Which are hampering a wider adoption of its potential benefits by existing organisations

7 common misconceptions about “The New Way of Working”

Jorn Verweij
07 Dec 20

An original article by Decision Free Solutions

For the full article in PDF go here.

Summary

The “new way of working” encompasses new ways of organising, performing, and leading. These are set to overcome the downsides of the “traditional” way organisations operate (e.g., strict hierarchy, control, no freedom, no creativity, slow to adapt), which are all the more glaring in dynamic environments. The new way of working, instead, combines improved organisational performance with the resolution of a range of employee frustrations.

What this new way of working looks like is demonstrated by a range of “pioneering organisations” (e.g. , Buurtzorg, Patagonia, Haier, Spotify). These and other organisations tend to have a range of organisational features in common, which — in absence of underlying principles explaining these features — have become “characteristics” of this new way of working which need to be embraced.

In this article it is put forward that the essence of the new way of working is about creating the conditions to optimally utilise the expertise available to the organisation. This involves defining non-ambiguous aims, identifying expertise, and overcoming the challenges 1) posed by various types of decision making, and 2) of establishing clear communication between experts and non-experts.

This article argues that the typical “characteristics” of the new way of working are, in fact, on the extreme end of a spectrum of organisational solutions, and that by focusing on these extremes the wider adoption of the new way of working is hampered.

Following the underlying principles of the new way of working — based on logic and as laid out by the approach of Decision Free Solutions — the following misconceptions about the new way of working are addressed:

  1. Change must be radical
  2. Hierarchy must be flattened
  3. It is all about trust
  4. Just try something!
  5. Self-management is key
  6. Control is part of the problem
  7. It is all about people.

 

What is “the new way of working”?

“The new way of working” isn’t a well-defined concept. It encompasses new ways of organising, performing, and leading which overcome the downsides of the “traditional” way organisations operate. This traditional way tends to be characterised by strictly hierarchical structures where leadership and managers tell employees what to do and how to do it, pursuing narrowly defined (financial) targets, with plenty of control going around.

In these “traditional” ways of working most employees have little freedom and autonomy, and end up feeling frustrated and demotivated. The traditional way of working also is characterised by slow decision making, and an inability to adapt to a dynamic world with open boundaries and limitless data and rapidly changing values.

Freedom, responsibility and trust are core values, and the organisational structure associated with it tends to be flat

The new way of working, typically, has organisations pursue a broader (more meaningful) purpose, with the ability to quickly adapt and change if required, seeing and treating its employees as a key asset in achieving its purpose.

This new way of working has different concepts and ways of measuring performance, and different approaches to recruitment and employee engagement. Freedom, responsibility and trust are core values, and the organisational structure associated with it tends to be flat. Management terms frequently used in this context are teal, sociocracy, holacracy and humanocracy, and the companies often used as examples include Semco, Zappos, Haier, Spotify, Netflix, Buurtzorg and Patagonia.

 

What are the characteristics of the new way of working?

The new way of working, because of the many potential benefits, has generated a lot of excitement. It has resulted in multiple platforms sharing tips and experiences, in academia studying organisational structures, in a brand new branch of the consultancy industry, and in plenty of publications either focusing on a particular organisation or trying to capture the essence by looking at trends and shared features between successful “pioneering organisations”.

Unsurprisingly, as each organisation tends to be both unique and complex, there isn’t a well-established set of structural or organisational characteristics which can explain the success of those pioneering organisations.

An organisation is much more than its values and its structure, and patterns offer no explanation

Organisations pursue goals which may or may not be well defined, in environments which may or may not be complex, changing and competitive, employing people with varying and often unknown skills, talents and motivations, who work in a culture which often has been shaped over many years and is in constant flux. And yes, organisations also have a structure.

To make sense of this complexity, it is only human to focus on common features and trends in how pioneering organisations operate, what values they emphasise, and how they are structured. Seeing patterns is something we, as humans, excel at. But an organisation is much more than its values and its structure, and patterns offer no explanation.

