This post is an edited excerpt from “When Millennials Take Over: Preparing for the Ridiculously Optimistic Future of Business,” (Ideapress Publishing, March 2015) by Jamie Notter and Maddie Grant. The book identifies four principles that will guide successful businesses now and in the future: Digital, Clear, Fluid, and Fast. This excerpt is from the chapter on Fluid.
There has been a long-standing love/hate relationship in the business world with hierarchy. It has helped us scale and get things done, and it also reduces complexity for us by providing a set of rules about who gets to decide on things, but it frustrates us by making us less agile and bogging us down in bureaucratic details. And although many call out for “flattening” the hierarchy, what we really need is for our hierarchies to be more fluid and flexible. When you look at the threads that connect the companies that have unlocked the potential of a fluid hierarchy, you will see that two fundamental building blocks can enable such a system in your organization:
- understanding what drives success, and
- investing in soft skills.
Understanding what drives your success may sound like an issue of strategy rather than organizational culture or structure, but it’s important to remember that there are different levels to understanding what drives the success of your organization. At the basic strategic level, you must get clear on where your company is going to compete and how you will win with your particular set of products and services.
QLI, a health care company that we profile in the book, provides rehabilitation services to people with brain and spinal cord injuries, so its high-level success drivers revolve around providing high-quality medical care to patients. In that sense, it doesn’t need to be fluid. QLI could hire the best-trained physical therapists, speech therapists, and so on and put them into a rigid, vertical hierarchy and still provide high-quality healthcare. But QLI has figured out that there is more to their story
At QLI, high-quality health care is a given, but from the very beginning QLI staff realized that they were not just dealing with patients that had healthcare issues; they were dealing with people whose lives had been shattered. Rebuilding a shattered life requires more than medical attention. It requires a deep knowledge of the patient as a person and integrating that person’s life and passions into the medical care. It is that kind of intimacy with the patient that requires a flatter hierarchy, where the people know more about all facets of the patient’s life are the ones who get to make the decisions, regardless of their title. When they do this, they get better results. QLI does not choose to be fluid because it is a cool new management technique. It chooses to be fluid because that makes it more successful.
Take Zappos as another example. At a high level, all it does is sell shoes and other apparel online, so its success could be driven by solid logistics, good relationships with manufacturers, and effective marketing. But early on, Zappos figured out that giving the customer a “wow” experience is actually at the heart of its success. Zappos realized that it needed to draw people in with not just good customer service, but customer service that would blow people away. The kind of customer service where customers hang up the phone, and literally say “wow” out loud.
Understanding success at that level has implications for the culture at Zappos, particularly around being flat and fluid. To provide a “wow” experience, it had to give more power to people at the lowest levels of the hierarchy, the call-center employees, because they were closest to the customer. Zappos call-center employees make their own decisions about whether or not to upgrade a customer’s account or give them free shipping. They are famous, in fact, for being able to stay on the phone as long as they want with customers. (The record is more than 11 hours with a single customer.) Note that, despite this inefficiency, Zappos managed to grow from $1 million in sales to $1 billion in sales in just eight years.
We could try to scare you into being fluid. We could make a compelling case, actually, that the Millennial generation is going to storm into the workplace over the next several years and demand it. But you won’t access fluid’s true power by being reactionary. You need to look more deeply at your organization and your business model to understand what drives success and clearly identify how being more fluid does or does not connect to that. When we do culture assessments with clients, we always include an in-depth, qualitative assessment designed to uncover this deeper level of what drives the success of the enterprise so that it can be connected to the culture-strengthening interventions.
Once the deeper strategic connection is made, you still have to handle the implementation of a fluid hierarchy, and that’s where so-called “soft” skills become critical. Remember that a rigid hierarchy does serve a purpose: reducing cognitive load. Over the years, we have learned to rely on hierarchy to determine things like who gets to decide and where the information flows, which allowed us to focus our attention on other aspects of running the organization. What we didn’t realize, perhaps, is that by allowing the hierarchy to literally structure our relationships internally, we let our basic skills in building and maintaining relationships among the human beings in our organizations atrophy. That is probably why we considered these skills to be “soft” (less important) to begin with—the hierarchy was already taking care of it.
Fluid hierarchies are more dynamic and flexible, which puts the onus back on the people in your organization to do a better job at managing their relationships. If you want a fluid hierarchy, then you need to build the internal capacity for effective relationship building by investing in soft skills, like conflict and authenticity.
The ability to confront and work through conflict, without the drama and angst that we typically associate with it, is at the heart of making a fluid hierarchy work. Conflict resolution has long been an underdeveloped skill inside organizations. In a command-and-control hierarchy, the primary directive is to follow orders, thus eliminating the need to actually resolve conflict. At best, one assumed that major conflicts were resolved at the level of senior management teams before the orders were handed down the chain, but in reality that rarely happened. In Patrick Lencioni’s best-selling “Five Dysfunctions of a Team” (written squarely about corporate senior management teams), the core dysfunction is a lack of trust, but immediately following is the inability to raise and resolve conflict.
The result has been a large-scale avoidance of conflict inside organizations. Since we’re bad at it, the only experiences we have of conflict inside organizations tend to be the ugly ones, and that only reinforces our desire to avoid it. But in fluid hierarchies this doesn’t work. Where decision-making authority is more fluid, people throughout the structure will be forced to figure things out themselves, and that requires the smooth handling of conflict when it emerges. Avoiding the conflict simply gives it space to get worse or more complicated.
Make sure your people know how to manage and resolve conflict.
Authenticity does not usually make the list of “soft skills” in your business training program catalogue. You are more likely to see topics like conflict resolution, communication, teamwork, collaboration, and even outliers like enthusiasm or resilience. (For the record, we are still puzzled about how you teach people to be enthusiastic, or why you would want to.) But, for a fluid organization, authenticity is a critical skill. Authenticity involves moving through the world as your whole self, so that your external behavior and the way you engage with others is very closely aligned with your deeper identity, purpose, and even destiny. When the way you show up at work becomes disconnected from who you are inside, you are being inauthentic. Note, this is not about constant self-expression, as some critics of authenticity in the workplace assert. You can be authentic and still make choices about what parts of yourself to share in any given context, and that’s fine. It’s when workplace expectations cause you to behave in ways that are not true to who you are that problems emerge.
Why does that matter to fluid organizations? Because fluid organizations intentionally spread power throughout the hierarchy. Fluid organizations rely on the individuals in the system to do the work of figuring out who makes decisions and why, rather than having the hierarchy decide that for them. Authenticity makes that constant negotiation easier by doing what the hierarchy used to do, reducing cognitive load. When your people are confident that their coworkers are more consistently who they appear to be, it becomes easier to speak the truth, challenge each other, and tackle the tough issues. You spend less of your time trying to figure out how people will react or how they expect you to behave in the first place. Both of you get to simply be who you are. More is put out on the table, and less is hidden behind the curtain, and that leaves more of your mental bandwidth for handling the job of making the flat hierarchy work.
True authenticity is not easy, and it’s not common. The pressure is strong to conform in organizations and leave your true self at home, so supporting your employees to be more authentic will require some investment.