Events

The second layer of our Model for Responsiveness is DISTRIBUTED AUTHORITY. Our research indicates that responsive organizations empower employees to make decisions affecting their work, which enables collaboration and effective responses to market needs.

In this roundtable, we gathered a diverse group of global leaders for a discussion around the second layer in the Responsive Organization model.

Figure 1: A Model for Responsivity | Source: RedThread Research, 2020.

Distributed Authority happens when organizations change the way their authority structures work. Instead of holding decision-making centrally (as most organization in the last 100 years are apt to do), authority to make decisions is spread throughout the organization, in all functions, and in all levels. Responsive organizations understand that, in order to respond to external pressures, people at the edges of the organization are often better equipped to make educated decisions about how to get things done.

3 areas of distributed authority

Figure 2: Behaviors for Building Distributed Authority | Source: RedThread Research, 2020.

Distributed authority mindmap

Distributed authority roundtable video recap

Roundtable summary & leader advice

In the following sections, we expound on these 3 areas and highlight the good advice we heard at the roundtable.

Decision-making rights

Decision-making rights is the control employees have about how they execute their role or their responsibilities. We found that decision-making rights vary greatly by organization, manager, level, and sometimes even industry.

Advice from leaders:

• Defer to expertise, not title. During crisis, there is often an unconscious “because I said so” attitude from managers. We get it. Lots of people feel powerless and are looking to salvage some sense of order. However, one of the best pieces of advice shared was that organizations should default to expertise, not title. Let the person with the most information make the decision on the thing.
• Implement decision-making logs. One leader said that her senior leaders (C-suite) had instituted a process wherein they published the decisions they made and the reasons for those decisions. We like this idea for a couple of reasons. First, it establishes a level of transparency that we think is healthy during a crisis and helps everyone become comfortable with those decisions. Secondly, it’s an excellent learning tool. Not only are the decisions public, but the reasons why those decisions were made are also public, teaching employees the subtle art of decision-making.
• Throw out the 9-5. We have mentioned this in previous roundtable readouts, but it bears repeating. The world has gone mad. Employees are dealing with children and/or parents, lack of schedule, feelings of isolation, and a host of other challenges. This is an excellent opportunity for organizations to determine what’s important and what is not. Is it important that an employee is sitting at their desk and available for 8 hours straight everyday? Are the processes that have been followed for years really necessary? Or is the fact that work is actually getting done and deadlines are being met more important?

Diverse & engaged teams

The power of diverse thinking and inclusivity has been well-documented over the years, and not surprisingly, our responsive organization research backs that up. We know that organizations with diverse thought and inclusive behaviors do better – from higher engagement scores to more innovation – than their less inclusive-minded counterparts. We also know that diverse thought and inclusive behavior leads to more responsive organizations – allow them to react more quickly to external threats and opportunities.

Advice from leaders:

• Take advantage of the sense of humanness happening right now. Leaders mentioned that there is now more inclusivity and shared responsibility to carry the load and help each other out. Some leaders mentioned they had seen teams pull in people who are relevant, but not central, to disperse feelings of isolation. They also mentioned the need of leaders to be open and vulnerable about what they didn’t know so that others felt safe to do so as well.
• Leaders, create opportunities for contribution. Leaders mentioned ideas to help employees feel included – particularly those who may be more introverted and less likely to speak up. Ideas included: sending detailed agendas, complete with challenges to be discussed and decisions to be made, so that everyone had an opportunity to think about how they could contribute; being aware of those not actively participating in discussions, and encouraging them, either with back channel communication, or gentle verbal prompts, to share their ideas; establishing that there are no bad ideas; emphasizing that we’re all in this together and working to solve the same challenges.
• Make decisions together. As fairly radical changes are being made to structure, work environment, communication patterns, and work itself, leaders in the roundtable encouraged other leaders to make as many decisions as possible together as teams. Things such as asking for agenda items, asking for input on meeting cadence, duration, ideas for getting the work done, and the like, can go a long way to build trust and buy in.
• Understand nuances in team engagement. With the large number of people working remotely, it’s worth paying attention to how teams are maintaining their engagement at this time. As such, it’s important that leaders maintain an open mind to varying levels of engagement that may point to different needs across teams. So in addition to providing resources to individual people, organizations should consider providing resources to teams like promoting frequent check-ins, managing collective anxiety, and showing empathy toward one another.
• Scale up tools. To keep a close pulse on engagement, leaders in our roundtable mentioned that organizations need to amplify and scale up tools, especially for middle-managers so they can understand team engagement real-time. We heard that this is a particular area of opportunity, especially for the healthcare industry because it tends to lag behind in engagement tools and resources at the mid-management level.

