The world is changing fast – how can you ensure your organization can innovate and adapt quickly to survive and thrive?

According to MIT Sloan Lecturer Kate Isaacs, the answer includes nimble leadership, flattened structural hierarchies, and an empowered workforce.

During her recent MIT Sloan Executive Education webinar, Isaacs shared three key factors for enabling a team-based, networked organization where people at all levels can dream up new ideas and bring them to life:

• Purpose: Purposeful companies outperform the market by 5-7%, yet most organizations define purpose too narrowly, and don’t use it to guide daily decision-making. Purpose is a primary mechanism that nimble organizations use to align people around strategic direction, and it can be used to motivate and inspire people. Nimble organizations find ways to connect people’s daily decisions to the organization’s larger purpose, so purpose doesn’t end up as just a motto on the wall.
• xTEAMS: The building blocks of nimble organizations, xTEAMS are externally oriented, in that their members actively reach out to stakeholders outside of their organizations via three key activities: sensemaking, ambassadorship, and task coordination. According to Isaacs, the degree to which teams are externally oriented is a big predictor of performance. Can teams be good ambassadors for their agenda, and pull in the right resources and talent? Can they coordinate their roles and priorities with the rest of the organization? Can they understand the world (sense-make) by talking to a variety of stakeholders and customers? Because if there’s one practice that’s crucial to get right as an xTEAM, it’s being customer-centric.
• Architecting the game board: Nimble organizations flip the traditional top-down hierarchy and instead use a partnership approach with their people and other stakeholders. Nimble organizations are an alternative to a top-down command-and-control hierarchy in which leaders tell people below them what to do. Instead, nimble organizations emphasize teams that are flexible and fluid, with leadership distributed across many levels of authority. Yes, the people at the top still set the vision and priorities, but they are doing something else: they are creating the “game board” conditions—the resources, the information, the culture, and the structure— so that the “entrepreneurial leaders” in the organization can be both autonomous and aligned around strategic goals. There’s a two-way flow of information. A starting point for shifting toward this kind of model is this question: Do you think of your people as human resources, or do you think of them as partners that will help you achieve your goals as an organization?

Based on their research on nimble organizations, the content covered during the webinar and the Q&A below offers a preview of Isaacs and Ancona’s new course, Distributed Leadership: Cultivating Nimble Organizations.

Webinar Q&A

Our faculty cover a lot of ground during their live events, yet there are always more questions from participants than time allows. We followed up with Isaacs to get some of those questions answered, and her insights are below. 

What is the difference between nimble and agile?

This is a question we get a lot. 

Agile – which originated in the software development world– was an effort to bring the customer perspective into the development process and reorganize work processes away from large, buggy software releases to smaller, more frequent releases that could continue to be improved through rapid iteration. Work happens at the team level, and teams are expected to be in frequent contact with customers to hear their feedback and prioritize their work accordingly.

Nimble also emphasizes teams, as mentioned during the webinar, and our work really looks at the leadership and the cultural angle of things. What does it take to get all the teams in an organization aligned around a set of strategic goals? We focus on what is the overarching purpose, culture and values of the organization, and its structures and incentive systems, which all work together. 

We also look at leadership at the individual level, the team level, and the organizational level, and how leaders knit and coordinate the teams’ efforts so that you get the whole enterprise moving in a coherent direction. Others are doing work on agile at the whole organization level also—what we’re doing is aligned with that evolution in the field.

How can you eliminate ‘bad’ ideas and select stronger ones without tampering freedom?

Nimble organizations encourage people’s freedom to participate in a collective vetting process. People are invited to consider ideas work together to quickly throw out bad ideas that just aren’t going to work and put resources into good ones that will.

In the webinar I talked about the simple process that materials science company Gore has to do, called “real-win-worth.” People are asked to fill out a short statement to describe what the product is about, and then they must schedule “real-win-worth” vetting exercises every so often. Those are designed to ask a lot of different people in the organization to their minds around the questions: “Is this a real idea? Are we likely to win given our capabilities within the market? How much is it worth in terms of revenue opportunity?” So, people are free to contribute their creative and critical thinking in that process. 

