What differentiates winning organisations?

This is the third of five posts on the META (Mobilise, Execute, and Transform with Agility) framework detailed in my book, Accelerating Performance, co-authored by Sharon Toye.

Business is all about innovation, but in one area—how companies are organised—we’ve seen precious little change over the years. In fact, organisational structures have remained mostly the same since Alfred P. Sloan oversaw the development of the modern corporation at General Motors from the 1920s to the 1950s. Why? It’s risky to try new things. To be innovative, you must be prepared to experiment, fail, and get back up again.

Consequently, too many companies have become herbivores—slow to act and react.

In our book, Accelerating Performance, we identified 39 differentiating actions that can help spur organisations to a faster pace—and better results. Here, I will discuss a handful of those actions. At the very least, they will allow you to operate much more efficiently, but they also have the potential to send you accelerating far past your competitors. (For the full list, see our white paper.)

As in my previous post on accelerating strategy, we will look at these differentiating actions as they fall within the META framework.

Mobilise: Put your customers first

Mobilising requires that you read changes in the external ecosystem through the lens of your customers. The clothing company Zara is widely recognised for a method it has used to coinvent with customers. Sales associates carefully watch which items customers consider buying but then put back. They ask for feedback and communicate it instantaneously to the company’s design team, which then modifies items and ships them out—tailoring products to reflect customer preferences.

While this approach is effective, there is another side to the equation: you have to anticipate customers’ needs before they recognise those needs themselves. Henry Ford reportedly said that if he had just asked customers what they wanted, they would’ve told him to design faster horses. He knew more about their needs than they did. But to understand your customers today, you have to spend time with them. Your leaders need to engage face-to-face with customers.

Execute: Embrace simplicity

Execution at the organisation level requires you to harness and streamline resources, and for that to happen, simplicity is key.

The visionary art critic John Ruskin famously warned, “It is far more difficult to be simple than to be complicated.” Indeed, that’s why you see organisations getting bogged down and overwhelmed by data, hierarchies, and new product offerings. But some of the most successful companies have straightforward offerings and structures. Take Apple with its 19 products or Chipotle with its 5-item menu or Comcast with its organisational structure that frequently puts leaders in physical proximity to frontline employees.

Try to reduce the layers of your business, with no more than five to seven layers between the CEO and the front line. With too many layers, it’s easy to get distracted from the task at hand: making the best products or offering the best services.

Another area begging to be simplified is your data. With so much information at your fingertips, how do you know what to look at or what to do with it? Our advice is to pick a limited set of metrics for your scorecard. Decide carefully which you’ll look at, make decisions based only on those metrics, and don’t be afraid to change your metrics as the business or business climate evolves. In fact, insist on it. The environment changes—your metrics may need to change as well.

Transform: Innovate collaboratively with courage

Transforming involves experimenting and innovating—and collaborating to make that all happen. To truly be innovative, you must encourage disruptive thinking across the organisation. Listen to your instincts, back them up with empirical data, and then track the impact of new ventures on your customers and employees. Take General Motors. It is investing aggressively in driverless cars, even though they could represent a threat to its long-standing business model. It’s a courageous move, with an eye on the future and a little bit of faith that it will all work out.

To get the most innovative ideas out of the organisation, though, you have to encourage collaboration and celebrate net exporters of talent. “We don’t have time for people who hoard insights or data,” said Comcast Cable’s head of HR, William Strahan, in an interview for the book. You’ve got to remove blockers and make information transparent. Create an open, collaborative environment, and everyone will feel equally a part of the organisation, thus making employees more likely to contribute. Transparency is how you get even more and better ideas from people throughout the organisation.

Agility: Learn and bounce back from mistakes

As the critical element of acceleration, agility allows you to spot opportunities and threats, learn from mistakes, and pivot quickly.

Failure is not the enemy. In fact, agile organisations invite people to fail, as mistakes present opportunities to learn and adapt. Intuit, for example, tried a marketing campaign aimed at young adults that would let them get tax refunds as gift cards to retailers. While the campaign generated almost no interest, it cost next to nothing. “It is only a failure,” cofounder Scott Cook said, “if we fail to get the learning.”

Try risky endeavours, but also conduct a postmortem on mistakes. This way the organisation can adopt what worked and avoid what did not—and do it quickly. When something “bad” happens, it’s natural to slow down, take time to think it over, and lick your wounds. But recovery has to happen on the go. Keep pushing forward and trying new things, and don’t forget to praise those unafraid of putting themselves out there for a new opportunity.

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Innovation is hard, and it’s why so many organisations are structured the same way they were 10, 20, or even 50 years ago. But continually rethinking how you engage with your customers, how you can simplify, how you collaborate, and what you do in the face of failures can keep you fresh, competitive, and, critically, accelerating.

In future posts, we will discuss how teams should embrace a handful of differentiating actions and how leaders can themselves accelerate to better serve their teammates and the organisation.

To learn more about how organisations, teams, and leaders can outpace competitors, explore Accelerating Performance or consider taking our brief self-assessment.