Pioneering organisations are characterised by embracing purpose, shedding hierarchy, empowering their employees, organisational experimentation and transparency

In 2015 A. Sachs and A. Kundu wrote a blogpost ([1]) about organisational transformation, with the aim to allow the organisation to “inspect and adapt”.  The proposed that organisations are to “find the balance between the following opposites (see figure below) enabling it to respond with urgency”.

Figure 1: Opposites an organisation is to find a balance between.

 

Where Sachs and Kunda write about finding a balance between opposites, many advocates of the new way of working identify a trend away from the left column and towards purpose, networks, empowerment, experimentation and transparency.

Pioneering organisations — sometimes confusingly called “progressive”organisations — tend to be those organisations which are on the extreme end of this spectrum, and who have both an engaged workforce and good to great performance. They are thus characterised by embracing purpose, shedding hierarchy, empowering their employees, organisational experimentation and transparency.

As exciting these pioneering organisations are, and how appealing these extreme characteristics seem, neither the (structures of the) pioneering organisations nor these extreme characteristics define the new way of working.

There is a broad spectrum of organisational solutions which able to overcome the most important disadvantages of the traditional way of working. To do so it is not always necessary to embrace purpose, to experiment, let alone to get rid of hierarchy.

 

What is preventing existing organisations from embracing the new way?

The benefits associated of the new way of working are manifold, and there are thousands of organisations which have embraced several or all of its aspects. Many of these organisations started from scratch, or were forced to make a transformation because they were on the brink of failure, and had either “visionary” leaders at the helm, or were helped by experienced and no less visionary consultants.

Yet, there are millions of organisations which haven’t adopted the new way of working. Organisations which are not run by visionary leaders, which can’t build a new culture from scratch, are not pushed to change by impending failure, and don’t have the resources to “experiment” and  drastically restructure. Organisations which usually can’t tell whether the new way of working is for them, and if so, where to start. A transformation, after all, carries immense risk and tends to be very costly.

In absence of underlying principles, focusing on pioneering organisations has a downside

So how should existing organisations approach the new way of working? Seeing trends and identifying common features between pioneering organisations is of interest, but it doesn’t explain anything in itself. It doesn’t help the countless organisations who might benefit.

Haier operates in an extremely dynamic environment and has a flexible organisational structure consisting out of thousands of networked micro-enterprises which come and go. Buurtzorg teams work in parallel to each other, and each team serves a single unchanging neighbourhood while part of an organisational structure which is extremely stable.

Both organisations don’t have a layer of middle management, both work with autonomous teams.  But to claim that getting rid of middle management and working in autonomous teams thus needs to be embraced forgoes any attempt at an explanation.

Today’s publications and platforms tend to focus on a relatively small group of pioneering organisations. They share exciting ideas and provide valuable support for a much larger group of interested organisations. But, in absence of underlying principles, their focus on, especially, the structural characteristics of these more “extreme” examples has a downside, also.

As has been shown time and again, the new way of working has many potential benefits. It can improve both organisational performance and resolve workplace frustrations, and may even reduce the grievances of racism and discrimination [2]. If organisations would adopt “the new way of working” en masse, everyone would benefit. But as it is, they don’t.

The majority of organisations don’t want radical change, and shouldn’t attempt it

One simple reason is that, to begin with, “traditional organisations” neither have a big appetite nor great potential for change. Which is only compounded by the fact that many proponents of the new way or working argue that the change required must be “radical”. In their view organisations need completely different models to get rid of their formal structures. They should just begin, experiment and persevere, and give their employees freedom, autonomy and trust.

By far the majority of organisations not only don’t want radical change, they should not even attempt it. It will only usurp resources and end in chaos. Traditional organisations are better served by gradual change, at a pace the organisation can manage. But this is not what advocates of the new way of working have to offer.

“Freedom” and “trust” aren’t organising principles

The real reason preventing a wider and faster proliferation of the new way of working, is precisely the absence of underlying principles. Only with underlying principles in hand would it become possible for change to become both gradual and substantiated.

