As I’m establishing a network of change managers in an organisation this idea of a dual operating model reminded me of a possible way of making the network have impact and influence.
Curious, off I went to find out what Kotter himself said on this in 2012. He’s quite clear, ‘The hierarchical structures and organizational processes we have used for decades to run and improve our enterprises are no longer up to the task of winning in this faster-moving world. … The existing structures and processes that together form an organization’s operating system need an additional element to address the challenges produced by mounting complexity and rapid change. The solution is a second operating system, devoted to the design and implementation of strategy, that uses an agile, network like structure and a very different set of processes. … The new operating system continually assesses the business, the industry, and the organization, and reacts with greater agility, speed, and creativity than the existing one. It complements rather than overburdens the traditional hierarchy, thus freeing the latter to do what it’s optimized to do. It actually makes enterprises easier to run and accelerates strategic change. This is not an “either or” idea. It’s “both and.” I’m proposing two systems that operate in concert.’
Leith Sharp, (Harvard Extension School) is also blunt on the need for a dual operating model. She’s been asking senior leaders the question, ‘Do you think management-driven hierarchy, or the command control operating system that predominates almost all sectors, is adequate for tackling a complex adaptive challenge like sustainability? Or is it adequate for tackling our other complex 21st century challenges?’ She continues, ‘No one is saying yes. Add to this anecdotal avalanche the empirical nugget that 70% of the US workforce is disengaged at work (Gallup State of the American Workplace Report 2013), and there you have it. Nobody actually seems to think that our predominant mode of organizing is going to get us through this century effectively. Put simply, we are in the wrong organizational vehicle for the 21st century.’ She advocates ‘an adaptive operating system, that can be harmonized with command control to bring about a new era of organizational engagement’.
Neil Perkin, who wrote Building the Agile Business Through Digital Transformation is another in favour of the dual operating model, noting, ‘Having a dual operating system enables you to capitalise on key needs of the modern business – executing against short-term targets and business as usual and managing existing models to be ever more efficient and predictable, whilst still solving new problems, developing new value, disrupting existing norms. One (hierarchy) is more focused on management, the other (network) on leadership, but both are needed .
Writers on ambidextrous organisations say pretty similar things. Take this HBR article example, written in 2004, ‘We discovered that some companies have actually been quite successful at both exploiting the present and exploring the future, and as we looked more deeply at them, we found that they share important characteristics. In particular, they separate their new, exploratory units from their traditional, exploitative ones, allowing for different processes, structures, and cultures; at the same time, they maintain tight links across units at the senior executive level. In other words, they manage organizational separation through a tightly integrated senior team. We call these kinds of companies “ambidextrous organizations,” and we believe they provide a practical and proven model for forward-looking executives seeking to pioneer radical or disruptive innovations while pursuing incremental gains. A business does not have to escape its past, these cases show, to renew itself for the future.
Ambidexterity, according to Antonio Nieto-Rodriguez of the London Business School, hangs on the concepts of both exploitation and exploration. ‘Exploitation includes such things as choice, refinement, production, selection, execution efficiency and implementation. While exploration encompasses knowledge creation and analysis of future opportunities.’
In most cases,organisations that aim to be ambidextrous organise ‘breakthrough efforts … as structurally independent units, each having its own processes, structures, and cultures but integrated into the existing senior management hierarchy.’ (There are some org charts showing how in the HBR article)
Continuing the theme of two operating systems, in agile circles there’s talk about the need for enterprise ‘backbone’ to provide a foil for agility. In his blog Agility Needs a Backbone Tom Graves speaks well on this saying, ‘Agility takes place out at the edge: things happen fast there. But in so many, many cases they can only happen fast out there because the core takes care to move slowly, cautiously, providing the solid, certain backbone for the agile edge to push against. And as in living bodies, getting the right balance between them can be a literal make-or-break. A point that it’s probably wise not to forget?’
So, there are at least three similar ideas – dual operating model, ambidexterity, backbone – each advocating the need to question traditional hierarchical structures and not necessarily supplant them, but augment or support them with a more fluid structure. All three propose the combination of two types of structures working interdependently to propose and promote change, innovation, and other things that keep the organisation transforming whilst maintaining a certain stability.
All this is well and good. The idea of dual operation (for change, innovation, etc) is sound. It’s getting the two structures to, in Kotter’s words, ‘operate in concert’ that is more difficult to put into practice. The idea of two systems throws up the potential for clashes not only around behavioural things – competing power dynamics, personality issues, tribalism and various cultural factors but also around system and process things – performance measures, governance, compliance, outputs v outcomes, budgeting processes, etc.
My experience in designing an implementing a dual system model is stuck in Beckett’s cycle of ‘Ever tried. Ever failed. No matter. Try again. Fail again. Fail better’. Looking for something that could help me break out of this, I thought Antonio Nieto-Rodriguez (mentioned above) might give some clues. He offers a 6-pillar ambidexterity ‘execution roadmap’ which caused me to read on, but I found he states the obvious without any substance, e.g. ‘Implementing the right connections between the change-the-business and the run-the-business activities is fundamental for the execution of the strategy.’
I turned to Julian Birkinshaw and Christina Gibson (writing in the MIT Sloan Management Review) who, also on ambidexterity, offer ‘five key lessons that emerge from our work.’ But warn, ‘We found no evidence that specific organizational levers, such as incentive compensation or risk management, were consistently linked to success. There are many ways to build an organizational context that enables ambidexterity.”
I remain optimistic that a dual operating model (whatever label) offers potential for meshing different organisational intentions in a healthy collaboration, I’m less of a view that anyone knows how to make in work in practice over any length of time. I’m going to give it another go hoping I, and colleagues, succeed this time around.
What’s your view of dual operating models? Have you got any methods of making them work over the longer term in practice? Let me know.
Image: Framework by L Sharp & R Gutter, adapted in part from J Kotter, is licensed for open sharing and adapting under Creative Commons CC BY-AS 4.0