In our book, we discuss some key approaches towards structuring for digital transformation and organisational change, and one notably useful model comes from Kotter’s Accelerate, in which he describes an organisational structure model designed to enable the rapid development of new ideas and models whilst still maximising the operational efficiencies needed to manage business as usual. He calls it the dual operating system.
The challenge facing most incumbent businesses is how you deliver against the current targets and short-term business requirements but still leave room to create the next breakthrough. Traditional management hierarchies are well optimised for execution, delivery and efficiency but they are not structured for innovation, concurrent, and responsive working. For that you need a more networked approach that is more agile, adaptive, and able to act at speed to capitalise on opportunity. So Kotter describes the need for a dual operating system that combines the entrepreneurial capability of a network with the organisational efficiency of traditional hierarchy: the network is ‘more like a start-up’s solar system than a mature organization’s Giza pyramid’. But one powerfully complements the other:
Most startups are organised as networks before they evolve into bigger businesses with reporting relationships and org charts, and in large organisations informal networks of change agents (often operating under the hierarchical radar), are frequently the ones making new things happen, and happen faster. But the challenge with informal networks is that they are often not very visible, and are difficult to sustain. If the network is a constantly evolving solar system, says Kotter, then the guiding mechanism is the Sun, strategic initiatives are planets, and sub-initiatives are the moons or satellites.
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.
Kotter has a few key principles to support the effective dual system. He talks about the importance of many people from various parts of the business driving the change, rather than a few appointees – a ‘volunteer army’ if you like. And I do think that there is something very powerful in enabling those who want the change to happen to be the ones to make it happen. In my experience it’s always the people who are really passionate for change that end up really driving it.
He also talks about a ‘get-to’ mindset, not a ‘have-to’ one. And I think the idea of energy here is a useful one. Simple physics tells us that change requires energy, and I think there is far more momentum created when people are minded to want to go in a particular direction rather than being told to. It’s heart, and not just head, supported by a big opportunity that people can believe in.
And he talks about how the two systems need to be inseparable, with a clear line of communication and oversight, whilst still being allowed the freedom to work in their own way. This for me is really important – whilst the networked element might start out small (perhaps only a small percentage of the headcount), the commitment needs to flex and flow between that and the hierarchy as organisational needs change. My own version of the networked system is small, multidisciplinary teams focused on solving a particular business challenge. As the requirements of the company shifts, the initial teams might be joined by more small teams, each tackling a different problem. Over time, the proportion of headcount that is working in this way might grow, but the cycling of staff through the network can enable the spread of new ways of working and thinking. A focus on maintaining a close connection between the two systems but also the freedom to operate differently ensures suitable governance whilst preventing a drift back to hierarchically-driven priorities.