By: Chuck Frey
Nilofer Merchant, in her excellent new book, 11 Rules for Creating Value in the Social Era, points out that in order for companies to be fast, nimble and innovative enough to survive in today’s Social Era, leaders must meet their workers’ desire to contribute to a mission that matters.
Humans have always had innate desires for purpose and connectedness with others. But those desires can now be fulfilled in new ways in today’s hyper-connected world. During the industrial era, workers were content to check their brains at the door, dutifully do the work like a cog in a giant machine and take orders from a handful of managers and leaders. But people have much different expectations today. They want their talents to be appreciated and the opportunity to contribute to the business in a meaningful way. And they’re not hesitant to vote with their feet, gravitating to those organizations that meet those needs.
Companies have always hired based on people’s talent, of course, but it hasn’t been leveraged as well as it could be by many organizations, Merchant says. “While organizations have honored the gem from Jim Collins to get ‘the right people on the bus,’ once those people have been hired, too many organizations often ask them to sit down, shut up, and let someone else drive,” she explains.
That’s because traditionally, a small group of leaders and managers developed the firm’s strategy, while the vast majority were expected to carry it out – often without a clear idea of what the organization’s strategy really was and how they could contribute to it. Merchant cites research by Robert Kaplan and David Norton, the founders of the Balanced Scorecard, who say that only 5% of employees understand what their company’s strategy is. Such a dismal percentage may have been tolerable in years past, when change came slowly and there was ample time and manpower to correct course and fix mistakes, but Merchant emphasizes that businesses no longer have that luxury.
When only 5 percent of the people in an organization knows the strategy, then only 5 percent are ready to make decisions that align their work to that vision.
“When only 5 percent of the people in an organization knows the strategy, then only 5 percent are ready to make decisions that align their work to that vision. It means only 5 percent are able to apply themselves to building that strategy into reality. Typically, this means that a part of the organization develops a great idea that is only fully understood in a small corner of that company. The larger organization then gets to work on the execution plan without ever really owning the strategy. While the strategy-execution gap is a persistent bugaboo, it becomes nearly catastrophic in the Social Era: you can’t be fast, fluid, or flexible if 95 percent of the people in your company have no idea what direction they’re supposed to be running toward,” she explains.
All too often, the results are misunderstandings, confusion and misalignment. Merchant says even if the organization’s leader is communicating the company’s mission to its employees, that’s no longer enough. That’s because the rank and file workers don’t “own” the mission enough to be able to make the numerous day-to-day decisions that are required to make change happen. What’s flawed, she says, is that strategy can no longer be separated from execution; the two need to be co-created, so that the strategy is owned throughout the organization.
Impossible, you say? Not so fast. Merchant shares an example of a world-class company that is putting this idea into practice today. Google shares its high-level direction to everyone who works there; it’s posted on an internal website, and is frequently updated (not just in an annual or quarterly strategy session) based upon input from its employees. This enables Google to be fast, innovative and to quickly adapt to changing conditions.
It also sends a critically important message to Google employees: We value your brain. It also sets an important expectation of every employee, too: It’s up to you to figure out how the projects you’re working on fit into the big picture, and to adapt your approach as needed. It becomes the basis of dialogue in nearly every meeting at Google, and a yardstick that everyone can look toward as they build consensus and understanding.
“Understanding unlocks people to recognize what they need to let go of or change to shift from the current ‘here’ to a new ‘there,'” Merchant indicates. The “new there,” of course, is the new products, services and business models that will help to carry the organization into the future. It’s arguably why Google is able to conduct so many experiments, and then decide ideas should get additional funding and support. In short, it enables the search engine giant to move fast and continuously adapt, giving it a nimbleness that helps it to be consistently successful on many fronts.
In addition, Merchant points out another very positive dynamic of this new approach to strategy-making and execution: It enables people to collaborate more fully, instead of staying locked into rigid conceptual boxes that historically defined our positions within the organizational and who owned key resources.
A sense of shared mission, high personal ownership and incentives for cooperating and collaborating can help the organization to move with the power and agility of an Olympic athlete, with all of his or her limbs moving in perfect harmony, rather than a creaky old machine.
But does all of this engagement and collaboration actually have an impact on the bottom line, or is it just an attractive-sounding theory? Merchant cites Gallup research that shows it does have a positive impact on key metrics. This study, which focused only upon the results of high employee engagement, showed that profitability increased an average of 16 percent, productivity up 18%, customer loyalty up 12% and quality, 60%.
Happy workers solve problems over the weekend or in the shower, or wake up at 3 a.m. with breakthrough answers.
“These gains are based just on high employee engagement, the first step on the road from traditional strategy to the talent approach needed in the Social Era,” she points out. “Imagine what happens when direction is fully known, when insights are gathered everywhere and acted on quickly, when ownership is shared, when power is distributed.”
Ultimately, Merchant believes this new approach to strategy has the potential to bring out our best, most creative selves in service of the organizations for which we work and the complex challenges they face.
“If you’ve been lucky enough to lead people when they fully contribute what they have to give, you’ll know that this is when they are also their happiest. This is powerful… Happy workers solve problems over the weekend or in the shower, or wake up at 3 a.m. with breakthrough answers. This is the picture of a Social Era team.”
By Chuck Frey
About the author
Chuck FreySenior Editor, founded InnovationTools.com and served as its publisher from its launch in 2002 until the partnership with Innovation Management in 2012. He is the publisher of The Mind Mapping Software Blog, the definitive souce for news, trends, tips and best practices for visual mapping tools. A journalist by trade, Chuck has over 14 years of experience in online marketing, and over 10 years experience in business-to-business public relations. His interests include creative problem solving, visual thinking, photography, business strategy and technology. His unique combination of experience and influences enables him to envision new possibilities and opportunities.