In this article I would like to describe two examples of business cases that I have analysed in my field research with Peoplerise on the topic of Teal Organizations and new organizational designs. Julia Sjövall
Organizational Design in Transition
Since the way an organization is designed can have a great impact on organizational performance, it should be in the best interest of all companies to ensure that they are organized in the best way to achieve their goals and visions. However, the way most companies are organized today is not consistent with the current business scenario.
In fact, many companies still rely on traditional forms of organization that are more than a decade old, such as functional design, divisional design, and matrix design. These forms are linked to historical economic eras when managers aimed only to take advantage of market conditions.
However, many things have happened during these last decades that have affected market conditions and consequently the adequacy of traditional forms of organization. For example, we are no longer in an industrial age, but in a knowledge age that is characterized by a need for continuous innovation. In addition, the overall workforce is much better educated today. Talented younger generations prefer different forms of organizing.
There has also been a rapid progression in technological development that has provided new tools and possibilities for organizations. This, as well as the entry of international players into the market, changing consumer demands and short-lived products, have highly influenced the competitive market. Today’s business environment is much more dynamic and uncertain. To succeed in these conditions, organizations must become innovative and responsive, which is something that traditional and rather mechanistic designs can hinder.
Thus, both today’s economic scenario, but also the more modern view of employees can force organizations to go beyond traditional forms of organizing.
Teal Organizations & evolving organizational models
In uncertain contexts, organic organizations are better suited. That is, organizations with horizontal differentiation, decentralized decision-making, and a task-division that changes in accordance with opportunities and needs as they arise.
Organic organizations also allow for a greater ability to be agile. This is an organizational capability that enables efficient and effective adaptation of resources for value creation. In fact, it is linked to greater performance in uncertain environments.
Thus, benefits can be found for companies that engage in organizational change and transition to more current organizational models. These have emerged as a response to current prevailing market conditions, similar to how traditional ones had emerged in the past.
The process of organizational change
One difficulty in adapting new forms of organization can be found in the process of organizational change. In fact, engaging in organizational transformation tends to be very challenging, which is also visible by the high rate of failed change initiatives.
Furthermore, most of the literature on the topic discusses the planned approach to change, i.e. the implementation of change in a top-down way. In which the detailed steps of how to move from point A to B are predetermined. This approach is seen by several scholars and entrepreneurs as unsuitable in the unstable market conditions we are experiencing today.
Consequently, this results in a situation where many organizations feel the need to change. But the available literature on how to do this successfully and how to transition to these new forms of organization is limited.
Transition to Teal Organizations: 2 business cases
Because of this drawback, it is necessary to address the above-mentioned limitation and to increase understanding on how to manage such a change. Also by means of concrete examples.
In the latest edition of the Italian version of Reinventing Organisations, translated by Peoplerise, two successful transformation journeys can be found. The new cases featured in Reinventare le organizzazioni, in addition to Mondora‘s update, are those of Zordan and Credem Banca. Two very different organizations in terms of size and sector, whose transformation I was able to investigate closely, having Peoplerise supported the journey towards the Teal paradigm.
By learning from these organizations, insights, tips, and practices can be learned that are useful for organizations that rightly wish to change and organize themselves according to today’s conditions. So as to be ready to face the future in an Evolutionary way.
Differences and similarities
In my research on the implementation of new organizational models, I analyzed in depth the two Italian cases mentioned above. One feature that emerged immediately, as a difference between the two journeys, was the way they dealt with change.
Zordan had a top-down participatory approach, while Credem had a completely bottom-up approach. However, despite this initial diversity, an important similarity is related to the high involvement and participation of employees. This, in turn, allowed for real co-creation.
After dealing with this initial difference, it was possible to identify several similarities between the two paths. For example, besides high participation of people, another feature that I consider successful is that both organizations created an internal guiding community. The purpose of the community of practice was to facilitate and support change.
The two companies also implemented these change initiatives gradually. This is a factor to be considered vital when living in a dynamic environment.
A further similarity was the emergence of new roles, team leaders and competence leaders, who work as facilitators of collaboration within the self-organized teams of the 2 teal organizations.
Can all organizations change?
After having deepened the study of the two cases, two main variables emerged that impose on companies the need to go beyond the traditional forms of organization. The first is the current external environment, and the second is a more modern view of work on the part of employees. Consequently, the way to do it successfully becomes interesting. The cases also confirm that change is possible, regardless of the size of the organization and whether the organization produces goods or services.
What, on the other hand, may influence the actions and efforts, which have to be made to ensure the sustainability of the change, is the organizational culture. The organizational starting point in relation to the new model. The bigger the cultural ‘gap’ between the current and the desired state, the more important it is to take action so that the organizational culture aligns with the new way of working.
It is indeed crucial, from a long-term perspective, that these two correspond.
The journey to become part of the Teal Organizations then becomes systemic. In order to reduce the gap, we work at several levels, accompanying the cultural transformation to that of structures and processes. Without losing sight of the development of mindset, skills and transversal and innovative leadership competencies.