As the next normal takes shape, leading companies all over the world are reimagining the basic tenets of organization. We caught up with Chris Gagnon and Mary Meaney, the co-leaders of McKinsey’s Organization Practice, to reflect on how organizations are navigating this time and preparing for the year ahead.
What’s top of mind for you and your clients as 2021 begins?
Mary Meaney: Over the past year, leaders have seen a seismic shift in how organizations operate. Almost every leader we speak with has an inspiring story of radical, positive change in how work gets done and what can be accomplished in the midst of disruption.
While at some point COVID-19 will no longer claim the share of mind that it did in 2020, staying ahead of future disruption will remain at the forefront for leaders and organizations.
So as we start a new year, leaders are thinking about how their organizations can become not only faster long-term but also better for customers, employees, and society at large. To do so, organizations should consider three critical questions: Who are we? How do we operate? How will we grow?
These questions are part of an integrated approach that is both bold and deeply human, which we’re calling Organizing for the Future.
That sounds really interesting. Can you share more about this approach?
Chris Gagnon: Global macro trends are unwinding the old rules of management. In many cases, traditional organizations have felt too bureaucratic, too insular, too inflexible, too slow, too complicated, and often more focused on profit than on people. Barriers to entry and costs to achieve scale are evaporating, accelerating the shift to a “winner takes all” economy.
Leading companies are organizing for the future by reimagining the basic tenets of organization to overcome bureaucratic challenges in light of this shifting dynamic. Our work on this approach actually started two years ago, and the pandemic has revealed just how necessary it is. As leaders move from crisis management to the next normal, a unique unfreezing opportunity arises that is generating organizational “unlocks” at many companies to create new systems that are anti-fragile.
The concept involves recognizing that the organization is an interconnected system, having the courage to experiment boldly (because maintaining the status quo will no longer cut it), and designing an organization that is more resilient and simply more human – one that optimizes for great work rather than managerial control.
The three questions Mary mentioned are crucial because they correspond with shaping the foundational reason for an organization’s existence, establishing a frictionless operating model designed to keep up with the pace of change, and building for growth by scaling innovation and learning at every level.
Mary: Within each question we’ve identified specific imperatives that work together to strengthen the overall organization. To shape that reason for being through a compelling shared identity, leaders should define a resonant purpose, sharpen the value agenda to maximize business value, and create a unique culture to attract and inspire people. The operating model that fosters simplicity and speed should involve a flatter structure, faster decision making, and a talent-first approach with meaningful experiences to support and motivate employees. Building for scale involves an ecosystem view, data-rich technology platforms, and a commitment to learning. All of these imperatives are highly connected, influencing and reinforcing each other. The entire approach relies on embracing experimentation: Experiment, fail fast, learn, repeat.
We recently collaborated with CNBC to explore how the next normal will require reimagining organizations, with an emphasis on enabling faster decision making and integrating purpose throughout an organization.
What is the most important takeaway for alumni?
Chris: We’d love to hear from alumni to learn more about how they’re seeing these trends play out in their industries or regions and what their priorities are for 2021.
We’re also building lighthouse cases across markets where many leaders are thinking about how they will organize for the future. We’re eager to learn from leaders and tailor this approach as needed to help most in this critical time. An organization may not need to rethink their approach to all nine imperatives if a few key areas emerge as strong priorities where efforts should be focused to maximize value. More recently, we’ve started developing industry tailored approaches in the U.S. and E.U. – for example, in U.S. banking, a main priority right now is reskilling talent.
If Organizing for the Future resonates or includes elements that could benefit your organization, we’d welcome a conversation on your challenges and opportunities. Please get in touch with either of us via Mary_Meaney@mckinsey.com or Chris_Gagnon@mckinsey.com.
Are there any other big areas of focus for the practice?
Mary: We’ve been thinking a lot about the next frontier of change management, successfully transforming an organization in our increasingly personalized world.
The biggest hurdle in a change program is typically getting individuals to shift their mindsets and behaviors. We often say, organizations don’t change – people do. So instead of treating the entire organization as a monolith as many change efforts do, we’ve been using behavioral economics thinking and nudge theory to tackle the mass personalization of change – finding better ways to create one-on-one interfaces between managers and employees with real-time feedback. Looking forward to even more progress in this space, especially with the help of technology and analytics.
Chris: We’re continuing to tackle critical organizational decisions in a more data-driven, tech-enabled way through our proprietary analytics-powered digital solutions that help unlock faster, better decisions rooted in data instead of instinct. We’ve continued to implement these tools during the pandemic and even develop new ones in response to client needs. For example, the Organizational Health Index (OHI) – which assesses how an organization is being run and has 6+ million respondents in its database from the past 15+ years – has shown some companies have been thriving during the pandemic and therefore allowed us to highlight learnings around management practices that other organizations can study to improve their own odds of successfully navigating challenging times. Another effort is Talent Exchange, an online talent marketplace powered by artificial intelligence that’s helping connect people to jobs at no charge to individuals impacted by COVID-19, companies experiencing furloughs or layoffs, and companies that are hiring.
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New article: Organizing for the future: Nine keys to becoming a future-ready company