Collaboration

Organizations that distribute authority get more Collaboration (and should encourage it). More minds are better than one – and organizations are able to gather insights across different areas or business functions when authority is distributed.

Cross-functional teams are enabled to solve challenges or take advantage of opportunities at the edge of the organization rather than waiting for central decision-makers to either notice the challenge or prioritize it. Collaboration also builds employee networks, which in turn increases the flow of knowledge around the organization, allowing employees more ready access to expertise.

Advice from leaders:

• Be clear on expectations. Distributed authority does not mean that organizations operate in chaos. Organizations should be clear on expectations and desired outcomes. For teams, either formal or informal, expectations can act as a unifying force that help to foster communication and break down barriers
• Look for stumbling blocks. As organizations have focused on efficiency and productivity over the past 100 years, they’ve also standardized ways of doing things that often stand in the way of collaboration. To enable employees to exercise their authority, organizations should look for those things that may keep employees from sharing information with each other and helping each other on projects.
• Embrace self-driven teams. Allowing greater fluidity in how teams operate may help address some of the current engagement challenges people face today. For example, people in autonomous or self-driven teams can volunteer to combine different skills or talents to address a particular immediate need and maximize their impact. They can also exercise autonomy as a team by deciding priorities to work on each day and how they will divvy up tasks to accomplish them.
• Think in terms of MVP deliverables. A minimum viable product (MVP) or deliverable is a version of the deliverable that allows a team to collect the maximum amount of value with the least amount of effort. Particularly now, organizations can begin to think in terms of MVP and consistent iteration instead of holding a deliverable until it is nigh on perfect. This encourages innovation and collaboration, but also helps employees focus on what is value-add.
• Default to the strategy. In helping employees determine what’s important, consistently reiterate the end goal or strategy. Ask them to ask themselves, “how is what I’m doing related to the end goal or strategy?”
• Stand up meetings. While many teams are not currently collocated, one leader said that they still have a daily standup meeting. The meeting allows all members to check in with each other, to raise questions or concerns, and to state what they will be working on. This requires each team member to come to that meeting already having thought about the value-add activities they would be accomplishing during the day. It was also a nice opportunity to connect on a human level.
• Focus internally. A few leaders mentioned that they are using this time to actively work on their internal structures and norms. Employees and managers are finding internal projects that have been on the back burner for years, but once complete, will increase the abilities of the organization. Thus, not all value-add activities should be externally focused; sometimes the best thing employees can focus on are internal.

To sum up

Overall, our roundtable conversations acknowledged the important role that distributing decision-making has on enabling the organization to effectively and efficiently respond to external needs.  There was also a sense of urgency around the need for greater clarity, communication, and expectations around decisions, especially within the current remote working context.

A special thanks for all the leaders who joined our second roundtable. Thank you for your willingness to share ideas and insights – it makes our research that much better!

The foundational lens of our Model for Responsiveness? RESPECT. Our research shows that organizations that have any intention of effectively responding to their external environments must start with respect of their employees.

Figure 1: Model for Responsiveness | Source: RedThread Research, 2020.

