Last November, I blogged about culture being the formative messenger or genetic code of organizations. To communicate and enable its performance, an organization invents or discovers a pattern of basic operating assumptions. In the words of Edgar Schein, organizations use these assumptions to cope with their “problems of external adaptation and internal integration.” These formative messages are then taught to new members who typically adopt them and continue their legacy. Thus, the cultural DNA of an organization is inherited and passed from one generation of employees to the next generation.
More concretely put, if an organization’s DNA is variety-reducing (i.e., bureaucratic), its formative messages will focus on optimizing core activities by reducing waste and error — continuous improvement. This bureaucratic, and typically autocratic, DNA works best in non-turbulent environments such as the post-Industrial Revolution era. Herein lies the paradox. Since the 1960s, turbulence (volatility, uncertainty, complexity and ambiguity) has steadily increased creating a business environment that requires a new DNA — variety-enhancing. Nonetheless, most organizations today still operate as bureaucratic, variety-reducing entities.
For organizations that managed to survive, weathering the last 50 years has been a slow, arduous journey toward innovation. To function in today’s fast-paced turbulent environment, organizations must expand their operating capacity and culture to include variety enhancement — innovation. Turbulent environments, due to their rapid change, present previously unconsidered challenges and wicked problems that yesterday’s solutions cannot solve. Hence, innovative organizations need to operate in a more agile network culture and structure (not a bureaucracy) to optimize diversity, creativity and invention.
A major reason for the slow progression toward innovation is the restrictive leadership of autocratic (command and control) bureaucracies. Innovation requires many decision makers to voice their knowledge and objections. When many voices are involved in the decision making process of an organization the responsibility for the work being done is given to those who actually do the work. If organizations cannot master distributing decision making (sharing leadership) throughout their structure, they will not shift nor expand their DNA from variety-reducing to variety-enhancing.
The inability to shift is evidenced by where organizations currently focus their attention and energy — managing, organizing and crisis intervention. However, the turbulent environment experienced by today’s citizens and employees shows they value quite a different genetic makeup — integration, inspiration and relationship building.
As is often typical, complexity necessitates an “and/both” rather than an “either/or” solution. Organizations need to simultaneously optimize their core business operations (reduce variation in the form of errors and waste) as well as adapt to today’s complex environment by innovating new products and services (increase variation in the form of diversity, creativity and invention). A dual operating system — a traditional hierarchy that sets standards and routines along with an agile network that experiments and innovates — captures the best of both DNA structures. This dual culture and structure is aptly captured by John Kotter in his recent book, Accelerate: Building Strategic Agility for a Faster-Moving World.
What is your DNA — variety-reducing? variety-enhancing?
For more about complexity, adaptation and innovation, click here.