Deloitte in the News
How to Take an Organization to a New Evolutionary Level: Theory and Practice
7 August, 2018
Have you noticed how much the business environment has changed? Over the last 100 years, the average lifespan of S&P 500 companies has shrunk from 67 years to 15 years. Moreover, three out of four companies to join the list in eight years’ time have not been founded yet. To gain the lead and achieve dizzying results, some startups now need only several years. This is a compelling argument for businesses to set on the road of change in order not to be abandoned on the roadside of history.
We are witnessing how fast the labor market changes under the influence of new trends. According to Deloitte’s survey, 43% of millennials and 61% of Gen Z are ready to change their workplaces within two years. 62% of young professionals consider a ‘gig economy’ to be a viable alternative to full-time employment that offers an excellent opportunity to realize themselves independently from corporations and achieve a work-life balance.
Today, the way young people select their employers is very different from what it used to be earlier. They expect their workplaces to be built on diversity, tolerance, inclusiveness, and flexibility – the ideas considered by business as completely unacceptable only five years ago.
The need to change is virtually beyond dispute, yet only few dare to take the first step. Another Deloitte’s survey states that only 14% of business leaders are ready to work in the conditions of continuous changes. So what should you start your transformation process with after you realize the necessity to change and are ready to take the first step?
Do Your Homework
In our efforts to find the best solutions to our tasks, we often derive information and experience from varied sources. Ready-made answers are not always available, however, the information gathered helps at least to elaborate own approaches. The book Reinventing Organizations by Frederic Laloux has become my source of inspiration and served as a certain roadmap used by me in the process of our business transformation. The author talks about five evolutionary stages that organizations go through and how their management models change along the way.
At the ‘wolf pack’ stage, a company has a strong leader; an entire organization is centered around the leader’s personality. At the ‘army’ stage, a company has a clear vertical of executive power, well-defined processes, and stable organizational structure. At the ‘machine’ stage, a company has highly efficient business processes and is focused on success and innovation.
At the ‘family’ stage, a company defines for itself a global objective and does not focus solely on generating profit; instead, the financial resources are treated as a means to realize corporate values. The ‘living organism’ stage of a company is distinguished by a high level of self-management, where each employee acts as an initiator of the activities.
These stages are very different; however, companies may go through several stages of evolution at the same time. For example, the HR team may be a ‘family’ whereas the finance department operates at the ‘machine’ level, and risk management function treats the ‘army’ management system as most efficient for their team. This is a completely healthy situation – there is no need in transferring all functions to the same management model at the same time.
Areas that We Have Succeeded to Transform in Deloitte within Four Years
Deloitte Ukraine is a business with the turnover of nearly USD 20 million and the team of 450 employees.
Serving in the capacity of Managing Partner, I have tried to change processes at different levels:
At the ‘machine’ level, we have restructured our organization’s management model from vertical to matrix organization model and centralized many business processes. To achieve really impressive results, it is important to get the teamwork right. This is why we established an innovation team in our company and introduced a position of Chief Innovation Officer. Initially, they were engaged in changing our internal processes and later began to offer proven solutions to our clients and the market.
At the ‘family’ level, we devoted much time to determining our corporate values. Honestly speaking, we had to spend a lot of time to this process, and things did not go as smooth as I had expected at the beginning. It was important for me that those values could knit the whole team together and resonate equally with all employees. Our values underwent several developing stages before we could adopt them at the level of corporate culture.
If you just articulate the values with nothing to back them up, they will remain nothing but ‘words on the wall’. To make sure that each employee understood and genuinely shared Deloitte’s values, we held 47 activities in different formats where we presented and worked up each behavioral marker embodied in our values. One cannot change mentally without changing the landscape around.
For this reason, we established a creative space in our office where our employees could gather together for brainstorming and team-building sessions and where they could concentrate on their tasks and work alone, and where everybody could have a bite at the local cafeteria, or have a breather by playing ping-pong or a game console in the recreation zone. We created a little island of the ‘office of the future’ in order to try and see what it will be like out there, years ahead. And it looks good!
At the ‘living organism’ level, we felt it would be ok to focus on comfort and well-being of our employees. Due to the fact that standard arrangement of working time becomes less and less popular among young professionals, we have switched from the usual working day from 9:00 to 18:00 to flexible schedule.
Besides, our employees may work out of office once a week, and the dress code has been transformed into business casual, to be used the whole week through. This approach ensures more autonomy and area for creativity, which, in turn, encourages employees to focus on achieving personal goals and the organization’s general mission rather than on working off the required hours.
Moreover, within the framework of another initiative, we have introduced meditation sessions: for seven months already, nearly 30 Deloittees have been meeting up for the 15:00 meditation sessions on a daily basis.
Choosing the Road to Transformation
Transformation always involves experiments, which may minimize risks, nevertheless, not make you 100% sure in the ultimate results. It is like a vector directed only forward, and it does not matter whether you obtain the expected result or the lesson learned and a number of things to rework. Only real experience in transformation can give your strength, knowledge, and confidence to move forward. Looking back at my own experience, I can point out a few issues you will encounter when choosing the road to transformation.
You need to determine the evolutionary stage at which your organization is. And here you should be absolutely honest to yourself, neither overestimating the state of things nor falling into wishful thinking. Seek for missing factors that are required to transfer to the next level. Be ready to start moving, experimenting, and not being afraid of mistakes, without which no progress is possible. Be ready to bide your time. Since changes appear to be an evolutionary process. And if you run too fast, it is very likely that you will need to start from the very beginning.
The few organizations may call themselves ‘living organisms’ at the moment; but I am sure that only companies with this management model will be able to interact efficiently with the ever-changing external world, and do it as easily as any biological organism is continuously adapting to the environment.