This week, we took the opportunity to gather several leaders together in an interactive roundtable and brainstorming session around RESPECT for employees and the 3 features of employee respect, as shown in Figure 2 below.

3 Areas of Respect for Employees

Figure 2: 3 Areas of Respect for Employees | Source: RedThread Research, 2020.

This leader roundtable addressed each of these 3 areas in the context of two main questions: 1) What are your respective companies doing in these areas? and 2) What are your ideas for doing this better?

This discussion was particularly interesting given the current context: our organizations are faced with the need to radically change internal processes and norms to react to unprecedented change in their marketplaces. Most urgently, companies are ramping employees to work effectively from home; more long-term, companies are considering cashflow and product viability, and making people adjustments to accommodate. Below is a mindmap representing the roundtable discussions.

Responsive org roundtable #1: Respect mindmap

Source: RedThread Research, 2020

For a brief summary of the roundtable and the 3 aspects of a Respectful culture, watch the video below.

Respect roundtable recap

In the following sections, we expound on these 3 areas and highlight the good advice we heard at the roundtable.

Psychological safety

One of the most powerful themes, directly addressed in the psychological safety discussion but permeating all other discussions as well, was the need for organizations to create a psychologically safe place – to view employees as thinking, feeling humans and ensure their well-being.

In times such as these, mistakes will be made and failures will happen. A psychologically safe place acknowledges these mistakes and failures respectfully, without compromising employees’ self respect or jeopardizing their careers.

Advice from leaders:

• Personal huddles. Quick, concise, personal check ins – not about the work, but about the person. One leader suggested two questions leaders can ask: 1) How stressed are you? and 2) What help do you need?
• Increased leadership connection. Leaders should be connecting more with employees to understand needs and provide direction. Suggestions included more regular pulse engagement surveys (instead of the yearly, or bi-yearly versions), direct contact with employees that may be struggling, regular check-ins and communication with staff, and follow-up with support for information gathered through surveys and check ins.
• Leadership responsibility. Managers and leaders set the tone; if organizations are striving for an open, safe, place for employees, it is the managers and leaders who must model the behaviors they expect.

Autonomy

Autonomy & Respect from Leaders showed up in the data together. We think this is because they often go hand in hand: managers who allow more autonomy  among employees tend to respect them more, and vice versa.

Autonomy means that organizations give employees control over the day-to-day operations of their roles. They recognize and honor employees' abilities to use their unique skills and knowledge to problem-solve.

Advice from leaders:

• Address failure carefully. Employees are paying careful attention to how leaders react to failure. Will leaders continue to encourage intelligent risk-taking and learning from mistakes, or will they buckle down and discourage it? Our roundtable discussion encouraged leaders to share failure stories (including their own) and learn jointly from things that didn’t go quite as planned.
• Experimentation. Organizations can use the current chaos (nothing is working the same way it did) for experimentation because everything is up in the air. There may be antiquated systems, processes, technologies, or even products that need to be rethought. Now is the time. Organizations should use this time to develop an experimentation muscle to deal with uncertainty and change.
• Post-crisis team. One leader suggested the idea of putting together a team dedicated to identifying positive changes made during this time and finding ways to institutionalize them. While there is a strong desire to return to “normal,” now is a good time to determine what, if anything, about the “normal” wasn’t good, and retool it.
• Collaborate with employees. During this time when everything is up in the air, one leader said he noticed more collaboration between managers and employees. Instead of, “Do this!” it was, “What can we do in this circumstance?”
• Focus on well-being. Leaders also noted that more time was being spent on personal conversations. Managers were asking after employees and their families more, and carving out more time during the week to spend some time together as humans, not just coworkers. Managers were also more understanding (because we’re all in this together…) about screaming children, aging parents, barking dogs, and strange haircuts.
• Equip managers. One leader mentioned that he would like to see more help for managers – and not just traditional training. Coaching and mentoring, job helps, data, and feedback can both set expectations for what we expect from managers, but also alleviate some of the pressure they’re currently feeling. One leader also suggested creating networked leaders so that they can share information with each other and hold each other accountable for the types of leaders they want to be.