Buurtzorg and Haier operate in very different environments, and have very different organisational dynamics. Both lack middle management and employ self-managing teams. But that doesn’t make “self-management” or “absence of middle management” essential to a new way of working.

Employees in pioneering organisations tend to have more freedom, and generally feel that the company has trust in their performance. But “freedom” and “trust” aren’t organising principles.

There are several common misconceptions about what is needed and what must be done to arrive at a new way of working. To explain this it is pivotal to first attempt to define what the underlying principles of the new way of working actually are.

 

The underlying principles of the new way of working

It has been convincingly shown that, given the right circumstances, also very traditional  and hierarchical organisations can adopt a new way of working and be successful (and without getting rid of hierarchy) [3]. But even then there are still two challenges remaining: replication and sustainability.

The new way of working is unlikely to be widely adopted, replicated or sustained

Buurtzorg’s approach and success in providing neighbourhood care hasn’t achieved the same traction in other countries. Haier’s RenDanHeYi-model is widely studied, but hasn’t been successfully copied. As it is, both companies still have their visionary leaders at the helm. What happens when they leave? What happened to Semco? What role does leadership actually play in the context of autonomous networked teams?

As long as there is no fundamental understanding of the principles underlying certain trends and features — principles which also take the (complexity of the) environment in which an organisation is to achieve its purpose into account — the “new way of working” is unlikely to be widely adopted, replicated, or sustained.

The starting point for arriving at the underlying principles of a new way of working has to be logical:

  • Successful organisations are organisations which achieve their organisational goals with minimal use of resources, and hence by minimising risk.
  • To do so they have to make optimal use of the expertise available to them.

To optimally make use of expertise two challenges have to be overcome

To make optimal use of available expertise throughout the organisation, first the goals to be achieved (as an organisation, within a team or project) have to be both transparent (understood the same by all involved) and objective (it should be clear when it is achieved). The best available expertise to achieve these goals has to be identified, and then the conditions have to be created to optimally make use of this expertise.

To optimally make use of expertise — of the skills and talents employees take to their job — two challenges have to be overcome:

  1. All types of decision making have to be minimised (hierarchical decision making and as frequently found in rules, procedures, protocols, best practices, checklists and contracts)
  2. Clear communication between experts and non-experts has to be established.

Ad 1: Whenever choices are made which are not fully substantiated to contribute to achieving a goal, the risk this goal will not be achieved increases. This is what is so often problematic about hierarchical decision making, and rules and protocols. These often are, or contain, choices which can’t be fully substantiated, and which in turn hamper or prevent the utilisation of available skills and talents. These different types of decision making both cause frustration and negatively affect organisational performance.

In many organisations control is like a teacher on a playground telling kids not to climb the climbing frame

Ad 2: Organisations which heavily control their employees don’t do so out of sadism, or tradition. They do so because they find the organisation’s course and performance to be unpredictable. Unable to tell whether things go right, control is a reflex: a “risk mitigation tool” to limit unknown damage from occurring when things go wrong. Organisations which rely on control tend to have unclear goals, little idea about the skills and talents their employees bring to the table, and no way of telling whether their employees are achieving these unclear goals. In many organisations control is like a teacher on a playground telling kids not to climb the climbing frame. Not because it is beyond them, but because there are simply too many other kids running around he needs to pay attention to, also.

To do things right, most importantly, goals need to be non-ambiguous. Then, in order to prevent the organisational reflex of control kicking in, the communication between experts (i.e., employees with the right skills for the task at hand) and non-experts (e.g., managers or leadership responsible for the outcome) needs to be transparent. A prerequisite for this is the measurement of relevant outcomes. In absence of transparency control will always kick in.

It is the responsibility of leadership-roles throughout the organisation to create the conditions to utilise expertise

The required conditions to optimally utilise expertise include a clear purpose (goals), an environment of no-decision-making, and transparency with respect to communication and outcomes.

Furthermore, the organisational culture must be safe for everyone to contribute their ideas, and all relevant information needed to substantiate the choices which have to be made has readily accessible. It is the responsibility of all leadership-roles throughout the organisation to create these conditions.

