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As Society 5.0 is on the horizon, a fresh batch of upheavals will strike most organizations as emerging technologies, market dynamics and people’s relationship with work will change. 

This means that, yet again, organizations will have to face Change. It means a lot of power plays will happen, a lot of money will be spent (and often wasted), a lot of people will be stressed and a lot of company will fail their changes in a way that will cost them far more than just money. 

Just talk about Change in your organization and you’ll see the fear in the look of the people around you. “Not AGAIN.” 

We see Change as something big, put in motion as events. Each requires solid change management skills to build a strong strategy, communicate it appropriately, deliver the plan, manage expectations and manage for resistance to change. All of these things are difficult and the bigger the changes, the more difficult they are. 

Big changes will always be stressful. It will be difficult for humans who have evolved stress to improve their survivability during unexpected and uncertain events. It will be difficult for organizations built like machines: precise, ordered and predictable. The more you add stress, the more the resistance and the higher the chances something breaks. 

So how to approach those big Change events to execute them successfully? 

Don’t. 

Lean experts have been advocating for creating a culture of continuous improvement, of constant small changes. This is great, as it creates a culture of constant dynamism. For people, those changes are not violent, events or big enough to put them in danger. For organizations, it requires a reorganization into a living, dynamic structure, much closer to a natural ecosystem. 

But that the theory. “In the real world, it doesn’t work like that Maurice.” Big changes often end up not working or paying off as intended. Companies either aren’t Lean or have adopted parts of a Lean model. Old habits die hard, and they still manage their changes from a central authority. I have met my fair share of Lean change experts who will spend months analyzing change impacts, devising change management plans and creating communication plans for the rollout of those changes. Or of companies that ask for continuous improvements and innovation, and yet stifle any attempts of locally modifying behaviors and dynamics that haven’t been decided/designed/approved by a central authority. Where’s the Lean in that? 

Just asking for companies to allow their divisions, like teams, to innovate without interference, or even better with their full support, is wishful thinking. Why? Because until those companies changes, anyone initiating those changes will be at risk and will face resistance. In Jack: Straight from the Gut, Jack Welch describes his attempts at bringing change to General Electric, as a CEO, akin to starting a war and throwing grenades. If it’s that difficult when you are in charge, imagine when you are just a cog in the machine. 

Sure, teams can achieve a limited form of continuous improvement. As long as it doesn’t rattle the rest of the organization, it can work well. But it is limited. It can be so much more than that. And if we want to evolve a company to adapt to the emerging world of Industry 4.0 and Society 5.0, it’s a situation we need to address. 

To understand the underlying problem bringing changes in companies, one that becomes clear when we use a bit of system theory and learn how complex systems work. 

Explaining the problem

We’re going to do a bit of theory now, so please bear with me. 

One standard model of complex systems is the hierarchical model, where specialized systems of varying complexities nested within one another. Like companies. 

One of the most frequent problems with hierarchical systems is that the healthy dynamics between the hierarchical levels becomes skewed. 

Hierarchies evolve from bottom to top, from the lowest level to the highest, from the cell to the whole organism. The lower you go in a hierarchy, the faster the evolution rate. Those lower levels are the front line of the complex hierarchical system and as such have to respond a lot more precise and specialized stimuli.

The highest-level system, like the brain or the board of directors, still has a critical role to play: it must give a general direction, a purpose, to this evolution. Without it, lower systems will evolve fast in often unpredictable, and undesirable, directions. Like cancer. The higher-level system parses vast quantities of information coming from all the sub-systems, but that information is more straightforward, higher-level, already digested into something less complicated. 

Both high-level and low-level systems have their precise roles. The common mistake is to give too much power to one or the other. 

In a company, the most common issue is too much power taken by upper management. They know where they want to company to go and request departments and teams to execute their plans to get there. But that kind of centralized power comes at the loss of most of the information that should be gathered and processed by the teams. The team’s focus becomes execution rather than intelligence and adaptation. Information only trickles up within the system rather than flow and is usually ignored until it can’t be anymore. Innovation is stifled, hurting the capacity of the entire organization to adapt to change. 