Bottoms up information

Finally, organizations show respect to employees by providing ways to get information to them, but probably more importantly, gather information from them. This shows up in two main ways.

First, through feedback loops. Feedback loops ensure that employees have the information they need to do their jobs as well as information about how they’re performing those jobs. Feedback loops ensure that everyone is on the same page and working in the same direction. One leader noted that organizations often default to being “nice,” or not sharing necessary information because it’s not polite, when in actuality, keeping that information from employees shows a lack of respect for them as humans and as employees.

Second, organizations also show respect to employees, their knowledge, and their skills by soliciting their perspectives. Employees at the edges of the organization, or with deep knowledge in certain areas often identify needed changes before those more centrally located. Established norms for gathering and sharing that information enables organizations to move more quickly as a whole.

Advice from leaders:

• Use OKRs and goals as feedback mechanisms. Organizations that have moved from yearly goal discussions to more frequent check-ins can and should leverage these discussions to make sure that everyone has the information they need. This ensures that goals don’t get lost at lower levels and established a process and norm for feedback that is often less threatening and more collaborative.
• Use tools such as retrospectives. Many leaders mentioned that feedback an/or perspective sharing doesn’t happen because there are not mechanisms in place. A retrospective is an exercise wherein a team gets together to discuss what went well, what didn’t go well, and what needs to change. This can be used at the end of a project, at certain milestones within a project, or even at regular intervals. A retrospectives normalizes feedback and perspectives and eliminates the need for blaming. It also promotes teamwork. (Incidentally, we used a retrospective at the end of our last roundtable to make the next one even better.)
• Model behaviors. This has been mentioned in previous areas we have discussed, but it bears mentioning again. Feedback and perspective-sharing often doesn’t happen unless it is modeled by leaders. Some suggestions for modeling from the roundtable included: clearly setting expectations and holding managers responsible for feedback / perspective sharing; inviting senior leaders (CEO) to be transparent on where the company is during a crisis and inviting questions / suggestions; and providing coaching job aids that give managers key information about how to give feedback.

To sum up

In all, roundtable conversations were much more optimistic than pessimistic. Yes, the current situation is throwing all that we know and are comfortable with out the window, and we are all feeling our way through this. But, as these leaders pointed out, this is a perfect opportunity to make changes that will positively affect the organization internally, as well as help it compete more effectively externally.

A special thanks to all of the leaders who participated in this interactive roundtable. Thank you for your willingness to share your experiences and insights – it makes the research that much better!

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.

It feels like every time we turn around another post, article, video, or report is discussing the changing nature of, well … everything. We’re constantly inundated with information showing the dynamic and ever-evolving world in which we live and work.

Rethinking How We Do Business: Responsivity

In previous times – when organizations could reasonably predict their environment for the foreseeable future – it was easier to set a course of action and revisit the plan every 3 or 5 years. That no longer works today. Businesses must now find a way to adapt and to change in ways that don’t become obsolete in the same amount of time it took to strategize about those changes.

So, what kind of organization will survive in the future?

Our prediction – the responsive organization.

But what exactly is a responsive organization and what steps can organizations take now to be more responsive?

Our current (working) definition of a responsive organization is:

An organization that identifies change, determines trends, and responds in ways that turns change and disruption into a distinct organizational advantage.

To begin understanding these organizations in more detail, we looked at more than 50 academic and business articles, reports, and books for this literature review.

What we saw

It may not come as a surprise that academic literature isn't flooded with research on the concept of “responsive organizations.” However, the concept has loosely been described throughout popular press and the foundational ideas have been rigorously studied. We looked at any concept we thought would help us uncover what makes an organization responsive (i.e., agility, decision-making, engagement, motivation, rewards, learning, empowerment, technology, performance management).