If you’re a passionate champion of an idea and your idea gets shot down, you may not necessarily be free to keep pursuing that idea. However, there’s a good reason for that if the idea has been through the rigors of this collective process. It may not be as real as you thought, it may not be as big a win as you thought. The only way you find that out is with this engagement with others who can give different perspectives – from technology to sales to marketing, and the customer perspective as well. 

You also seem to highlight the importance of building that culture of trust for the organization – where people will share ideas with the understanding that some ideas might move forward and some might not, but this is done in respectful and deliberate manner. 

Yes, that’s very true. And there are very important cultural mechanisms that make this work. Psychological safety we find is pretty high in these organizations. People are able to talk about ideas and be critical of ideas without taking it so personally. A good example of this is a story from Ford Motor Company when CEO Alan Mulally was trying to turn around Ford. Everybody had been pretending that everything was going okay, but really they were actually afraid to speak about the real problems. 

Mulally set up a system of red, orange, and green tracking, and he had Monday meetings where all the heads of the different regions would come together and talk about their progress. Everyone’s charts were green meeting after meeting. But how could this be the case since they were losing bucketsful of money?

And finally, one exec, Mark Fields, who was in charge of North America at the time, decided to tell the truth and mark one of his indicators red for the next meeting. Fields put up his red chart and Mullaly recalled that you could feel the air go out of the room. There was silence. And then what did Mullaly do? He started clapping. 

This is a very important point, because this is one thing leaders do, they signal with their behavior the kind of culture they want to create. So with that simple act of clapping Mulally signaled it was okay to tell the truth – and this was the only way Ford was going to solve its problems and move forward. 

Nimble leadership depends on the willingness to tell the truth. To tell the truth, you need to have a culture of psychological safety where people are not going to be punished, but rather acknowledged and rewarded for speaking up. The only way to make progress together is to tell the truth and keep working for the good of the whole enterprise. And it can’t be just about “my team.” Leaders need to be able to care as much about the success of the whole enterprise than they do about their team or unit. That’s especially important to get right in the senior leadership team, because then that gets communicated through the rest of the company. 

Yes, you want your team and yourself to be successful – but it can’t be at the expense of the whole enterprise.

How can we transform politics and bureaucracy to become nimble?

Wherever there are human beings there is going to be politics and bureaucracy. In terms of politics, it again comes down to the cultural question I just answered. Basically, with the authority that you have as a leader, one of your most important jobs is to model the culture you want, to support, recognize, and encourage others to behave congruently.

Using psychological safety as an example: are you as a leader willing to speak the truth? When someone speaks truth to you, even if it’s not what you want to hear or it implicates you, how do you respond? Do you acknowledge what’s being said, or do you become defensive? 

Politics is about power – it’s about who’s on top, who’s in control, and who’s getting the attention. You need to be able to see those dynamics, and then think about how you as a leader want to transform the downsides of those things with the scope of authority that you have inside the organization.

Bureaucracy is another issue. One thing that fellow MIT Sloan faculty Debora Ancona emphasizes a lot in her model of teamwork is “sensemaking” – one of the three activities of an xTEAM. Individuals and teams are not going to be successful unless they sensemake about their external and organizational environment. You as a leader have to figure out “Who has the power here? What motivates them? What motivates us a company? How can I build relationships here? What are the informal networks?”

You have to first see those connections before you can transform them. 

How do you attract the most creative and entrepreneurial people when you do not have a big brand name and competition for the best talent is at the highest?

In my community there’s a small grocery store chain called Crosby’s Market. They’re an amazing employer and a community treasure. They care about their people. They listen to their customers. They don’t have a big national brand. Are they listed on Fortune’s Best Companies to Work For? No. Are they a fantastic company and everyone in the community knows it? Yes. 

Word gets out when you’re doing things that make your company any exciting place to work, and you care for your people. Word gets out even if you don’t have a big brand name. When people start to become aware of your reputation that does become a differentiator in terms of attracting talent. Its why purpose is so important in nimble organizations – not only because it aligns people, but also to inspire them. These days, people want to work for places that are doing something bigger than simply making money. People want to feel that they are contributing to something meaningful and want to work for companies that are trying to do the same.  

Are there ways to speed up the cultural change needed to achieve a nimble organization?

