy with an approach suited for complicated (but predictable) environments.
Second, he realized that while their approaches were robust, they were not resilient. Robust systems are effective at tackling one specific obstacle well while resilient systems are able to adapt to unexpected hurdles. Airbags in a car, for example, are robust because they are good at protecting drivers against head injury immediately after collision. But they are not resilient because they cannot protect the driver from other, unexpected hurdles like a deer in the road or a flat tire. To compete in complexity, you needed to build a resilient system, not just a robust one.
As McChrystal said, “In complex environments, resilience often spells success, while even the most brilliantly engineered fixed solutions are often insufficient or counterproductive.”
This led him to a new organizational philosophy he called a “team of teams.” You break your organization down into small teams. These are not specialized teams (e.g., your marketing team, accounting team, operations team) but they are capable of adapting to a variety of potential hurdles. They are designed for “resilience” over “robustness.”
You ensure each team has the requisite elements of high-performance. He specifically believes there are four: (1) a common purpose, (2) understanding of the big picture, (3) decentralized authority, and (4) trust.
With each person you add to the organization, communication complexity grows exponentially. Three people must manage three relationships, four people six, five people ten, etc. By molding his organization into modular teams, he was able to avoid the communication and coordinate friction that hinders large organizations’ efforts to change course.
Now, you can find multi-disciplinary teams in other areas of organizational life: ad-hoc problem-solving teams, special committees, etc. But these teams always report up into an organization bigger than a team. That limits their ultimate flexibility.
How McChrystal solved this issue is, in our view, the unique brilliance of his model.
He overlaid an “umbrella” team, a team of teams, to keep each team acting in coordination with each other. He made sure this “team of teams” shared the same characteristics of effective teams: a shared common purpose, understanding of the big picture, decentralized authority, and trust. He prevented the tribalism that usually develops between teams (“our team is better than yours”) by ensuring every team had people who knew people on others teams. That way, “they envisioned a friendly face rather than a competitive rival.”
His approach actually maps nicely to the principles of complex systems and resilient systems. To build a system that can compete in complexity you want to create modular units (teams) that can stand in for each other (thereby creating redundancy) and reconfigure themselves as needed. What results looks less like a machine and more like an adaptive organism. This is precisely what the “team of teams” approach delivers.
Now, if digitization is thrusting the world into complexity, and if the right answer is a “team of teams” approach, we can imagine the traditional top-down, specialized hierarchy giving way as the predominant organizational model.
We can imagine a functional expert who repeats optimized processes giving way to the generalist who can understand the big picture, has greater authority to make decisions, can react flexibly to unexpected hurdles and opportunities, and who has enough information and trust to engage with other people and teams to leverage the scale advantages of his or her organization.
What do we call that person?
You have just described an intrapreneur.
We are entering an era of the intrapreneur.