So, things have changed

Not to overstate it, but within the space of three weeks, our entire reality has changed – personally and professionally. We are now social distancing, homeschooling our children, and hoarding toilet paper (you know who you are). But, as people leaders, we’re also trying to figure out how to enable entire workforces to work virtually, understand markets that have changed ridiculously fast, and deal with the financial repercussions of “doing the right thing.” It’s hard. And it’s a little bit scary.

The good news (if there is good news) is that many of the professional changes we're seeing were likely inevitable: changes in technology, the global nature of business, and evolving customer and employee needs had already set us down this path. Before the crisis, some organizations had begun to peer around the corner to the future, putting in place the strategy, infrastructure, and practices to respond to changing environments quickly.

So many others, though, kept talking about the need to respond to these things in the future, expecting that they’d have time to adjust. However, thanks to COVID-19, the future is here. And it's evenly distributed¹

Some organizations are recognizing the opportunity before us. In a recent webinar, HFS Research shared that 22% of their sample of 279 major enterprises indicated they were seeing emerging opportunities as a result of the crisis and are making appropriate investments (or actively responding to the situation). Only 16% said that they were hunkering down and planning to roll out cost-saving measures, and exactly 0% said that their business was in grave danger and that they were considering drastic immediate options to survive this.²

Figure 1: Changes to Business Decision-Making from COVID-19 | Source: HFS Research, 2020.

So how do you move toward a position of taking advantage of emerging opportunities? The first step is to understand what an organization that can respond quickly to change looks like.

For the last 6 months, we have been studying the idea of organizational responsiveness – or what makes organizations able to respond more quickly to their market and employees’ needs than others.

This research was originally due to publish in May 2020. However, as we've looked at the incredible efforts of organizations to respond to this new reality, we recognize that our model and some of our findings could create some coherence and provide some guidance for leaders trying to help employees right now.

What the research says

Six months of research, lots of literature reviewed, and several conversations with really smart people have provided a sound overview of what a responsive organization is, what characteristics they have, and how organizations should become more responsive. The following discussion is led by the following 4 questions.

• What is a responsive organization?
• What characteristics do responsive organizations have?
• A model for responsiveness: How do I prioritize as I build a responsive organization?
• How can I participate in the roundtables?

What is a responsive organization?

One of the most difficult parts of this study has been trying to understand and clearly articulate what a responsive organization is – defining the undefinable qualities that separate those organizations who can respond to their environments from the ones that are at their mercy. After scouring the literature and conducting a lot of interviews, we landed on the following definition for a responsive organization:

An organization that determines trends in their environment and responds to them in ways that turn possible disruption into a distinct organizational advantage.

Responsive organizations are not just those who are able to keep up with the market; they are defined by their ability to understand and use trends to move ahead of the market. Four quick examples from recent history:

• General Motors³ – For getting rid of unprofitable parts of the business so that they can focus on mobility – not just automobiles – broadening both their market and their innovation. (An example of this responsiveness on display at this moment is their quick turn to manufacturing ventilators within their electric vehicle manufacturing plant⁴.)
• Target⁵ – For recognizing and understanding the trend toward boutiques and creating cult brands inhouse to fight the big box store image and remain competitive.
• Netflix⁶ – For continuously pivoting as they recognized trends in the marketplace – from mailed DVDSs, to streaming movies, to partnerships with networks to stream content, and ultimately to becoming an award-winning studio of their own.
• Amazon⁷ – For seeing the potential in delivering items directly to one’s door versus leaving the house for them, and then creating large-scale efficiency by doing so.

In the cases of each of these organizations, they weren’t just lucky moves – they didn’t just happen into the right answer. They were able to recognize trends in the marketplace and capitalize on them. And in order to do that, they needed a people structure and philosophy that supported it.

What characteristics does a responsive organization have?

During our initial research, we searched, not just for good examples of responsive organizations, but also what those organizations have in common – the characteristics that they share. Through extensive literature reviews and many interviews, a set of characteristics emerged. Figure 2 outlines these characteristics and provides a company example of each.

