Posted by Josh Bersin on January 16, 2018.
Why is “agile” organization design so important in 2018? Companies are only a few years into a decades-long shift away from corporate hierarchy into a world of “company as a network.” Embracing the idea of “team at the center” and building “squads and tribes” that help keep teams aligned is a profound and different model than the one many companies use today to manage people.
Designing an agile organization
The enormous topic of “agile organization design” will start to become more common in 2018. Some companies started thinking about “self-organizing teams” three years ago. Zappos talked about “holacracy” and its efforts to do away with management,1 while ING Bank in the Netherlands looked at the potential to apply the disciplines of agile across its business.2
Today, the idea of an agile organization model has arrived. Deloitte’s latest research shows that “redesigning our organization to be more digital and responsive” is now the #1 human capital trend around the world (59 percent of companies rate this as “urgent”).3 Companies are now embracing this model with real results. So what’s going on?
- First, almost every company is trying to “become digital.” This means not only creating digital customer experiences but also reorganizing the company to deliver digital services, continuous improvements in digital apps, and a series of “microservices” that let consumers and customers interact with a company’s products anytime with no friction.This trend, which Deloitte’s research with MIT4 shows is affecting almost 80 percent of all businesses, forces leaders to redesign their companies from functional hierarchies to structures based on agile teams. Pioneering companies such as Cisco, ING, W. L. Gore, Spotify, and others, as well as most software and consulting firms, now operate this way.
- Second, this change will impact nearly every talent, leadership, and HR practice. In an organization that functions as a network, managers lead projects, not just people. People lend their skills to multiple teams. Teams are often cross-functional, and they must have an easy way to form and change over time.Consider some of the practices shown in the figure below. This shift will have an impact on job design, recruiting, goal-setting, careers, rewards, culture, and the role of management. Topics such as continuous performance management, digital learning, and 21st-century careers are all being driven by this change—a fundamental and perhaps existential shift in the way companies operate. Consider some of the practices in Figure 1. This shift will have an impact on job design, recruiting, goal-setting, careers, rewards, culture, and the role of management. Topics such as continuous performance management, digital learning, and 21st-century careers are all being driven by this change—a fundamental and perhaps existential shift in the way companies operate.
- Third, this shift is opening the door to a whole new industry of software and tools designed to improve productivity. We now need standard tools for team-based performance management, goal-sharing, team feedback, project management, and of course messaging and collaboration. As vendors such as Atlassian, Facebook, Google, Microsoft, Slack, and others further enrich their team management tools, a new set of leading practices is needed to help form, manage, measure, and optimize teams.
What does this mean for HR leaders? It’s time to rethink career and talent models according to the principles in Figure 1. How ready are you to attract, manage, and grow people in a network, rather than a hierarchy? Are your career models, performance management practices, leadership models, and reward systems ready? Quite possibly not, but 2018 is the time to start rethinking them.
Three years later, ING Bank, for example, has put an agile organization model in action, and it’s working well for them.5 Companies that redesign themselves around teams and networks—and create new roles such as “agile coach,” “sponsor,” and “career advisor”—can have a transformational impact on their business.
Every day from January 16 through January 26, Bersin will be sharing perspectives on the most timely, relevant, and interesting developments for HR professionals to watch in 2018. Check back every day, or visit bersin.com on January 29 for a consolidated report with all of the predictions.
1 “Holacracy and Self-Organization,” Zappos Insights, 2017, www.zapposinsights.com/about/holacracy
2 “ING’s agile transformation,” McKinsey.com / Deepak Mahadevan, January 2017, www.mckinsey.com/industries/financial-services/our-insights/ings-agile-transformation.
3 2017 Deloitte Global Human Capital Trends: Rewriting the rules for the digital age, Deloitte Consulting LLP and Deloitte University Press, 2017, https://www2.deloitte.com/us/en/pages/human-capital/articles/introduction-human-capital-trends.html.
4 Achieving Digital Maturity: Adapting Your Company to a Changing World, MIT Sloan Management Review, Deloitte Digital, and Deloitte University Press / Gerald C. Kane, Doug Palmer, Anh Nguyen Phillips, David Kiron, and Natasha Buckley, 2017, https://www2.deloitte.com/insights/us/en/focus/digital-maturity/digital-mindset-mit-smr-report.html.
5 “ING’s agile transformation,” McKinsey.com / Deepak Mahadevan, January 2017, www.mckinsey.com/industries/financial-services/our-insights/ings-agile-transformation.