On the other hand, not enough guidance form the upper management and the various teams will only react to their own, immediate situation. This will cause a significant loss of cohesion and productivity across the entire company. We don’t see this situation as often as too much control from management, as it requires a decentralized, self-organizing model, like Holacracy, which is still rare. 

The principle remains similar for governments. Too much control at the top and you create a totalitarian regime, replacing natural adaptability, innovation, and evolution by whatever is deemed the priority of the moment by the government. Too little regulations and you get tax avoidance (which prevent the delivery of shared services), monopolies concentrating common resources (such as money) in few hands, crime and other similar system-related problems. More often than not, governments strive for a balance but end up with too much and too little at once: constraints who end up benefitting large conglomerate while killing small businesses, help for specific slices of the population that ends up trapping them in a situation where they need that help, over or under-reacting to a challenge because they focus on the wrong reasons (such as an upcoming election), etc. This situation is a result of addressing symptoms without understanding the underlying system. 

Fixing the imbalance

If we fix that power imbalance, not with a single patchwork but with a change of internal dynamics to align how the company works with how a complex hierarchical system works, then we can hope of creating an organization that is a dynamic system under constant evolution and improvement. 

My favorite model to remedy to this power balance is based on an approach described by Dave Gray in his book The Connected Company. He calls it podularity. It is a model, not a framework or a complete, complex solution. To make it work for you, you need to fiddle with it a bit, you need to keep communications going, and you need to keep it alive and evolving. For organizations that adopt a Lean mindset, this is right up their alley. 

In this model, management establishes goals, constraints, and resources into sandboxes. Teams are wholly self-organizing but attached to a sandbox. Teams get their resources from the sandbox but must contribute information and effort toward the goal as well as respecting the constraints. The system is very alive as the sandboxes will evolve, with their resources and constraints adjusted based on the information contributed by all the teams attached, while still aiming for the goal determined by management. Teams who don’t follow the rules of their sandbox can’t draw resources from it and will need to attach to a more appropriate sandbox or starve and be eliminated by the system. The beauty of this model is that it is self-correcting and the power distribution between higher and lower systems stays in balance through the sandbox. It makes for a very organic model and can be scaled to apply to a government level.

One of the strengths of the model is that it is possible the to progressively introduce it within an organization. Start with the groups that are ready and willing. Make sure their sandbox includes everything both they and you need to give them their independence. Then let them deliver results and improve the system. Make sure their successes and challenges are well communicated across the organization, so other groups can open their minds to it and start thinking how it can work for them. 

I often talk about decentralized organizations. Well, this is it. 

Just like adequately working complex hierarchical systems, the higher systems set high-level goals and constraints. Lower-level systems must work within these guidelines but can evolve fast to adapt to their changing environment. They can also influence the guidelines to make sure they are kept relevant. The entire complex system will slowly adjust and evolve as a result of all the small local changes, slowly modifying the dynamic of the whole organization. The entire dynamic feel more natural, reducing stress across the whole system as the scale of actions, decisions, and consequences is vastly reduced. Autonomy and reduced scale allow for experimentations, leading to innovation and adaptability. 

It does require a will for the central authority to let go of its power and redefine its role. This kind of transformation starts with the top, not as a big change management plan, but rather as a will to let go. The hardest changes in the culture of an organization rarely come from the team, but instead, it comes from the organization’s leaders. A desire for change and a willingness to do what it takes are two very different things. 

If you want to know more

While using this model isn’t overly complicated or difficult, it helps to know what you are doing. 

I recommend reading Dave Gray’s The connected Company. Not only is the decentralized model outline there, but the whole book is a fascinating read, showing us clearly why companies need to evolve their habits, as the old ways won’t work anymore. 

I’m involved with two companies that can advise and support you if you are interested in evolving your organization toward such a model. 

Octant organizes seminars and retreats, both privates and open to the public. Decentralized model is a subject we often cover. 

If you want to adopt this model and require training or coaching for your organization, get in touch and I’ll hook you up.