Characteristic	Explanation	Example Company
Decentralized structure	Decentralized structures allow the organization’s various divisions and business units to react to the environments in which they find themselves instead of relying on central control to react to ‘average’ environments.	W.L. Gore has long been held up as an example of decentralized structure. Traditional org charts found in most organizations are not found at Gore. Everyone has the right to talk to everyone else, providing the freedom the organization has needed to innovate in areas ranging from Gore-Tex to aerospace cable wiring assemblies.8
Team-based organization	Responsive organizations tend to leverage teams – both formal and informal – to react to internal and external conditions, and to share knowledge across the organization. Teams come together to solve problems, and then often dissolve and reform so that employees are constantly sharing what they know and applying that knowledge to solve new problems.	Cisco talks of making teams the source of insight and inquiry. Cisco allows teams to self-identify – recognizing both the formal and informal teams, and then offers team leaders development resources and information about how their team is working.9
Continuous learning & development	Responsive organizations tend to prioritize (read: invest) in continuous learning and development so that their workforces can gain needed knowledge and skills for a constantly changing environment. It often moves far beyond traditional learning events and instead embraces a culture of teaching each other, exploring beyond the walls of the organization, and trying new ideas.	Unilever takes continuous learning & development seriously, most recently introducing the idea of a talent network. Employees are asked to create “purpose statements” and share their skills (and desired skills) broadly. Using an ecosystem of learning, work, and people management technologies, employees become a part of the talent network – a system that finds projects that align to development goals as well as already developed skills.10
Openly shares information and data	Responsive organizations tend to be freer with information – meaning that not only do they intend to share information throughout the organization, but that they also put mechanisms into place in order to ensure that it happens.	Zendesk has a policy of radical candor amongst its employees, and regularly conducts root cause analysis to help their teams dig into problems. This practice is used in the moment of error. Instead of simply identifying and commenting on incorrect code or bring it up later (after it’s been fixed, the team stops, discusses why the code is incorrect, and how it happened in the first place. This practice creates a culture of sharing and openness and allows the organization to learn and respond together.11
Dispersed decision-making authority	Responsive organizations tend to be less hierarchical in their decision-making – allowing them to be made at lower levels, which speeds up work and helps organizations move more quickly.	Ritz Carlton empowers all of their Ladies and Gentlemen (what they call their employees) to solve guest problems to the tune of $2,000, per guest, per incident.12 This move disperses decision-making authority throughout the organization, making it more able to meet the needs and desires of their guests.
Tools to help employees do their best work	Responsive organizations tend to be early intelligent experimenters of technologies that help employees excel. Some of the more recent of these technologies includes AI, natural language processing, and blockchain.	Some of the experiments and implementations leaders we have spoken with are trying include: AI – for surfacing the best information for learning a specific thing Analytics – offering insights into personal behavior Natural language processing – using tech to “listen” in meetings and provide insights to leaders to make them more effective Nudges – offering timely, insightful data to improve personal interactions

Figure 2: Characteristics of Responsive Organizations | Source: RedThread Research, 2020.

We think it interesting that these 6 characteristics repeatedly surfaced in our discussions and in the literature. Much has been written about them individually; however, in our work, we see them as part of a holistic system that works together.

These patterns formed the basis of the survey questions we asked. From these 6 characteristics (which, again, were based on significant qualitative research), we formed a Responsivity Index that was then used to determine which actions taken by organizations contribute significantly to their ability to be responsive.

What's the model? How do I build a responsive organization?

Once we understood what a responsive organization was and the characteristics it had, we used the data to create a model of responsiveness, as shown in Figure 3. This model represents 4 layers that build on each other to create responsive organizations.

Figure 3: A Model for Responsiveness | Source: RedThread Research, 2020.

Why layers instead of levels? Good question, with two answers. First, as the model shows, the layers are transparent. Organizations, looking down through the top of the model, can see the impact of the lower layers on the higher layers. For example, it is difficult for an organization to be responsive at all without baseline respect. Respect is on the bottom of this model and affects all four layers.

Second, organizations that have made it to Layer 2 still have to focus on Layer 1. While our conversations with leaders indicated that there was a good deal of “systematization” that could occur to enable lower layers, people leaders still need to pay attention to those lower layers.

Interestingly, the data shows it's difficult, if not impossible, to jump layers. For example, most organizations aspire to be the type of organization its employees and the market trusts. However, to do so, the organization must also espouse respect, distribute authority, and have a culture of transparency and growth.

As with other models of this type, the more responsive an organization is (i.e., the higher the layer it has achieved), the more likely it is to:

Figure 4: Met or Exceeded Business Goals | Source: RedThread Research, 2020.

Figure 5: Very Highly Engaged Employees | Source: RedThread Research, 2020.

Figure 6: Responds Quickly to Changes in the Marketplace to a Very Great Extent | Source: RedThread Research, 2020.

Figure 7: Innovates Faster Than Competitors to a Very Great Extent | Source: RedThread Research, 2020.

Let’s briefly review each layer.

Layer 1: Respect

Interestingly, our data and interviews suggest that good old-fashioned respect is the foundation for all organization responsiveness. While this shouldn’t be surprising, it's a bit surprising how often respect is sidelined, particularly during times of crises. We are seeing this real-time with COVID-19. As organizations pivot in-office work arrangements to work-at-home arrangements, we’ve heard horror stories about organizations (and managers) who insist on detailed schedules and task lists at the start of each day, theoretically to ensure that employees are “on task” and not wasting company time.

