"Things are moving so fast we can’t keep up!”
In the last two weeks, both Pier 1 and JC Penney announced bankruptcies, no doubt partially brought on by the Covid-19 pandemic, but both organizations have been hurting for a long time. Macy’s and Sears are closing more stores; the latter barely holding on by a thread. Even Walmart and Walgreen’s have announced they will close stores. Brick and mortar are giving way to the digital age. Amazon continues to grow at breakneck speed. Over ten years, Amazon’s revenue has increased about 12 times, whereas Target Stores’ revenue has increased about 1.2 times.
When we look at the retail industry specifically, and others more generally, it’s clear that traditional organizational structures are falling short. They are unable to keep pace with the demands of the digital economy.
The advancement of the Internet over the past two decades has taught us that we must run our organizations differently for our businesses to thrive, and perhaps even survive. This digital transformation is inevitable. To successfully move into the future, leaders need to strike a balance between organizational hierarchy and cross-functional coordination. While there still needs to be accountability for results, organizations need to be able to move faster to achieve these results.
In the late 1800s, Fredrick Taylor pioneered the idea of specialization to speed production. This specialization drove greater efficiency and productivity as organizations invested heavily in projects to streamline operations. Yet this specialization also drove hierarchical adherence which in turn promoted cross-functional dysfunction – especially during times of change. If leaders wanted to deploy a new product design or improve business processes across the organization, they ran into huge amounts of resistance. This led to lots of failure of organizations to achieve results in desired time frames, if at all.
This means that organizations must reduce their dependence on hierarchical adherence and drive more toward teams that work more effectively cross-functionally. People in these organizations must operate at higher levels of cross-functional collaboration, requiring greater trust, healthy dissent, and greater ability to engage in informal accountability.
This starts at the top. The leader of the organization must be willing to give up traditional command and control in favor of a more facilitative approach. She must be passionate about her organization’s mission, must be humble, and must demonstrate greater trust and willingness to engage in healthy dissent. Further, she holds her leadership team accountable to collaborate cross-functionally and promotes and models the idea that employees across the organization work together to drive these outcomes and are willing to challenge each other to do so.
This article is the subject of my upcoming online seminar, How to Drive a New Culture to Embrace the Digital Age, sponsored by the Project Management Institute. Click here for more info.