In reviewing the literature, we uncovered 5 themes of responsive organizations:

• Structure is still needed, but rigidity won’t work
• Authority and power can’t be held by the few
• Empowerment leads to chaos if learning is lacking
• The human element is a distinct advantage, now more than ever
• Technology has an increasing role as a supporting actor

Structure is still needed, but rigidity won’t work

There's a general agreement that traditional hierarchical structures are barriers for organizations wanting to be more responsive. These organizational structures were set up to address efficiency – as though humans would always just make widgets on an assembly line. However, work is no longer done in a linear manner and efficiency limits responsivity – to customers, changing market conditions, new technology, etc. The modern world of work requires a network of individuals and teams that balances stability and flexibility.

More specifically, responsive organizations remove layers – opting for flat, more networked, team-based structures. Working in a network enables businesses to organize around what matters most (i.e., specific challenges, products, knowledge, customers, markets) and to remove traditional notions of control and authority. Yes, there are some decisions that should be made by leaders and within a centralized structure but, by in large, there's a lot more opportunity for the employees who are doing the work on the frontlines to identify problems and take action on solutions.

Regardless of the actual structure, the key point is that old models which primarily emphasize command-and-control operations will become increasingly less effective in the future. Instead, organizations have to provide enough structure to direct work but be flexible enough to evolve in real-time. This idea of flexible, network-based organizational structure is central to the idea of the responsive organization.

Authority & power can’t be held by the few

One of the key benefits of more network-based, flexible structures is the ability to facilitate decentralized decision-making and shared leadership. In traditional models, authority is held by the few and decisions trickle down to workers lower in the hierarchy in a (slow) process. Responsive organizations recognize that power can no longer be held just by the few and embrace the idea of shared leadership. Power – the authority to make decisions and to act on behalf of the organization – has to be pushed down to the people closest to the challenges being solved.

Responsive organizations trust their employees and provide the psychological safety necessary for employees to know they won’t be punished if they act – in good faith – on behalf of the organization. This is critical. Evidence suggests that, when employees feel trusted, it positively impacts performance and these employees are more likely to make extra effort outside of their role.²

Decentralized decision-making and sharing authority are more than simply telling employees they can make their own decisions. Responsive organizations create cultures that value entrepreneurialism and encourage – even reward – employees for coming up with solutions.

“The need for organizational sharing of information, decision making and responsibility among project team members requires a new paradigm of how data and personal relationships will flow.”³

All that said, responsive organizations also understand that strong organizational norms, articulated accountability, and organizational controls are still needed. These set boundaries for employees and help them interpret shared authority through the same lens – ensuring that employees know when leadership needs to be involved.

Empowerment leads to chaos if learning is lacking

Traditional command-and-control models can impede how quickly individuals identify and address skill gaps. When individuals have little insight on strategy and no authority to make decisions, in real-time, they're simply doing a job. They’re not as often confronted with the reality of what’s needed next for them to be able to succeed.

On the other hand, responsive organizations are pushing individuals to operate in roles not easily defined. They're giving employees insights on the vision, strategy, and goals of the organization so employees can better respond to customers. But to respond effectively to customers, employees need to have the skills, capabilities, and knowledge necessary to meet customers’ existing and future needs. This requires employees to be continuously learning both the skills they need to perform today and those necessary to prepare for the future.

Unfortunately, our recent research suggests that a majority of organizations are falling short in helping employees learn and prepare for the future. Less than 50% of organizations are providing an environment to facilitate information-sharing, encouraging continuous learning, or helping employees identify what's needed for future success (see Figure 1).

Figure 1. Developing and Preparing Employees for the Future | Source: RedThread Research, 2019.

Employees in responsive organizations are constantly faced with the reality of their own limitations and must work quickly to address these. This requires responsive organizations to place learning and development (L&D) at a premium for 2 reasons:

1. Giving employees the power and authority to act on behalf of the organization and to take charge of problem-solving is great, unless they don’t have the necessary skills and abilities to actually do this.
2. Expecting individuals to operate in roles, not jobs, means they need to also identify where the skill or knowledge gaps are among the team and find a way to fill those.

