How to Create a Flexible Organization

As you’ve witnessed already, the rate of change is occurring faster and faster. As recently as 1984, people could expect to have one career for their entire working lives.

And then it all changed. Corporations worldwide dissolved the psychological contract. Almost no one had a guaranteed job for life.

At first, people had only a few jobs in their working lives. Over time, however, the number increased. The gig economy grew.

With COVID-19, everything changed again. Working from home went from a perk to a necessity - overnight, and now more people expect to do it even after things return to normal, whatever normal looks like, and whenever it occurs.

Every time there’s a big shift in the workplace, however, leaders, managers, and employees have to adjust. They have to be flexible enough to change with the times.

The 80/20 Principle is especially appropriate here.

 

80/20

The 80/20 Principle was first documented by Vilfredo Pareto, a late 19C and early 20C economist. He observed a relationship between input and output, specifically that 80% of the wealth in Italy was held by just 20% of the population.

This principle was recognised in many other areas, too. It’s where the idea that 80% of your output could be obtained with 20% of your input, or that completing 20% of your to-do list would give you 80% of your results for the week, and so on.

Perry Marshall, marketing strategist and author of 80/20 Sales and Marketing, says that this ratio can be found inside of itself - that there is an 80/20 in every 80/20.

For example, to calculate the first iteration, you’d take 80% of 80% and 20% of 20%. The result is that 4% of your input produces 64% of your output. In the second iteration, you discover that when you take 80% of 80% of 80%, and 20% of 20% of 20%, that less than 1% of your input yields more than half of your output.

 

What would that look like in real life?

Marshall says that 80% of the cars are on 20% of the roads, that 64% of the cars are on 4% of the roads, and that more than half of the cars are on less than 1% of the roads; and you know this to be true no matter how much or how little driving you do. It seems that everyone wants to be on the same roads no matter how many others are, and hardly anyone is innovative enough to look for a different route. Even if it is a little bit farther, often it takes less time in the long run because you’re among the few cars that go that way, but almost no one notices this. They’re all too busy doing what everyone else is doing.

 

You can flip this around.

Just as 80% of your output comes from 20% of your input, you also only get 20% of your output from the remaining 80% of your input.

In other words, the same ratios that work for you, also work against you, and that means that you have to ask yourself if those smaller results are worth chasing at all.

Brian Tracy suggests that you ask “What activities could you eliminate altogether with no real loss of productivity, sales, or profitability?”

If you were starting over today, from scratch, what would you keep, and what would you eliminate?

This may seem patently obvious, yet it’s remarkable just how many organisations there are that scramble to obtain that last little bit of market share. You’ll see them diversify into markets they have no business being in, often to the exclusion of their base. Marks and Spencer did this in the late 1990s. That loss of focus combined with a number of other things has meant that the company has never been able to return to the successes of its heyday.

One question for you might be this: Are you putting the 20% of your best people onto the most important jobs in your organisation? Or are they scattered across a number of departments?

It is they who will produce 80% of your results, so why not make sure that they’re doing the things that are the most important? And why not structure your organisation so that they are working together officially.

By now, you should be able to see at least the relevance that the 80/20 Principle has on a flexible organisation.

Flexibility, by definition, means that things aren’t rigid. Rules are guidelines, in the strictest sense of the word. They’re not a synonym for them. Instead they reflect the fact that there’s more than one way to do something, and all of your employees have the freedom to choose which.

 

Flexible structure

The idea that you can have a flexible structure may sound like an oxymoron, after all, a structure almost by definition is rigid. Yet there are buildings designed to withstand earthquakes that are flexible. So the analogy isn’t as far-fetched as it may sound.

The curious thing, however, is that many leaders say that they want their organisations to be flexible, but then institute policies and rules that are designed to prevent it.

The reasoning seems to be that companies are more like machines that need to have a low tolerance for error and which are strictly controlled, which is why chains-of-command are put in place: to ensure uniformity and minimise variation. But such controls are the antithesis of flexibility. Adaptation, for instance, is another way of saying that you’ll change according to the business environment, and flexibility means that you’ll be able to do this quite easily. It’s impossible, however, to maintain strict controls and to be flexible and adaptive at the same time.

You have to decide what you want your output to look like first, and then pursue the path that will take you there. But it’s an oxymoron to suppose that you can have your cake and eat it, too, so to speak.

