Cracking the Code: How to Identify Transformational Organizations

Most of our politicians run for office because they want to make a difference. I believe that. They're fed up with a system that doesn't seem to be working or they're just called to serve, bringing high-minded ideals and a sense of optimism to the campaign trail.

Once elected, though, they realize that their ability to effect change depends on staying in office, which means they'd better go raise money and they'd better vote their party line. If they don't, they'll be marginalized, primaried, and replaced. Next thing you know, they're complicit in perpetuating the very system they had hoped to transform.

Sadly, this isn't just the domain of politics. In far too many organizations and institutions, a dispiriting, dehumanizing system beats down well-intentioned people who fail to realize their potential. If you believe (as I do) that fulfillment comes from making progress on the journey between performance and potential, there's almost nothing sadder.

It will take transcendent, transformational leaders to re-shape these systems, but too often toxic cultures and broken systems stifle and re-shape potentially great leaders.

So how do we change this dynamic? Should we focus on leaders and leadership, hoping transformational individuals assemble enough leverage to reform our toxic systems? Or do we work to identify and promote great organizations with generative cultures that will allow transformational leaders to thrive and potentially produce such leaders at scale?

Not surprisingly, the answer is Yes. We need to do both. And while most of what I'm writing is focused on leaders and leadership, I'd like to call out the attributes of transformational organizations in the hopes that people (shareholders, employees, customers, leaders, donors) will vote with their feet and their purse strings.

Identifying those organizations, though, can prove quite challenging. Like the idealistic politician, no organization sets out to crush the spirt of its team members. And all organizations profess to do the right things.

In the late 1990s, McKinsey declared that we're all in a?War for Talent, positing that the future would be defined by organizations that assemble and build the most talented teams. They talked about purpose and development, and they highlighted one of the companies that would no doubt define the future. This company was "re-writing the rules" for how work gets done. Some 24 months later, Enron, the model company, was unraveling amidst hubris and scandal. They had apparently re-written a few too many rules.

With the benefit of hindsight, we can marvel at how anyone would have identified Enron as a paragon of virtue. When joining an organization or buying their products? or donating to their cause, we don't have the benefit of hindsight. Most organizations say the right things. Most organizations want to do right by their many stakeholders. But much like our political morass, most organizations fall prey to competing pressures and, despite good intentions, fall into transactional traps.

So how can we tease out the differences between those that talk the talk and those that walk the walk?

Here's what I've come to believe are the key areas of distinction for truly transformation organizations.

• Cause-Driven Mindset:?To be part of a transformational organization is to be part of a movement. There's a shared set of values and a commitment to doing something special. People feel like they're part of something bigger and expend discretionary effort. They're always building, always re-inventing. To an outsider, it can feel cultish at times, but team members don't care because the mission is that important.
• Wide-Boundary Results Orientation: All organizations have goals and organizations that survive achieve them more often that not. Transformational organizations, though, ensure those goals align with their purpose and have a longer-horizon in view. That doesn't mean they don't care about winning in the short-term. They very much do. But they realize that short-term winning is the oxygen required to fulfill their mission and play the infinite game.
• Generative Organizational Capabilities: Time and money express priorities. Transformational organizations prioritize competencies that bridge that gap between performance and potential. They do it formally with programs and initiatives, but they also nurture a culture where people focus on these competencies. If you're part of such an organization, it's hard not to get swept into the current of self development; it's hard not to be on a quest to bridge that gap between current state and potential.
• People-at-the-Center Culture: You can't open an?About?page on a website without some CEO proclaiming people are their greatest asset. Transformational organizations live this in a very different way. They lead with empathy, embrace inclusion, and see people and leadership development as an integral part of their reason for being. People are at the center of everything they do. People deliver today's results and people are the key to transformation.

The devil is still in the details. In fact, 1999 Enron probably fit much of the description above. With that in mind, I've further broken down these areas and offered some questions you can ask to tease out the differences.

Cause Driven Mindset?

Wide-Boundary Results Orientation

Generative Organizational Capabilities

People-at-the-Center Culture

Too many organizations suffer from an alignment problem. As a society, we over-index on extrinsic rewards (money and status). We've defined winning with narrow boundary goals. What have you done for me lately? We've created perverse incentives where people can privatize gains and socialize costs. All the while, we've allowed our discourse to become less civil and our divisions to define us.?

It's no wonder so many organizations are toxic. It's no wonder that, despite great people with positive intent, too many organizations live on the left side of these tables. But nothing changes if nothing changes. To move away from this transactional world, we need transformational leaders. And to generate enough transformational leaders, we need to re-imagine success. We need to embrace the companies and non-profits and governmental agencies that are getting it right.

Our future depends on it.