GUEST AUTHOR BLOG: Conquering the Rigidities that Stifle Business Growth by Claudio Feser, author of "Serial Innovators: Firms That Change The World."
Organizations age and die. They do so because—as they grow and mature—they develop rigidities, at both individual and organizational levels. The process of aging seems to unfold inexorably and naturally—similar to the processes of aging in biological organisms.
But the truth is that the aging of organizations is not a natural, biological process. Rigidities—both individual and organizational—are man-made. They originate in two areas: in the human brain, and in organizational constructs composed of human beings.
First, the human brain regularly develops rigidities in the form of biases, lack of self-confidence, and habits. The human brain is limited in what it can process. Therefore it works with shortcuts, or rules of thumb, to solve problems it faces regularly. Over time, these successful (and sometimes unsuccessful) rules of thumb, become mental models – the way to think about a problem or an issue.
Mental models are highly efficient, because they allow quick decision making and action, especially when confronted with familiar challenges. They can represent a major risk, however, when the context in which they were developed, or the marketplace, changes significantly. They may make people unable to correctly diagnose a problem or to apply the appropriate problem-solving approach.
Second, organizations regularly develop rigidities. Structures, performance management and reward systems, supporting cultures, capabilities (or simply collective experience) are human constructs that allow firms— groups of individuals—to fulfill their common mission and to implement strategies at scale effectively and efficiently. Without them, performing large tasks or implementing complex strategies requiring the effective and efficient collaboration of hundreds or thousands of individuals would not be possible.
However, as with mental models, these constructs—organizational charts and reporting lines, performance management and reward systems, the organizational culture, capabilities or institutional experience—are rigidities that may prevent organizations from adapting rapidly when markets change.
"Sometimes, but only sometimes, firms resist the aging process. Such firms adapt and thrive in dynamic markets; they are serial innovators; they continuously reinvent themselves; they change their industries."
Also, organizational rigidities tend to grow over time. To deal with the increasing complexity and demands of dynamic markets, and to capture ever more wealth-creation opportunities, firms tend to add additional functions, councils, processes, values, and norms onto existing organizations. Only seldom do firms eliminate older organizational constructs that have become obsolete—older processes, older functions, or older committees. As a consequence, layers of new constructs are added onto older ones, making firms bureaucratic, inward-oriented, and slow in adapting to changes in the market.
Sometimes, but only sometimes, firms resist the aging process. Such firms adapt and thrive in dynamic markets; they are serial innovators; they continuously reinvent themselves; they change their industries. By continuously inventing new products and services that make life healthier, better, and safer—they change the world. These firms create value for decades, sometimes longer, for their customers, their shareholders, and their employees.
Organizations that want to become serial innovators must do the following:
- Cultivate the organizations members’ desire to make a difference.
- Build a team of learners at the top.
- Frame the organization’s vision and strategy positively.
- Build on self-managed performance cells.
- Promote the organization’s members’ drive to perform and grow.
- Invest in capabilities to quickly develop new assets and skills.
- Cultivate a culture that fosters execution and promotes challenge.
Most importantly, Serial Innovators are driven by the passion to make a difference. And they experiment a lot. Therefore, when circumstances change, they’re much faster than other organizations to build new capabilities and skills. Serial innovators conquer the rigidities that stifle business growth.
Claudio Feser, author of Serial Innovators: Firms That Change The World (Wiley), is a Director of McKinsey & Company, where he leads the McKinsey CEO Network that focuses on CEO training and coaching. Feser previously managed McKinsey offices in Switzerland and Greece.