 

Decentralisation

A flexible organisation has decentralised its decision-making. Power and authority has been shared right down through the ranks, rather than concentrated into the hands of a comparatively few number of people.

Working-from-home has forced managers to relinquish the reins on things that they otherwise wouldn’t have let off their desks. But because people are working remotely, they’ve been forced to delegate them in order get them done.

This has meant allowing others to make decisions on-the-fly, as it were.

Decentralisation has also changed the appearance of the organisational structure. Instead of being vertical, it has become horizontal. That’s because there are far fewer people who manage others, and so layers of management have been removed. Employees are left to manage themselves and given the authority to make decisions.

All of this is nothing new. You’ve been aware of these changes for much or all of your working life, nevertheless, it’s remarkable just how much managers try to revert back to the older structures, even though in so doing they violate the principles of the flexible organisation they claim to want.

Some have suggested that you only change things around the edges; that you somehow leave the “core” intact. This is something that was made popular in the 1920s when GM was reorganised, though that new structure ended up being what one author called decentralised centralisation.

Decentralisation is never half-hearted. You either do it, or you don’t; but you can’t sort-of do it. Yet that doesn’t stop managers, or academics for that matter, from trying to find a model that lets them have it both ways.

 

Innovation

Flexibility means that there’s the freedom to innovate. Again, this is something that most organisations say they want. Companies want to be able to offer new products and services, but to do that they must also give people the freedom to share knowledge with whomever they choose irrespective of the relationships spelled out in the organisation chart, and to afford people the ability to ask questions of anyone without having to inform someone or get permission to do so.

You see, the more restrictions you place on the free movement of information within your company, the less flexible you become, and that’s because in so doing you’re exerting greater control.

Research has shown that one reason why some entrepreneurs succeed while others don’t is that the successful ones experience more failures early on. In other words, they make more mistakes. It’s where the expression fail fast comes from. The idea is that the more you fail, the closer you get to discovering what works. It also means, however, that less control is placed on your experiments.

 

Flexible or agile?

One of the most recent buzzwords in management-speak is agility, and you may be wondering whether to pursue it or flexibility.

An easy way to decide is to look at the root definitions of these adjectives.

Flexibility means that something can be bent or changed without breaking it. It’s not rigid, stiff, or brittle.

Agility means that you can change quickly, which suggests that you can do it easily, much the way an athlete would.

And right away, you’ll notice that the two ideas are not mutually exclusive. In other words, you don’t have to choose one over the other. In fact, it would be very difficult to be agile, without also being flexible though you could be flexible without being agile.

Flexibility assumes adaptability, a vital skill nowadays. If you can’t adapt to change, you’ll never survive, never mind grow.

Flexibility and agility, however, are not limited to your organisation or to the people who work in it. It’s something that you must also apply to yourself. This has always been the case, but now more than ever. Leaders and managers are fond of imposing organizational change on everyone but themselves. This can no longer be the case. If the organisation is to be flexible, then so must be those whose job it is to run it. And that’s because it’s their decisions that determine what everyone else will do.

The more controls they put in place, the more that those below them will also implement. It won’t take long before everyone is trying to control everything, and flexibility will be entirely lost.

 

Flexibility means more opportunities

It’s worth remembering that the goal isn’t a flexible organisation just for the sake of having one. Instead, its purpose is to create more opportunities.

 

How does that work?

As we’ve seen already, it promotes innovation. The more new things people create, the more opportunities they see as a result. For instance, the internal combustion engine was originally created to power cars. Henry Ford, with the help of his wife, is known to have fed petrol into a small carburetor on his kitchen table as he developed that technology. Nowadays, those engines are used more than any other throughout the world; not just for petrol engines, but also in diesel, gas-turbines, and rocket-propulsion. In other words, one small invention create an untold number of opportunities elsewhere. You never know where it’s going to lead.

Opportunities aren’t limited to technology. They also apply to people. Not just in the jobs that are created, but also in the skills that are needed to take advantage of them. And that means that people need your support to go after them. It’s an own goal if people feel less supported by you as flexibility becomes more widespread.

It’s a curious thing, but the word opportunity, according to thesaurus.com is synonymous with the word freedom - a topic touched on earlier in this article.

When you create an organisation that’s truly flexible, you also open the door to untold opportunities, not only for your business, but for those who work in it.

 

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