Responsive organizations are also learning organizations that push individuals to continuously build upon their capabilities and teach employees how to learn.

The human element is a distinct advantage – now more than ever

It would be great if we could read the “Responsive Organization Playbook” and see a few chapters on structure, authority and decision-making rights, and L&D, and call it a day. But the truth is, there’s a human element in responsive organizations that is often overlooked when reading up on organizational agility (a term similar to and highly related to responsive organizations).

Responsive organizations balance profit with purpose.⁴ Sure, organizations have to make profit to survive, but “rather than viewing profit as the primary goal of an organization, progressive leaders see profit as a byproduct of success.⁵” That means, responsive organizations are clearly attuned to the human side of their organization – creating 2-way channels of communication to understand their talent beyond the profit they provide.

This enables responsive organizations to create cultures that are intrinsically motivating⁶ – creating an employee experience that minimizes control and micromanagement, and increases individual agency and competence. These cultures recognize and reward progress, not just goal attainment.

Technology’s role as a supporting actor

The sheer volume and speed of information coming into and out of organizations necessitates the use of technology. In fact, many of the articles we read highlight a need for organizations to leverage technology to capture and interpret data both within the organization and external to the organization. This is especially true for responsive organizations. Next-generation technology has to be embraced by the organizations of the future.⁷

This doesn't mean that technology should be seen as something which will come in and disrupt the human element of the workforce. In fact, responsive organizations will need to identify the unique attributes that humans bring to the workforce and leverage technology in a way which enables people to do deeper, more creative work.

Just as responsive organizations need to create flexible, networked, and agile structures – they also need to invest in technologies, systems, and tools that will evolve with them. More importantly, disparate technologies have to be able to seamlessly integrate with each other. Employees are tired of leaving one system to manually enter data into another system about what they just completed in the first system. Unfortunately, this is the reality in many organizations – technologies aren’t integrated with each other and many don’t fit into the flow of work.

The truth is, there are a lot of great technologies out there, and many solutions are trying to provide seamless integration in the flow of work. But we aren’t sure we’re quite there – yet. This suggests to us that responsive organizations may need to think differently about their technological architecture and use a buy-and-build approach to ensure they're arming their people with access to the right information, at the right time, and in the right way.

What caught our attention

Of the literature we reviewed, several pieces stood out to us. Each of the pieces below contained information that we found useful and / or intriguing. We learned from their perspectives and encourage you to do the same.

The Operating Model That’s Eating the World

Aaron Dignan

“These companies are lean, mean, learning machines. They have an intense bias to action and a tolerance for risk … They are obsessed with company culture and top tier talent, with an emphasis on employees that can imagine, build, and test their own ideas. They are driven by a purpose greater than profit….”

Highlights:

• Discusses the responsive organization from 5 key components, including purpose, process, people, products, and platforms
• Highlights the shift in each component of the responsive organization
• Gives an example of an organization that has made the appropriate shift in each area

This article gets us excited about the responsive organization of the future. It gives a simple overview of the components of the organization that need to be reimagined and calls out the organizations that have made shifts in these areas.

The Future of Organizations is Responsive

Mike Arauz

“This difference – between optimizing for certainty vs. optimizing for uncertainty – is at the core of what separates successful organizations from everyone else.”

Highlights:

• Illustrates that organizations are thriving – and will continue to – because they are responding to disruption by creating new ways of working
• Argues that traditional structures impede resource availability
• Suggests that responsive organizations optimize for uncertainty, rather than certainty

This video presentation (slides and transcription provided) illustrates why work isn’t working anymore and provides a compelling argument for organizations that embrace uncertainty. In addition, the presentation highlights where technology is best-suited to support organizations and where the qualities unique to human (creativity, collaboration, etc.) should be leveraged.

