Institutional Evolution in the Era of Exponential Changes
Mauricio Lopes
Senior Scientist at the Brazilian Agricultural Research Corporation (Embrapa)
We live in an era where the pace of transformation challenges the stability and predictability that underpin many institutions. Public and private organizations, designed to offer solidity and continuity, now face a reality where rigid structures can quickly become obstacles to relevance and effectiveness. Without adaptation, these organizations risk becoming vulnerable and disconnected from the complex, interconnected needs of the 21st century.
In recent decades, advances in technology, communication, biosciences, and artificial intelligence have radically expanded the boundaries of possibility, requiring organizations to adapt swiftly. Simultaneously, global challenges such as the climate crisis, migrations, and cybersecurity arise interconnectedly and simultaneously, demanding agile responses that transcend traditional management and planning models.
The 2024 Nobel Prize in Economics, awarded to Daron Acemoglu, Simon Johnson, and James A. Robinson, underscored the importance of institutions for national prosperity, showing how their formation and structure impact economic and social development. The work of these economists emphasizes that resilient and adaptable institutions promote stability and progress, whereas rigid and outdated institutions often hinder advancement.
The laureates also highlight that institutional evolution does not occur spontaneously; it is usually the result of deliberate political and social choices. Their research demonstrates that a nation’s prosperity is closely linked to the design and functioning of its institutions, shaped by choices that reflect power relations, dominant interests, and the forward-looking vision of social actors.
However, these choices are far from infallible and often lead to recurring issues. Governance practices, vision-building, and planning usually prioritize the evolution of ideas and intentions but often neglect deeper structural changes. More incisive reforms require significant investments and directly impact the lives of employees, managers, and stakeholders, often discouraging changes in established processes and organizational models.
It is not surprising, then, that there is a natural resistance to profound reforms, especially those that demand dismantling obsolete practices, retraining teams, and reorganizing functions. Instead, incremental adjustments prevail, maintaining an appearance of modernization without truly preparing organizations for future challenges.
This reluctance to enact structural changes stems not only from financial and political costs but also from a desire for institutional stability that, ironically, compromises long-term effectiveness. The result is slow and superficial adaptation, quickly becoming outdated in times of rapid and profound transformation, leaving organizations vulnerable and unable to respond to complex crises.
A serious consequence of this rigidity in many essential organizations is the perpetuation of vertical, overly specialized structures. Ministries, public agencies, university departments, and research organizations follow functional and hierarchical models suitable for handling isolated or narrowly defined areas, such as agriculture, health, education, environment, and energy.
However, in a world of interconnected challenges, these organizational models limit innovation and institutional effectiveness by operating within rigid thematic boundaries with minimal synergy with reality. In science and innovation, this compartmentalization hinders progress in highly convergent areas such as food, health, energy, and climate.
An effective solution is creating integrated portfolios, bringing projects and teams together around strategic, cross-cutting themes, enabling a more flexible allocation of resources aligned with ambitious goals. Another possible approach is reinventing traditional institutional formats, such as mixed operational units or innovation hubs, capable of integrating processes, structures, and knowledge to accelerate responses to complex challenges.
It is therefore urgent to recognize that rigid and isolated structures no longer meet the demands of this century and have become major obstacles to innovation. Agile, interconnected organizations today demonstrate a unique ability to form flexible teams and programs, crossing thematic and hierarchical boundaries to foster an integrated vision. Without this transformation, institutional relevance will be at risk.
This article was originally published in the October 11, 2024 edition of the newspaper Correio Braziliense.
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