How your CEO may be constraining innovation and growth

Here’s a thought experiment for you.  

What if you had no boss?  

What if you were accountable only to your team mates? And what if you could choose which team you wanted to be part of, without getting permission from anybody — except the teams you wanted to join. 

Entrepreneur Brian Robertson decided to do that at his software company Ternary. He abolished hierarchy and, especially, he  abolished power in his organization.  

Between 2007 and 2011 he developed his organizational design into a system called “holacracy,” which was famously adopted by Tony Hsieh at Zappos. In its purest form, the CEO signs a company constitution that says the CEO no longer makes decisions. Decisions are made by the people closest to the consequences of that decision. It’s the devolution of responsibility from the centre to the edges of the organization. 

I’ve written about innovation many times, and the one thing that undermines innovation in organizations is not a lack of ideas; it is the lack of political will to implement those ideas. In conservative organizations, people are more interested in avoiding blame if things go wrong, than trying new ideas in the belief they will work. 

Accenture has identified this as a business signal in a post-Covid world. It’s called “Pushed to the Edge.” 

In 2020, Netflix’s top show was the Spanish-language movie Casa de Papel (translated as Money Heist). A few months later, the French show Lupin cracked the top 10 in the US. I won’t even talk about the Korean Squid Games which has caused such controversy in South Africa. 

If Netflix relied on the US head-office to greenlight shows, I’m guessing none of the ones I’ve mentioned above would have been made. But over 80% of Netflix’s subscriptions are now outside the US, and the company has realised that the best decisions are made by the people closest to the consequences. Netflix is pushing decision-making to the edge. 

W.L. Gore, the company responsible for the Gore-Tex fabric, calls itself an “innovation democracy”. Because innovation and decision-making are so decentralized, when the pandemic broke out the company developed face mask covers in less than a week. 

There’s always a tension between hierarchy and decentralization, but the Covid-19 pandemic has ignited two trends that seem to be pushing organizations to the edge. 

The first is remote work.  

To the astonishment of many managers, when people started working from home, almost nothing changed. When left to their own devices, people are perfectly capable of doing their jobs, with much less direct oversight than most bosses are comfortable with. 

I know people who are applying for jobs overseas, with no intention of moving countries. If you’re reading this, then in the last year, I’m guessing you’ve done work from a scenic balcony a long way from the office. 

The “Just Do It” shoemaker Nike has formalized this by creating a “local business with global scale.” It focuses on 12 key cities globally, inevitably including New York and London, but also Tokyo and Shanghai. That means when the pandemic broke out in China, Nike could respond very quickly to move stock destined from physical stores to warehouses that served its online presence. It also started pushing its Nike Training Club app workouts to help its customers stay active during the lockdowns. 

Flatter organizations with fewer decision-making choke points move more quickly, take more risks and experience more success. 

The second trend that Covid has ignited is the rise of local trade. We live in a global world, but trade is becoming more regional. China’s exports to 20 of its neighbouring countries have increased by nearly 15% in the last decade, and the pandemic has accelerated the trend. 

In response, 64% of respondents in our research said they are in the process of moving to a non-hierarchical model to better prepare for a fragmented world. 

I don’t think your CEO is about to sign a constitution to give up all their positional power, and I don’t think your boss is going anywhere, unfortunately. But I do think you can start looking forward to being part of a flatter structure. 

Rory Moore

Associate Director – Innovation, Accenture Africa

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