First, I would say that culture change happens very slowly. You need to start out with an expectation that it’s going to take time. At Gore, it was relatively easy to develop new technology and find new customers, but training new people in the cultural values that really underpin the company – that's a slow and developmental process. They felt that onboarding and training people how to work in a culturally appropriate way was their biggest limit to their pace of growth.

In order to lead culture change, you need clarity around what the company stands for and has always stood for – but it needs to be more than a motto on the wall. You want people really living the culture you claim to espouse. For that, two things are essential:

1) Willingness of senior leadership to model the culture. The tone is always set at the highest levels of leadership. Those leaders need to walk the talk – this is one of the most important jobs of leadership, especially in moments of pressure. You find out where people really stand when they have to make hard choices.

2) Creating contexts where people can grapple with how to apply or live the cultural values in daily decision making. This can be a simple as a check-in during meetings to ask if decisions are consistent with important cultural values. At Gore, one of the four cultural values is fairness. You hear people asking constantly: is this decision going to be fair, to our customers, to our people? At the Ritz Carlton, every morning the staff does a lineup to tell a story that exemplifies their cultural principles. The job of leaders is to figure out how to get culture off the wall and into the water.

What have you found to be the main hurdles for an existing organization to shift toward a "nimbler" one? 

There’s no formula for this. In fact, it’s the absence of a formula that’s really important to understand from the beginning. There are a few guiding principles or questions to ask when starting the journey though.

The first question is: Do we have a higher purpose that’s about contributing something of value that people feel connected to in the organization? In my webinar I didn’t list examples of bad examples of a purpose, but it’d be things like “Being #1 in my market.” That’s not really a compelling purpose. A compelling purpose is about being in service to someone in some way – and being clear about the strategy you’re using to enact that purpose. It has to be compelling, and it has to be clear. Purpose is your guiding light, and you’re not going to be able to get far without it.

The second set of questions involves the connection between your customers and your people. Are you in touch with your customers? How? Do you know what they want? Do you know where they’re frustrated? How are gather data about their experience of your organization? How do you tell their story inside your organization, and respond to what you’re hearing? Can your people see how their jobs connect to and enhance the customer experience? 

Lead with the customer perspective and then determine if your people are equipped to deliver the experience. There’s a lot of talk about employee engagement – but the end goal is to serve customers. Your people need to have enough clarity about their jobs and roles in order to provide the ultimate customer service. 

Those are the two starting points – clarity of purpose and customer connection – and then relate back to the employee engagement piece.

In doing that, leaders need to think about the FULL experience that their own people and their customers are having. It’s not just about the cognitive/rational, but the emotional experience as well. People who think about marketing and sales know about how important emotional engagement is, but I don’t think we talk enough about emotion in the workplace. We often don’t give people training in how to acknowledge, much less talk about, emotions, especially difficult ones like fear and anger. But emotions are a big part of who we are as humans, and we can’t leave them out of the conversation. Emotions drive a lot of behavior, both on the employee and customer side. Finally, in the last decade or so we’re starting to get the idea that an employee’s emotional experience matters in terms of their engagement, which has a big impact on a company’s overall performance. 

In terms of hurdles – I think a big hurdle is fear of the unknown. “Everyone tells me I need to decentralize authority – but then I’m going to lose control!” 

It’s a big mindset shift and people don’t necessarily know how to do it or have examples or how it can be done in their context. We are trying in our research to give people more models for how it can happen. But no matter what you’ll have to find the thing that works in your context. One organization’s solution won’t necessarily work in yours. It’s not one size fits all.

One of the principles of nimble is to start small, try something, see how it works, study it, gather data, and if it’s working then you can begin to scale out. Expect to stumble. Try things out at a scale where you won’t sink the ship if you fail. That’s how a learning culture works.

And lastly, I think the leadership demands on the nimble way of working are different. It’s an identity threat as much of anything. “Who am I as a leader if I’m not expected to have all the answers?” Deborah [Ancona] and coauthors have a great article called “In Praise of the Incomplete Leader.” Leadership is not about having all the answers. It’s about knowing your strengths and weaknesses and having the humility to surround yourself with people that are great at the things you’re not great at. Leadership in these contexts is about designing situations where the collective intelligence of the group can flourish.

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Learn more from Isaacs during her new live online course, Distributed Leadership: Cultivating Nimble Organizations.