“As the rate of change escalates exponentially, the old ways of organizing and educating, which were designed for efficiency and repetition, are dying.”
– Bill Drayton, Founder, Ashoka: Innovators for the Public
What restrains innovation and growth is not technology but the concepts that emerge around, or even in advance of, technology. Around 7,000 BC, after tens of thousands of years of humans spending their waking lives hunting and gathering, they suddenly started planting seeds and cultivating gardens. This led to a global transformation from hunting to agricultural societies, allowing humans to produce more food than they needed. This, in turn, gave us time to paint (art was born), organize (government was born), and study the environment (science was born).
Civilization as we know it today is possible because of the humans who started farming. We started farming not because we invented a new technology, but because we discovered new concepts: the “plough” (a stick scratches dirt and allows us to plant seeds) and the cultivation of the ox (which could pull the stick), led to “agriculture.”
In the late 1700s we came upon the idea that rather than producing goods by hand, we could use machines, to produce more with fewer workers. This ignited the Industrial Revolution. This concept of “mechanical production” drove us to find new ways to power machines. We discovered we could use steam and water, and invented ways to harness their power ever more efficiently.
One hundred years later we realized we could produce even more through a concept we called “division of labor.” Workers and machines, by specializing, could become radically more efficient and thereby multiply production. “Mass production” became the guiding concept we pursued.
In all domains we see the same pattern. Evolution is driven by the introduction of new concepts, which help us solve new problems, envision new possibilities, and direct our efforts toward achieving them. For example:
- Before the concept of the numeral zero (0) was grasped in India (around 700AD) and Europe (in the 1100s), many mathematical problems seemed unsolvable.
- Before Michael Porter introduced the concept of “competitive advantage” around 1990, organizations found it difficult to understand why some sustained long stretches of success while others struggled to break away from their competitive pack.
- Before Peter Drucker introduced a concept that would later be called “business model,” companies sort of fell into the model for how they made money. Today we consciously design it. Arguably much of the innovativeness of Silicon Valley startups is made possible by the invention of this concept.
History is filled similar examples – “inventory turns,” “hierarchy,” “portfolio theory,” “economies of scale,” “resource-based completion” – each shifting what we see as possible, what we pursue, the technologies we seek to invent, and the actions we take. This is why at Outthinker we have spent more than a decade studying the emergence of business concepts. Those who embrace new, winning concepts early win. Those who resist them fall behind.
Concepts emerge through a consistent, predictable pattern. When you understand this pattern, you can better foresee what is coming.
- Phase 1: A community of people realizes a possibility that cannot be achieved with existing concepts. Something is missing, and they lack the language to solve a problem that matters.
- Phase 2: The community starts experimenting with new concepts. They apply these concepts to see if they deliver better outcomes.
- Phase 3: When the community finds a concept that works, they narrow in on a common name.
- Phase 4: The new concept then interacts with a broader community and competes with existing concepts. It is either rejected, incorporated, or replaces existing concepts.
We are seeing today the emergence of new organizational concepts. We are heading into a new world in which the intrapreneur will play an historically significant role.
Phase 1: The current organizational concepts are broken
It is becoming clear that the current, hierarchical organizational concept that defines most companies no longer works. Innovation and strategy guru Gary Hamel points to this:
“We live in a world where never before has leadership been so necessary but where so often leaders seem to come up short. Our sense is that this is not really a problem of individuals; this is a problem of organizational structures – those traditional pyramidal structures that demand too much of too few and not enough of everyone else.”
Frederic Laloux, author of Reinventing Organizations, outlines the dilemma this way:
“Modern organizations have brought about sensational progress for humanity in less than two centuries – the blink of an eye in the overall timeline of our species. And yet, many people sense that the current way we run organizations has been stretched to its limits. We are increasingly disillusioned by organizational life. For people who toil away at the bottom of the pyramids, surveys consistently report that work is more often than not dread and drudgery, not passion or purpose.”
The evidence that the current organizational approaches have reached their limit is all around us. Nine out of 10 US employees report being disengaged at work. Seven out of 10 report feeling emotionally disconnected. As a result, corporations are failing more rapidly every year and the productivity of large organizations is steadily eroding.
Three global changes – including digitization driving the acceleration of change, the growing popularity of agile approaches, and a shift toward purpose-driven organization – are the key drivers pushing us beyond the hierarchical organizational paradigm. They are inspiring a community of forward-thinking organizations to explore better approaches.
Phase 2: A community experiments with new concepts
Following precisely the historical pattern of concept emergence, we see a community finding itself in search of solution. They do not form and then seek better options. Instead they individually start searching then find others working on similar challenges.
In the military, General Stanley McChrystal found that by reorganizing the tight, hierarchical structure of the Joint Special Operations Task Force into a “team of teams,” they became more effective at fighting agile, asymmetrical enemies. Despite the military’s advantages of size, equipment, and training, they were ineffective against Al Qaeda in Iraq. But he rethought his organization, breaking it into smaller, self-directed teams that could move more quickly, communicate more freely, and improvise. To coordinate those teams he organized each team as a member of an overarching team. He infused this organization with new communication that maintained a sense of “oneness.” The approach worked. His latest book, Team of Teams: New Rules of Engagement for a Complex World, is now being read by millions of corporate business leaders.
In business, Red Hat, the leading Open Source software company, has a long history of organizing communities of independent developers to collaboratively develop software. Red Hat has found that by applying the same principles to the leadership of its organization, it can ensure greater employee engagement, innovativeness, and, ultimately, better business outcomes. Written by their CEO Jim Whitehurst, The Open Organization: Igniting Passion and Performance is introducing their approach to thousands of other organizations.
Also in business we see companies like leading ecommerce retailer Zappos adopting the Holacracy model, which does away with hierarchical roles and titles. Instead employees sign up to perform the jobs that need to be done to help the organization succeed. Their roles may change week to week. They may take on multiple roles at any given time.
Google’s Objectives and Key Results (OKR) model for defining employee jobs and objectives and setting key performance indicators is helping hundreds of other companies embrace similar open organizational models. Every quarter the company defines new OKRs. Then teams – human resources, marketing, product teams – set OKRs to support corporate ones. Then individuals set their own. They track results weekly so the entire organization can self-organize around a common set of priorities.
These different but related concepts are working. Those adopting them are excelling where traditional organizations fall behind. They ignite passion, improve agility, and lead to better organizational outcomes.
Phase 3: Finding a concept that works
These and other similar concepts – there are many – currently exist in pockets. But they are starting to come together. What the emerging concept will be called we cannot yet predict. But the concept emergence pattern says that eventually one, common name will take hold. Then the global community will start experimenting with the new concept.
What is undeniable, however, is that the intrapreneur – the employee empowered to seek opportunities, impassioned to pursue them, freed to create new approaches, and listened-to enough to have their ideas embraced – sits at the center of this new organizational model. The intrapreneur will be at the heart of the organization of the future.
Phase 4: The new concept is rejected, incorporated, or replaces existing concepts
Given the success companies adopting the new organizational concept are having and the immense discontent that exists with the results of the hierarchical model, we think the open/team-of-teams model is bound to take hold.
“Governments want efficient technicians, not human beings, because human beings become dangerous to governments – and to organized religions as well. That is why governments and religious organizations seek to control education.”
– Jiddu Krishnamurti, Education and the Significance of Life