Global Trends Opinions

The dual operating system of a project-oriented organization

6 February 2019 / 8:00

When John P. Kotter published his book “Accelerate – Building Strategic Agility for a Faster-Moving World” five years ago, he came to the following conclusions: “The world is now changing at a rate at which the basic systems, structures and cultures built over the past century cannot keep up with the demands being placed on them. Incremental adjustments to how you manage and strategize, no matter how clever, are not up to the job. You need something very new to stay ahead in an age of tumultuous change and growing uncertainties.” This applies more than ever to organizations, and especially to project-oriented organizations!

However, Kotter does not advocate to trash the existing, typically hierarchical organization, but to add a second system, which adds needed agility and speed while the “old” one, which keeps running, provides reliability and efficiency. Both are necessary, balancing stability with dynamic change. In many project-oriented organisations an urgency for change is obvious, imposed by disruptive market players or technologies, political uncertainties or new demands of clients. For example, in Automotive Industry a radical change from combustion engines to electric drives, from focus on hardware to software, from product- to service-orientation and akin, puts all the organizations under pressure to change at a fast pace while maintaining the revenues to survive.

The “new” system is strategy- and innovation-driven, it focuses on seizing opportunities, delivering change in an agile and fast way. Projects are staffed with unconventional people, self-organizing and creative, focusing on collaboration and co-creation with partners within and beyond the own organization. Agile approaches such as Design Thinking, Scrum, Kanban and Lean Start-up are used to achieve a first deliverable (Minimum Viable Product) in order to “iterate it to wow” in close cooperation with the customer. Failures are welcome as they help to improve the deliverable and achieve real innovation. Projects are experiments, dynamic and risk-prone, but fun and what young people want. Kotter describes this new system as “more agile and network-like… This network is dynamic and free of bureaucratic layers. Its core is a guiding coalition that represents each level in the hierarchy. And its drivers are a »volunteer army« of people energized by the coalition´s vision and strategy.”

The “old” system is focussing on reliability and efficiency, following traditional roles and responsibilities along a standardized process of repetitive activities. Everyone knows what to do, job descriptions and metrics are set and basis for evaluations and thus a measure for success in a traditional sense. Products are defined to meet standard requirements and to be produced in big numbers through mass production. Everything that disturbs the routine of the system is perceived as threat. Projects performed through a matrix organisation typically suffer from a lack of support by the line functions. One of the reasons is the differences in mindset, culture, “takt” and tasks.

However, most of the organizations need both “hearts”. They even require to synchronize both systems well. Otherwise they risk to fail. Neither one nor the other is able to survive alone. In some organizations the “new” system may be in a starting position, so the “old” needs to support it, allow it to grow and play its role for the survival of all. The top management of the organisation needs to help the “new” to develop by clarifying the strategy, providing resources and support as well as synchronizing both systems like a choreography. Depending on market requirements, the “new” system will grow in importance and take care of more and more activities, substituting the “old” step by step. But that´s how our society works following Schumpeter´s “gale of creative destruction”.

In his book, Kotter offers eight accelerators for seizing the opportunities of a dual system organization:

  1. Create sense of urgency
  2. Build guiding coalition
  3. Form strategic vision and initiatives
  4. Enlist volunteer army
  5. Enable action by removing barriers
  6. Generate short-term wins
  7. Sustain acceleration
  8. Institute change

It´s not an incremental change, it´s rather revolutionary! It affects not only parts of an organization but may turn it upside down. Strategy, structure, processes, culture and competences are affected. Therefore, it does not make sense to “just use” an agile method like Scrum to speed up projects, or to be agile in one department… The change imposed on the organization requires leaders to think of and perform a fundamental change.

Source: IPMA

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