“At Inditex, we try to manage our businesses as if they were still small start-ups … The organization is very flat. That means a lot of people are empowered to make decisions.” said Paulo Isla; CEO Inditex (Source: HBR November 2016). The combination of flat hierarchical structures on the one side and networks on the other side will lead us according to John P. Kotter to dual system structures. This dualism will significantly change the hierarchical part of an organization compared to today. The power architecture is changing and thus the soft skill requirements for senior management. We need leaders–not managers anymore–on all hierarchical levels. Senior management needs to step away from driving the daily operations.
First, we have to define which role hierarchy can play in an agile organization. The teams are fully-empowered and partly the tactical level is very often an integral part of the developmental teams. Leadership is therefore a required part of the operations on both a tactical as well as a strategic level. Whereas good management traditionally defines leadership as a level in the hierarchy and differentiated organizations define leadership as a personal trait, agile organizations define leadership as an organizational capacity (that is, leadership is shared throughout the organization). This implies that we have to strengthen leadership skills in all roles within an agile organization. In the dual system, leadership is practiced within the hierarchy as well as within the networks. Above all, leadership within the networks becomes more important than ever as the networks are the drivers of the operational business. The dyadic relationship between the leaders and the members are ties and dynamics. People can take over the leadership function in one system whereby they are, at the same time in the dual system, in the member function in the other system. Furthermore, the dyads within groups constitute networks and the chain of the vertical reporting relationship constitutes an even larger network–all of which potentially convey valued resources.
Networks in agile organizations also give us an ideal opportunity to use findings from neuroscience to use our human capabilities in a suitable way. David Rock has indicated in NeuroLeadership that the approach-avoid response is a survival mechanism designed to help people stay alive by quickly and easily remembering what is good and bad in the environment. We have learned for too long in hierarchical structures what to avoid. Instead, agile organizations in the systemic loops support the approach mechanism as we can self-manage our contribution to team success. Our amygdala in our human brain, a small almond-shaped object that is part of the limbic system, plays a central role in remembering whether something should be approached or avoided. The recurred learning sessions within the agile organizations train our amygdala so that we are not focused just on avoiding mistakes.
It’s time to design more brain-friendly organizations. The organization which is able to use human capabilities in a more efficient way will have a significant competitive advantage. We have trained our members in the system for too long on an avoid response system. Performance has often been measured by rewarding what people have not done. We have to remember the determinants of people’s performance as this can be shown by the equation: performance = motivation x ability (see Lawler & Worley, Built to Change, 2006). But as discussed before, motivation comes from networks and not from hierarchies. Consequently, hierarchy cannot drive performance and thus hierarchy, in the relationship between the supervisor and the employee, was aiming for too long to assess the people on an individual level.
However, we conversely also know the following from the universal performance management principles 4 from Lawler & Worley which say “rate outcome, rate performance, but don’t rank people”. Moreover, we do hardly see any positive effects on individual performance measurements. There is research which shows that individuals are very anxious before and during performance reviews. They often don’t hear quite a bit of what is said to them during evaluations. Thus, we have to question this management tool; it neither gives us the positive effects in organizational performance nor motivates the people as it acts against our nature. Agile teams discourage the ranking of people as team performance is the main focus and prevents us from falling into an avoid response. This is essential as many psychological and brain studies support this idea, showing that the avoid response generates far more arousal in the limbic system more quickly and with longer-lasting effects than an approach response.
Apart from the approach-avoid response, agile teams support the individuals so that they feel they are part of a team. Research has shown that humans have a fundamental need to belong, are incredibly sensitive to their social context, and are strongly motivated to remain in good standing within their social group and avoid social exclusion. The agile teams are the social group which the individual can feel he belongs to. Within this group, they can work self-dependently on their status within the group. The individual performance will determine the status of the team members on the team. And status-confirming information can elicit activation in the reward of neural circuitry. We no longer depend anymore on the judgment of our senior managers.
In old traditional organizations, status is very often linked to hierarchical functions. Consequently, in every change management process, it is very likely that our status is in danger. Organizations are forced to adapt their business to the changing environment and thus the individual feels constant stress. The tendency to perceive changes in social status as threatening also appears to be related to a person’s baseline levels of testosterone. Do we really want to expose our people to this social pain? Agility is an alternative for avoiding these negative effects as status in an agile organization no longer depends on the hierarchy. Agile organizations are therefore much more brain-friendly than we have ever designed our organizations before in the past.
- Kotter, J. (2014). Accelerate. Harvard Business Review Press.
- Lawler, E., & Worley, C. (2006). Built to Change. Wiley.
- Lawler, E., & Worley, C. (2011). Management Reset - Organizing for Sustainable Effectiveness. Wiley.
- Sparrowe, R. (2014). Leadership and Social Networks: Initiating a Different Dialog. In D. Day, The Oxford Handbook of Leadership and Organizations (pp. 434-454). Oxford University Press.