Elements of a Responsive Organization

Dean Kimpton

“The idea of placing purpose before profit, is not about blind altruism, but attracting the interest of people.”

Highlights:

• Gives a short review of the ideas central to responsive organizations
• Discusses the potential upside in risk and failure
• Outlines the link between engagement and responsiveness

This quick read offers a fast skim of what makes an organization responsive and outlines a few reasons why. It also highlights what organizations should consider when trying to measure responsiveness.

The Four Intrinsic Rewards that Drive Employee Engagement

Kenneth Thomas

“ requires workers to make a judgment – about the meaningfulness of their purpose, the degree of choice they have for doing things the right way, the competence of their performance, and the actual progress being made toward fulfilling the purpose.”

Highlights:

• Argues that intrinsic motivation is essential when workers are asked to self-manage
• Highlights the factors involved in whether a worker is likely to experience intrinsic motivation
• Discusses each fact in the context of how organizations can create a high-engagement culture

This article provides an overview of current thinking about intrinsic motivation. It highlights the 4 components that help individuals determine whether they are intrinsically motivated, including meaningful purpose, choice, competent performance, and progress toward purpose. It also provides 7 recommendations for how to build a more intrinsically rewarding environment to boost engagement.

The Darkside of Transparency

Julian Birkinshaw and Dan Cable / McKinsey & Company

“We’re getting used to transparency in our lives … But transparency can also cause pain without much gain.”

Highlights:

• Summarizes the potential benefits of transparency within organizations, but cautions where this can go awry
• Suggests there are certain times and internal practices that shouldn't be open to radical transparency
• Discusses the role of transparency in daily activities, employee rewards, and creative work

There's an increased discussion around sharing information and pushing it down to the right levels. With that discussion comes the debate around transparency. This article highlights that debate, suggesting there might be times when privacy wins out over radical transparency.

Overall impressions

When we started this research, we weren’t sure what we’d find. To be honest, there isn’t a lot of information outside of the popular press to help organizations understand what the idea means. It’s still a bit of a muddy concept, and we had to get creative about the avenues we took to research topics that supported this concept. However, in taking a step back, we see that yes, it is a thing – a real thing that’s more than just organizational agility.

Responsivity requires organizations to:

• Rethink how they're structured
• Invest substantially in learning
• Give up control, and push leadership and decision-making down
• Embrace technology
• Rethink the importance of the qualities unique to the human-side of their enterprise

Additional readings

1. "Responsive Organization Practices: Lessons from Pepisco, AirBNB, and Charity: Water," Responsive Organization Practices – Responsive Org – Medium, Seidman, D., 2018.
2. "Adaptability: The New Competitive Advantage," Harvard Business Review, Reeve, M. and Deimler, M., 2011.
3. "Linking Empowering Leadership and Employee Creativity: The Influence of Psychological Empowerment, Intrinsic Motivation, and Creative Process Engagement,” Academy of Management Journal, Zhang, X. and Bartol, K.M., 2010.
4. "Knowledge Sharing in Teams: Social Capital, Extrinsic Incentives, and Team Innovation," Group & Organization Management, Hu, L. and Randel, A.E., 2014.
5. "The 5 Trademarks of Agile Organizations," McKinsey & Co., the McKinsey Agile Tribe, 2017.

Why we care:

Organizations, and the employees within them, are often compared to machines: leaders give employees a task, tell them to execute it, and approve any deviations. While this approach can work well for creating large efficiencies on clear tasks, it fails in times of massive and rapid change and complexity. We are now in one of those times.

We think it is time for an alternative approach – one that rethinks how we design organizations’ systems, processes, and measures to enable the entire organization to be more responsive.
This has been an ongoing conversation at RedThread for over a year and a half. Thankfully, the good folks at Glint agree with us, and have been kind enough to sponsor this research on understanding and creating a “Responsive Organization.”