This is not a new problem. In a Georgetown University survey of nearly 20,000 employees worldwide, respect was rated the most important leadership behavior. At the same time, though, employees report more disrespectful and uncivil behavior each year.¹³

Organizations looking to be more responsive to their market absolutely need to be an organization that espouses respect: from the organization to employee, from employee to employee, and importantly, from manager to employee.

Layer 2: Distributed authority

Layer 2 happens when organizations begin to change the way their authority structures work. During the first industrial revolution (and since, actually), there was a propensity toward efficiency. It's undoubtedly more efficient to make decisions centrally and have them roll throughout the organization flawlessly.

Unfortunately, that doesn’t work anymore. With diversified portfolios, different clients, and varying needs in business units, organizations need more flexibility. Like it or not, it's often quite inefficient to wait for a central authority to make a decision on something happening around the edges of the organization.

What’s more, this centralization likely stifles both agility and innovation. In her great book, Seeing Around Corners, Rita McGrath talks about innovation happening at the “edges of the organization.” In order to react to those changes at the edge of the organization and take advantage of opportunities there, organizations necessarily need to distribute authority much more widely than most of them currently do. According to our data, distributed authority at all levels helps with collaboration, and helps to eliminate busywork or nonvalue work.

Layer 3: Transparency & growth

Layer 3 describes the way organizations share information and encourage growth. A lot has been written lately on the importance of continuous learning & development, and it's become a buzzword in the employee development space. This has been enhanced with the ever-growing reskilling discussion: at least 54% of the population will need upskilling by 2022 (WEF), and 50% of them have concrete plans in order to do so (KPMG).

And, once again, this problem has been exacerbated by the current COVID-19 situation. Organizations, who frankly should have been looking at this all along, are suddenly faced with making sure leaders can lead, employees can work remotely, they are communicating as needed, and that employees are continuing to develop new skills – all in what was once considered “nontraditional” environments (they very well may become our new traditional environments).

Responsive organizations embrace the idea of growth. Particularly, they embrace the idea of growth outside of traditional channels. These organizations do not rely on classes and elearning courses to upskill their workforce; rather, they empower them to learn by doing, to fail safely, to understand which skills may be useful to them and to the organization in the future, and to give them honest data on how they’re performing.

The propensity for growth goes hand in hand with the dedication to transparency. Lack of information is basically ignorance. If employees need the best information to make the best decisions for your company – especially if you have distributed authority, ensuring transparency is crucial to responsiveness.

Layer 4: Trust

Layer 4 is Trust. Organizations with Layer 4 responsiveness have a community mindset. They have ceased to think in terms of “us” (management) and “them” (employees) and instead begin to focus on a “we’re all in this together” attitude – one that helps employees learn from their mistakes and invests in solving problems and learning together.

Obviously, a culture of trust can only exist with the three bottom layers in place. But a culture of trust goes beyond this and encompasses a sense of community. It is no longer enough to have a traditional employee value proposition – one where employees are paid and employers are paternal. At Layer 4, organizations move into an area where purpose and meaning take on more significance.

Responsive organizations – those that espouse purpose, and meaning, and community – work as a unit – an organism that responds along the edges and communicates back to the center. All employees are aware of the mission, vision, and purpose, and all trust that the organization – and other employees – are working together for that good.

1. William Gibson, an American-Canadian author, once famously said, “The future is already here, it’s just unevenly distributed.”.
2. HFS Research.
3. How GM went from a government bailout and bankruptcy to being one of the world’s best-run car companies a decade later, Business Insider, Matthew DeBord, October 20, 2018.
4. “Inside G.M.’s Race to Build Ventilators, Before Trump’s Attack,” Neal E. Boudette and Andrew Jacobs, New York Times, March 30, 2020.
5. Most Innovative Companies, Fast Company, 2019.
6. Agile at Scale, HBR, Darrell K. Rigby, Jeff Sutherland, Andy Noble.
7. Amazon at 25: The Story of a Giant, BBC, Danielle Palumbo July 5, 2019.
8. W.L. Gore: The company others tried and failed to imitate. Simon Caulkin, Financial Times. August 1, 2019.
9. How to bring out the best in teams. Andrew R. McIlvaine, Human Resource Executive, July 19,2019.
10. The Company as a talent network – Unilever and Schneider show the way. Josh Bersin, joshbersin.com August 30, 2019.
11. The Makings of Modern Performance. Stacia Garr, Dani Johnson, and Emily Sanders, RedThread Research, October 8, 2019.
12. The Power of Empowerment, Ritz Carlton Leadership Center. March 19, 2019.
13. Do your employees feel respected? Kristie Rogers, Harvard Business Review, July-August, 2019.