Organisations wanting to embrace the new way of working have to create the right internal conditions. But the “balance” they have to find, and the particular solutions and structure that work best for them, are also dependent on external conditions: the type of environment the organisation operates in.

The more dynamic the environment, the greater the importance of the swift utilisation of expertise to minimise risk becomes. In dynamic environments “expertise” relies less on experience and, especially, a high level of perceptiveness. Someone’s level of perceptiveness — someone’s awareness and understanding of change — is a trait. Which means that not all people are equally suited to work in any environment (let alone be suited to take on leadership-roles in these environments [4]).

In summary:

  • High performing organisations are organisations which manage to achieve their goals through the optimal utilisation of the expertise available to them.
  • This requires that these goals are non-ambiguous, and that the right conditions to utilise expertise are in place.
  • The two central challenges are the avoidance, for as much as possible, of all types of decision making, and  establishing clear communication between experts and non-experts.
  • It is the responsibility of the  various leadership-roles throughout the organisation to create, sustain and communicate these conditions.
  • What works best for a particular organisation depends also on the environment in which it operates.

Based on this logic the following misconceptions about the new way of working can be identified and explained.

***

The rest of the article is available as PDF.

 

BY John Mortimer | December 16, 2020
An interesting article that is useful because it helps to put the position of models and experiences in the context of the situation that was right for them. Simply following others is never a good idea; learning from others and gaining experience is a great way to gain knowledge and become effective. That list you have are mainly the outcomes of doing the right thing, and if you do the right thing, the outcomes may look different to what others have achieved. Thanks for posting.

Leave a Reply

Your email address will not be published. Required fields are marked *

Want to get a notification when we publish more articles?
The alternative to decision making is transparency.

Decisions are conclusions or resolutions reached after consideration (the Oxford dictionary definition of ‘decision’). When something needs to be considered it means it is not transparent. Create transparency and what follows are not decisions but ‘the logical next step’. When something is transparent you don’t have to think. Transparency allows decisions to be replaced by approvals.

Read more
Het vrijmaken van resources is efficiënter dan kosten besparen

In goede tijden is het eenvoudiger om goede marges te maken. In slechte tijden is je enkel verlaten op goede kwaliteit een uitdaging. Maar het simpelweg het mantra “kosten besparen” hanteren leidt tot een lagere kwaliteit en uiteindelijk kleinere marges. Het implementeren van DFS leidt tot een betere benutting van de beschikbare expertise, een verbetering van de kwaliteit, en dus uiteindelijk ook tot lagere kosten. Dit is hoe expert-organisaties de competitie voorblijven, en hun marges op peil houden.

Read more
Leadership performance is easy to predict.

In every leadership-role the aim is to create the conditions to achieve the aims against minimal risk. The needed combination of experience and skills is always different. Simple observations help to identify the right person.

Read more
Everybody can manage risk, only few can minimise it.

In every organisation there are both identified and unidentified risks. Unidentified risks occur e.g. when aims are not clearly understood, when it is unclear whether the right expertise is available, or used appropriately. All of which results in decision making. To manage identified risks is straightforward, to minimise risk you must avoid decision making. Which is what an expert does. But what does it take to become an expert?

Read more
To stay ahead, freeing up resources beats cutting cost.

In good times it may be relatively easy to make profits. In bad times relying on quality alone can be challenging. But the approach of “cutting cost” will affect the quality of your solution, and margins will get affected. Implementing DFS improves the utilisation of available expertise, improving quality and (thus) bringing cost down. This is how expert organisations stay ahead of competition, and retain healthy margins.

Read more
That decisions increase risk is not semantics, it is logic.

That decisions increase risk follows from the dictionary definition and use of logic. Few experience decisions in this way, for various obvious reasons. Many unsubstantiated choices are made based on experience or are educated guesses. We get a lot of decisions right. When the risk does occur, usually much later, we often fail to make the link with the decision. What is more, making decisions often makes us feel good. But the risk is still for real.

Read more