Finding Innovation in the Flattened Organization
I always thought that senior executives led most effectively by managing vertically. That is, they spent the majority of their time working upward with their Board of Directors and downward with direct reports. But then the world, in Thomas Friedman's words, "flattened out." Markets became more interconnected, global competition grew, demographics shifted and communication tools improved. Boundaries that impeded good results in the old world posed even bigger problems in a world complicated by differences in culture, geography, function, and varied stakeholder concerns. Like you, I witnessed these changes with eyes wide open, but also wondered if the tight grip on leading vertically — via the traditional tools of hierarchy, power, and authority — would still be the chosen path for senior executives.
Other researchers and I asked that very question, and many others, of senior executives in major global companies — and we got a big surprise. Of the five major boundaries we identified through our research — vertical, horizontal, demographic, geographic, and stakeholder — these executives, by an astounding 71 percent, ranked horizontal boundaries as their biggest challenge for leading in a flat world. And, even more surprising, they relegated the importance of managing vertical boundaries to dead last at a mere 7 percent. Turf battles, the intransigence of silos, navigating the organizational matrix, front and back office barriers — in other words, working across barriers of function and expertise rather than above or below them — were the issues keeping them up at night most. During a merger, in coordinating disparate functions, in integrating a foreign division, a conversation across the fence was more effective than a "do it or else" series of commands to subordinates. "Silo busting" had become crucial for success.
What was going on here? We asked another question that provides an important clue: "What were the top ten trends that will impact organizational strategy over the next five years?" By a whopping 92 percent, senior executives said it was the drive for innovation. The link here is clear — integrating expertise and experience across functions is a powerful route to innovation.
Leading across functions, however, is hard work. Consider the experience of a top executive of a government R&D agency: "My organization consists of 8 functional units and 7 laboratories, in which more and more of our problems require interdisciplinary solutions. Unfortunately, each lab has its own management culture, and this causes real challenges in partnering. I have a mandate to attack this challenge." For this executive, spanning boundaries can create breakthrough ideas. Successful innovation demands effective collaboration and intense interaction between the organization and its stakeholders, and across internal boundaries of level, function, demography, and location. Such interactions can be a catalyst for leveraging different knowledge bases, beyond what any one leader, group, or organization can achieve alone.
While 86 percent of the senior executives in our research said that it is extremely important that they collaborate across boundaries, only 7 percent said that they did it effectively. So, the next time you experience a corporate merger, an alliance with a foreign company, or any other situation in which you need to develop relationships across functions, units, and disciplines while counteracting conflicting loyalties, try these tips.
- Invite leaders from other units to your team meetings so they can discuss how each unit can help the other to solve pressing organizational problems.
- Set up some comfortable chairs and a whiteboard in the connector wing between two departments to encourage informal, collaborative conversations across functions.
- Following an organizational merger, get people from the same functions in the two organizations together. Have them craft a compelling mission about a new business opportunity that everyone can rally behind.
- When divisions are in conflict over an issue, help them articulate the source of their differences and then explore ways to creatively reconcile them for the overall good of the organization.
- Host "alternative future" conversations. Invite anyone in the organization to attend; provide no agenda other than to imagine the ideal, transformed organization 5 years from now. The more boundary spanning leaders it has, the stronger it will be.
Chris Ernst is a senior faculty member in the Center for Creative Leadership's Organizational Leadership Practice and co-author of the new book Boundary Spanning Leadership: Six Practices for Solving Problems, Driving Innovation, and Transforming Organizations