How putting guardrails in place is better than trying to turn the Titanic

Have you ever worked in an organisation where trying to make change is like trying to turn the Titanic?

Trying to effect system-level health reforms can feel like that!

People on the ground tell leaders that change is needed. The vision is set at the top, but the execution falls short.

In the mid-noughties, I worked with a team of dedicated doctors, health leaders, and union officials who put aside their entrenched industrial positions and focused on their shared interests to redesign the conditions under which different types of doctors were employed.

The changes were well-intentioned, but over time, local interpretations emerged that suited the interests of a few people with their own agendas. What resulted were potentially high-cost precedents if applied across the rest of the system.

Years later, I was called to appear before the Industrial Relations Commission as a witness because the intent behind the change was lost. Local decision-makers responded with agility to an emerging issue but it affected the system in which they worked.

Middle managers are too often blamed for halting change in its tracks or getting it wrong, but the sad reality is that many willing middle managers are not given what they need to support people make sense of the need for change and ensure change is applied to suit the local context without causing issues at the system level.

So how do you avoid middle managers making local decisions that create headaches when the original intent is firmly embedded in the past?

Middle managers and people at the organisation’s coal face should be empowered to act, but they also need well-defined constraints so they can act with confidence, knowing their actions will be aligned with the organisation’s strategic direction.

If you’re not convinced this is possible, researcher Nick van der Meulen made some surprising discoveries in a 2022 survey he conducted for the MIT Center for Information Systems Research (CISR) (The Four Guardrails That Enable Agility – MIT Sloan Management Review).

Organisations where most teams were empowered by using robust guardrails tended to outperform their less-agile counterparts. Van de Meulen says “Large organisations can move as fast as start ups if leaders empower employees to act autonomously via well-defined constraints”.

The statistics are compelling:

• Revenue growth was 16.2 percentage points higher
• Net profit margins were 9 percentage points higher
• A key indicator of innovation, i.e. revenues from products and services introduced in the past three years, was 15.8 percentage points higher.

Empowerment went hand in hand with accountability for adhering to decision guardrails defining constraints about organisational purpose, data, policies, and resource allocation. These guardrails gave teams in Toyota Motor North America, Toyota Connected, Allstate Insurance, and Mars Digital Technologies the confidence to make empowered decisions that positively affected their bottom lines.

Teams in these organisations were able to rapidly adapt to changes in both innovative and cost-effective ways – not by eliminating constraints but by carefully defining them.

Van der Meulen identified these four key guard rails as:

1. Putting purpose into action and ingraining continual reflection about whether choices are in alignment with an organisation’s well-articulated future aspirations, value propositions and core values. These act as a beacon and compass to achieving shared ambition.
2. Democratising access to better and more timely data within a regulated framework with training support and encouraging cross-collaboration so teams can analyse and experiment with solutions more quickly and effectively.
3. Establishing minimum viable policies that provide easy to understand ‘rules of thumb’ that protect business continuity without overly restricting teams. Approaches built around the requirement to comply with high level principles or explain the reasons for wanting to deviate within a system of review that was designed to ensure rapid consideration by the decision-maker or automatic escalation.
4. Providing the required resources (physical, financial and talent) using venture capital type funding approaches or using explicit mechanisms so teams can unlock contingent funding to prove prototypes before scaling effort and investment to the next stage of development. Resource allocation tied to a dynamic and responsive framework enabled empowered teams to respond to their evolving needs and deliver on intended outcomes.

Centred leaders know how to exercise tactical agility. It’s not just about reacting quickly. It’s also about thoughtfully adapting to change, thriving through ambiguity and embracing uncertainty while turning these into opportunities for growth.

The aim isn’t just to withstand the storms but for leaders to use them as an opportunity to grow, innovate and lead with clarity and purpose.

This week I encourage you to think about what guardrails are needed so your middle managers are empowered to withstand the storms of change.

#StrategicAlignment #Agility #Empowerment

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