Hypothesis:

Our hypothesis for this study is fairly simple:

The world has changed and requires a different kind of organization. Those that focus on being responsive – not just efficient – adjust better to external market pressures, which results in a competitive advantage.

What got us here won’t get us there

For at least the past 100 years, the corporate world has heavily focused on efficiency – and that has driven everything from the way we measure success to how we structure our organizations. And while a focus on efficiency has led to some excellent gains in productivity in the last century, signs point to the fact that it’s no longer enough. Specifically, as you can see in Figure 1, the last decade has experienced a much slower rate of productivity growth (which is essentially a measure of efficiency), than the two decades before it.

Figure 1: Multi-factor productivity, 1987-2018 | Source: Department of Labor, Bureau of Labor Statistics

Why are we seeing this flattening? There are a significant number of potential reasons, but we believe that at least part of the problem is that we may be reaching the limit of efficiency. It is impossible to make a machine or system infinitely efficient; at some point, the effort required to make something more efficient is greater than the resulting benefits from the efficiency. At that point, a fundamentally new system is necessary to improve efficiency gains. Let’s use a second industrial revolution example: people can only weave textiles so quickly, no matter how hard they worked and how efficiently they moved. At some point, the only way to do this more quickly was to use a sewing machine.

Here in the fourth industrial revolution, we believe we are at this point where we have to fundamentally rethink how we conduct business to adapt to the fast-moving, technology-saturated world in which we all work. Our organizations need to become more responsive to all that change. However, to do it, we will have to change organizational structures, measures, and practices that were designed for efficiency, but not responsiveness.

Technology alone won’t solve our problems

We recently read a pretty interesting (and disturbing) study done by Korn Ferry that indicated that CEOs are so enamored with technology that they see it as a larger source of competitive advantage than their own people. Other disturbing statistics from that study are shown below:

Figure 2: CEOs think that technology, not people, will create most value in the future | Source: Korn Ferry CEO survey, 2016.

Of particular concern, is the last finding – that 44% of CEOs say the prevalence of robotics, automation, and AI will make people “largely irrelevant” in the future. While some of the technologies that are becoming embedded in our daily lives seem amazingly “smart,” they have limitations. For example, Jonathan Zittrain in The New Yorker shares the following point:

Consider image recognition. Ten years ago, computers couldn’t easily identify objects in photos. Today, image search engines, like so many of the systems we interact with on a day-to-day basis, are based on extraordinarily capable machine-learning models. Google’s image search relies on a neural network called Inception. In 2017, M.I.T.’s LabSix—a research group of undergraduate and graduate students—succeeded in altering the pixels of a photograph of a cat so that, although it looked like a cat to human eyes, Inception became 99.99-per-cent sure it had been given a photograph of guacamole… Inception, of course, can’t explain what features led it to conclude that a cat is a cat; as a result, there’s no easy way to predict how it might fail when presented with specially crafted or corrupted data. Such a system is likely to have unknown gaps in its accuracy that amount to vulnerabilities for a smart and determined attacker.

While we certainly believe in the power of technology, we cannot lose the human aspect of work. People are the ones who design the systems in which we all live – and are the ones who can do the deep thinking to identify when we need to build different and better ones.

A fundamental re-think on how we measure and manage

As organizations realize the benefits of moving away from a focus solely on efficiency, we think they will begin to rethink their organizational structures. This will lead to changes in the following (at a minimum):

• Communication channels – Individuals at lower levels will have data and information they need to react to needs “on the ground.”
• Power structures – Decision-making will be more decentralized.
• Employee development – More autonomy and continuous development will ensure that employees have the skills and knowledge needed.
• Metrics – Measurements of efficiency will begin to give way to other types of productivity metrics that focus more on innovation, agility, and responsiveness.

These changes will have profound implications for organizations’ people practices and require different types of leaders than in the past.

This Project:

With this study, we want to gain an understanding of the characteristics that make organizations better able to respond to their markets. In our initial discussions, several themes have emerged that will serve as the basis for the research: