The Evolution Of (Progressive) Organizational Strategy
For months—maybe even years—we have talked about an online Corporate Rebels Academy. But, with our busy schedules and travels, we always found an excuse to not start this journey. Then the corona crisis changed everything. We cancelled most of our trips, cleared our agendas for months to come, and found ourselves with time to work on things that were overdue. This included our very own online Corporate Rebels Academy.
The focus of our first online course will be the design of progressive organizations, especially large ones that organize without middle-managers (it’s no coincidence this is also the topic of my PhD research). For 5 years now, we have visited many progressive organizations around the globe. We studied them in depth and found that most show a remarkably different approach to organizing their businesses, by design.
Most depart radically from the traditional hierarchical and bureaucratic way of organizing (a la machine organization) that dominates most modern-day businesses. Instead, this select group organizes in much more human-centric ways – even at large scale. Think of Buurtzorg in The Netherlands, Haier in China, NER Group in Spain, Nearsoft in Mexico and Centigo in Sweden.
Although these organizations find their unique ways to organize, there are parallels to be drawn between them. Notably, and apart from being radically different to the norms in their industries, this group is incredibly successful at running their organizations in a humane manner.
This group of businesses is incredibly successful at running their organizations in a humane manner.
An advanced level course
Our online course will be for an advanced level. It will teach you how to progressively design, organize and run your organization like this group does. It will teach you how to apply the winning strategies of these organizations to your own.
We are working on the content right now. It will include case studies of some of the most unique pioneering organizations of our bucket list. These will go much deeper than you can read in our blogs and our book (and other books).
I won’t go into the complete scope, scale and shape of the course here. That will be in another post, as we are still working on some elements. (But you can check the video below for more info)
The evolution of strategy work
In this post I would like to share some of the content I’ve already written, and invite your feedback. This part covers, briefly, the evolution of strategy in traditional organizations, and a summary of how it is done differently in progressive organizations. Let’s start with the overview of strategy evolution over recent decades.
Following the industrial revolution, the traditional, top-down, hierarchical model became fashionable. Strategic work was the job of a dedicated group at the top of the pyramid. In early days, this group of seniors focused on serving the internal needs of the organization, with little regard for external factors like competitors, or even customers. It became fashionable for leaders to go to ‘off-site meetings’ and spend days planning the future of their organization.
Once the strategic plan was designed (often using tools like SWOT analysis), the leaders would agree upfront on a long-term timeline to implement the strategy. These one, three, or five-year horizons became the holy strategic pathway for the organization. It was broken down into short-term objectives and performance targets. These were cascaded down the hierarchy. All this was done without much connection to the real-time or potentially-changing business environment.
The strategic planning process was, traditionally, not aligned with the members who would have to implement it. This began to change in the 1970s with the introduction of classic strategy frameworks (like Galbraith’s star model and McKinsey’s 7S framework). These were checklists of levers to be synched like internal structures, systems and culture with the strategy.
The frameworks were based on the theory that, for an organization to perform well, all these elements needed to be vertically aligned and mutually reinforcing. Thus, strategic work aimed to vertically align the entire organization around the structures, systems and culture needed to deliver the strategy.
However, these alignment decisions were mostly the judgement of a few key people at the top of the pyramid. Most in the organization were not aware of the process or simply did not understand it.
These strategic alignment processes were done without much consideration of factors that lay outside of the organization. This changed in the 1990s, mainly due to the work of management gurus C.K. Prahalad and Gary Hamel. They redefined strategy as the so-called ‘core competences’ or ‘core capabilities’ organizations needed to deliver value to customers.
This was based on the theory that a specific set of skills and resources, difficult to imitate by competitors, would enable an organization to access a variety of markets, and distinguish themselves in these marketplaces. Strategic capability theory argued that to succeed in the global marketplace it was more important to build core capabilities rather than to vertically align the organization using classic strategy frameworks.
Thus, strategy work, still mostly done by a few at the top of the pyramid, evolved into something that aimed to align the entire organization around a few key capabilities.
The Evolution Of (Progressive) Organizational Strategy
Strategy in progressive organizations
Progressive firms do not believe strategic planning, strategic alignment, nor strategic capabilities are the right tools for the environments they operate in.
They believe all members of an organization need to be able to embrace change as soon as it arrives. This is based on the belief that autonomous front-line members are best-placed to anticipate customer needs, and should have access to digital platforms to share, develop and execute best strategies with each other.
That is why progressive organizations do not base long-term strategy on trying to predict the future, or other fortune-telling exercises. They do not preset strategy in clearly laid-out annual plans. Instead, to build their desired strategy agility, they establish long-term, guiding purpose and principles for their entire organization, and let strategy emerge organically from it.
As such, strategy and execution become one, and occur simultaneously in rapid iterations.
What do you think? Are there some key developments in the evolution of strategy missing? Is there something crucial I completely missed?
Please drop your suggestions and feedback in the comments below.
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Not sure if you're missing anything critical in strategy (I'm no student of corporate approaches).
I'd be interested in the overall structure though as addressing the 'transition' will be equally important as what it looks like when you get there!
The mechanistic thinking is so embedded that mindset and bringing in the heart are even more important.
Having spent 3 years sitting at the centre of a £3bn transformation (which is falling very short) I have the scars and have grown through the experience!
This is why I've moved into coaching using nature as guide, inspiration and source of transformation.
You guys are doing some really important work and I'd love to support however I can.
Not sure where or even if this fits in, but there were (and still are?) companies who completely outsource their strategy process to companies like EY, KPMG, Gartner or Mc Kinsey. In these cases, strategies tend to degenerate to 200+ slides PowerPoint behemoths which only very few dare to fully read and even less really understand, and with close to zero effect, no matter wether they had internal or external or both areas in focus.
Another aspect that I am missing: there are companies that create strategic plans without even having a vision, a purpose or any other form of northstar to guide them. Thus, strategies tend to go to completely different directions with each iteration, mainly creating incomprehension and confusion where they should create a clear picture and align forces.
A good strategy honestly acknowledges the challenges being faced and provides an approach to overcoming them.
Richard Rumelt, Good strategy – bad strategy
This quote from Richard Rumelt is timeless for me. For me it can be applied in all different strategic approaches. The shift I see is who is acknowledging the challenges and who provides an approach. Developing strategies based on this means to check who is best placed for each task. Inherent shortcoming: In the end it will always be a very subjective view unfortunately. Honestly acknowledging, that is where the difficulty lies for me.
A good initiative, but you have mis-understood "strategic capabilities". They are not the Business Strategy, they are what you build your strategy on. In considering the need for a "progressive strategy" you are describing what capability theory refers to as the "dynamic capabilities" required, i.e. the capabilities that will provide agility, adaptability and resilience in your chosen sector and market. More here: https://design4services.com/concepts/resource-based-view-of-the-firm/
The concept of emergent strategy, long with emergent leadership expressed by Michael D McMaster in his 1985 book "The intelligence advantage, organising for complexity" is finally becoming mainstream.
What exciting times we are living in where the aim is to fully engage the hearts and minds of entire organisations around a strategic intent, vision and culture.
I wish the academy grat success. It's time is now.
I think it’s a handy overview, thanks so much for sharing!
If I zoom out you roughly spend 2/3 of the post on how things were and only 1/3 on how it could and can be done better.
I think 50/50 would be fair and 1/3—2/3 even better. That would set an emphasis on the crucial part.
What do you think?
Great blog Joost. Any progressive development is based on changing mental patterns, believes and habits. Therefore, attitude work is needed. That‘s what K2K does in one way, Martin Permantier in Berlin in another way and my new ideal for an Entrepreneur - Bodo Janssen - is stretching the importance of attitude from the beginning. Since I have done such work for me and in my social entrepreneurial projects and have met Bodo 4-times I am looking forward to share my thoughts with any community and also yours.
There are many examples of self-management on the Corporate Rebels Bucket List, all of which have very few layers of management, if any, and they are mostly highly successful. So this raises the question “If this is such a good way of organising work, why isn’t everyone doing it?”.
After writing up the business case of NER Group for our Online Academy, I read Jack Stack and Bo Burlingham's classic about their transformation of SRC Holdings, called 'The Great Game of Business'. I was struck by the similarities between the two.
How much do we actually need for living? That’s the first question German condom manufacturer Einhorn asks when it comes to salary. Beyond this basic income, every employee can help determine his or her own salary. Markus Wörner is on their salary council. We asked him: what is behind this?