The Path to Organizational Agility by Daniel Markovitz

The first personal computer was introduced by MITS in 1975.

Bell Labs brought out the first colour TV in 1929. 3M had the first copy machine in 1950. Good luck finding any of those products today. Peter Golder and Gerard Tellis’s seminal study of 500 brands in 50 product categories reveals that almost half of market pioneers fail. In fact, the greatest long-term success belongs to companies that enter a market and become leaders about 13 years after these first movers.

In follow-up work, Tellis found little evidence to support the idea of first mover advantage: Myspace and Friendster were ahead of Facebook; Books.com was online before Amazon; Altavista (among others) beat Google in search; and Sony,

Blackberry and others hit the shelves before Apple in mobile music, smartphones, and tablets. That’s quite a collection of corporate carcasses.

Rather than focusing on being first, leaders should instead focus on becoming faster and more nimble, so that they can get to the head of the market quickly, when the timing is right. That means eliminating the bureaucratic barnacles that encrust so many organizations. Following are three areas that can create lethal operational drag on the corporate ship.

PROBLEM: Lack of clarity around strategy. Jim Womack, author and founder of the Lean Enterprise Institute, describes this classic problem as “the loud voice of the CEO at the top becoming a faint whisper by the time it reaches the front lines of the organization.” At this level, managers are consumed with the chaos of daily operations, and seldom have any understanding—or bandwidth—to execute on the lofty strategic goals pronounced in the C-suite.

SOLUTION: Hoshinkanri (often called strategy deployment, or policy deployment) is often misunderstood as a form of strategic planning. It’s not. It’s a powerful way of translating strategic objectives into concrete plans at each level of an organization. Perhaps more importantly, hoshin creates both horizontal alignment among functional silos, and an interlocking cascade of goals, projects and tasks vertically within each silo. In my consulting work, I’ve seen business unit managers unable to achieve the market share goals mandated by the CEO because they couldn’t get the IT support for new product development software; Finance and HR support to hire the necessary material scientists; and Operations support to rapidly qualify new suppliers. Hoshin clarifies those needs at the beginning of the year and ensures that those internal resources are aligned.

PROBLEM: Right people, wrong seat. Leaving aside the problem of underperformers, there is the very real problem of putting talented, motivated people in the wrong job. The star saleswoman lacking organizational traits gets promoted to VP

of Sales; the gifted but painfully introverted machinist who becomes the plant manager; the talented financial planner without leadership skills who is put at the head of the new client service division. All-too-often, supremely wonderful employees are misplaced and put in a position to fail.

SOLUTION: Carefully assessing the skills and traits

required for each key position in a company, rather than simply promoting based on résumé, tenure or prior career path. This assessment goes far beyond a simple Myers-briggs (or similar) test, and requires close attention and cooperation with the HR department. It also requires a willingness to continually reassess the needs of the company at each specific position, and remove people whose skills don’t match those needs. As

Patty Mccord, former head of HR at Netflix once explained, “We are a pro sports team, not a kids recreational team.” When someone is not the best at that position anymore, or the company no longer needs the employee to contribute in that role, it’s time to move on.

PROBLEM: Misaligned decision rights. As organizations grow in size and complexity, the CEO often becomes a bottleneck for decisions—or worse, gets involved in decisions that she shouldn’t be making at all. At a $500 million footwear company I once worked with, the founder and CEO — long removed from his role in product development — decided that he personally didn’t like a particular style his product team had made. He diverted a container that was en route to the U.S. with $400,000 worth of shoes to Africa, where he unloaded everything at a loss.

SOLUTION: Shifting decision rights downward, to the

appropriate level of responsibility. WL Gore is an excellent example of an organization that does this. The $3 billion company has what it calls a ‘lattice’ organizational structure, which broadly distributes leadership responsibility throughout the company. This structure allows employees to make ‘above the waterline’ (i.e., low-risk) decisions on their own. Approvals are only needed for ‘below the waterline’ (high-risk) decisions. Although it would be nearly impossible for another company to copy Gore’s management structure, it is very much within the capacity of a leadership team to create clear guidelines for the kinds of decisions people at each level of a company can make.

These three problems — lack of clarity, people in the wrong seat and misaligned decision rights — create significant organizational drag that slow you down. The good news is that they’re entirely within your control to eliminate. By embracing the three solutions you will be able to focus on being faster and nimbler than any of your competitors — and take advantage of new markets when the timing is right.